Kresge Foundation - DHIC
Working Concept Document
HEART Investment Channel
Health · Equity · Adaptation · Resilience · Transit
Overview of HEART Investment Channel
The Foundation will help develop policies, practices and financing sources that foster the
development and revitalization of healthy, equitable, culturally vibrant, climate-resilient
communities near transit. Using grants, social investment and market-rate capital to stimulate
developers, community-based organizations, public agencies, anchor institutions and
intermediaries, the Foundation will help communities take a holistic approach to development,
expanding the availability of housing that is affordable to low- and moderate-income
individuals; accelerating the development of mixed-use places with social infrastructure that
promotes opportunity, walkability, and social cohesion; and working to ensure that such places
are health-promoting, sustainable and resilient in light of changing climate conditions.
Ultimately, the goal is to simultaneously improve the environment, the economy, and
opportunities available to low-and moderate-income individuals by working across disciplines
and sectors.
The goal of this initiative is to amplify the impact of Kresge’s program areas by assisting placebased actors to more effectively deliver mixed income and mixed use development that
promotes Health, preserves Equity, is Adaptive and Resilient to changing climate conditions,
and provides access to Transit (HEART Development.)
HEART development does not just happen. It requires cross sector collaboration because of its
bold ambitions, scale and complexity. This is true both at the specific project and community
level as well as efforts to address the various barriers systemically. Last, encouraging HEART
development will require multiple forms of capital. For instance, it requires philanthropic
capital for planning, public engagement, policy, research, and advocacy; patient capital and
equity given the multiple uses, greater public engagement, and longer development cycles;
predevelopment and acquisition debt to assemble land and preserve affordable housing; and
lines of credit and guarantees to build capacity on the ground. And perhaps, even more
important, it requires understanding how to braid these various forms of capital together to
catalyze projects to move from concept and planning to actually getting built.
Five Pillars of HEART:
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Planning and Implementation: Support cross-sector organizing and planning to achieve
the shared vision, support, and financial resources critical to achieving HEART
Development in specific places to serve as proof points.
Capital Investment: Develop capital tools that encourage, complement and streamline
available public and private capital resources and financing mechanisms.
Capacity Building: Build institutional capacity in the public, private, and non-profit
sector to imagine, make decisions around, resource and create HEART development.
Data & Research: Gather and develop a set of data and diagnostic tools that help assess
the assets and barriers to achieving HEART development and the social and economic
benefits of doing so.
Policy Development: Inform and inspire policy that prioritizes and facilitates HEART
development at the local, state and federal levels.
DHIC Projects that Fit the Bill
Washington Terrace
 Located in Southeast Raleigh, quadrant of Raleigh with greatest concentration of AA and
poverty.
 But like many communities that developed in the segregated South, it has pockets of
neighborhoods with large well-kept homes that served the professional class.
 WT has a great history. 1950. First housing for African American professionals.
Everyone in SE Raleigh knows WT. Opportunity to capture that history through
interviews and old photographs.
 25 acre site has potential for significant impact and to set standard for future
redevelopment in adjacent neighborhoods.
 Development will include affordable and market rate rental and homeownership
housing, playgrounds, community buildings, child care center, village green and
community gardens and perhaps more supporting non-residential uses.
 Adjacent anchor institution is St. Augustine’s University (HBCU). Other anchors or
supporting institutions include Boys and Girls Club, Wake County Public School System
Alternative HS, YMCA satellite location, and City of Raleigh Parks & Rec facilities
 Near St. Augustine’s new public health center that will be utilized by Inter-Faith Food
Shuttle to offer cooking and nutrition classes and on-site community garden.
 WT site complements and leads other planned projects and redevelopment, including
150+ City owned parcels to the south and new YMCA Branch planned within a 2 mile
radius. .
 Proximity to LISC-funded federally qualified health center; opportunity to include
residents in effort to improve access to and utilization of primary healthcare services.
 Continuing DHIC commitment to build green, healthy communities. Enterprise Section 4
grant has helped us support this effort
WT easily embeds five pillars:
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Robust community-engaged master planning process, with multiple cross-sector
partners at the table
Ample opportunity for diverse capital investment across 5-7 phases and 7-10 years, plus
secondary projects that may arise adjacent to the parcel
The project is building DHIC’s internal planning capacity and that of partners and
neighborhood residents—NeighborWorks CLI will help, looking for other ways to build
permanent capacity to address complex issues of gentrification and community
economic development.
Myriad data and research opportunities, from social and economic indicators and shifts;
systems change affecting a variety of racial equity indicators; gentrification; links
between health and housing, etc.
Policy development: relationship with the City of Raleigh and need to coordinate goals
and objectives is raising lots of issues; as is the role of federal and state funding and
funding priorities (ie: sustainability features and LIHTC) ; infrastructure policies and
incentives also an issue.
Challenges that HEART Investment Channel Can Help Solve
1. Helping to ensure the redevelopment remains true to community needs and goals while
also responding to funding opportunities/trends and sustainability needs and goals.
2. Support for mixed income mixed use varies—NCHFA against. City for. Requires a
segmented strategy.
3. Multiple phases that require up-front, risky predevelopment investments that tie up
DHIC’s capital.
4. Need for inexpensive yet patient capital, matching funds, flexible funding…various gaps
that cannot be planned for in every circumstance.
5. Tension between redevelopment and need or goal to retain the character and
demographics of the area—fight against gentrification that drives away African
American residents. Young white hipsters are more likely to be in a better position to
access moderate-income homeownership opportunities than neighborhood residents
(historic privilege, assets, credit-readiness).
6. Funding for innovative Green features, including solar or other alternative energy
components, high-level LEED features, and programmable open space (re: community
gardens, exercise facilities), is limited with tax credit rules unless other funding sources
cover capital costs.
7. Area is not a “food desert” but healthy food options are limited. Some opportunities to
improve healthy food access through adjacent privately-owned commercial assets,
community gardens, partnerships with high-capacity organizations such as the Interfaith
Food Shuttle, Farmers FoodShare, the Raleigh City Farm, and Grocers on Wheels, a
mobile fresh produce truck that serves low-income communities.
8. Neighborhood commercial center is limited and neighbors would like to see it
maximized for their benefit. Opportunity to collaborate or incentivize redevelopment,
but requires working with private property owner. Tricky.
9. DHIC’s chief core competencies are in housing development, asset management and
related resident services, so the project requires high-level service and/or ownerpartners to ensure value-added services hit the mark. DHIC needs help as it builds
capacity to vet, select, measure and monitor childcare and health care operators
10. DHIC wants the project to meet Health and Housing goals, a connection also being
explored by the YMCA and St Augustine’s. What can we reasonably do to explore and
prove the connection? This kind of longitudinal data collection and monitoring is
expensive and not a core competency.
DHIC’s Goals in Participating in HEART Investments
1. Reduce DHIC’s financial risk while ensuring Washington Terrace is a HEART Community.
2. Provide enhanced support services to our residents leading to reduced turnovers and
enhanced bottom line results.
3. Create financial efficiencies across the master plan such that innovative programs and
features can be added to it.
4. Build internal capacity for connecting our development work with measurable, relevant
resident outcomes.
5. Build our capacity for collective impact with anchor stakeholders/high-capacity partners.
6. Bring the learnings of our experience at Washington Terrace the balance of the DHIC
rental portfolio.
7. Prepare to illustrate to the NC Housing Finance Agency the benefits of mixed income
mixed use strategy with enhanced resident support systems. Agency leadership will be
changing—the QAP can be changed.
Potential Uses of Funds
Grants
1. Expand or replicate Advance Health Care (FQHC) collaboration already in place with
LISC. Washington Terrace is not currently included in the effort. Could also connect this
effort to other properties where DHIC has some scale (multi-phase properties like Water
Garden).
2. Build on partnership with Inter-Faith Food Shuttle and NCSU’s A PACKed Kitchen—
expansion of Cooking Matters classes; measure outcomes.
3. Create oral history and/or walking history of the area—in partnership with NCSU’s
public history project and St. Augustine’s communications and media programs.
4. On site resident services coordinator dedicated to Washington Terrace and
neighborhood as it populates.
5. Grants for amenities, open space and facilities that may not be included in development
financing---child care, open space, community gardens.
6. Funds for ongoing planning, including community engagement with residents,
stakeholders, partners, anchors.
7. Additional staff at DHIC level to coordinate partnership and documents outcomes of
HEART strategy.
8. Deliberate exploration of gentrification—convening, whitepapers, etc.
9. Support for financial capability program for WT and CP residents to prime pump for
homeownership.
10. Examination room in common area to support healthcare collaboration
11. Office for County housing specialist (supporting stabilization of fragile populations)
12. Demonstration kitchen for education re: nutrition, cooking, etc.
13. Fitness programming and rooms as well as open space (see below) including measured
walking trail
14. Transit improvements such as covered bus shelters designed and built by local artists;
build on existing bike route adjoining property
Loans
1. Replace existing $3mm land loan at 5% interest with 1% interest rate loan generating
$120,000 per year in savings. Can invest this savings in staff and other capacity to
manage and monitor soft services/resident outcomes
2. $2 million in infrastructure development financing
3. Financing to incentivize or create redevelopment opportunities for adjacent commercial
strip. Could include acquisition down the road.
4. Financing to ensure success of childcare center—social impact bond opportunity?
5. Funds for lot release fees associated with creating open space.
6. Enterprise level funding multiple purposes/predevelopment.
7. $500,000 low interest loan to existing Washington Terrace commercial to redevelop the
property.
Guarantees
1. Need guarantee or source of low-cost funds for construction financing for
homeownership product. Revolver with low costs that could be used for infrastructure
costs before home construction starts.
2. Operating reserve guarantees (or similar tool) to free up project cash for resident
services or other programs.
Expanding Impact to the DHIC Portfolio
Intergenerational DHIC Communities
While Washington Terrace is DHIC’s largest planned community, there are other larger scale
rental communities that DHIC has developed that would benefit from the ideas being tested at
Washington Terrace. The communities all feature two or more tax credit communities that
individually serve either families or seniors. These projects include:
Highland Village, Cary NC. Mixed income community featuring 278 homes including 3
tax credit communities, a 48-unit homeownership community and a common amenities
package offering a community clubhouse with swimming pool and fitness center and a
village green.
Wakefield Manor and Commons, Raleigh, NC. Located in an opportunity neighborhood
(a planned community of 5,000 homes featuring a PGA golf course), this LIHTC
community includes a 96 unit seniors complex and 80 apartment homes for families.
Water Garden, Raleigh, NC. Water Garden is one of DHIC’s newest LIHTC community
that includes 60 apartment homes for families and 88 for seniors.
Each of these communities have sufficient size and attributes to continue to test the models
developed at Washington Terrace and give DHIC the opportunity to carry these strategies
across the DHIC portfolio.