Making it big in the real estate development business takes generational wealth, expert networking and much luck. Gina Merritt, head of Northern Real Estate Ventures who is regarded as one of the leading minority real estate developers in the country, knows it also takes believing in dreams. Between the ages of eight and 15, Merritt said she had a “recurring nightmare” of being chased by a bulldozer. “Sometimes it would get me,” she says. “I’m serious. Sometimes I cried.”

After going to college to become a psychologist then switching to getting a degree in management information systems, going to business school and working on Wall Street, she finally took a job with a construction company in D.C. focused on building affordable housing. She had a memorable first day.

“I pulled up and it’s nothing but dirt and a bulldozer,” she recalled. “I started crying. That’s when I knew I was doing the right thing. This is what I was supposed to be doing.”

After Merritt’s circuitous route to the elite status of her field, she’s part of a $175 billion housing development business where less than 5% of the real estate developers are minorities and less still are women — or even women of color.

She is also one of several minority developers participating in a program Wells Fargo announced early this year to change those demographics. The Growing Diverse Housing Developers directed $40 million to several CDFIs across the country to deploy to minority developers with the goal of increasing the number of minority real estate developers in the U.S. business and spurring the development and preservation of affordable housing.

Wells Fargo is partnering with Capital Impact Partners, Low Income Investment Fund, Raza Development Fund and Reinvestment Fund. These CDFIs have selected 39 developers of color to participate in the four-year program. The developers will have access to lower-cost, flexible capital, as well as training, mentors and resources. In effect, it’s a holistic training camp to help developers spur construction of multifamily and mixed-used housing projects.

“One stark reality is that people of color are significantly underfunded and underrepresented in the real estate industry,” says Bill Daley vice chairman of public affairs at Wells Fargo, in a statement announcing the program. In addition, he said he hopes the program “offers communities more affordable options for renters and homeowners.”

Public agencies and corporations realize the demand for affordability housing is easily outstripping demand. And some major real estate investors and corporations see profit in providing affordable housing. Of the nation’s 43.5 million multifamily housing units, just 10% are considered affordable for those whose income are 80% of the area median income. Earlier this year, New York State announced a $25 billion, five-year program to create and preserve 100,000 affordable homes.

Lauren Counts is the senior director and head of national programs at Capital Impact Partners, a 40-year-old CDFI based in Arlington, Maryland. She noted that her agency fights against inequality on many levels, but providing affordable housing is the “heart of our mission.” In 2018, Capital Impact launched the Equitable Development Initiative in Detroit after learning that only 9% of the $152 million they had loaned between 2006 and 2015 in the city went to projects led by minority developers — in a city that is more than 80% non-white. The initiative aimed to close the economic inequality gap through what Capital Impact called a “holistic solution to building capacity.” They hope this new program does the same.

Capital Impact expects to produce a minimum of 1,500 units through the Wells Fargo program. Half of the $30 million Capital Impact got from Wells Fargo will go toward providing Black and Latino developers with enterprise funding, which includes administrative expenses related to staffing and other office-related costs. It’s also used to bolster balance sheets, which will make it easier for the developers to qualify for loans.

Merritt is indeed using the funding she received from Capital Impact Partners as enterprise funding. The funding support “is really allowing me to leverage that into better deals for myself because now I can actually stand up or support some of these guarantees,” she says.

The Wells Fargo program has much promise. But admittedly, $40 million is a relatively tiny investment for one of the biggest banking institutions in the world. In addition, minority developers freely acknowledge the challenges they face, most notably the generational wealth gap and high barrier for women, of any color.

Merritt — who regards herself as one of the more seasoned developers in the program with 27 years under her belt and experience in finance, construction and asset management — knows the importance for minority developers to create a network. Many of the top leading officials in her company are women of color.

“Being a person of color and female, most of my network are people that look like me,” Merritt says. “So when it comes to connecting with people for employment and economic opportunities, I wind up, at least for my company, with those folks and understanding that there are so many talented Brown people.”

In fact, Merritt is working with an attorney to set up expanded profit-sharing opportunities for employees. “I’m on this trajectory of creating generational wealth,” she says. “I’m trying to do that with my employees.”

The program comes at a tricky time for the real estate industry. Rising interest rates are creating financial burden for developers and making access to capital more expensive — even as high inflation is upping the cost of supplies. However, Counts of Capital Impact remains optimistic about the long-term value of the Wells Fargo program.

“The funding commitment from Wells Fargo is really going to accelerate our ability to leverage our dollars in a time when longer-term interest rate environment is uncertain,” Merritt says. “It’s essential to get financing now to developers so they can weather what bumps might be ahead.”

This story is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.