Community Banks: The Essential Piece to Community Development

The tough times we face today because of the recession are not unfamiliar to individuals throughout Ohio. In many of Ohio’s communities, the day-to-day realities of financial stress are a constant companion. Finance Fund works with many organizations to help improve the lives of Ohioans living in distressed urban and rural areas. However, much of this work could not be done without community banks. Some wonderful examples of this work are located here

 

Community banks are a valuable resource to neighborhoods and families throughout Ohio because of their investments locally. Think back to the classic film It’s a Wonderful Life where George Bailey, played by Jimmy Stewart, fights to keep his savings and loan afloat to save his community. Of course this is a Hollywood example, but it does demonstrate the basic principal of a community bank. Their local investments and interests make community banks a vital part of Ohio’s neighborhoods.

 

As noted by the Independent Community Bankers of America community banks “focus attention on the needs of local families, businesses and farmers.” Officers at community banks are typically involved in local community affairs and work for a small business, making their focus more community-centric. Also, because their loan decisions are made locally, they can quickly provide funding that benefits their communities. Locally, the Community Bankers Association of Ohio does great work through advocacy and support to promote the interests of the state’s community banks.

 

Community banks often encounter challenges in providing the financing required to fund projects. These come from providing enough financing to have a major impact in a severely disadvantaged or distressed community. Or issuing loans for projects considered marginal, either due to location in low- to moderate-income areas, lean size, lack of established credit or risk potential.

 

The great news for community banks is that there are programs available that bridge the financing and risk gap to bring these projects to fruition. Numerous programs and tools exist to help community banks leverage their existing funds. These include New Markets Tax Credits, linked deposit programs, predevelopment grants and economic development grants. These tools help community banks fund projects by reducing risk and allowing them to underwrite deals that promote community and business development. Finance Fund continues to partner with community banks in their efforts to serve as community champions.

 

If you’re a community bank looking for a partner to invest in your community, give me a call at 614.221.1114.

A Lesson in Cognitive Development

As Ohio families get ready to send their children back to school, I can’t help but reflect on how our society treats its youngest members. What long-term impact will our education and childcare systems have on future generations? A study from the Organization for Economic Cooperation and Development found that children in the United States score less proficiently on education exams than numerous other developed countries. Much speculation and research surround this issue, including the importance of cognitive development during the first few years of life.

 

The famous psychologist, Jean Piaget, explained that child’s play is not just fun, it is an important part of their brain development. Other studies validate Piaget’s statement, showing that the first years of a child’s life determine the trajectory of their cognitive, emotional and interpersonal issues.

 

We must then ask ourselves how this impacts the cognitive development of economically-disadvantaged children with limited access to early childhood education. Unfortunately, the answer is not surprising. A recent study by Child Trends found that underprivileged children typically lag behind other children as young as nine months old. Those of us working toward improving the viability of low-income communities should be particularly mindful of this staggering information.

 

So what can be done in Ohio to ensure all children have access to opportunity? For one, we can invest in improving childcare. We cannot subject young children to emotional anorexia and expect their cognitive skills to develop effectively. A study from the National Center for Early Development & Learning found that quality child care was critical in ensuring that a child is ready for elementary school both cognitively and behaviorally. Essentially, child-teacher bonds formed in the childcare classroom prepare children for their future education.

 

We must make providing access to early childhood centers in our communities a priority. Both funding and resources are available to make this a reality. For example, Finance Fund had the pleasure of helping to fund the first and only early childhood center in Noble County. The Noble Learning Center had struggled for some time to find a stable location, operating out of rented apartments and struggling to keep its lease. Through creative funding, the Noble Learning Center was able to reclaim a vacant building and now operates as the four-county region’s only licensed childcare center. Projects like these improve opportunities for children in our communities to fully engage in their education.

 

As you begin to see school buses and school playgrounds fill with children, take a moment to ask yourself an important question. What can you do to ensure that all children are provided with the opportunity to learn and ultimately succeed? It’s imperative to our future.

Execution as learning? Interesting approach.

As some of you know, I’m fairly new to this leadership thing… I’ve only been doing it for about 30+ years. I am always interested to hear how others approach leadership, management and productivity issues in their organizations. This was a new one for me and I thought I’d share.

 

The Competitive Imperative of Learning (Harvard Business Review July-August 2008), by Amy C. Edmondson

Most executives believe that relentless execution – the efficient, timely, consistent production and delivery of goods or services – is the surefire path to customer satisfaction and financial results. Managers who let up on execution even briefly, the assumption goes, do so at their peril.

                In fact, even flawless execution cannot guarantee enduring success in the knowledge economy. The influx of new knowledge in most fields makes it easy to fall behind.  Look at General Motors which was the largest most profitable company in the world in the 1970. GM remained wedded to a well-developed competency in centralized control and high-volume execution. They have steadily lost ground for decades and are now counted in the ranks of high profile bankruptcies.

                Edmondson’s research identifies a different approach to execution, what she calls “Execution-as-learning ”. The approach maintains that a focus on getting things done, and done right, crowds out the experimentation and reflection vital to sustainable success. By continuing to think about execution as efficiency, which she refers to as old fashioned and narrow, companies fall into predictable self sabotaging traps.

1.       Critical information and ideas fail to rise to the top

2.       People don’t have enough time to learn

3.       Unhealthy internal competition arises

4.       Companies think they can do no wrongr0807e_a

In addition the environment must be made safe. Before an execution-as-learning can occur organizations must foster psychological safety. This means ensuring that no one is penalized if they ask for help or admit a mistake. This safety is not done at the expense of accountability and Edmondson presents a safety/accountability matrix which suggests that effective organizations achieve high levels of both.

        The goal of the approach is to find out what works and what doesn’t; employees must absorb new knowledge while executing, often sacrificing short term efficiency to gain insight into and respond to novel problems. The author reveals four steps to make this happen.

1.       Provide process guidelines

2.       Provide tools that enable employees to collaborate in real time

3.       Collect process data

4.       Institutionalize disciplined reflection

 

The article presents a valid and viable alternative that strikes a median between hierarchy and self guided teams. Fostering an atmosphere in which trust and respect thrive, and flexibility and innovation flourish, pays off in most settings, even the most deadline driven. When people know their ideas are welcome, they will offer innovative ways to lower costs and improve quality, thus laying a more solid foundation for their organization’s success.

 

You can read the full article here.

 

Lies and apathy (Naked again)

We all come naked from the womb, but most of us do not stay that way. Yet again I am amazed at the rhetoric flying about the airwaves and the halls of congress concerning the Shangri-La or inferno of revamping the U.S. health care system. It’s not the topic that is disconcerting but how the opinion of the American public is so easily swayed by any titillating story, whether true or false, and how easily we are lured away for meaningful debate into the afternoon soap opera. My example is not taken to focus on any one point of view because the tactic is used by all sides of the issue.

On the radio show hosted by former Sen. Fred Thompson, New York lieutenant governor Betsy McCaughey stated that the House’s proposed health care bill contained a provision that would institute mandatory counseling sessions telling seniors how “to do what’s in society’s best interest…and cut your life short.” Citing page 425 of the bill, McCaughey claimed that “the Congress would make it mandatory … that every five years, people in Medicare have a required counseling session that will tell them how to end their life sooner, how to decline nutrition, how to decline being hydrated, how to go into hospice care … all to do what’s in society’s best interest … and cut your life short.”

Here’s what the bill says, “An explanation by the practitioner of the continuum of end-of-life services and supports available, including palliative care and hospice, and benefits for such services and supports that are available under this title.” The accepted definition of end-of-life planning means thinking ahead about the care you would like to receive at the end of your life – which may include the choice to reject extraordinary measures of life support, or the choice to embrace them.  The section would require Medicare to pay for, not mandate, some end-of-life planning counseling sessions with a health care practitioner once every 5 years. It is clear that McCaughey’s distorted interpretation of the content of page 425 was offered not to stimulate debate but to frame an atmosphere of fear and mistrust.

Several television ads sponsored by Patients United Now claim that Canadian citizens survived serious illness only by leaving the country to get treatment in the U.S. because of the length of their wait for service in the Canadian health care system, claiming “Washington wants to bring Canadian-style health care to the U.S.” The reality is that no one is advocating for a government run health care system. The president and the leaders of both parties resound with the words of Sen. Max Baucus, Chair of Finance Committee, “single-payer (government run health care) is not going to get even to first base.” Yet the ads continue for what purpose? Not to stimulate debate but to frame an atmosphere of fear and mistrust.

There was a time in this country that I can remember when someone or some group publically making a misstatement or an outright lie, the journalistic community would stand up on their hind legs and demand accountability, and there was an American public that had not abdicated their role in the republic and given place to apathy believing everything we are fed. Naked again.

Paying attention to Renewable Energy

Treasury and DOE Accepting Applications for Section 1603 Renewable Energy Grant Program

Sure you know what the 1603 program is.   You don’t?    In fact, we’re pretty sure that you who follow our messages about CDFI and New Markets Tax Credit won’t immediately relate to this important announcement.  But the Finance Fund has been looking into ways to participate in renewable energy initiatives as it is indeed aligned with our mission.   In that spirit, we thought the availability of $3 billion was worth sharing.    If you have ideas or interest in this topic, let us know.  In the meantime, here are some links to learn more about this new initiative.

The U.S. Department of Treasury and the U.S. Department of Energy announced recently that they are accepting applications for a federal cash grant program that will make direct payments to eligible renewable energy project owners in lieu of federal income tax credits.

With the goal of expanding the development of renewable energy projects throughout the United States and creating new jobs, The U.S. Government anticipates distributing at least $3 billion in financial support to approximately 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities.

The funding for this grant program has been made available through the American Recovery and Reinvestment Act of 2009 which authorizes Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009.  Previously, these companies could only file for a federal income tax credit to cover a portion of the renewable energy project’s cost.

Under the Section 1603 grant program, applicants may elect to forgo future tax credits in favor of an immediate cash reimbursement for a portion of the property expense.

Close to Home III Breaks Ground in Ironton

Breaking Ground on Close to Home III

Breaking Ground on Close to Home III

When our program team met Sharon Hartwig and Charlie Kunkel, co-owners of St. Lawrence O’Toole Gardens, we were inspired by their dream of reclaiming a vacant, historic building for their community.  We’re proud to announce that dream came one step closer to reality last Friday when Lawrence County’s only assisted living center to be called Close to Home III, broke ground on the site of the old St. Lawrence O’Tool Community Center.

Upon completion, Close to Home III will create 30 new jobs.

“Finding a new use for this important historic building is a point of pride for the Ironton community,” Charlie told me. “Lawrence County has needed an assisted living facility for quite some time. We look forward to bringing this new resource to the region.”

The Close to Home III project will rehabilitate the now vacant St. Lawrence O’ Toole Community Center, originally built in 1910 as the St. Lawrence School. Its owners, St. Lawrence O’Toole Gardens, will build a 8,316-square-foot addition and making structural and sidewalk improvements. Of the 30 positions created by the project, 16 will be filled by individuals of low or moderate income.

Finance Fund partnered with the developers at St. Lawrence O’Toole Gardens, LLC by providing $2.7 million in New Markets Tax Credits funding. Also funding this project were the Ohio Department of Development, with a $500,000 grant from the Community Development Block Grant Economic Development Program, and a loan from the Huntington, West Virginia-Ironton, Ohio Empowerment Zone, Inc.

We also thank the Ironton Tribune for their nice story about the event.  You can read it here.

He Does Exist!

He does exist!   I’m back from DC and am pleased with our activities while there.

The week included two NMTC conferences (Novogradac and NMTC Coalition), a NMTC Coalition Board meeting, a couple of media interviews (Cleveland Plain Dealer and Wall Street Journal), a panel presentation at the Coalition conference, a fundraising breakfast with Rep. Richard Neal of Massachusetts, and a number of hill visits.

The week was capped off by offering testimony to a Congressional public hearing held by the Select Revenue Measures (Chair Richard Neal (MA)) a subcommittee of Ways and Means and Domestic Monetary Policy and Technology (Chair Melvin Watts (NC)) a subcommittee of Financial Services. The topic was a report by the Government Accounting Office (GAO) entitled “NEW MARKETS TAX CREDIT: Minority Entities Are Less Successful in Obtaining Awards Than Non-Minority Entities” (blogged – A D.C. Visit, June 15, 2009). There were seven witnesses; Donna Gambrell, CDFI Fund; Michael Brostek, GAO; Ron Phillips, NMTC Coalition; Blondel Pinnock, Carver Federal Savings Bank; William Cunningham, Creative Investment Research, Inc; Joseph Haskins, Harbor Bank; and me.

It was a long but productive trip. We’re working on the Child Care Facilities Financing Act of 2009 (H.R.1625), the 5 year extension of the NMTC program(H.R. 2628) and the CDFI funding in the budget bill. Looks like I’ll be heading back that way in July.

Bernanke speaks on CDFIs

As my week in DC is winding up I wanted to share some exciting information with you.

The morning of June 17th, I sat eagerly listening to Chairman Bernanke give a speech that substantially focused on Community Development Financial Institutions (CDFI). Please check out the Chairman’s speech, as he gives his thoughts about CDFI lenders and the challenges they face in the current economic and financial environment.

A D.C. Visit

I begin today with two days at the Novogradic New Markets Tax Credit Conference talking about current hot button issues in the industry.

The most prevalent is the recently release GAO report “Minority Entities Are Less Successful in Obtaining Awards Than Non-Minority Entities” that attempts to identify reasons for the lack of success. I have some opinions but will do more on that later.

Then it’s lunch with Rapoza Associates Friday, getting ready for the New Markets Tax Credit Coalition Board meeting on Monday, and preparing for the NMTC Coalition Policy Conference on Tuesday and Wednesday. The Coalition is working on a five-year extension of NMTC, a House version of which has been introduced by Rep. Neil and Rep. Tiberi (HR 2628).

Sprinkled into the mix are a number of Hill visits in the House and Senate talking about the Child Care Facilities Finance Act (HR 1685) introduced by Rep. McCarthy and the Senate companion (S 1002) dropped by Senator Casey. It all comes to a conclusion with my testimony (thanks to an invite by Rep. Tiberi) to the Subcommittee on Select Revenue Measures of the Committee on Ways and Means and the Subcommittee on Domestic Monetary Policy and Technology of the Financial Services Committee. I’ll be talking about the GAO report. Busy trip!

“When I was younger, so much younger than today”

When I first heard this line from “Help!”  the Beatles 1965 song by John Lennon, I had graduated from High School and was poised to meet life head on. Full of vim and vigor and not much else, the first lines of the song were probably more suited to what was in store. “Help, I need somebody, Help, not just anybody, Help, you know I need someone, help.”

Interestingly, the Beatles song has been reinvented by several artists, and a quick Google search produced a myriad of applications of the sentiment. Yesterday I sat next to Bobbie Garber, Community Research Partners, at the Ohio Capital Corporation for Housing’s Partners Luncheon. We talked about the way life constantly changes and how the challenge is not only keeping up with it, but preparing for it. Over the years we have both observed and experienced how organizations strategically address change. Some Don’t Ever Change but expect their model and mission are strong enough to stem the tide. Others are so focused on the task at hand that the idea of strategic examination is met with the same response,  “Don’t Bother Me”. Gone are the days of Long, Long, Long processes of strategic planning that specifically define goals and objectives, typically outdated by the time of completion.

So, How do you do it? Most critical thinking in this area talks about framing strategy around the inevitability of change and getting ready to adapt to whatever happens. I’ve included a list of some books espousing these ideas, and From Me to You none of them advocate doing away with strategic planning but simply make our planning more strategic. As a matter of fact, one recent book “The Momentum Effect” (J.C. Larreche) suggests that many successful businesses do very little strategic planning in the typical definition but thrive on experience, a good sense of the market, and an ability to quickly adapt to change. It is my observation that this is the approach of many of the businesses in the community revitalization industry. They just Act Naturally and do what needs to be done relying on innovation, perseverance, and sometimes just plain dumb luck to make things happen.

Groups like Vistula Management Company from Toledo continue to reinvent themselves over the years for the benefit of their beneficiary families. John Kiely from Vistula recently sent me a letter after attending Finance Fund’s Annual Reception in which he reminisced about the connection we have had over the years and sent copies of correspondence highlighting more than a decade of continued dedication to serving low-income Toledo neighborhoods. John talked about “memories of when we were both much younger (than today) and had a great deal of enthusiasm for creating low-income housing in Ohio.” It is my observation that the enthusiasm has not diminished and simply has yet again blossomed in innovation. Let It Be known that If I Fell prey to waning passion you will Tell Me What You See, because In My Life since that 1965 Beatles song, I have seen the answer to the Help reprise. We have an active industry of helpers and I Feel Fine.