Emerging Developer Training Programs
Summary
One challenge that many legacy cities face is a lack of developers willing to build on the small, infill lots available. Many home builders today often prefer large sites to achieve efficiency of scale, as predevelopment and construction costs decrease with the greater number of homes built in close proximity. For example, the average sized project for a national home builder in 2024 is 25 acres and 50 units, according to a report from the National Association of Home Builders.
Small-scale developers are more likely to be interested in building one or two units on available infill lots but the development industry is complex and can be difficult for beginners to enter. To address this issue, communities have created emerging developer training programs to grow the ecosystem of local developers, builders and contractors.
Such programs expand local communities’ number of developers/builders while also supporting workforce development and wealth building by helping existing local tradespeople expand their businesses.
About
Below is information on six emerging developer training programs in Ohio, Indiana, and Pennsylvania, run by a variety of entities including local governments, CDCs, and CDFIs. Some programs are operated as a cohort of individuals for a specified time period while others operate as ongoing consulting. All programs offer technical assistance during the development process as well as some form of financial assistance through grants or low interest loans.
Build South Bend Toolkit
City of South Bend, IN
The City of South Bend is committed to promoting redevelopment at all scales and has taking significant steps to support infill development including rewriting their zoning code, creating pre-approved housing designs, and developing an online-based collection of resources for developers interested in building in the city.
This Toolkit contains information and resources on due diligence, financing, site acquisition, and educational webinars on all aspects of development. Users can explore information on vacant lots, local construction costs, zoning, titles, and design as well as information on permit requirements and applications.
Users can download a sample proforma template to aid in determining project feasibility. Several pre-approved housing plans are available for download, which can greatly reduce design costs for developers. As of September 2024, five pre-approved houses have been built, by four developers. Nearly 100 additional pre-approved buildings are in the planning stages and expected to be built within the next two years.
The city hosts periodic workshops and seminars on development aspects including legal and design. These sessions are recorded and saved as webinars for future users. Having due diligence, financing, permitting, and educational resources in one place makes the complicated world of development more accessible for those entering the field.
Centralized Real Estate Accelerator
Neighborhood Allies, Pittsburgh, PA
In 2020, Neighborhood Allies, a CDC in Pittsburgh, launched the Centralized Real Estate Accelerator, a program designed to grow community-based real estate development in the city. The Accelerator provides technical assistance and capital to aspiring local developers and small businesses.
Participants are offered marketing and fundraising assistance to garner project support from investors, elected officials, and other stakeholders as well as development strategy and project management services.
The program provides participants with predevelopment grants to explore feasibility, predevelopment loan guarantees for design and engineering, and membership and partnership interests to help close permanent financing gaps. In 2023, the Accelerator awarded $700,000 in grants to local developers and small businesses.
Contractors on the Rise
Village Capital Corporation, Cleveland, OH
Village Capital Corporation, a CDFI, in Cleveland, created the Contractors on the Rise Program in 2020 to help minority and women contractors get a foothold in Cleveland’s construction industry. Geared toward contractors who already had some experience in rehab, new construction, or subcontracting, this program allowed participants to expand their portfolio, increase capacity, and improve their cash flow.
Through the Contractors on the Rise program, each participant was eligible for up to $200,000 in a revolving line of credit based upon their capacity and experience. These funds could be used for property acquisition as well as hard (construction) and soft costs. Eligible project sites were limited to select neighborhoods (Buckeye -Shaker and Slavic Village).
After realizing that participants needed additional business coaching, VCC reallocated some of the funds originally slated for grants to put an accountant and lawyer on retainer to help cohort members formalize their businesses.
Primarily funded through OH3C grant dollars from JP Morgan Chase, the Contactors on the Rise program ran for roughly two years and served nine women and minority businesses, seven of whom purchased and remodeled their first home.
Cleveland Equitable Development Initiative
Cleveland Development Advisors, Village Capital Corporation, Capital Impact Partners, Cleveland, OH
Cleveland Development Advisors (CDA), Village Capital Corporation (VCC) and Capital Impact Partners created the Cleveland Equitable Development Initiative (CLE EDI) in 2023 to provide minority developers with training, technical assistance, mentorship, networking and pathways to financing. The program takes developers with experience and works to “take them to the next level.” For example, one participant was an experienced single family home rehabber and flipper and the program helped him gut rehab and rent a small apartment building.
The nine-month program consists of formal real estate development training, workshops with local development experts and city leaders, transparent discussions around challenges and opportunities for developers of color to succeed in Cleveland, and beyond. Participants are paired one-on-one with a developer mentor to support from both a business and project approach perspective. These local experts provide project-specific guidance to further participants’ real estate development efforts.
After graduating, several participants subsequently secured development loans from Cleveland Development Advisors, Village Capital, and other lenders, like Enterprise. The program’s first cohort had 15 members. The second cohort is set to start in fall 2024.
Minority Contractor Capital Access Fund
Western Reserve Community Fund, Summit County, OH
This program is a collaboration between the Western Reserve Community Fund and the Akron Urban League and provides financial and technical assistance to Akron and Summit County-based minority, women, LGBTQ+, Veteran and Disabled-owned businesses in the construction trades.
Eligible businesses apply and are evaluated based on need, experience, and growth potential. Once accepted, those businesses are given the opportunity to apply for financial assistance in the form of short-term credit to pay for costs related to specific construction contracts. These low-cost short-term loans are repaid as the contractor is paid for work performed on the job. This short-term financing can help a construction business scale up and manage the cash flow challenges of the construction draw process.
MCCAP participants receive access to technical assistance, targeted training, and mentorship (coordinated through the Akron Urban League) that build the business skills needed to grow and thrive in the construction trades. Examples of assistance include help with bidding and estimating, project management, government contracting, compliance, and other key areas for businesses in the construction industry as well as assistance with general business practices such as bookkeeping, marketing, human resources, and certifications.
Emerging Developers Accelerator Program
Affordable Housing Trust for Columbus Franklin County, OH
The Emerging Developers Accelerator Program (EDAP) is AHT’s minority developer cultivation and training program designed to create pathways to development careers for groups who have historically faced barriers.
The program consists of three elements:
Technical assistance: six-month education course covering affordable housing development (legal structuring, feasibility, market analysis, site selection and acquisition, proforma and financing, project management)
Access to capital: Upon successful completion of the program, participants can apply for loans to build affordable housing through AHT.
Ongoing consulting: Participants will benefit from ongoing consulting with industry experts throughout the development process.
The program is funded through the City of Columbus Department of Development, Franklin County, JP Morgan Chase, and the U.S. Bank Foundation. Since its creation, the program has had 40 participants across three cohorts. The fourth cohort is set to begin in fall 2024.