$5.5 Million Awardee
Boston Community Capital’s staff pride themselves on looking around the corner—that is, on paying close attention to emerging trends and how they might impact communities. Back in 2006 and 2007, the particular corner they looked around was the mortgage market, and they couldn’t quite believe what they were seeing. “We were looking at rising home prices in the neighborhoods and did not understand how those prices could be sustainable over time,” says Elyse Cherry, the organization’s CEO. “We saw income levels in the neighborhoods that were roughly flat. Meanwhile home prices were rising dramatically. We knew we had a problem coming.”
The problem did come, of course, and as the foreclosure crisis deepened, BCC took action. A highly effective community lender since its founding in 1985, the organization decided to start a mortgage brokerage company. Their idea was to refinance people into better mortgages, but they soon discovered that the people they wanted to help owed so much more on their mortgages than their homes were worth that they could not be refinanced.
Undeterred, BCC became a licensed mortgage lender and launched a new initiative called Stabilizing Urban Neighborhoods (SUN) to help homeowners struggling with their mortgages to stay in their homes.
The basic strategy is simple but innovative. BCC buys—at deeply discounted prices—the homes of people who are in foreclosure and facing eviction, then sells the homes back to them, providing a new mortgage that is properly underwritten and affordable.
Since launching the SUN Initiative in early 2010, BCC has provided $9.9 million in mortgage financing and enabled 90 families facing eviction to remain in their homes. On average, the new mortgages have reduced homeowners’ monthly mortgage payments by 46%. There has not been a single delinquency.
Currently, the SUN Initiative is limited to selected low-income neighborhoods of Boston and Revere. However, BCC plans to use the Wachovia Wells Fargo NEXT Award for Opportunity Finance to expand the program to other communities in Massachusetts.
Looking around yet another corner, Elyse Cherry can see important things ahead. “Today we’re trying to be a mortgage lender to folks in foreclosure, but it’s hard to imagine why we or some similar organization can’t become the go-to lender for everybody in the community,” she says. “The key is that we don’t want to simply fix things for the moment and then have the next round of predatory lenders come in. There is clearly an opportunity for Boston Community Capital and other CDFIs to take a much more significant role in the lending market. To us, it’s not just an opportunity; it’s an obligation.”
$2.75 Million Awardee
John Berdes, President and CEO of Enterprise Cascadia, is well aware of the long-term threat that climate change poses for low-income communities, but he also sees something else on the horizon. “At Enterprise Cascadia, we believe that a clean energy economy is emerging today, and that there is an opportunity for those that have historically been excluded from the mainstream to be full participants in this new economy,” he says. Enterprise Cascadia was formed in 1995 to promote economic opportunity and a healthy environment for urban and rural communities of Oregon and Washington, so it is hardly surprising that the organization would envision urgent opportunity in slowing climate change. What is striking, however, is the boldness of its newest initiative to realize that opportunity.
That initiative, Clean Energy Works, is a multi-faceted program designed to create jobs while cutting carbon emissions. Its main component is a low-interest consumer loan that finances energy-efficient retrofits for homes and coordinates contractors to do the work. Underwriting is based more on utility payment history than credit history. The basic concept is that the retrofits will reduce the homeowner’s monthly energy costs by an amount roughly equivalent to the loan payment, thus eliminating the obstacles to implementing energy-efficient measures. Servicing the loan on utility bill links home performance to the home budget each and every month.
Clean Energy Works also includes business loans for contractors working on projects financed by the consumer loans, as well as a Community Workforce Agreement that ensures that the program will provide high-quality jobs for workers drawn from low-income populations. The goal, according to Berdes, is to create a “finance ecosystem” that grows the capacity to deliver energy-efficiency and economic opportunity as it grows demand for the efficiency itself.
Enterprise Cascadia launched Clean Energy Works in partnership with Portland, Oregon, in late 2009, and has already made more than 345 loans and provided $4.1 million in financing. Plans are in the works to expand the program to Seattle and to rural communities in the region. Enterprise Cascadia will use the Wachovia Wells Fargo NEXT Award for Opportunity Finance to complete a $20 million warehouse for its Clean Energy Works consumer loans and to support its efforts to work with other CDFIs that are interested in replicating the program.
Berdes believes that Clean Energy Works offers a strategy that many CDFIs can put into practice—and that it’s critical for the industry to begin advancing environmental, as well as economic, goals. “Unless CDFIs recognize the mission opportunity and the business opportunity in this climate change world, we will be on the sidelines and our beneficiaries will be on the sidelines,” he says. “Now is the time to address both the threat of hardship that climate change presents and, more importantly, the opportunity for inclusion.”
$25,000 Awardee – Advocacy
Madison, Wisconsin-based Forward Community Investments (FCI) has been recognized for its Advocacy work representing the very low-income unserved and underserved communities of Wisconsin. FCI’s advocacy work focuses on supporting nonprofits and CDFIs in Wisconsin. In 2009, FCI was instrumental in the passing of an amendment that preserved the tax-exempt status for nonprofit affordable housing providers. Without the amendment, nonprofits that provide housing to low-income individuals and families would have to pay property taxes, resulting in higher costs that would compromise the quality of housing and eliminate supportive services for low-income residents. In 2010, FCI worked closely with Wisconsin legislators to introduce a bill that would stimulate private investments in Wisconsin CDFIs by providing a state tax credit to individuals and corporate investors. Based on California legislation, the Invest Locally to Grow Wisconsin Act would provide a 10% tax credit for investments ranging from $10,000-$150,000 and a 12% tax credit for investments of $150,000-$500,000.
$25,000 Awardee – Community Impact
Bethex Federal Credit Union (Bethex), based in the Bronx, was awarded the Community Impact prize for achieving a high volume and quality of community outputs to a severely distressed market where the poverty rate is 40.8% and more than half of the children live in poverty. Bethex provides an impressive array of high-impact and high-volume programs and consumer services including low- or no-fee check-cashing services, volunteer income tax assistance, consumer loans, business loans, and real estate. Bethex holds a $2.6 million portfolio of more than 1,000 consumer loans, a $1.9 million portfolio of 46 small business loans, and a $2.3 million portfolio of real estate loans including 10 cooperative apartment building loans to non-profit corporations that promote homeownership among low-income people and prevent purchases by outside investors and speculators.
$25,000 Awardee – Financing
Headquartered in Columbia, South Carolina, and providing loans to small businesses in South Carolina, North Carolina, and Georgia, Business Carolina (BCI) was selected to receive the Financing award for its substantial growth in financing and its leveraging of financing capital. BCI utilizes an active secondary market for its SBA 7(a)-guaranteed loans in order to maximize the economic impact of each dollar of capital that it lends. Through the sale of the guaranteed portion of each loan, BCI is able to recoup up to 90% of the original principal balance of the loan, plus a typical 5–7% premium. Through leveraging each loan dollar in this manner, BCI can fund up to $10 million in loans for each $1 million of capital lent. BCI has substantially grown its financing from $13.5 million in FY 2007 to $18.1 million in FY 2008 to $35.1 million in FY 2009.
$25,000 Awardee – Innovation
Based in Cleveland, Georgia, Access to Capital for Entrepreneurs (ACE), formerly known as Appalachian Community Enterprises, received the Innovation award for its new green microenterprise and business lending program. In 2009, ACE launched Georgia Green Loans, which provides capital to businesses that provide an eco-friendly product or service or that wish to operate more sustainably. In its first year of operation, Georgia Green Loans provided $377,756 to 16 businesses including a green architect, a solar installation operation, and a manufacturer of organic cotton baby goods as well as alternative transport, composting, and water pollution prevention businesses. Environmental metrics gathered include reduction in energy usage, materials removed from the waste stream, water use reduction, toxins eliminated, and renewable energy generated. By boldly stating a commitment to sustainability, ACE has attracted new partnerships and funding including a competitive $700,000 grant from the Georgia Environmental Facilities Authority, an SBA PRIME grant to create the national Academy of Green Micro-enterprise Development, and SBA Microloan Program financing to support a joint effort among ACE and two other lenders to provide green loans in every Georgia county.