Outlet: Comstocks Magazine
Author: Allen Young
Nehemiah Corp., a social enterprise nonprofit that has spent two decades developing programs that help low-income people afford homes, is winding down most its operations, the company has announced.
The organization, based in Sacramento, will continue its prominent Emerging Leaders mentorship program, but will shutter its real estate and community lending businesses, including a flagship program that purchases distressed single-family homes, and fixes and resells the properties to low-to-moderate income buyers.
As the stock of foreclosed residential properties diminishes amid an improving national economy, Nehemiah has faced decreasing profits and decided in January to shut down its real estate business, said Chairman Scott Syphax.
“Given the decrease in foreclosures, it’s time to scale back that operation because the profit margins aren’t there,” Syphax said.
Syphax, who joined Nehemiah in 2001, stepped down this month as the organization’s CEO. He is continuing on as its chairman. Darrell Teat, the organization’s president (and Comstock’s editorial board member), assumed the title of acting CEO, but he plans to step down and depart the company after the real estate business closes this fall. The nonprofit has cut 15 of its 32 positions.
Syphax and Teat said in a joint interview that Nehemiah would continue to seek real estate and economic development ventures that fulfill the nonprofit’s mission of expanding homeownership and neighborhood improvement.
But the organization is closing a national community lending operation that invests in certain commercial building projects in low-income neighborhoods. In 2002, for example, Nehemiah invested nearly $1 million into Sacramento’s 40 Acres Project, an Oak Park development that now includes the Guild Theater and Underground Books.
Syphax emphasized that Nehemiah has survived several major overhauls since the nonprofit launched in 1997 and will remain poised for expansion as opportunities arise.
“We will do fine,” he said. “We have expanded and contracted based on the cyclical nature of business. In social enterprise, you scale up and scale back as opportunities open and recede.”
The nonprofit underwent a full makeover in 2008, for example, following a federal prohibition of its signature down-payment assistance program. At the time, federal officials argued that the program, which allowed first-time homebuyers to bypass residential down-payments by allowing sellers to “gift” that payment to Nehemiah, led to foreclosures, an assertion that Syphax and his team fiercely disputed.
The law left the organization scrambling to find new business. In 2011, Nehemiah switched its flagship operation to the current distressed asset program that relies on a steady stream of foreclosures. That program operated in 26 states last year.
Nehemiah is the former developer of Township Nine, a 65-acre multiuse project in the River District. In February 2016, First Capital Real Estate purchased a 92 percent interest in the project. Nehemiah retained a small stake in Township Nine and is assessing its options for that holding, said Teat.
Nominations are currently open for the Nehemiah Emerging Leaders program, a prominent Sacramento leadership development course for young people of underrepresented backgrounds.
Teat said he planned to explore other professional opportunities following the closing of Nehemiah’s real estate programs this fall. He declined to elaborate on his personal plans.
The remaining business of Nehemiah “doesn’t need a top-management structure,” Teat said. “It allows me to look into the endeavors that I have always been interested in.”
Editor’s note: The piece has been updated to reflect that the sale of Township Nine occurred in February 2016.
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