It’s a drab gray morning in April, and real estate developer Nadine Ngouabe Dlodlo (MBA 2008) is standing at the corner of West Baltimore and South Calhoun Streets in Baltimore’s historic Union Square district. Behind her, a chain-link fence decorated with a small yellow stop-work notice surrounds an empty lot. To the east stands a vacant building; to the north, a liquor store with iron bars on its windows. In short, it could be any corner in any struggling neighborhood in the United States. Yet for Dlodlo, it might as well be the Rubicon.

The lot is empty because Dlodlo recently tore down two dilapidated row houses that had been vacant since 1978. She intends to replace them with affordable rental apartments—the opening salvo in an ambitious plan to redevelop West Baltimore Street, whose boarded-up windows and abandoned storefronts belie its history as a once-vibrant commercial corridor of Southwest Baltimore. Factories and warehouses supplied the city with everything from furniture to gelato, and people flocked to the strip’s shops, theaters, and saloons. Just to the south, a series of elegant row houses earned one block the moniker Millionaire’s Row.

If Dlodlo has her way, a six-story, mixed-use building will soon rise above the dirt and gravel. The ground floor will feature an Afrocentric bookstore-café where customers can peruse books by African authors while sipping hibiscus tea and baobab juice. (Dlodlo, who hails from West Africa and is herself a single mother, wants to name the building Madikizela, in honor of the late South African political activist Winnie Madikizela-Mandela, a symbol of Black female resilience.) The upper floors will contain well-appointed rentals, whose target market includes single moms working low-wage jobs at a nearby medical center—moms who will no longer have to spend hours commuting each day, and who will return home in the evening to find their kids crafting projects using the 3D printer in the building’s Teen Shack.

Despite the stop-work order, Dlodlo is confident that she will break ground on Madikizela by the end of this year. And there are mounting signs that her other plans for the neighborhood—a smaller retail-residential site that will house her African-themed online clothing business, a 51,000 square foot live-work building for artists and digital nomads—will also soon come to fruition.

That’s good news not just for Dlodlo but also for the community leaders who have supported her progress, and who see in her the possibility of rejuvenating West Baltimore Street and its surrounding neighborhoods.

That support separates her from her predecessors: Unlike many who have launched ambitious (and ultimately unsuccessful) plans to redevelop Union Square and other parts of Southwest Baltimore, Dlodlo began by asking residents what they wanted and needed. Everything about Madikizela, from the incorporation of culturally diverse retail to the inclusion of a makerspace for teens, reflects not just her vision but also theirs.

To Rawi Abdelal, an HBS professor of international management who serves as faculty co-chair of the Bloomberg Harvard City Leadership Initiative, Dlodlo’s community-focused approach to redevelopment represents a necessary step toward reversing the entrenched patterns of structural racism and economic inequity that deny so many Black people safe, healthy, and attractive housing. And with multiple studies showing income inequality at its worst since the Roaring Twenties, cities around the country facing a lack of affordable housing, and the racial wealth gap continuing to widen, her model could have implications well beyond the corner of West Baltimore and South Calhoun.

“What Nadine is doing is essential for the future of Baltimore—and for the future of all of our cities,” Abdelal says.

The stop-work order that has temporarily halted progress on Madikizela is the latest in a series of breathtakingly capricious bureaucratic hurdles.

The city initially fast-tracked the demolition of the two vacant buildings on the site because they were in imminent danger of collapsing, then reversed itself, then miscalculated the fees for the demolition permits and somehow held Dlodlo financially responsible for the error.

And despite overwhelming local support for the $3 million project, city officials raised objections that Dlodlo believes would never have been lodged against a developer in a more affluent neighborhood. Tax breaks that have fueled redevelopment elsewhere have not been forthcoming. Commercial lenders have also shunned her, even though much of the financial risk associated with the project ultimately stems from discriminatory practices such as redlining, which for decades denied residents of the area access to mortgages and other loans simply because they were Black.

“Banks don’t want to touch this; they consider it a toxic asset,” Dlodlo says of the rubble-strewn lot.

The challenges confronting Dlodlo are not unique to Baltimore. Cities ranging from San Francisco to New York are struggling to address a lack of affordable housing while redressing gross racial disparities in wealth and income. And because homeownership is one of the principal ways in which families build wealth, housing, race, and economic inequality are all intertwined. It is no accident, for instance, that data from the Census Bureau and the Federal Reserve reveal a 30 percent gap between homeownership rates among Black and white people, with white people owning more than 85 percent of household wealth and Black people owning less than 5 percent.

Nonetheless, says Abdelal, Baltimore has an unusually troubled history when it comes to the discriminatory housing practices that helped create this situation. Or as Calvin Young (MBA 2015), a Baltimore native and 2016 mayoral candidate who now works at the private equity firm Green Street Impact Partners, puts it, “there was real intentionality around the policies and processes that ultimately led to the disinvestment that happened” across the city along racial and ethnic lines.

In the early 20th century, Baltimore pioneered the use of racially discriminatory housing ordinances and deed covenants that prevented Blacks, Jews, and other minorities from buying homes in white neighborhoods. In the 1930s, the federal Home Owners’ Loan Corporation deemed vast swaths of Baltimore populated by people of color to be “hazardous” and shaded them red on its official maps. Banks refused to offer mortgages and other financial services to residents of these “redlined” neighborhoods, denying them crucial tools for homeownership and wealth creation.

Though prohibited by the Fair Housing Act of 1968, redlining had lasting implications—as did related real estate practices such as blockbusting, which encouraged white flight by playing on fears of racial integration, further deepening the economic gap between increasingly segregated white and Black neighborhoods.

Analysis by the National Community Reinvestment Coalition indicates that three-quarters of the neighborhoods graded as hazardous 80 years ago are now low- to moderate-income communities, with two-thirds predominantly populated by people of color. In Baltimore, these redlined areas form the shape of a so-called Black butterfly, and they suffer the highest rates of poverty, crime, and chronic disease in the city. Studies show that investment is far lower in predominantly Black neighborhoods than in white ones. And developers are hesitant to operate in economically stressed areas where property values remain low, preferring instead to wait until someone else has taken the first-mover risk and values have begun to rise.

These structurally disadvantaged areas—like West Baltimore Street, in the heart of the Black butterfly—offer the perfect crucible for the restorative power of Dlodlo’s unconventionally mission-driven and community-centered approach to redevelopment. “Working with Nadine has been a blessing,” says Donnell Nance, a Union Square homeowner and officer in the Southwest Partnership (SWP), a coalition of neighborhood associations that supports Dlodlo’s efforts to restore West Baltimore Street to its former glory. “What was, can be.”

Dlodlo didn’t know anything about redlining when she came to the United States to attend HBS in 2006. But she did know something about the importance of stable housing, and how tough it can be for single mothers to achieve.

Dlodlo grew up in Cameroon, where her ethnic group, the Bamiléké, are known as traders and businesspeople. Her mother was a bank executive; her father, a civil servant with a passion for real estate. The latter built a sizable portfolio of properties before he died when Dlodlo was 15 years old, and his extended family quickly swooped in to seize his assets—a common move known locally as a land grab. Dlodlo’s mother, who was left to raise five children single-handed, fought off her in-laws as long as she could. Eventually, however, she had to sell the family home to fund Dlodlo’s university education, a loss that can still bring Dlodlo to tears.

After earning a degree in finance at the University of the Witwatersrand in Johannesburg, Dlodlo remained in South Africa, working in international marketing and corporate banking before signing on as a full-time consultant to the government of Angola on foreign direct investment. That experience, coupled with childhood memories of the painful structural adjustment programs foisted on Cameroon by the IMF (her own mother lost her job due to austerity-induced “retrenchment” in the banking sector), left her predisposed against development projects that are imposed from above, with little concern for local needs.

By the time she arrived at HBS, Dlodlo was herself the single mother of a two-year-old daughter, a circumstance that made business school a grind: class during the day, taking care of her daughter in the evening, and late nights studying cases. It also constrained her opportunities after graduation. “As a single mom, I could not take a full-time job,” she notes.

Working as a freelance consultant in New York City, Dlodlo bought a house in New Jersey, only to nearly lose it soon after. Slapped with a lien for non-payment of a tax bill, the property would have been sold in a foreclosure auction had her uncle back in Africa not paid the debt. A few months later, Dlodlo moved to Washington, DC, where she founded an online clothing business (Isonah, named for her daughter) and saw firsthand how rising rents and property taxes can make gentrifying neighborhoods unaffordable for longtime residents.

All those experiences shaped the work that Dlodlo undertook when she moved to Baltimore in 2018. The next year, Dlodlo established Women’s Home Preservation LLC and the Women’s Home Preservation Fund. The first is a mission-driven real estate development firm focused on creating desirable affordable housing for single mothers and their families. The second is a nonprofit that uses a percentage of the firm’s revenues to provide emergency financing to single moms who are at risk of losing their homes through foreclosure. (Dlodlo plans to export this bipartite model to Africa to help prevent families there from suffering the fate that befell her own family after her father died.)

From the outset, Dlodlo was committed to pursuing a socially conscious approach to real estate development. Madikizela, for example, is meant to fill a local housing gap that significantly affects low-income families: Hourly workers at the nearby University of Maryland Medical Center, many of whom are single mothers, have a hard time finding affordable rentals in the area, which forces them into long, expensive commutes. Dlodlo plans to set rents below market rate; yet the building, with its modern design and elegant aesthetic touches (the façade will evoke the patterns of traditional West African fabrics), will be one where Dlodlo would happily live with her own daughter.

Dlodlo also immediately began building relationships with community organizations in the area, forging connections with the SWP and attending monthly meetings of the Union Square Association to get a sense of local needs and wants.

Those ties have proved mutually beneficial. Community leaders have shared tips with Dlodlo on promising properties and gone to bat for her with the city. When the Commission for Historical and Architectural Preservation threatened to reject Dlodlo’s proposal for Madikizela on spurious grounds—a commissioner objected to the proposed height of the building even though it was within zoning regulations—the association lobbied to get it approved.

Local backing also helped Dlodlo secure $300,000 in pre-development financing for Madikizela from the state of Maryland. Her professional network helped too, with industry ties to the Reinvestment Fund, a community development financial institution (CDFI) with operations in several cities, leading to more than $950,000 in financing. “Rarely do financial institutions in the US invest in Black women at the $1 million level, especially when the underlying assets don’t hold much value,” says Dlodlo.

CDFIs, which range from banks and credit unions to venture capital providers and nonprofit loan funds, seek to expand economic opportunity in low-income communities by providing access to financial products and services. As Michael Pokorny, a senior director at the Reinvestment Fund, explains, that includes supporting small developers who are “trying to figure out transformative projects on the edges of where it makes financial sense.” Dlodlo certainly fit that description; but the fact that she didn’t have a fat bankroll or a portfolio of successful projects still made her a risk—one that was mitigated in part by the unusual degree of community support she had mustered.

Local leaders, meanwhile, found in Dlodlo a partner who was willing to listen and who shared their vision for the future. Which was not at all what they were used to.

Like other parts of the Black butterfly, Southwest Baltimore has seen its share of developers who have failed to solicit community input or walked away when confronted with the kinds of problems that Dlodlo has encountered. And while residents want to improve their neighborhoods, they are also wary of the dark side of gentrification—namely, the potential dispossession and displacement of people who cannot afford the higher rents and taxes that accompany rising property values.

Dlodlo’s commitment to affordable housing came as a balm, as did her willingness to engage the community. When Dlodlo retained the renowned architecture firm Gensler to develop the concept for Madikizela, she invited members of the Union Square Association to join the design committee. Several spoke about the need for a broader range of activities for neighborhood youth—a concern that led directly to the Teen Shack, a safe space where adolescents can work on creative projects.

“She really wants to know who we are and what we want,” says association president Bif Browning. “And that’s something we’ve never seen.”

Boosters like Browning hope their partnership with Dlodlo will provide a model for equitable, community-driven redevelopment elsewhere. And they see her efforts spurring a local renaissance of the sort that is already occurring in parts of the Black butterfly that are further along the reinvestment curve.

While the path forward is promising, says Dlodlo, there are challenges.

The main issue is financing. Madikizela will ultimately carry a $3 million price tag, and Dlodlo cannot rely solely on CDFIs to underwrite her. While a non-depository CDFI like the Reinvestment Fund can assume risks that a traditional bank cannot—“banks can’t take losses,” Young, who once worked at a CDFI, explains—it must also set higher interest rates to cover its own costs, which could make Dlodlo’s plan to charge below-market rents unfeasible.

On the other hand, the low property values that allowed Dlodlo to enter the market in the first place (she acquired the two buildings that she demolished for a mere $25,000) will continue to make her projects unattractive to commercial lenders.

Dlodlo recently received a $555,000 grant from the Growing Diverse Housing Developer program, a highly selective national initiative led by a consortium of CDFIs that aims to increase the capacity of developers who identify as Black, indigenous, or people of color. The program aims to help developers produce at least 100 units of affordable housing in the next few years, and Dlodlo is currently looking to assume control of a large portfolio of vacant properties presented to her by community leaders, in which she intends to house frontline health care workers. The program should give her access to flexible financing options as well.

In a business where every milestone reduces risk and reassures investors that a developer can return capital, all of this comes as welcome news. But Dlodlo and her backers at the Reinvestment Fund agree that government support (grants, subsidies, tax credits) will ultimately be required to make her numbers add up.

To Young, that speaks to a broader need for government intervention in situations where intentionally discriminatory policies have caused real estate markets to fail. “Government has to play where the market doesn’t,” contends Young, who argues that the public sector should provide first-loss capital to de-risk real estate development in underserved areas, much as it de-risks tech startups by funding early-stage R&D.

Dlodlo did receive a small government grant to support the acquisition of the furniture factory that she plans to turn into a live-work space; and she is hopeful that more significant public aid will materialize for Madikizela as the project gains momentum. But even if it doesn’t, she has no intention of backing down.

“It would be nice to get public subsidies, and I’m still hoping to get some because the project needs it,” she says. “But I’m committed to it regardless.”

Standing next to the vacant lot on which Madikizela will soon rise, Dlodlo reflects on how difficult the journey has been thus far. The previous owner spent several fruitless years trying to redevelop the site before finally throwing in the towel; and there were times when Dlodlo, who has been getting by on her savings, also considered giving up.

But the stakes were simply too high, the opportunity too great to help families whose struggles she understands all too well. She remains motivated by the community support she sees for her work and the prospect of perfecting a model for affordable housing investment that she can replicate elsewhere in the US and globally. And she hopes that her example will encourage other developers to see communities like Southwest Baltimore as places where they can generate profits while making change.

“Sometimes,” she observes, “it’s about taking the risk of coming in and building something.”

Since this article was reported, Dlodlo’s Women’s Home Preservation launched a new, $9 million redevelopment project in West Baltimore, transforming a neglected factory into a live-work arts center for emerging artists. Her company has also received additional funding from the Growing Diverse Housing Developers program and the City of Baltimore Affordable Housing Trust Fund, and will launch a research-based studio with the Cooper Union Irwin S. Chanin School of Architecture in spring 2023. The studio, says Dlodlo, will focus on urbanism, innovative housing typologies, and new construction technologies with the aim of addressing long-neglected issues in West Baltimore that fall at the intersection of architecture, politics, and social justice. “Housing supply has not kept up with soaring demand and with the World Bank predicting that by 2030, three billion people, or 40 percent of the world’s population, will need new housing units, it is imperative that real estate practitioners engage in interdisciplinary dialogues to unlock innovative solutions for this housing shortage,” says Dlodlo. “The Cooper Union studio, a rare example of intentional collaboration with a minority developer and formerly redlined communities, gives us a platform to broaden our expertise to new domains such as digital fabrication for affordable housing, particularly as we look to expand our mission of equitable housing in the US and internationally."

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