Affordable housing nonprofit paying it forward by helping fledgling investors build wealth

Affordable housing champion Project for Pride in Living (PPL) announced it will sell 83 of its smallest apartment buildings to budding property developers and train them on property management skills.

PPL’s RE-Seed Program is believed to be the first of its kind in the state, blending the nonprofit’s affordable housing mission with its other goal of improving low-income communities.

Combined, the 83 properties are estimated to be worth nearly $50 million.

“We have been talking about this for a year. This is brand new for us. And we are pretty excited,” said Karla Henderson, PPL’s senior vice president of housing. “This is about building generational wealth.”

The program will help PPL clear the books of its smallest two- to six-unit buildings, many of which were acquired during the banking and foreclosure crisis of 2008.

PPL has since used the properties to extend affordable housing options to families in St. Paul’s Frogtown neighborhood and the Ventura Village, Whittier, Phillips, Powderhorn, Near North, Folwell, Hawthorne and Camden neighborhoods of Minneapolis. A few of the properties are in New Hope.

All 83 will be sold in the next three years, PPL Chief Executive Paul Williams told a crowd of about 80 community members who gathered last week in Minneapolis to learn more about the program.

RE-Seed is designed to offer people who live in the area the chance to expand their existing small real estate property operations or to provide new developers in the area with training and the chance to buy well-maintained apartment buildings for the first time.

By selling the small properties now, PPL will refocus its energies on developing much larger properties such as the $66 million, 110-unit Opportunities Crossing affordable housing complex it is building by Lake Street and Nicollet Avenue in Minneapolis, Henderson said.

All properties will be fully restored before being sold. PPL is starting with nine buildings, which should have repairs done by November and be sold by January.

The RE-Seed sales, however, come with strings.

Prospective buyers cannot live in the apartments, which are only meant to be investments. The apartments must continue as affordable housing units until at least 2030. Lastly, buyers must take classes in finance, property management and regulatory compliance to ensure their success, PPL officials explained during last week’s launch and informational sessions in Minneapolis

To ensure the new buyers do not purchase headaches, PPL has hired Black-owned Abundance Properties under a $1.6 million contract to repair each of the apartments before they are put on the market.

Abundance, with operations in Minneapolis and Bloomington, has started installing new roofs, gutters, water heaters, furnaces, windows, brick tuck pointing and other repairs on nine of the PPL apartment buildings.

Jordan Crockett, who co-founded Abundance three years ago with four other Black commercial construction workers and property flippers, said “it means a ton” PPL choose their firm, which will employ about 50 workers and subcontractors to repair the first nine properties.

By using local contractors and focusing on local buyers, “PPL is being consistent with their stature of being community-first. It is just a clear testimony of PPL being an intentional organization that empowers the community,” Crockett said.

On Monday, his business partner and co-founder, Rashad Kennedy, was leading five crew members as they tore off the weathered roof on a fourplex at 2745 Portland Av. They’ll finish it and another Portland Avenue buildling this week and move onto two other PPL properties on Chicago Avenue next week, Kennedy said.

In addition to using local contractors, PPL is using eight local or minority-owned real estate agents to sell the properties.

The first nine properties — four duplexes, four fourplexes and one six-unit building — are collectively worth $4.9 million (before repairs), or $570,000 to $630,000 each.

Erik Hansen, Minneapolis’ director of Community Planning and Economic Development, likes that PPL is using area businesses to spruce up the buildings and is maintaining its affordable housing mission in the new program.

“That’s good that they are thinking [about] how to keep their funding, their investments local [by] using local labor, local contractors, local Realtors,” Hansen said. “That will keep that money and those dollars circulating within the Minneapolis economy.”

Fixing the roofs, boilers and windows of each property before putting them up for sale is important, Hansen said.

“That’s supporting the preservation of these units,” Hansen said. “You have to continuously invest in the capital needs of a housing unit.”

Before launching RE-Seed, PPL officials spent weeks discussing how it might structure its experiment with community boosters such as Local Initiatives Support Corporation (LISC) TwinCities, Urban Land Institute, Common Bond and the Minnesota Housing Finance Agency.

LISC Senior Program Officer Gretchen Nicholls said it provided PPL with an $80,000 grant so the organization could bring in the experts and consultants needed to ensure all property deeds are clean and clear before being sold to new developers.

Given that PPL acquired the properties during the banking and foreclosure crisis, and the properties’ strict affordable housing requirements, each property required a type of financial forensics and detailed conversations with lien holders, each city, plus several federal agencies, Nicholls said.

Now that the program is in gear, word is spreading.

“There’s just so much excitement about these individuals having access to these opportunities,” she said. “You just feel it. I mean, it was just palpable.”