Community Impact Investing
Community Capital Management, Inc. (CCM) is a registered investment advisor, headquartered in Weston, Florida, with offices in Boston, Massachusetts and Charlotte, North Carolina. The firm manages just over $2.4 billion, $2.1 billion of which is in the CRA Qualified Investment Fund (CRA Fund). “CRA” stands for the Community Reinvestment Act, which regulates banks within the U.S. The CRA Fund is a market-rate, fixed income fund that invests in U.S.-based community impact investments. Community impact investments focus on positive criteria for inclusion in a portfolio and can include a wide range of intentions such as affordable housing, neighborhood revitalization, and small business development.
Launched in 1999, the CRA Fund was created for banks looking for CRA investments and has grown to include individual and non-financial institutional investors interested in its community impact investment strategy. To our knowledge, it is the largest impact investment bond fund in its peer group and the largest in the U.S. The Fund offers three share classes for investors – one for banks (ticker: CRAIX), one for retail investors (ticker: CRATX), and one for institutional investors (ticker: CRANX). All three share classes are available on a variety of platforms including Fidelity, Charles Schwab, Pershing, TD and LPL.
The CRA Fund’s strategy is fossil fuel free and focuses on investing in four sectors of the bond market where our CCM team identifies, records, and tracks the environmental and social activity that each transaction supports. These sectors include single family agency mortgage-backed securities (MBS), agency commercial MBS (CMBS), taxable municipals, and asset-backed securities (ABS). These types of investments provide capital to help finance affordable homeownership, loans to start or improve small businesses, loans to rehabilitate affordable rental housing properties and healthcare facilities, and improvements to communities nationwide such as green technology, revitalization activities, rural community development, and more.
Our pioneering research process combines impact with financial analysis providing an added layer of investment transparency by detailing the use of bond proceeds. We use a quantitative and qualitative approach to understand what each bond is financing and to report on each bond’s multiple positive-based outcomes. Since 1999, we have invested over $8.1 billion in community impact initiatives nationwide.
Impact investments are categorized using seventeen “impact themes” that include: affordable health/rehab care, affordable housing, arts & culture, disaster recovery, education/childcare, enterprise development/jobs, environmental sustainability, gender lens, government supported communities, healthy communities, human empowerment, minority neighborhoods, neighborhood revitalization, rural community development, seniors/disabled, sustainable agriculture, and transit-oriented development.
Each bond in the CRA Fund is assigned one or more of these impact themes. We believe the real heart of the story lies in the qualitative research and detailed explanations of what the bonds are financing within communities nationwide. Here are two examples:
Kivel Manor, Phoenix, AZ
Kivel Manor is an affordable independent living property for seniors in Phoenix, Arizona that consists of 118 studios and one-bedroom maintenance-free apartments each with a 24-hour emergency call system. The property is in a moderate-income and high-poverty census tract with 23 percent of the population living below the poverty line.
Kivel Manor offers residents a dining program, food pantry, social and recreational programs, and a social services coordinator at no cost. Residents also have free access to an onsite library, lounge areas, and computer center with high-speed internet access. Additional amenities include hairstyling services, a bank, dental clinic, mini-mart, laundry rooms, meal plans, and covered parking.
The entire Kivel Campus of Care, including Kivel Manor, Kivel Manor East and Kivel Manor West, serves the local community by providing 255 units of affordable housing, including 210 independent apartments and a 45-bed assisted living facility. Fifteen of the assisted units are memory-care units for assisted-living residents with Alzheimer’s disease, dementia, and other memory problems.
The campus was recently renovated with help from a $4 million grant from the U.S. Department of Housing and Urban Development as part of the Green Retrofit Program for Multifamily Housing. The grant program’s goal is to retrofit older multifamily properties with energy-efficient appliances, materials and systems, with an eye toward reducing energy costs and water consumption, assuring indoor air quality and creating jobs for industries that produce the energy-efficient products.
The impact themes associated with this investment include Affordable Health/Rehab Care, Affordable Housing, Environmental Sustainability, Seniors/Disabled.
74 West Tremont Apartments, Bronx, NY
74 West Tremont Apartments is a special purpose affordable housing property located in the Morris Heights neighborhood of the Bronx in a low-income census tract, where 97 percent of the population are minority households and 57 percent live below the property line. The building consists of 34 units, three of which are leased to Section 8 voucher tenants and 27 of which are leased to non-profit tenants who provide transitional and permanent housing for homeless youth and adults, substance abuse challenges, chronic medical conditions, and those recovering from mental and behavioral health issues.
Of these 27 units:
• Twelve are leased to Comunilife, a community-based health and housing service provider. Comunilife also operates a full-service, Latino-centered, mental health clinic and a suicide prevention program for Latina girls.
• Five are leased to Praxis Housing Initiatives Inc., which offers overdose prevention training, nutritional counselling, workforce development programs, harm reduction skills, and other services for homeless people.
• Six are leased to Services for the Underserved (SUS) that offers both supported and low-income housing. In addition to housing, SUS specializes in intellectual and developmental disabilities services, homeless services, veteran services, urban farming, and employment opportunities.
• Three are leased to Promesa, a health and human service and community development organization with a mission to enable residents to become self-sufficient citizens who contribute to the quality of life of their communities.
• One is leased to Covenant House, the largest privately funded charity in the U.S. providing care and vital services to homeless, abandoned, abused, trafficked, and exploited youth.
The impact themes associated with this investment include affordable health/rehab care, affordable housing, education/childcare, gender lens, human empowerment, and minority neighborhoods.
Both Kivel Manor and 74 West Tremont Apartments exemplify positive community impact. These are just two examples of thousands of bonds we have purchased over the last 18 years that showcase how community impact investments can have multiple positive-based outcomes to families and neighborhoods nationwide. Integrating community impact investments into your portfolio can help all communities become more viable. These investments increase the supply of affordable housing and facilitate the creation of more jobs – both of which are vital to the economic development success of society and communities nationwide.
Article by Jamie Horwitz, chief marketing officer at Community Capital Management, Inc. (www.ccminvests.com). Jamie is responsible for developing and implementing the firm’s overall positioning in the market. This includes oversight of firm-wide communications, strategic marketing initiatives, media relations, marketing compliance, websites, social media, and all marketing materials. She is also involved in sales outreach to institutional investors and consultants. Jamie is a member of the firm’s Management Committee.
Jamie joined CCM from Bear Stearns in New York City where she worked in their corporate marketing department. Prior to that, she was a credit analyst at Chase Manhattan Bank. Jamie enjoys volunteering having served as a Reading Pal through the United Way of Broward County’s ReadingPals program. The program is an early literacy initiative for children in kindergarten through third grade. It focuses on ensuring that children have been exposed to the wonders of literature and are reading at grade level at the end of third grade. She is a past mentor for Take Stock in Children, a non-profit organization that provides college scholarships for low-income and at-risk students in Florida. In 2013, Jamie participated in the CFA Pilot Program for the CFA Institute Investment Foundations™ (f/k/a Claritas Investment Certificate). Jamie received her B.A. in Economics from the University of Michigan. She holds FINRA licenses: Series 6 & 63.
Investing involves risk including loss of principal. Bonds are subject to interest rate risk and will decline in value as interest rates rise. The Fund is non-diversified.
Carefully consider the risks, investment objectives, charges and expenses of the Fund before investing. The prospectus contains this and other important information and is available at www.ccminvests.com. Please read the prospectus carefully before investing.
The Fund is distributed by SEI Investments Distribution Co., which is not affiliated with Community Capital Management. The securities described are for illustrative purposes only. Their selection was based upon non-performance criteria, such as the security’s social and/or environmental attributes. As of 9/30/17, the investment that included a loan to Kivel Manor and the investment for 74 West Tremont Apartments represented 0.11 percent and 0.22 percent of the Fund’s assets, respectively.