Helping Legacy Businesses Build Wealth through Commercial Property Acquisition

Why this investment?

Formerly known as Chocolate City for its majority-Black population, Washington D.C. has historically served as a hub for Black culture, organizing, and wealth. Despite this, white households hold 81 times the wealth of Black households as a result of federal wealth-building policies that favor already-wealthy, predominantly white households and discriminatory practices restricting Black people from higher-wage career pathways. 

Committed to taking action to close the racial wealth gap, Mayor Bowser launched a $40 Million Legacy Initiative supporting Black residents and businesses. Of the $40 million, an initial $4 million was allocated to the Commercial Property Acquisition Fund, an idea that originated in 2016. Inspired by the desire to help build a legacy for business owners of color who were disproportionately impacted by the surge in small business closures during the pandemic, the Deputy Mayor’s Office for Planning and Economic Development (DMPED) sought to create a commercial property acquisition program for historically marginalized businesses in Washington D.C. The idea re-emerged during the COVID-19 pandemic, as the DMPED wanted to create wealth-building opportunities specifically for business owners of color.

What is this investment?

The Commercial Property Acquisition Fund is a closing cost and down payment assistance program that awards grants up to $750,000 or 25 percent of the sale price, whichever is less, to eligible businesses seeking to purchase buildings in D.C. Washington D.C.’s Department of Small and Local Business Development (DSLBD) partnered with a local CDFI, City First Enterprises, to deliver the program, intending to give legacy small businesses the resources to close on a commercial property integral to the program design. 

The program is targeted to Equity Impact Enterprises (EIE) defined by the department as “A business enterprise that is a resident-owned business and a small business enterprise that can demonstrate that it is at least 51 percent owned by an individual who is, or a majority number of individuals who are: “(A) Economically disadvantaged individuals; or “(B) Individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.”

Centering equity in the program

Tailoring the program eligibility requirements to reach a specific demographic of small businesses was a key component of the Commercial Property Acquisition Fund’s (CPAF) program design. Sybongile Cook, Director of Business Development and Strategy, says that requirements such as employing under 100 people, incurring revenue of less than $15 million, help them target the small businesses they seek to serve. “If you have more than 100 employees and exceed $15 million in annual revenue, that business has a greater chance of getting traditional funding,” Cook says.

In its inaugural round, CPAF experienced challenges with businesses who lack knowledge surrounding the implications of purchasing a vacant lot or a property that is not zoned appropriately for the type of business they want to run. Drawing lessons from this first round experience, they decided to offer a certification course (CPAF 101), that informs businesses on concepts including insurance, zoning, and permits, which are essential knowledge for a successful close. The course aims to support participating small businesses who lack developer experience and consequently, knowledge around insurance, liability, and ownership. In addition, CPAF tailored the eligibility requirements to exclude vacant lot purchases.

Outcomes to date

In 2021, CPAF rolled out its first launch with a $4.7 million allocation, and the second round launched in 2023 with an additional $4 million. The program has become so successful that Mayor Bowser introduced legislation to continue the program with local dollars with an additional $6 million in 2024. They are currently preparing for a fourth round in FY25, which has an allocation of $2.5 million in local dollars, and are in the process of administering the third round of the grant which will work in tandem with another department initiative—the Grant and Grow Expo. The Grant and Grow Expo is an opportunity for business owners to learn about and qualify for the various programs offered by the department. As part of the expo, CPAF will be included in a series of information sessions offered to eligible businesses who will also receive an opportunity to certify for the program through the CPAF 101 course, which is now a prerequisite to apply to the program. 
Inaugural program awardee LaToya Liles, owner of Tsunami Hair Studio, received a $150,000 grant to support the purchase of a building in Ward 7, a predominantly Black community in D.C. As a longstanding member of the cosmetology industry, the grant allowed Liles to close on the property she had been renting for seven years.

Toward transformative change

The Deputy Mayor’s Office for Planning and Economic Development (DMPED) is actively considering how to extend the acquisition program after ARPA funding ends. More specifically, the department is working on building out the next phase of the program as many of the participating businesses require support beyond acquiring property. DMPED is currently developing a concrete value proposition for the Commercial Property Acquisition Fund to sustain the program beyond ARPA dollars. “We're already working with our CDFI to begin building out a white paper that demonstrates why this is necessary [and] the impact of it,” Cook says. “And so it's studying these last two cohorts going into our third, the efficacy of the program, and to make a case for future years.”