Community Interest Model
Ownership of Commercial Real-Estate and the Community Interest Model.
Similar to eliminating exclusionary zoning, broadening ownership in real-estate for millions of less affluent people, who could never afford to make larger real-estate investments given prevalent social equity and justice issues, offers sound community and personal investment opportunities. The concept works to leverage a large number of community members in fractional real-estate investment, whereby the neighborhood’s constituency is a participate in the financial funding of the project, to a greater or lesser extent. An example is a community of say, 50 households, form a collective and become part of the financing in development projects within the community. The key point here is this model could provide access investment opportunities for low-income families and promote their ownership in the development of vacant or neglected properties. Ownership promotes a common interest in the type of project while highlighting the needs of a community. It is at a “micro real-estate” investment scale that allows a community to leverage their personal interests while building personal wealth, and who, may otherwise struggle make such a demanding personal investment. The micro real-estate concept centers on individual investment together with larger shareholders, both of whom become the beneficiary of new development.
One possible exit strategy is the eventual buyout of municipal or developer’s interests with local community interests. Since a community buyout could be delayed and incentivized by tax reductions, and community grants to the developer, a delay in selling the property could also result in an increase of value and a more desirable position to hold the property. Perhaps a municipal interest could assist the community and provide matching funds to secure low land costs, while the constituency contributes to the project management and financing costs over time. The primary idea is to transfer property ownership and its interests, to the children, families, and related interests of the community over time.
Compton, California, for example, could be the test piece for consideration, where interested families can buy micro shares of property within multiple neighborhoods. They would then have a shared interest in creating value, at least to some extent, to bind the community to the real-estate investment and a shared interest in its success. The idea would need a portfolio of properties to make the investment worth the effort. What are the number of houses, for example, that require ownership? Perhaps another way to ask the question is, would an errant neighbor/investor dilute the motivation to invest? A recent case study in Denver may provide one answer. When a house was sold and used for illicit purposes by the new owner, the neighborhood eventually turned the owners over to the police, which ended the problem. The main point here, the neighborhood acted concerning the use of the house. Imagine if neighborhoods actually had multiple ownership interests in the property, and what that type of interest might prevent?
This concept of shared investment also asks for commitment on behalf municipal agencies to broaden the type of investment services in neighborhoods that are currently overwhelmed by in-situ systems of economic, and social hierarchies, and witness losses in land values and lack the resources necessary to sustain a vibrant community. With this investment concept, neighborhood constituencies have a shared interest in development projects and become the beneficiaries of real-estate transactions while shaping the type of development that occurs in their best interest.