SOCIAL TOPICS (Archive): COMMUNITY DEVELOPMENT INVESTING

Published, July 1998

       In October 1997, Community Bank of the Bay (CBB) received a $1.6 million grant from the Community Development Financial Institutions Fund, a division of the Treasury Department formed during the Clinton administration to encourage banks to make loans to inner cities. What’s the big deal? Not only has the Community Bank of the Bay been in existence just since mid-1996, but the only bank to receive a larger grant was Citicorp.

      With $7.65 million in equity capital raised from religious groups, insurance companies, banks, individuals, and the Oakland Redevelopment Authority, CBB opened its doors in an abandoned bank office in Oakland. It is the sixth community development bank in the country. Its chairman, Lydon Comstock, was also instrumental in starting Community Capital Bank, a similar bank based in Brooklyn. Community Capital Bank is also included in our community development service.

      Like all banks, CBB offers traditional banking services such as checking accounts, savings accounts, and CDs. As a community development bank, CBB also provides critically important financing to small businesses and non-profit organizations in low-income neighborhoods which many other Bay Area banks avoid. CBB’s average loan is under $100,000, but they can lend up to $900,000.

      To date, CBB has made $11 million in loans and commitments. Recipients include churches in need of structural rehabilitation, a minority-owned truck manufacturer, a woman-owned restaurant, and non-profit housing development and rehabilitation organizations. A recent public–private initiative will provide financing, training, and certification to area contractors involved in lead paint removal, including loans from CBB to purchase necessary equipment at below prime rate. This program is the first of its kind in the country.

      The Youth Employment Partnership Inc. (YEP), a non-profit organization and recipient of working capital financing from CBB, is in the business of deconstruction. Deconstruction salvages many valuable materials which can be reused or recycled. With the decommissioning of many military bases in the California area, many buildings as well as warehouse spaces leased by the military have become vacant. Using local construction trainees between the ages of 18 and 25, buildings which might normally be demolished are deconstructed. For example, in deconstructing a three-acre warehouse, YEP was able to salvage over 800,000 board feet of construction grade timber and other finished materials which were used in the construction of low-income housing. What would have been tons of waste dumped in a local landfill has now become a source of jobs and materials within the same community.

       Walden Asset Management began its Community Development Investment Service in 1996. Twice a year, we provide our clients with a choice of pre-selected community development loan funds, banks and credit unions that target international, national, regional or local projects, primarily in affordable housing and small businesses. All investments are client directed and are registered in clients' names. In the spirit of our clients’ willingness to accept a below market rate of return, USTC does not charge a fee on below market investments unless they exceed 5% of a portfolio.