Rather than ignoring those concerns, Shift Capital partnered with local entrepreneurship incubator IF Lab, local nonprofit Impact Services, and the Philadelphia Industrial Development Corporation to establish Kensington Corridor Trust as a vehicle for residents to take control of real estate along Kensington Avenue and develop it in ways that truly reflected their collective vision as a neighborhood. (Note: This story has been updated to include more details about the trust’s creators.)
As Next City later reported, it wasn’t easy convincing residents and business owners to join the trust’s initial board. Kensington Corridor Trust spent much of its first few years working on its legal structure and governance — while working in parallel to raise funds and begin acquiring properties. Today, Kensington Corridor Trust consists of two layered entities.
At the top of Kensington Corridor Trust’s structure is the actual neighborhood trust, also known legally as a perpetual purpose trust. Under the model, the trust is governed by a trust stewardship committee, which in this case consists of nine members elected from residents and local business owners within the trust’s catchment area. The trust entity holds the deeds to the properties in the portfolio, and the trust stewardship committee makes major strategic decisions like setting rents, determining what types of businesses to allow as tenants, or defining the catchment area — ensuring major decisions align with the trust’s overall purpose and goals. Last year the stewardship committee extended the catchment area by one more block along Kensington Avenue.
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Tuesday, Feb. 18 is the deadline for applying to run for one of this year’s open seats on the trust stewardship committee. The minimum age to run and serve is 16. Unlike a standard nonprofit, the trust compensates stewardship committee members for their time in meetings, paying them double the local living wage or currently $44 an hour. Five residents submitted their names for two open seats. Current members of Kensington Corridor Trust stewardship committee will submit their votes at their first quarter meeting in March.
“Last year when we did the election cycle, we received applications from a bunch of people we didn’t even know, just residents in the neighborhood who live there, who want to be engaged and involved,” says Adriana Abizadeh, Kensington Corridor Trust’s executive director. “When that happens it gives us new networks and new expertise and that’s very exciting.”
Below the neighborhood trust is the original nonprofit entity incorporated five years ago, which employs Kensington Corridor Trust’s growing staff and handles the day-to-day operations. That includes fundraising, identifying properties for acquisition, negotiating with sellers, construction manager for gut rehabs or new construction, and also serving as property manager and broker. The non-profit has a separate board of directors, also selected through open calls to the community.
A whirlwind year
Kensington Corridor Trust is coming off its busiest year yet, making eight acquisitions in 2024. The trust now owns 30 properties, which include a mix of vacant lots and mixed-use buildings all along Kensington Avenue. Some have occupied storefront and residential tenants; some have vacant storefronts but apartment residents above; others have a mix of occupied apartments and vacant apartments that need gut rehabs.
All told, the trust’s properties currently include 26 actively leased affordable apartments and 14 active storefronts, with another 25 or so apartments and seven more storefronts in the rehab and construction pipeline.
“Last year was a really crazy whirlwind of a year,” Abizadeh says. “A lot of properties went up for sale, there were some private developer exits that happened, and so I don’t anticipate that happening again this year. This year we anticipate five acquisitions.”
The trust recently made its largest and first multi-million dollar acquisition to date, a mixed-use building at the corner of Kensington and H Street. Acquired for $2.3 million from Shift Capital, the building features 16 residential units above two commercial storefronts anchored by the Sunday Love Project, a food pantry that uses the client choice model that allows participants to select what they take home from the pantry’s shelves.
The trust’s largest acquisition has been this mixed-use building at the corner of Kensington and H Street, featuring 18 residential units and two commercial storefronts. (Photo by Melissa Simpson)
“Before they took it to market, they called us and said, hey, before we put this on the market, do you want to acquire?” Abizadeh says. “And I was like, heck, yeah, we want to acquire it. Give me a second to go find some capital. I’ll be right back.”
Kensington Corridor Trust has set a target for itself to borrow $20 million for acquisitions, rehab and construction. So far it has borrowed $12 million, with another $3 million in final approval stages.
All of Kensington Corridor Trust’s debt is unsecured, meaning the lenders do not take any properties as collateral and the trust does not have any cash to serve as a backup source of repayment in case it goes belly up. These aren’t loans that banks or even most community development financial institutions are willing to make, but the trust has found success with a few smaller foundations that believe in the trust’s vision and values. There are also around 20 or so individual investors who pooled their personal wealth into a low-interest loan to the trust because they, too, share the trust’s values.
“We really want 0% interest loans, but we’ll take one, and if you can’t do one, then we’ll take two, but if you can’t do two, we cannot take three or four or five or six percent,” says Abizadeh. “It’s a slimmer pool of people who are willing to lend for 10 years unsecured at 2% or below.”
Keeping the interest it pays to investors so low ensures that the trust can make its residential and commercial units affordable to people and local businesses in the neighborhood. The trust sets residential rents based on income, targeting households in the 30-60% area median income range, or between $575 a month for a one-bedroom/one-bath and $1,500 a month for a three-bedroom/two-bathroom. Meanwhile, the trust sets commercial rents at 75% of comparable market rate rent along the corridor, which currently comes out to $750 a month on average to rent a typical-sized storefront in the trust’s portfolio.
Some of those funding sources, however, aren’t going to last — by design. The Kataly Foundation, based in Oakland, California, has been one of Kensington Corridor Trust’s biggest lenders and grantmakers. But Kataly is a spend-down foundation, meaning that it is planning to give away all of its wealth, making its final payments to grantees in 2027.
Eventually, Kensington Corridor Trust anticipates that rental income from its portfolio will cover most or all of its staffing and programming operations as well as making interest payments to its lenders. But for now, the nonprofit still raises grant dollars from foundations to cover its operations, which now include a seasonal community gardener.
“The garden is a very physical reminder that beauty is possible,” Abizadeh says. “That change is possible here, and that neighborhood-led initiatives can be not just imagined.”
