The Year that Asked Questions
By: Nikishka Iyengar
Tags: Community Development, Racial Justice, Economic Development, Community Organizing, Real Estate

The Year that Asked Questions

“There are years that ask questions and years that answer.” — Zora Neale Hurston, Their Eyes Were Watching God

I stumbled on this quote from Zora Neale Hurston the other day, and it summed up so much of what this year has been about. To put 2020 mildly, it’s been a year that has asked us, all of us, a lot of fundamental questions about how our society operates. Questions that surfaced to the top of that list range from “What happens when you’re in a global pandemic and your best chance at survival is making sure everyone around you is housed, healthy and cared for but you have an economy that incentivizes the exact opposite?” to “How do we stop the unrelenting assault on black lives from white supremacy — the symptoms of which fall anywhere from horrific police brutality to bearing the disproportionate brunt of said pandemic?”

As we watched essential workers turn sacrificial, unemployment and evictions skyrocket, and murder after murder at the hands (and knees) of cops while the stock market soared, we recognized that these questions are interlinked. If we didn’t know it before, we know now. We know that white supremacy is a deadly virus unto itself, that capitalism reinforces white supremacy and is antithetical to our collective well-being, and that our liberation is, as Indigenous activist Lilla Watson said, bound together.

I’m writing this on my birthday, which also usually brings about its own set of existential questions each year. How do I make sure the work I’m doing is in service to our collective liberation, and not inadvertently perpetuating the same systems of oppression I routinely call out? How do I personally embody the values I hold as true and necessary for liberation?

“There is no housing crisis. Just housing under capitalism.” — Keeanga-Yamahtta Taylor

The Guild started out as a personal experiment, out of my house, and aimed to reflect how I wanted to build and live in community. It has since morphed into a company (transitioning into a cooperative, but more on that later) with a wonderful team that is wrestling with a lot of questions about the industry we’re in. Real estate has been not just complicit in white supremacy, but one of the key drivers of it. As a startup founder/entrepreneur, there is a lot of folklore and advice out there about “disrupting the industry” you’re in, but given what we know about the real estate industry, my goal isn’t “disruption”, which only serves to make capitalism, and the various systems of oppression it reinforces more efficient. Instead, I’m focused on what it might take to dismantle the industry as we know it, entirely, and shift from private ownership and profit maximizing models to collective ownership and stewardship.

With over 60% of the world’s capital tied up in real estate, that’s an audacious (and overwhelming) goal, but thankfully we’re not in this alone. We’re joining a growing national and global movement that is challenging the dominant narrative about land, housing, and ownership. Earlier in the pandemic, I wrote about what we might expect to see in terms of land grabs from COVID-19, and what one alternative might look like. Today, I’m excited to announce we just closed on a property that will allow us to test out this alternative.

Introducing Groundcover

We love our nature-based analogies at The Guild. A guild is usually defined as an association of people working toward a common goal, but in permaculture specifically a guild is a grouping a plants, trees, animals, insects and other components that work together to help ensure their health and productivity. In an ecosystem, groundcover is the layer of vegetation that protects the topsoil from erosion and drought. Across the country, communities of color act as rich groundcover for local economies, but are being disproportionately displaced due to systemic racism and gentrification. In order to repair and restore this groundcover, we believe it is necessary to invest in real estate and broader economic models that help close the racial wealth gap and shift power from investors, corporations and landlords to communities.

The Guild team in front of the building we just bought!

The plan is to convert this old, abandoned, beautiful one story building into three stories of retail, office and housing units that will be owned collectively by the tenants as well as residents in the neighborhoods at-large through a community real estate trust.

At a high-level, Groundcover is an exploration of three key questions:

What might non-reformist reforms, as Ruth Wilson Gilmore calls it, look like in the fight towards land-based liberation? Non-reformist reforms are “conceived, not in terms of what is possible within the framework of a given system and administration, but in view of what should be made possible in terms of human needs and demands”. They work to threaten the status quo, rather than maintain it. The majority of real estate projects, even the most well-intentioned ones with [short-term] affordability targets, unfortunately still serve to maintain the status quo, a lesson I’ve learned over and over in the past few years of growing The Guild.

A project at our scale won’t dismantle the real estate industry, of course, and I’m under no illusion of it, but I hope what we create through this model — and how we create it, which is equally, if not more important — can at least create a viable alternative to the status quo. Our model is a combination of an investment trust and a housing cooperative, but how we go about creating and implementing it over the next year will be our test, and a hard one at that. More to come on this soon.

What does a rebalance of risk and return to achieve true racial equity look like? This is not a popular question to probe in any industry, let alone real estate and finance, but we’re fundamentally questioning the morality of “market-rate returns”, when the market is based entirely on the marginalization of Black, Indigenous and other People of Color. Redlining and gentrification have both been manifestations of the idea that Black communities are inherently riskier, and not as valuable, as white communities. Rejecting that idea means rejecting capital that forces wealth to be extracted out of historically Black neighborhoods, which is almost all real estate capital out there, unfortunately. Features of a typical real estate development include: assembling a capital stack with some mix of debt and equity, with the equity usually seeking upwards of 15% of a return, and the debt (issued by banks or CDFIs) deeming some projects “riskier” than others based on the location of the project and the track record (of profit maximization) of the developer. While the latter is harder to control for in this moment, we’re pushing the lever on the former.

We do that by organizing philanthropic capital and more “patient equity” to front the risk at the early stages of the development, and then work to create an affordable investment offering (of $10–100/month) that allows for people otherwise excluded from wealth-building opportunities to buy shares of the property and financially benefit from its development. Community investors make a return through annual dividends based on the performance of the property, as well as through an appreciation of their share price as the neighborhoods develops further and property values go up. Our thesis is that it is communities, not typical capital holders, that bear the risks (of being priced out and displaced) of development, and communities (residential tenants and patrons and workers of small business/commercial tenants) that create value for these projects, so returns should accrue to them.

What model of governance will help us meet our goals for this project and the long-term needs of the community? Instead of allowing for investors who put the most capital in to drive key decisions of the project, such as future rent amounts and terms, we’re instead focused on democratizing decision-making so every individual (tenants and community investors alike) has one vote. This is a critical piece of the model, and one full of complexity — the neighborhood we bought the property in, Capitol View, and the zipcode it’s in, has already started gentrifying. How do we best center those that are at risk of displacement (and those that have been recently displaced) while determining what the right place-based boundaries for this investment offering should be? I don’t have the answers to this yet, but luckily for us, Atlanta is full of brilliant Black housing justice and other community organizers who we’ll be leaning on, learning from, and building with.

As we develop this project over the next couple years, we plan to share a lot of the “behind the scenes” of our model and process. So much of real estate development is opaque by design, and one of our main goals is to change that. I’m so thankful to everyone that has supported us to get to this point — my friends and comrades at The Kataly Foundation, our growing advisory circle, Kendeda Fund, and my bold, brilliant, and committed team. We’re just getting started, and a huge part of me feels terrified to put this all out there in writing, but I hope you’ll follow us on this journey and hold us accountable along the way. Lots more (including a much-needed website update) to come soon.