Newark Mayor Ras Baraka launches “40 Acres And A Mule Fund” to help minority-owned businesses
Newark Mayor Ras Baraka spoke to REVOLT about teaming up with Bernel Hall, President & Chief Executive Officer of Invest Newark; and Wayne Meyer, President of New Jersey Community Capital, to launch the “40 Acres And A Mule Fund.” Read here.
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Newark, New Jersey Mayor Ras Baraka doesn’t believe in just chanting the words, “Black Lives Matter.” He wants to create a community that reflects it. Newark is home to one of the country’s busiest airports and where major corporations like Prudential and Panasonic are headquartered. It also has a thriving hub of minority-owned businesses. When the COVID-19 pandemic spread, businesses large and small were hit hard. Those owned by Black and brown people, however, were even worse off since they didn’t receive much of the PPP (Paycheck Protection Program) loans, which could have kept them financially afloat.
This is not surprising considering that even before Coronavirus, Black and Latinx business owners weren’t getting equal access to capital. Mayor Baraka is seeking to change all this once and for all. He’s teamed up with Bernel Hall, President & Chief Executive Officer of Invest Newark; and Wayne Meyer, President of New Jersey Community Capital, to launch the 40 Acres And A Mule Fund (FAM Fund), an initiative which will put capital directly in the hands of minority-owned businesses who need it the most. Mayor Baraka hopes this will help to close the racial wealth gap in the city of Newark, and give deserving businesses that have real potential the tools they need to thrive.
Can you tell me about the 40 Acres And A Mule Fund and what you’re hoping to accomplish for the city of Newark through this project?
Hall: The purpose is to provide a systemic response to systemic racism by creating a virtual cycle of economic empowerment. One of the great things that Mayor Baraka has done throughout the course of his administration is create a plethora of opportunities for MWBE (Minority/Women-owned Business Enterprises) developers and small businesses. He’s created a $5 billion real estate pipeline, much of which is real estate that represents neighborhood business expansion opportunities for MWBE businesses that will actually be built out by minority developers. He’s also created a Live Newark strategy, where he’s really encouraging people who work in Newark to live in Newark. And he’s also created a procurement agreement with anchor institutions like Prudential, Panasonic and Audible where they’re really committing to creating business-to-business contract opportunities for MWBE businesses operating within the city of Newark. We see the 40 Acres And A Mule Fund as the final leg to that circle of economic empowerment, which provides the capital that is hard for them to come by, to take advantage of all these great economic policies that Mayor Baraka has put in place.
Mayor Baraka: I would say that given the time period we’re in, where people are saying Black Lives Matter, this is an opportunity to actually make Black Lives Matter. While there is a lot of discussion about racism and the structural things that inhibit Black and brown people from gaining access to wealth and being a part of the American dream, there’s very little opportunity to make those things a reality. And I think this is a chance for us to do this with this FAM fund. We’re talking about $100 million. In New Jersey, the wealth gap is so big. It would take maybe 300 or so years to fill it. It’s all about the average median. The wealth of a white family is about $300,000 and for Black families its little over $5,000. For Latino families, a little over $7,000. That kind of gross inequity is very clear and absurd. We talk about it a lot and we try to do small things, but it’s time for some really big things to happen. We believe that the fund is the beginning of that, first in Newark and then throughout the state of New Jersey.
Can you tell us what economic opportunity currently exists in Newark for Black and Latinx business owners, and how they might be able to take advantage of that?
Mayor Baraka: I was about to say that some of the things that Bernel pointed out are things that we’ve been deliberately doing, and very intentionally, to make sure that we shore up these businesses, the access to land that we’ve been given, the ordinances that you need for minority co-development and projects. And that if you get city grants or a tax abatement, you have to have minority developers that get equity in a project. We have been actively giving and helping these small businesses, small Black and brown businesses get access. Not just the property, but also to be a part of real estate development and also a part of city contracts. A lot of these people’s balance sheets aren’t correct and their paperwork isn’t done correctly. So, we make sure that we work on opportunities to get their back office paperwork done. But, as Bernel pointed out, we help them get balance sheets together, so they have access to capital and can compete in bids and RFPs. And that was specifically on the Live servers replacement line project — about $120 million of Live service replacement line. And we required along with them to have minority developers on their projects, and a lot of these developers needed capital in advance. And so we had to figure out how to get them that so they can actually get access.
Hall: In many cases, when you have access to contracts for African-American/Latinx businesses, you don’t have access to capital that’s necessary to handle some of that upfront costs that it takes, or buy some of the insurance, or level of bond that it takes to actually take advantage of these contract opportunities they get. And then even if you have the capital and all these contract opportunities, whether it be via government or partnerships with the corporate community, you still need to provide the technical assistance and back office support to these businesses so that they can make sure they have the payroll, accounting, marketing, and HR functions in place. I think what’s great about what the mayor has established here in Newark is the plethora of corporate, public, and private partnerships that take people all the way through the cycle of getting contracts, getting technical assistance, getting capital, and then allowing them to grow in place by hiring other people in community.
Meyer: I’ll add that New Jersey Community Capital is privileged to play a role. What Mayor Baraka and Bernel are trying to do is to even the playing field by providing access to capital for minority businesses. There’s a wide body of research that suggests that there are structural challenges that undermine the economic viability of minority-owned businesses. If you look at the Federal Reserve Bank, they did a study just this past year that said they’re more likely to show signs of limited financial health by factors such as startup costs, credit challenges, and profitability. And the one thing that’s been absolutely clear is that the limited access to capital is a compounding factor that really hurts the health of these businesses. Besides the businesses themselves, there’s been a major shift in this small business lending landscape and this has been going on for decades.
As if there weren’t enough challenges for minority-owned businesses caused by systemic racism, they’ve also been affected by the Coronavirus pandemic. Can you speak to the impact that has been seen with small businesses in Newark, and also to how the community is recovering and working to move forward?
Mayor Baraka: That’s right. All of our businesses have been affected by the shutdown due to Coronavirus. A lot of these smaller Black and brown businesses are definitely hit hard. The PPP dollars that were given out, one, were given to financial institutions that they don’t have access to. And two, the money is too restrictive. It didn’t allow them to use the money on things that they really needed it for like their lease withhold, their bills, or other things. So, the city of Newark gave out a few of these grants. Obviously we don’t have enough money to give to all of the businesses. So, we gave it out in a very competitive way to businesses as a $10,000 grant to help them. And it was very flexible. They could use it for whatever they needed it for.
We’re going to do another round of that, but ultimately that is exactly why we need to do something like this fund — to be able to allow these businesses to sustain themselves, to grow, to expand, to invite other businesses back to the city or to the city period. We are really encouraging an ecosystem where people believe that they could compete on a level playing field. So, not only do you buttress the businesses that are already here, but you also show people around the country that this is a place that they probably should come if they want to make their business viable in this country.
How can qualifying Newark-based Black and brown business owners get access to the FAM Fund?
Hall: So, the mayor has done a great job of making sure that both on the City of Newark’s website, as well as the Economic Development Corporation’s website, there are specific COVID-19 pages where it lists and continually updates all of these resources that were mentioned. We’ll continue to do the same things, and once the FAM fund is off the ground and launched in the next 30 to 60 days, people will know exactly where to go to apply for these resources. We’ll also do webinars to make sure that people have the information they need to apply in a way that gives them the highest probability of success.
Mayor Baraka, what is your vision for getting the FAM fund to its $100 million goal? What corporations and investors are you hoping will commit?
So, we are primarily going after the CRA dollars that financial institutions are obligated to make these investments in these underserved communities. We’re also going after the kind of corporate financial institutions, the corporate philanthropic organizations that are able to donate money and give money to this fund. And as you said, we have many of them here in the city of Newark. We have a list of companies here that do very well from Prudential to United airlines. PSEG. Pharmaceutical companies in New Jersey to Horizon Blue Cross Blue Shield. The New Jersey Devils. We have a host of companies here that could give money to this fund on one side. And on the other side, there are financial institutions in this area and nationally that want to spend their CRA dollars in this market. The scene here, the development that’s happening here in Newark, is positive. It’s been growing and I think this is a market that people are interested in.
And on the other side of it, I believe that because the need is so great, it gives people an opportunity to do well and do good at the same time.
Hall: I also want to add that we’re putting together an advisory board of the senior leaders of some of the corporate partners that were mentioned. Also, I will be remiss not to emphasize that we brought in a partner in New Jersey Community Capital led by Mr. Wayne Meyer, who has 30 years of experience and has actually invested over $600 million into these communities over that timeframe, to walk with this hand in hand and make this a reality.
Meyer: New Jersey Community Capital is privileged and honored to participate in this. Because our mission really aligns with the mayor’s vision of how to build better places in the community through housing, through economic development, through education, through recreation, through food security, and also how to promote economic mobility as a desired social outcome.
Watch Monday’s (Sept. 28) press conference announcing the FAM Fund below.
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