 The City of Richmond and the Richmond Community Foundation are partnering in a program to combat housing blight in the City of Richmond funded with social impact bonds. My name is Joshua Gensler. I am the chair of the board of the Richmond Community Foundation. Richmond, California is across the Bay from San Francisco, a little bit north of Oakland and Berkeley, a city of about 100,000 people. Its main claim to fame is during World War II, it was the site of the Kaiser shipyards, at which thousands of victory and liberty ships were built that transported men, materiel, and ammunition around the world to enable this country to fight that war. That was the effort that gave rise to the legend of Rosie the Riveter. During World War II, the City of Richmond grew from the size of 20,000 to a population of 100,000 as people poured into the city to work in the shipyards. And women worked, of course, that's the Rosie the Riveter. People of color came and worked next to people not of color, not always happily, and gave rise to a lot of tension. But eventually, the war ended. And when the war ended, the City of Richmond was left with a population of underemployed, undereducated people, a substandard housing stock that was built to house all these people that had poured into the city, and an ethnic mix at a time when that was not considered a virtue. And the city was then and thereafter stigmatized as a place that was less attractive to live in than many other places in the San Francisco Bay Area. Fast forward 70 years, and the City of Richmond in many ways has still not recovered from World War II. We have many challenged neighborhoods, and in those neighborhoods are many blighted homes. The City of Richmond Housing Department estimates that at any given time, they have a list of 120 boarded up blighted homes that they are managing. They're evicting the drug dealers from them. They're evicting the squatters from them. They're whacking the weeds. They're boarding them up at a cost of $7,000 per house per year. Now, how can this be? How can they have all these boarded up blighted homes at a time and a place in the San Francisco Bay Area where housing prices are so high and climbing so fast? We believe there are five reasons. One is the foreclosure crisis. Many banks began foreclosure proceedings, and people abandoned their houses, but the banks didn't always complete the foreclosures because the banks didn't want these houses anyway because they were not assets, they were liabilities. And banks were not equipped to manage a blighted house. People die. And people die sometimes without family to take care of their affairs or with family that aren't equipped to take care of their affairs, and their houses and their assets remain in limbo. Taxes. They grow delinquent on their taxes, and the penalties and the interest add up, and the code enforcement fines go on to the tax bill, and the amounts of money simply become too great for people to afford. And the tax assessor won't even put these properties up for sale because they believe that they will not attract sufficient amounts of money to sell to cover the tax bill. Sometimes people just can't afford to maintain their houses. They simply go broke and they allow their houses to deteriorate. And finally, there's the ill-fated neighborhood stabilization program, which was the administration's attempt to address the foreclosure and blighted housing crisis during the financial meltdown. And it was not a successful program, and the city of Richmond has an inventory of houses left over from that program. How are we going to address those problems? We're going to go talk to the banks, and we're going to say to the banks, foreclose. Finish the foreclosing process, and then sell us the house right away. You will never have to own this liability. We'll take care of it. We've asked the public administrator to expedite the administration of these homes owned by deceased owners. The public administrator is, as my friends, the estate lawyers say, the place where properties go to die. But we are encouraging them to make the priority of these things to get them administered so that they can either be bought out of probate or go to tax sale and be bought at tax sales. We are going to buy houses at the tax sales. We don't need to make as much money as a private investor would, and we can take larger risks. So we'll pay more to buy at a tax sale. But more importantly than that, the city of Richmond will rebate to us the amount we pay at a tax sale that is from the code enforcement fines. And so we have a pay for success, a success payment aspect to this that gives us a competitive advantage at the tax sales. A number of people have simply approached us, the Richmond Community Foundation, when they heard about our program and asked us to buy their houses from them. So we expect to buy some of these houses in simply negotiated private transactions. And the city of Richmond is going to sell us their inventory left over from the neighborhood stabilization program. Now, how are we going to pay for this? This is the coolest part. We're paying for it with what are called social impact bonds. The city of Richmond has issued $3 million in revenue bonds, but the city has no obligation to repay those bonds. It is not a guarantor of the bonds. The bonds are payable solely out of the success of the program. That $3 million is going to be given to a limited liability company operated, of which the foundation is the sole member. And that limited liability company is going to use that money to buy houses, to fix them up, and then we're going to sell them. And then we're going to recycle the money. That money is going to be used over and over again for four years. At the end of four years, we're going to stop the recycling because we've got to pay the bonds back at the end of five years, accumulate the money, pay the bonds back, and any profit at the end of that five years gets divided between the bondholders and the foundation. Now, this is the first social impact bond program in the state of California. It is the only social impact bond program in the country that is actually bonds. And I'm very happy to announce that our local bank, Mechanics Bank, is going to buy all $3 million of these bonds with their Community Reinvestment Act money, and we expect the transaction to close any day now. And I said this is a partnership with the city of Richmond. Not only has the city of Richmond cooperated by issuing these bonds, but the city of Richmond is giving us a single point of contact with the building department so that we can expedite our building permits. And we have a number of other partners who are helping us with this. We have pro bono help from bond lawyers, from municipal advisors, from bond underwriters. We have real estate brokers who are working on discounted commissions. We have title companies that are giving us discounts on escrow fees and title insurance company and title insurance policies so that all of this can work together. The Richmond Community Foundation operates a program called SparkPoint. SparkPoint is a collaboration, is a single point of contact for 17 different agencies that help families in financial distress. Families can go to this one place and get the help they need to recover their financial health. Graduates from the SparkPoint program have money in the bank, have a decent credit rating, and qualify as HUD first time home buyers. The SparkPoint program in Contra Costa County, run by the foundation, has graduated over 100 families, but only six have actually been able to buy houses. The problem, of course, is that they can't compete with cash buyers. So what we're going to do is we're going to give SparkPoint graduates a right of first refusal to purchase the houses that we buy and rehabilitate so that we are going to attempt to put owner occupants in these houses. We're gonna do this at fair market value. This is not a low income housing program. This is an anti blight program. But nevertheless, we are going to give the SparkPoint people the right of first refusal. Now if there's no SparkPoint family available or the SparkPoint nobody wants a particular house or it falls through, we are gonna put it on the market and sell it. Richmond also operates a program called Richmond Build. This is a job training program in the building trades. Our contractor is going to be hiring people out of Richmond Build to work on the rehabilitation of these houses. That's me, that's the Richmond Community Foundation. Please stay in touch with us as we progress from this program. Thank you.