Risk Management in Equitable Development

by Molly Heyen

Introduction

Equitable development carries unique rewards, but like any real estate project, it comes with risks. For mission-driven developers, risks often feel more complex because they involve both financial performance and community outcomes. Understanding how to anticipate, manage, and mitigate these risks is critical to long-term success.

1. Financial Risks

Equitable projects can face funding gaps, delayed disbursements, or unexpected cost overruns. To mitigate:

Build conservative budgets with contingency funds
Secure multiple funding streams (grants, loans, and private capital)
Work with lenders or CDFIs familiar with mission-oriented development

2. Market Risks

Projects may not align with current market demand or could struggle with tenant recruitment. Mitigation strategies include:

Conducting thorough feasibility studies
Building strong community partnerships to ensure demand
Designing spaces with flexibility for multiple uses

3. Regulatory Risks

Zoning, permitting, and compliance issues can delay or derail projects. To reduce risk:

Engage local officials early
Work with legal or planning experts who understand Chicago’s development process
Stay current on policy changes affecting affordable housing, small businesses, and community investment

4. Construction Risks

Delays, material shortages, or contractor disputes can significantly increase costs. Developers can mitigate by:

Pre-qualifying contractors with a track record of delivering similar projects
Building realistic timelines
Using phased development to spread risk

5. Community Risks

Equitable development hinges on community trust. A lack of engagement can lead to opposition or underutilized spaces. To mitigate:

Hold community meetings early and often
Incorporate local voices into project design
Partner with neighborhood organizations to strengthen buy-in

6. Long-Term Sustainability Risks

Even after completion, projects may face risks tied to ongoing operations or maintenance. To safeguard sustainability:

Create realistic pro formas for operations
Explore partnerships with nonprofits or local institutions for long-term stability
Plan for future adaptability as community needs evolve

How I Can Help

My role is to help developers anticipate these risks and connect them with trusted experts who can provide specialized guidance. Whether it’s navigating zoning issues, exploring funding models, or strengthening community partnerships, I serve as a connector and advisor to help projects succeed.

Conclusion

Risk is inevitable in equitable development, but with careful planning, the right partners, and strong community engagement, developers can mitigate challenges while creating meaningful impact.

If you’re exploring a project and want to talk through potential risks and strategies, I’d be glad to help you get started.