Brandon Rule is new to the real estate development game. He’s got three deals in the works — a 56-unit affordable housing project in Milwaukee, a market-rate deal and potentially a rural development as well.
It’s a tough gig to get into. It takes a lot of capital, a lot of connections. There are a lot of barriers, especially if you’re young — Rule is 28 — and black.
“Development in itself is a very capital-intensive business,” says Rule. “Some of the issues that I face are compounded by race. It just compounds some of the traditional issues that you face as a developer. Being a 28 year old male having his own company trying to work on multimillion-dollar deals I run into issues. Sometimes obtaining site control, because of the way I look, is difficult. But that also could come from inexperience. There are different ways to slice it. I can’t attribute every single issue I have to race. But if you want to dig deeper into the issues, not coming from wealth, multi-generational poverty, things like that, just creates a gap in itself. That is a disparity in itself.”
A new partnership between Wells Fargo and Madison-based Forward Community Investments (FCI) looks to help overcome those disparities. Wells Fargo has invested $1 million with FCI to fund projects developed by people of color at low interest, and donated another $100,000. The investment is part of Wells Fargo’s $75 million nationwide program called Diverse Community Capital.
“You look at the landscape of developers, and it’s a very very white, male, homogeneous landscape,” says FCI President Salli Martyniak. “You also look at the fact that these real estate developers carry a lot of power and make a lot of money. I’m not begrudging anyone making money or having power. There should be a way to open doors for people of color and also women to participate.”
“This is unique because this is statewide,” says Wells Fargo Community Development Officer Dan Sweeney. “There are a few programs in Milwaukee focused on building up and educating minorities and people of color around real estate development, but now we’re bringing this statewide.”
“I think it’s always been Wells Fargo’s priority to make sure that we’re involved in community support programs,” says Wells Fargo Regional President Kim Sang, who oversees Wells Fargo in Wisconsin and Michigan. “We’ve always believed that we are only as good as our communities are and we have to be a great corporate citizen in order for us to be a great business. I’m so glad we were able to bring the funds here to Wisconsin. I’m thankful that we have great partners who are able to do this for us. It’s a great partnership.”
Loans up to $250,000 through the Emerging Developers program will be available primarily for predevelopment activities. Advocates say the program will build not only buildings, but community.
“When individuals can give back, from a business perspective, from a spiritual perspective, from an emotional perspective it helps improve the community,” says State Representative Jason Fields (D-Milwaukee). “Now you have people from the community building and uplifting that community. Some of the intangibles are those individuals become role models in their community. It’s a win-win all around. When you look at the economics, and particularly in minority communities, it has to be more than just the business. It has to be more than just the capitalistic side of it. When you’re able to have people from those communities succeed and buy in it affects the whole community.”
Gender is also an important issue when it comes to the real estate development game.
“In the multifamily space, women are 70 to 80 percent of the workforce,” says Wisconsin Housing and Economic Development Authority (WHEDA) Executive Director Wyman Winston. “Within WHEDA, within the property management, within the banks, but you never see them on the development side. It doesn’t make any sense at all.”
“We are the future,” says Fatima Laster, a recent graduate of the Associates in Commercial Real Estate (ACRE) program, which helps train people of color and women in real estate development. “At some point you have to invest in who is coming next. There are other players out there who have different perspectives on how to bring beauty and equity to spaces.”
The initial program will run for three years.
“We have three years to prove ourselves,” Martyniak says.