The new fund consists of a $500 million Opportunity Zone Fund and a $500 million non-Opportunity Zone Fund. SoLa Impact will partner with regional developers on development projects financed by the twin funds, and 13% of all asset appreciation and fees earned through this endeavor will be channeled into funding the affiliated not-for-profit Black Impact Community Fund, which will leverage the for-profit Fund’s size, operating efficiency, and purchasing power to build affordable homeownership opportunities in the targeted communities.
Furthermore, the new community fund will team local governments, faith-based organizations, and other nonprofits for new affordable housing and related projects built on surplus land and underutilized lots. The new housing focus is a shift for SoLa Impact, which aimed at educational initiatives that included more than $100,000 in scholarships during 2019 and more than $1 million in vocational scholarships to South Los Angeles residents this year.
“After a decade of successfully investing in Los Angeles’ African-American and Latinx communities, we have learned a great deal about how to deliver near-term and long-term dividends for both the investors and the community,” said Martin Muoto, CEO of SoLa Impact and founder of the Black Impact Fund. “Ultimately, it is about creating shared prosperity and racial equity. In light of all the country is going through, it is clear the size and scope of the problem requires a bold and ambitious response. The time to act is now.”
Muoto added that the non-Opportunity Zone Fund will enable endowments, foundations, pension funds, and other mission-aligned institutional investors that were previously unable to receive tax benefits from the federal Opportunity Zone programs to invest in projects designed to provide housing and business opportunities in communities of color.
“While we believe the Opportunity Zone legislation has the potential to significantly benefit these communities, the areas designated as OZs have been somewhat inconsistent,” he said. “As a result, we are seeing incredible deals literally ‘across the street’ from our Opportunity Zone properties that our OZ Fund could not invest in. The side-by-side non-OZ structure allows the Black Impact Fund to access undervalued real estate assets and broaden its reach and its impact.”