Fighting Blight with Social Impact Bonds (AKA Debt)

Richmond, California, home to eminent domain for underwater mortgages, is also home to a new bonding mechanism to fight blight.

In 2013, Richmond created “Richmond Community Foundation” which uses this bond mechanism for blight:

• $3 million of social impact bonds to purchase, rehabilitate and sell blighted properties.
• During a four-year revolving period, sale proceeds will mostly go to purchasing new properties; during the final year of the bonds’ five-year life, proceeds will be devoted to repaying principal and interest.
• Bonds are issued by Richmond, but not secured by city revenue.
• bonds will be sold via private placement to a local bank that is meetings obligations under the Community Reinvestment Act

The homes will then swap owners like this:

• Homes will be offered to graduates from the Richmond Spark Point Center, a United Way Project.

CaliforniaEconomicSummit.Org