A now well-known set of maps are the ‘residential security maps’ created by the Home Owners’ Loan Corporation (HOLC). The image above is a 1937 residential security map of Oakland and surrounding cities. HOLC was established in 1933 as part of President Franklin D. Roosevelt’s New Deal programs under the Homeowners Refinancing Act. As a government agency one of HOLC’s responsibilities was to develop a system to help banks identify investment risk at the neighborhood level in various cities across the United States. They developed a letter-graded system that includes: “A- best,” “B- still desirable,” “C- definitely declining,” and “D- Hazardous,” where each color-coded map is a visual representation of different neighborhood’s grades. This letter and color-coded system is not based on an individual’s qualifications or credit standing, but rather, it is based on judgements about people with low-income, people of color, and foreign-born individuals. Predominately white and wealthier neighborhoods were deemed desirable and therefore receive higher grades based on HOLC’s system. The Federal Housing Administration (FHA), created as part of the National Housing Act of 1934 and also part of the New Deal, used HOLC’s maps to determine approval of loans and mortgages. This discriminatory practice, known as redlining, meant that people living in the neighborhoods within the red lines were denied financial services or received low-quality services based on their race, ethnicity, and/or economic status.
In Northern California, of the 350,000 federally backed loans between the years 1946 – 1960 fewer than 100 went to African American families; more than 98% of these loans were given to white families. This legacy of financial neglect shows up in the wealth and health of a community. While FHA focused only on home loans, the impact of their discriminatory practices extended into investment in commercial and public spaces for whole neighborhoods. Oakland’s flatlands are a clear example of how financial discrimination contributed to the disparities in the availability and quality of community assets like grocery stores, thriving small businesses, maintained streets, and parks and green space.
As a community development financial institution, Community Vision is dedicated to aligning capital with justice and equity to address the history of discriminatory financial practices and intentional disinvestment. Community Vision works to remove barriers that have contributed to a lack of economic progress in low-income communities and communities of color. As the administrators of FreshWorks, capital is the tool and food is the medium to invest in the health and wealth of California’s communities.
Disinvestment of whole communities doesn’t happen overnight and neither do the solutions, Community Vision’s collaboration with CFM can attest that truth. Community Vision has had the privilege to be a partner alongside Brahm Ahmadi since 2016. Before that, Cat Howard, Community Vision’s director of Strategic Initiatives, was involved in awarding what was then People’s Community Market with FreshWorks’ first grant in 2012. Since then, Community Vision has developed a partnership with Brahm that goes beyond providing financial support to include deep respect and a reciprocal relationship, supporting each other on panel discussions, at community events and media engagements, and with funding connections and investor engagements.
Realizing that traditional funding streams were not going to back a non-traditional grocery store going into a disinvested community, Brahm turned to the community to raise funds through a direct public offering to California residents. The DPO campaign raised more than $2.2MM in investments from nearly 650 California resident shareholders, which made it possible to secure ongoing financing from other sources. Unlike traditional venture capital or start up investments, the funds raised from the DPO will be patient equity that does not extract outsized returns from the CFM and its local community.
Over the last eight years, FreshWorks and Community Vision have invested in CFM in a number of ways. The early FreshWorks grant provided seed capital for the company’s capital raise. A FreshWorks’ credit enhancement unlocked more than $17MM financing from its network of lenders. In the Summer of 2016, Community Vision provided CFM with a $25,000 dollar grant from the Greater Oakland Fund (Go Fund) that covered the often difficult to finance site-specific pre-development costs. Later, in 2017 Community Vision and FreshWorks provided a $3,477,000 construction loan, and FreshWorks supported an additional construction loan from Self Help Federal Credit Union. In 2018, Community Vision, Clearinghouse CDFI, and the Nonprofit Finance Fund provided a $6.1MM NMTC leverage loan with FreshWorks credit enhancement. As well, Community Vision provided $11 MM in NMTC. Finally, both Community Vision and FreshWorks further supported the CFM’s Direct Public Offering with matching investments at critical junctures as the project needed to attract equity investments.
When Community Foods Market acquired land at San Pablo Ave. and Myrtle St. there were critics who suggested that the store would never sustain itself in the neighborhood. But the people who said that the store is needed and will thrive were the people living in the community. At Community Vision we strongly believe that communities know what they can achieve, which is why we have always believed in the vision of CFM Principal Brahm Ahmadi. Community Vision understands the potential for good that a locally owned market, focused on stocking fresh, healthy foods, and creating new jobs in a community-focused setting could have for the area.