Richmond Housing Renovation Program
On June 2, 2015, the Richmond City Council voted to issue up to $3 million in Social Impact Bonds for the purpose of rehabilitating and repairing abandoned residential properties in the City. The Richmond Community Foundation (RCF) facilitates the program from acquisition to sale of the properties. Families who are participating in SparkPoint Contra Costa, a local financial services program with 17 nonprofit partners, will be given the first opportunity to purchase the homes through the First Time Home Buyer program.
Social impact bonds are an emerging strategy which blends private investments with projects that generate a positive social impact. Investors purchase the bonds to fund programs designed to address social issues. If the program is successful and earns a profit as a result, the profits are used to repay the investors and help continue the work to tackle social problems.
Richmond’s Code Enforcement Department currently manages more than 250 blighted, abandoned properties, keeping them boarded up, cutting weeds, removing illegal dumping etc. This costs the City of Richmond approximately $7,000 per house annually.
The Richmond Housing Renovation Program has several goals:
- Create clean, safe and decent housing
- Provide opportunities for first-time homebuyers through SparkPoint
- Stabilize neighborhoods
- Increase neighborhood homeownership rates
- Reduced code enforcement costs and police calls for service
- Stabilize neighborhood property values
- Increase property tax revenue for the City of Richmond
Mechanics Bank purchased the entire bond series, providing the program with the capital it needed. By targeting the most blighted properties, the bond program will improve the quality of life and property values in the neighborhoods that most desperately need this sort of help. Due to the success of the program, Mechanics Bank has agreed to extend the term of the social impact bond for another 5 years, allowing the program to continue reclaiming abandoned properties.
To date, the Richmond Housing Renovation Program has achieved the following results:
- 11 houses complete and sold to local first-time homebuyers
- 2 homes are being completed and will be ready for sale in June 2020
- 3 brand new homes that will be ready in September 2020
- $6.5 million in local spending; $700,000 repaid in code enforcement liens and property taxes; and $350,000 reduction in Code Enforcement costs so far
RCF Connects has had great partners in this work, including private law firms and financial institutions—which have structured the transactions on a pro bono basis—to implement this innovative concept. The Richmond bond is a great example of a fourth sector initiative, in which private for-profit companies, governments and non-profits team up to tackle stubborn social problems.
The Richmond Housing Renovation Program and Richmond Community Foundation’s social impact bonds have been featured in the news multiple times. For examples please click here or here, or you can see our full Press page by clicking here.
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