In March of 2017, the Council of Development Finance Agencies (CDFA) published a white paper titled Urban Revitalization & Impact Investing: Unlocking the Potential for an Impact Investing & Development Finance Agency Urban Revitalization Collaboration. The Introduction appears here:
Henry Cisneros, the former HUD Secretary and Mayor of San Antonio, calls urban revitalization, “the new urban reality…and urban renaissance.”
Urban areas have seen a significant increase in investment for both residential and commercial development in the past 15 years. This is due in part to demographic changes such as the population getting younger, more diverse, better educated, and more mobile, as well as costs of suburban
development increasing and renewed interest in downtown and dense urban areas on the part of business, universities and health care.
Many, if not most, central city or neighborhood urban areas are seeing an increased interest in revitalization. Office buildings are being converted to condos or rental units. Companies are relocating from suburban campuses to denser downtown areas. Older factories and Class C office buildings are being upgraded or converted to residential and tech spaces. Retail, restaurants, grocery and hardware stores, and other commercial businesses are looking at downtowns as the place to be.
Yet, despite all of this economic activity, major metropolitan areas still struggle with disinvestment, poor or insufficient infrastructure, and declining housing stock. Targeted and specialized financing through public private partnerships is required to see a true urban renaissance occur.
The purpose of this Urban Revitalization & Impact Investing White Paper is to document the potential of a collaboration between impact investors and high performing Development Finance Agencies (DFAs) to fill the capital gaps facing cities and neighborhoods working to support urban revitalization and to accelerate DFAs as a major source of capital to grow, create jobs and spur economic and community development.
With the increasing interest in more urban living, neighborhoods that have experienced deterioration and disinvestment over the years are becoming more popular because of their proximity to job centers. This migration and shift of resources is presenting unique challenges to the planning and economic development sectors. It also presents a vast opportunity to align impact investing and urban revitalization efforts like never before.
The primary financing challenge to today’s urban revitalization is that the capital markets have not kept up with the capital needed to invest in older areas. Most conventional financing sources, along with the national capital markets, are still entrenched in older traditional models of investment: safe, risk averse, suburban, strong credit quality, and safer markets.
Urban revitalization is a broad-based term, representing efforts to build stronger neighborhoods, downtowns, business districts and anchor institutions. Specific investments can include:
- Basic infrastructure investments including water, sewer, streets, bridges, parks, community centers, libraries, schools, broadband, transit, parking and sidewalks.
- Real estate redevelopments, including residential, commercial and retail as well as mixed-use, mixed-income, historic rehabilitation and adaptive reuse projects.
- Cultural facilities including theaters, museums, arts spaces, cultural centers and magnet schools.
- Large scale infrastructure including ports, highways, subway, bus-rapid transit, clean energy facilities, wind farms, solar facilities, docks and wharves.
- Anchor institutions, including colleges and universities, dormitories, hospitals, clinics, wellness centers and research parks.
Cisneros identifies 15 key activities for urban revitalization, most important of which are building for sustainability, harnessing advanced industries and anchor institutions, modernizing urban infrastructure, increasing walkability.
Photo of the San Antonio Riverwalk via Adobe Stock.