Four Points Funding: A Case Study On Housing Opportunity And Community Impact In Rural Colorado

Originally published by Forbes and the Sorenson Impact Center.

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Though urban areas often dominate the national discussion around housing shortages, rural communities throughout the U.S. increasingly grapple with a lack of affordable housing. This scarcity undermines the economic development of rural towns by discouraging migration of new talent and preventing potential homeowners from building wealth.

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In the face of this challenge, the impact-oriented real estate investment firm and developer Four Points Funding has helped galvanize socioeconomic mobility in rural Colorado by meeting the demand for affordable, workforce housing. Partner Stephanie Copeland and her team share how Four Point’s theory of change leverages Opportunity Zone capital to focus on geographic equity, community engagement and the utility of social impact for investors.

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Challenges and Successes Since Forbes OZ 20

In the time since winning the rural category in the Forbes OZ 20 contest, Four Points Funding experienced three major headwinds. First, the small scale of their rural markets limited the interest of institutional investors. Second, the novelty of running a fund for the first time stretched their leadership. Finally, they encountered consistent gaps between raising funds and executing projects, particularly related to the Covid-19 pandemic and its impact on the real estate sector. Housing demand soared as the transition to remote work accelerated migration from the coasts into the Midwest and Mountain West, increasing pressure on housing stock in those regions. Additionally, low labor availability, high inflation and supply chain disruptions introduced new uncertainty for real estate developers across the country, including the Four Points Funding team.

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However, these headwinds hardly slowed the team down. With little help from government organizations, the firm expanded into eight markets and built one million square feet of affordable workforce housing, totaling around 1,200 new units. They also raised $150 million for their most recent fund, which is now ready to be deployed to upcoming projects.

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Geographic Equity: Connecting to Social Mobility and Economic Opportunity

A vision of geographic equity informs Four Points Funding’s modus operandi. The firm attracts funding in part by selling the vibrancy and nascent potential of rural Colorado, as ongoing economic diversification in technology, green energy and outdoor recreation continues to flood the Mountain West. To Copeland, these localities offer a unique quality of life due to their intimate size and proximity to natural beauty. However, many rural communities in the U.S. struggle with depressed incomes compared to their non-rural counterparts, and rural Colorado is no exception. These communities also remain somewhat excluded from access to healthcare, education, and innovation, something Copeland’s team hopes to help change by increasing access to quality, affordable housing. “We think that’s part of a bigger puzzle,” says Copeland, referring to how housing often acts as a foundation for social mobility and economic development that can lead to greater opportunity.

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De-risking Rural Investments with Impact

Creating an impact also means introducing a positive element into a community that otherwise wouldn’t have existed for Copeland’s team. She explains that her organization uses impact as a vehicle to simultaneously create high-quality products that meet community needs and de-risk the investment for stakeholders. Four Points focuses on the items that residents value the most, such as broadband internet bundled with monthly rent or in-house childcare spaces, rather than lavish, high-cost amenities that don’t support their target market: working families in the median income range. “It’s the population that has both the biggest need, and they are the biggest sector of the population,” Copeland states. “That's one impact we're trying to have that can actually de-risk vacancy.” Because residents of Four Points Funding developments have access to built-in wraparound supports at an affordable cost, property owners can retain satisfied tenants and generate stable returns long-term.

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Trust as Currency: Earning Community Buy-In

Much of Four Points Funding’s capacity to make change emerges from cyclical trust building between their team, partner communities and outside investors. Strong community support inspires investor confidence, and that confidence funds new development, which further builds community trust. “I’d say the supermajority [of feedback] is positive, particularly in the smaller markets we’re really catalyzing,” says Copeland. However, some communities have reacted to new development with skepticism, especially in the Eastern Plains region, an area dominated by agriculture and largely left behind by the outdoor recreation boom in the Mountain West. “It’s taken a tremendous amount of work with those communities—an outsized amount of work—to build trust with them,” says Copeland. In spite of this initial apprehension, Four Points Funding has managed to execute several projects that have added value to the region, such as building 64 units of affordable housing in southeastern Colorado. In their experience, consistent investment with demonstrable benefits creates valuable social capital with locals and has made the difference in aligning public opinion with investment.

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Looking Forward

Four Points Funding looks optimistically to the future with plans to expand their impact. Copeland says, “There's no more fulfilling work than actually carving out a really nice living by bringing things to a community that otherwise wouldn't come.” The firm aims to construct an additional one million square feet of housing, expanding on their strategy of incorporating vital amenities that create supportive and empowering living environments for residents.

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