CINCINNATI — What would it look like to establish a Community Investment Trust program in Cincinnati? It’s a question Vice Mayor Jan-Michele Lemon Kearney wants the city to answer in a report in the next 60 days.
“It’s a way for residents who’ve lived [in a developing neighborhood] for a long time to be able to benefit from the changes happening in their community,” said Kristen Baker, executive director of Local Initiatives Support Corporation (LISC)
Here’s how it works: a nonprofit takes out a loan to purchase a property. Then, they set up an investment structure where low-income neighbors can buy shares of the building every month for a low price, between $10 and $100.
“They will earn dividends in various ways from investing in a property and being part of the ownership structure,” Baker said.
Over time, as the neighborhood develops, the tenants in a commercial building might pay more for rent, creating increased short-term profit through yearly dividends to investors. Over the long term, the property value increases as well.
The goal is to make real estate investing attainable and local.
“This doesn’t necessarily require a lot of legislative action,” Baker said. “What it requires is the right partners, the right tools, and some resources to help them be able to get started on that path.”
Getting the city on that path is what Kearney thinks a report could help with. She pointed to Portland, Oregon, a city that has been using this program since 2017.
“People think it’s too good to be true,” said John W. Haines, executive director of Community Investment Trust of Mercy Corps. “But after six years, we’ve proved it’s possible.”
The building in Portland is commercial. The share price has gone up from $10 to $19.02, according to Haines, with an average yearly dividend yield of 7.9%.
Investors can cash out at any time. It is a zero-risk program. The whole idea is to help individuals build generational wealth.
“It’s putting people that are otherwise not able to be in the asset class of real estate into that asset class,” Haines said. “The vulnerability at the bottom of our society is significant. And this is a long-term path to build up that resilience.”
