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Efforts to diversify the largely homogeneous ranks of Massachusetts’ real estate developers hit a major milestone last week when MassHousing and the Massachusetts Housing Investment Corp. (MHIC) formally started accepting applications for their Equitable Developers Fund.

The joint-venture between the quasi-public housing finance agency MassHousing and the private nonprofit MHIC has been initially capitalized at $50 million and is aimed at expanding the capacity of existing diverse developers and increasing the number and diversity of capable developers working across Massachusetts. The two lenders are looking to raise an additional $25 million from private investors.

Black and Hispanic real estate developers made up less than 1 percent of the national commercial real estate development industry, according to 2023 research by Grove Impact and the Initiative for a Competitive Inner City.

The fund will offer developers working capital lines of credit and standby letters of credit, MassHousing said, as well as technical assistance. The products are designed to break down traditional barriers of entry into the real estate development industry, which has historically been overwhelmingly white and male, with a not-insignificant number of developers coming from well-off backgrounds.

“Opening funding applications for the Equitable Developers Fund represents an exciting milestone in our efforts to create new housing in Massachusetts and expand growth opportunities for underrepresented developers,” MassHousing CEO Chrystal Kornegay said in a statement “The enterprise level growth capital that the Equitable Developers Fund provides will help emerging developers grow to scale, deepening our housing delivery system.”

The fund is the largest publicly-led financing program of its kind in America, MassHousing said.

MassHousing and MHIC are looking for developers to apply who:

• Have lived in Massachusetts for five or more years or who can document “social disadvantages such as economic insecurity, barriers to educational access, disability, membership in a group historically subject to social prejudice or social bias, or previous and/or long-term residence in an environment isolated from the mainstream of American society.”
• Have some previous experience developing rental, homeownership or mixed-use developments.
• Intend to pursue rental, homeownership or mixed-use development in the state, particularly one of Massachusetts’ 26 Gateway Cities, Boston, Framingham, Randolph or a qualified HUD census tract.
• May need technical assistance to better navigate the real estate development permitting process to grow their business.

“With an overwhelming shortfall of affordable homes in the Commonwealth, we need more developers putting shovels in the ground,” Moddie Turay, MHIC’s president and CEO, said in a statement. “We also need to help ensure that socially and economically disadvantaged developers can participate in solving our region’s affordable housing crisis. The Equitable Developers Fund directly and impactfully addresses this challenge.”

The launch of the Equitable Developers Fund comes as advocates and real estate industry leaders of many stripes are looking for ways to help Massachusetts residents of color break into commercial real estate, particularly as housing developers.