LocalCode Kansas City is a Black woman-owned, regenerative real estate development company based in the east side of Kansas City, Mo. The company, co-founded by Ajia Morris, an attorney, real estate developer, mother of four, and longtime resident of the east side’s urban core, was created to directly address the city’s intergenerational racial wealth inequality problem.
Like many cities around the country, Kansas City has a de facto racial divide that separates its wealthy white community on its west side from its poor, majority Black community on the east side. A particular street, Troost Avenue, has been the dividing line for three generations. Neighborhoods east of Troost Avenue were redlined in the 1930s as areas deemed not worthy of inclusion in New Deal-era government homeownership and lending programs, primarily because Black people lived there. The federal decision, combined with racial covenants that barred Black residents from buying homes, effectively blocked investment in the area for over 80 years and solidified the racial segregation of the community with glaring inequities. As LocalCode notes, in Kansas City, a resident’s level of wealth and even the length of their life are often defined by whether they live east or west of Troost Avenue.
The impact of generations of disinvestment can be seen in large numbers of dilapidated homes, vacant properties, a far lower per capita income and lack of access to basic services like education and healthcare. Only one-third of the neighborhood’s members own the home in which they live, compared with an 85% homeownership rate on the west side. Additionally, the majority of commercial real estate is externally owned, meaning owners who live outside of the area accumulate profits made from community members.
Like many communities in America defined by economic racial segregation, Kansas City is also experiencing rapid gentrification of its east side. Investors and speculators from all over the world are scooping up cheap properties in a land grab across the east side, upgrading them and selling or renting at far higher prices to newcomers and wealthier whites from other communities to turn a profit. Local renters are facing higher rent prices and getting priced out. The massive buy up ends up enriching mostly white investors at the expense of Kansas City’s Black residents.
When Morris speaks with the members of her community, she knows people are worried and scared. With an average annual median household income of just $17,100, tenants are facing higher rent costs and getting priced out, unable to compete with out-of-town cash buyers for homeownership. Morris and her team understand that in order for development to include the current Black residents of Kansas City, development must be led and controlled by its own community members. A program that isn’t designed to counteract the effect of decades-long discrimination will probably replicate it.
LocalCode’s goal is to revitalize and transform the neighborhoods on the east side of Kansas City by empowering families and providing them with opportunities to guide development and build wealth and well-being through local ownership of real estate within their community. Structuring development with community input so that long-term ownership is in the hands of the community directly counteracts some of the deepest structural challenges Black communities have faced in Kansas City and across the country.
LocalCode will carry out the community-focused development effort in several phases and in specific neighborhoods across the east side. One of the cornerstone projects revolves around Ladd School, a historic landmark which up until LocalCode came along, had been sitting vacant for thirteen years. Morris lives four blocks away from Ladd School and wants to see the school transformed from a symbol of disinvestment and exclusion to a vibrant community asset. In March 2022, the Kansas City Public School District sold the school property to LocalCode, which has established plans in partnership with the community to renovate the building into a mixed-use development with commercial space for Black-owned businesses, an event space on the first floor, and residential apartments on the top two floors. The project’s community benefits agreement articulates the commitment to community ownership, no cost or preferred access to community spaces for local residents, housing affordability, funding for home rehabilitation, and financial literacy and real estate development training, education and apprenticeships. The Ladd School project is in pre-construction. Renovation and construction is scheduled to begin later this year, and estimated to be complete by mid-2026.
The next phase of the project is based at Prospect Avenue and 31st Street, one of the most active intersections in the east side of Kansas City. This development will catalyze economic activity and re-energize the community by providing affordable and workforce housing with transit-oriented retail, restaurants, co-working spaces, a health and wellness center, and event spaces primarily for local east side residents.
Roughly half of the financing for LocalCode’s projects will come from the federal New Markets Tax Credit and Historic Tax Credit programs, and the other half will be raised as equity and debt financing from mission-aligned investors and partners. LocalCode is deep in the process of its capital raise to meet its $25 million goal in mission-aligned equity investment. The project is bringing together investors committed to racial justice to support the initial development project rooted in the vision created by the community itself. Over a 10-year period, the equity in the project will be transferred to east side community members, putting long-term ownership into local hands. Morris, also a Wealth Innovation Fellow with the Aspen Institute’s Financial Security Program, is deeply engaged in the challenge of leading the fundraising process.
LocalCode’s goal is $1 billion in locally owned real estate on Kansas City’s east side within one generation. Further, it is hoped the model being developed in Kansas City can be replicated in other communities across America facing similar issues of historical disinvestment, exclusion and extraction.
This publication is distributed to clients and friends of Natural Investments, LLC (NI). NI is an investment adviser registered with the SEC. It is for educational purposes only and is not intended to contain recommendations or solicit sales of any specific investment. Authors, representatives, or related persons of NI may own securities mentioned in here.
