Section 1: A View of the Landscape A Look Inside ... Barry Wides, Deputy Comptroller for Community Affairs, Office of the Comptroller of the Currency (OCC) T he recovery effort in the Gulf For businesses, the Gulf Opportunity Coast from the 2005 hurricanes (GO) Zone Act of 2005 allows a is now entering its fourth bonus depreciation tax deduction year. Hurricanes Katrina, Rita, and for property placed in service Wilma created the greatest physical before December 31, 2010. HERA and economic destruction the United eliminates a requirement that States has ever experienced from construction of these properties a natural disaster. The response at start by December 31, 2007. The the local, state, and national levels, date change ensures that more Holy Cross School by necessity, involved a great deal Gulf Coast properties will qualify Rendering of the new campus of the Holy of experimentation, as there had for this bonus depreciation. Cross School in New Orleans, which lost its previously been no similar experience historic campus to Hurricane Katrina. Banks Though not specifically targeting the from which to draw lessons. have invested in support of its rebuilding. Gulf Coast, the increased allocation (See articles on Capital One (page 13) and The past three years have included a of low-income housing tax credits Whitney National Bank (page 16) for broad array of initiatives, investments, (LIHTC) to states will boost the more details.) policies, and programs from public, amount of affordable housing private, and philanthropic sector actors. created for lower-income households As a result of HERA’s enactment, the This issue of Community Developments in the Gulf Coast. Additionally, federal government will put additional examines some of these initiatives HERA creates a new type of “high- resources in the hands of the families through the vantage point of some of cost area” for the LIHTC program, and individuals who live and work the primary organizations involved wherein a state credit allocating in the Gulf Coast and in the hands in the recovery effort—specifically, agency can designate specific of businesses that help Gulf Coast national banks, government agencies, projects to receive extra tax credits communities thrive. We look forward and their development partners. due to their high development costs. to seeing these resources at work. Working at their best, national and Projects so designated would then As you read the articles in this regional actors channel resources to qualify for tax credits of 130 percent newsletter, we hope you will find local organizations that understand of their qualifying basis instead of the experiences of banks, nonprofit how to distribute resources to support the usual 100 percent. This provision organizations, state agencies, local recovery. We see this strategy will improve the financial feasibility and businesses useful as your at work in the federal government’s for LIHTC projects receiving this bank considers its own support special allocation of Community designation in the Gulf Coast. for the Gulf Coast recovery. Development Block Grant (CDBG) HERA restores the authority for funds to the state government and banks to make affordable housing Cover photo credits, clockwise from top left: NeighborWorks America, NeighborWorks America, Enterprise Community then down to local communities to and community development Partners, NeighborWorks America. help renovate and rebuild the housing investments under the public welfare stock and public infrastructure. We investment authority in 12 USC Community Developments see it in the small business loan funds 24 (Eleventh) (Part 24) in a mix Deputy Comptroller established by state governments, of low-, moderate-, and middle- Barry Wides national and local nonprofit income communities. This enables Editorial Staff Design Staff organizations, and foundations to banks to make Part 24 investments Beth Castro Victor Battista Bill Reeves Cheryle Robison support small business recovery. in distressed middle-income areas Kristopher Rengert The recently passed Housing and of the GO Zone without needing Lily Chin Morey Rothberg Economic Recovery Act of 2008 to demonstrate that the benefits Questions or comments, please phone (202) 874-5556. (HERA) includes several provisions will flow primarily to low- and This and previous editions are available on our Web site: that will have a special impact in the moderate-income people. www.occ.treas.gov/cdd/resource.htm. Disclaimer Gulf Coast, increasing the resources Articles by non-OCC authors represent their own views and not necessarily the views of the OCC. available at the local level. 2 Community Developments Section 1: A View of the Landscape Community Redevelopment in the Gulf Coast: How Banks Are Supporting Recovery John C. Dugan, Comptroller of the Currency T hree years after Hurricane neighborhoods in the wake of Katrina Katrina devastated New Orleans and Rita. Inevitably, less attention and the Gulf Coast – and while has been paid to the success stories assessments of the damage from – the many instances in which hurricanes Gustav, Ike, and this year’s banks, community development hurricane season are still under way – organizations, entrepreneurs, and three words strike me as the essential government entities have worked keys to long-term regional recovery: together to get recovery projects patience, perseverance, and partnering. funded and to move them from the Inevitably, disasters of such magnitude drawing boards to fruition. But if we create challenges that are more want to create a climate that supports complex and difficult to address than sustainable long-term recovery, it’s anyone could anticipate. Thus the vitally important to hear these stories compelling need for patience – even and learn how such partnerships are though, as time goes on, patience can working. That’s what this issue of wear thin and is never inexhaustible. Community Developments is all about. As for perseverance, it’s obvious Disaster and Response to anyone who has been on the When Katrina struck the Gulf Coast in scene, whether as a long-term Lessons Learned from August 2005, it became the costliest resident or short-term visitor, that natural disaster in U.S. history, Hurricane Katrina the recovery process will continue destroying or damaging millions of I for many years – during which those n 2006, the OCC and other homes and businesses and leaving in committed to recovery will have member agencies of the Federal its wake the greatest displacement of to overcome countless obstacles, Financial Institutions Examination people since dust storms covered the from uncertain housing market Council and the Conference of Great Plains in the 1930s. And Katrina State Bank Supervisors published conditions to rising insurance costs. was followed by Rita. Then Wilma Lessons Learned From Hurricane And that brings me to the compelling struck Florida. Katrina: Preparing Your Institution for need for partnering. A vast natural a Catastrophic Event. The publication Ultimately, these storms displaced disaster demonstrates, beyond describes financial institutions’ more than 750,000 people, disrupted at experiences and lessons learned in dispute, that no one can go it alone. least 125,000 businesses, and damaged the aftermath of Hurricane Katrina No individual or group of citizens, over 1.2 million housing units, with that other institutions may find helpful no government entity, no financial more than 300,000 totally destroyed or in considering their readiness for a institution has all the resources needed catastrophic event. severely damaged (see table on page to restore a great city and revitalize 12 for housing damage estimates). This report is at www.fdic.gov/regulations/ an entire region. Everyone has to resources/lessons/index.html. To a great extent, the storms were find ways to work together – pooling equal-opportunity calamities, afflicting resources, sharing expertise, cutting affluent as well as low- and moderate- red tape, finding creative ways to income communities and destroying I visited with area families and business remove barriers to progress. large as well as small businesses. owners and saw first-hand the appalling There has been ample media coverage Together they created the most urgent damage to their homes, businesses, of the obstacles encountered by and extensive need for community and communities. It was clear that the Gulf Coast residents and institutions development investment in the modern recovery effort would require massive trying to rebuild livelihoods and banking era. resources and many years of work, and that banks would play a key role. Fall 2008 3 Section 1: A View of the Landscape Three years later we can see lawmakers and regulators to channel facilities. Areas experiencing considerable evidence of progress – more funding resources to the region substantial in-migration also faced a while harboring no illusions about the by having it designated it as the Gulf severe need to develop new housing challenges that still lie ahead. Those Opportunity (GO) Zone. Areas in and community facilities. East Baton challenges have been magnified by this the GO Zone include those directly Rouge Parish, for example, suddenly year’s hurricane season, even though affected by storm and flooding damage gained some 19,000 storm-displaced the damage has not been on the same from the hurricanes as well as those residents, and other communities found scale. affected by the movement of residents themselves similarly stressed. In the immediate aftermath of the 2005 from the directly impacted areas to National banks are addressing these storms, banks helped to avert additional surrounding areas. needs. For example: disasters, both personal and regional, High on the critical list was the need • Banks are partnering with local by working with borrowers needing to replace structures that had been nonprofit organizations to support to postpone mortgage and other credit destroyed and to renovate damaged the rehabilitation and reconstruction payments. They also worked with housing, businesses, and community of single-family homes. Banks provide financing; the nonprofits $1 Billion Gulf Coast Rebuilding Challenge provide construction management and financial counseling for Channels Capital into Gulf Region homeowners. T he $1 Billion Gulf Coast With CDARS, a bank that belongs to Rebuilding Challenge (the the Promontory Network can offer a • Banks are supporting small business Challenge) channels capital in depositor access to up to $50 million recovery and efforts to establish the form of deposits from America’s in FDIC coverage. Through CDARS, new businesses. In one partnership large corporations to local community the community bank places the funds with local government and a banks participating in the Certificate in FDIC-insured CDs issued by multiple nonprofit community development of Deposit Account Registry Service, banks, making the deposits eligible financial institution (CDFI), several or CDARS. for FDIC insurance for up to $50 banks are supporting the Baton By simply depositing funds in Federal million. The community bank receives Rouge Small Business Loan Fund, Deposit Insurance Corporation matching deposits from other banks, providing flexible financing for making the full amount available for start-up or operating capital and (FDIC)-insured, interest-bearing Gulf Coast area lending. targeting women and minority certificates of deposit (CD), corporations and other depositors To receive deposits through the entrepreneurs. are helping to rebuild the region. Challenge, a bank must have less • Congress provided supplemental These corporations include Bank of than $500 million in assets, be located New Markets Tax Credit (NMTC) America, Fannie Mae, First American, in areas affected by the storms as allocations for the GO Zone, with a General Motors, the Home Depot, designated by the Gulf Opportunity and Microsoft. Zone Act, and be a member of the major share going to banks. Banks Promontory Network. are using their NMTC investments The Challenge was announced to support businesses, schools, and in November 2006. Thirty-five Alden J. McDonald Jr., President other community facilities. community banks in the storm- and Chief Executive Officer of the damaged region are currently eligible New Orleans-based Liberty Bank • Housing developers – including to receive deposits. Corporate & Trust, a participating community for-profit and nonprofit entities, participants pledge to deposit bank, summed up the purpose of the established national entities, and $1 million to $5 million for five Challenge: “Get us the money to do local start-ups – have used the years through an eligible Gulf area our jobs and we’ll help get people expanded Low-Income Housing community bank, though some back on their feet.” Tax Credit (LIHTC) program in the participants have deposited much For more information, contact GO Zone to rehabilitate, replace, more than $5 million. Phil Battey at (703) 292-3357 or and create affordable multifamily The funds are placed in CDs using firstname.lastname@example.org. You may also housing, creating opportunities for the CDARS service, which makes the contact Brian Christie at (703) 292-3456 bank investments in the process. full amount of the deposit eligible for or email@example.com. FDIC insurance. 4 Community Developments Section 1: A View of the Landscape • Banks are investing in regional CRA consideration for activities in the 2008 Housing and Economic funds supporting the reconstruction supporting recovery has recently Recovery Act (HERA). This change and creation of new, affordable been extended from 2008 to 2011 facilitates national bank direct public housing. Several banks have (see OCC Bulletin 2008-24). welfare investments, such as affordable invested in the Louisiana Loan housing, in areas of the GO Zone that • Additional bank support will Fund, a public/private partnership were not defined as low- and moderate- be needed to help communities managed by the Local Initiatives income in the 2000 Census. (See “A impacted by this year’s hurricanes Support Corporation and Enterprise Look Inside ... ” on page 2 for more Gustav and Ike, and potentially Community Partners. The fund details on other HERA changes). by other storms. CRA credit is provides much-needed acquisition available for bank activities in and predevelopment financing for support of recovery efforts to Looking Forward affordable housing developers in revitalize and stabilize federally Three years after the storms of 2005, Louisiana’s GO Zone. national banks and their partners are designated disaster areas for three years after the designation has been providing much of the financial fuel The OCC’s Support made. To determine which counties and technical support needed to help In 2005, we created a new position have been designated and when, bring back Gulf Coast communities. to serve as our Gulf Coast liaison – a banks should review the Federal As you’ll learn from the articles in this District Community Affairs Officer Emergency Management Agency issue, those three key words – patience, (DCAO) based in the region helping Designated Disaster Areas listing at perseverance, and partnering – are hard to organize working groups of banks, www.fema.gov/news/disasters.fema. at work in a striking variety of ways. local government officials, and leaders But there’s much more to be done. from business and nonprofit sectors. It was clear that the For years to come, innovative recovery effort would and resourceful bank lending and Federal regulators, including the investments can help shore up OCC, reinforced the importance of require massive resources infrastructure, rebuild businesses, banks’ roles in supporting recovery. and many years of work, and provide affordable homes for The Compliance Corner article on and that banks would play people impacted by the Gulf Coast page 29 describes how the definition storms. These are not just good of community development in the a key role. works: it can be good business for rules implementing the Community To help maximize the impact of banks. The challenges and economic Reinvestment Act (CRA) was amended bank investments in affected areas, opportunities presented by the Gulf to include support for recovery efforts the OCC worked with congressional Coast offer a variety of ways for in a federally declared disaster. Other leaders to restore banks’ public bankers to spur development and regulatory changes have increased the welfare investment authority to economic revitalization and grow level of CRA consideration that banks include distressed middle-income their business in ways that are both may receive for supporting recovery. census tracts, and this was included sound and constructive. For example: • The 2006 CRA Q&As explain that Contacts for Key Organizations activities will be considered to Mentioned in This Newsletter revitalize or stabilize a designated Organization Contact Phone Number disaster area if they are recovery- Federal Deposit Insurance Corporation Kevin Williams (225) 201-1717 x6725 related and help attract or retain Federal Reserve System Nancy Montoya (504) 593-3256 businesses or residents. Office of the Comptroller of the Currency Scarlett Duplechain (504) 828-6555 Office of Thrift Supervision Aaron Satterthwaite (972) 277-9569 • OCC Bulletin 2006-6 explains Fannie Mae Tim Carpenter (985) 249-7392 how national banks located outside Freddie Mac Nancy Gresham-Jones (770) 857-8860 designated disaster areas may Enterprise Community Partners Michelle Whetten (504) 821-7242 receive positive CRA consideration Local Initiatives Support Corporation Evelyn Brown (212) 455-9800 for activities supporting recovery. NeighborWorks America Tom Deyo (202) 220-2301 • The time period for which Federal Emergency Management Agency Cindy Taylor (202) 646-4600 banks may receive positive U.S. Department of Housing and Urban Development Brian Sullivan (202) 402-7527 Fall 2008 5 Section 1: A View of the Landscape Louisiana Recovery Authority Looks to Match Investments to the Right Recovery Opportunities Paul Rainwater, Executive Director, Louisiana Recovery Authority T he Louisiana Recovery entrepreneurship that Authority (LRA) is the state’s are ultimately key planning and coordinating to our recovery. body established in the aftermath We have dedicated of hurricanes Katrina and Rita to more than lead Louisiana’s recovery efforts. $11.5 billion to support Our board of directors includes homeowners in their business, civic, and political leaders, rebuilding efforts and including representatives from to increase the supply the many industries that form the of affordable rental backbone of Louisiana’s economy. housing, approximately Our mission is to ensure that $300 million to Louisiana rebuilds safer, stronger, and support small Marvin Nauman/FEMA smarter than before. In pursuing this business recovery and New Orleans youth share their ideas for how they would like to see mission, the LRA initially focused $700 million for our their community rebuilt during the LRA’s “Collecting the Voices” on policy development and planning local governments to effort part of Louisiana Recovery Planning Day in January, 2006. activities and now has power and jump-start long-term oversight over the implementation recovery projects indentified in program that provided gap financing of the programs it helped create. the early days after the storms. for more than 370 affected small Much of these funds has already businesses as it waited for Small We oversee and distribute billions of Business Administration (SBA) loans been put to work in communities, dollars in federal and state investments or insurance proceeds. Shortly after where they are invested alongside in the recovery effort and ensure that receiving federal recovery funds, the more than $3.5 billion in federal these public investments leverage state added another $45 million into funds dedicated through the Federal additional ones from financial this program. This first phase of the Emergency Management Agency institutions, businesses, and individuals. bridge loan program provided short- (FEMA) for important infrastructure Currently, we are focused on repairs, including repairing schools, term (up to 180 days) lump sum loans streamlining our processes, eliminating health care facilities, and governmental between $5,000 and $25,000 with zero any barriers preventing homeowners, structures. We expect to invest or four percent interest rates, depending businesses, and governments from billions more in the coming years. on the situation of the borrower. rebuilding, and helping them access The state invested $35 million into 2008 has been an important year for the resources they need. While our phase two, which offered short-term us. We have focused our efforts on organizational goals are changing (up to 180 days) lump sum loans that removing hurdles from rebuilding, as Louisiana’s recovery progresses, either carried a 6.5 percent interest rate even as we have continued to gather our objectives and strategies through or were interest free. The minimum resources to support the recovery 2009 are formally laid out in our loan amount for this phase was $5,000, effort. As we see it, the LRA works not strategic plan, which can be found at and the maximum was $100,000. only to enhance Louisiana’s recovery http://lra.louisiana.gov/assets/docs/ but also the state’s image as a place Loan proceeds could be used only searchable/StrategicPlan0809.pdf. to live, to work, and to invest—three to maintain or restart a business in Louisiana is now three years into a essential components of a healthy state. a designated area or in a temporary rebuilding process that will likely last location in one of the qualifying for years, because public investments Small Business Investments parishes that sustained damage or in the initial stages lay the foundation Immediately following the storms, the interruption of operations from for the private investment and state put $10 million in state funds hurricanes Katrina or Rita. Banks into a Small Business Bridge Loan were essential partners with the 6 Community Developments Section 1: A View of the Landscape Small Business Bridge Loan program and other community-based lenders as they contributed staff time to originate and service these loans. The Louisiana help develop the program and then The LRA and LED will apply Recovery Authority’s originated and serviced the loans approximately $90 million of the Core Programs on the state’s behalf. (See Capital The LRA has focused its efforts in repayment stream from the Business One article on page 13 and Whitney three areas, with multiple programs Recovery Grant and Loan program National Bank article on page 16.) supporting each. to establish a revolving loan fund Small Business As it became clear in fall 2006 that for small businesses in communities SBA loans and insurance proceeds in South Louisiana. This fund will • Small Business Bridge Loan Program were arriving more slowly than help ensure a continued supply • Business Recovery Grant and Loan Program anticipated, the state set aside more of capital for small businesses than $200 million for a grant and loan in the affected communities. • Small Business Revolving Loan Program in South Louisiana program for small businesses. The first phase of the Business Recovery Grant Housing Investments Housing and Loan program, developed by the The LRA administers the $13.4 billion • Road Home program supporting homeowners LRA and administered by Louisiana in federal disaster recovery funds Economic Development (LED), was • Piggyback program combining delivered, using the Community CDBG and LIHTC programs for launched in January 2007 and enabled Development Block Grant (CDBG) mixed-income developments nearly 3,500 grants of up to $20,000 program. Early in the recovery, the • Small Rental Property Repair Program to small businesses and loans of up to LRA prioritized the bulk of this funding supporting small-scale landlords $250,000 to more than 350 businesses. to be used for replacing lost housing Municipal Infrastructure A second phase of this program was stock and infrastructure repairs, with • Long Term Community launched in April 2008. It aimed to help a smaller allocation carved out for Recovery program an additional 1,500 small businesses. economic development. We channeled • FEMA reimbursement for These funds are not only being used most of this funding into assistance infrastructure repairs by as emergency funding. They are being for homeowner-occupants through local governments invested in innovative, hard-working the Road Home program, which soon businesses, which use the funds to pay became the largest home rebuilding critical operating expenses, diversify program in American history. business offerings, and provide through FEMA. This will ensure The Road Home program offers critical services to communities. that rebuilt properties will be safe grants to homeowners for their losses from future hurricanes and floods. The funds support the rebuilding of up to $150,000, less money received the fishing industries in Plaquemines from their insurance companies. We have also allocated approximately and Cameron Parishes and serve So far, we have disbursed more $1.5 billion in CDBG funding for as operating capital for cultural than $6.7 billion directly to more workforce and affordable rental businesses that retain the spirit and than 115,000 homeowners, so they housing, through our Piggyback soul of our state. Additionally, these can repair their storm-damaged program. This program couples CDBG funds will repair retail and service homes through the Road Home. funds with low-income housing companies, like CHL Linen in New tax credits to create unique, mixed- Participating homeowners must agree Orleans, which uses its funds to buy income, and affordable housing to covenants on their property or enter fabrics that will help it replenish units. We have approved more into contracts ensuring that any new its stock and serve its customers. than 30 such projects, and 13 have or rehabilitated structure will meet closed and are under construction. Another company, Beary Cherry new building code requirements and Tree Daycare, uses its grant award to FEMA elevation requirements, if In addition, we created a Small Rental pay for increased insurance costs so applicable. In addition to rebuilding Property Repair program to aid small it can provide a critical community funds, Louisiana has launched a large “mom and pop” landlords, who service. Businesses apply for these home elevation program, devoting a provided most of the rental housing grants and loans at designated local combination of $1 billion in CDBG for the New Orleans workforce community development financial funds with $750 million in Hazard prior to Katrina. So far, the state has institutions (CDFIs). These CDFIs Mitigation Grant program dollars awarded grants to approximately Fall 2008 7 Section 1: A View of the Landscape outlined at www.louisianaspeaks.org, provide a blueprint for the region’s future to help guide assessments of different investment opportunities. We continue to channel significant state and federal resources into recovery efforts, which should leverage private investments and increase confidence that our communities are open for business. And, together with our partner state and local agencies, we have our fingers on the pulse of the growing Louisiana economy and are eager to share ideas and opportunities with investors seeking to support our state’s growth. Charlie Simokaitis Photography/LISC Along with our neighbors in Ashley Place, a LIHTC development in Denham Springs, Louisiana. Mississippi, Texas, Alabama, and Florida, we recognize that Louisiana 6,800 owners of rental properties Infrastructure Investments needs banks and other investors to to restore about 12,800 units. support our continued recovery from The LRA designated $700 million of the hurricanes of 2005. Without The grants are payable at the its federal disaster recovery funds for the continued commitment by completion of construction and the Long Term Community Recovery banks to invest in our businesses renovation. Of these, approximately program, which provides funds to and people, we will not be able 1,500 owners have received firm support implementation of local long- to continue to move forward. commitments from the state and term recovery plans in the most heavily are proceeding to complete their affected communities in the state. We also recognize that we have a units. Nine projects totaling 13 strong economic foundation in place; The program is generally used to repair units have been completed. together with the public sector funding municipal infrastructure damaged initiatives, entrepreneurial spirit among Skyrocketing insurance costs, coupled by the storms and otherwise to help our business owners, and pride and with the housing credit crunch, are enhance communities as places to dedication among our homeowners slowing the repair and replacement live and places to invest for residents, and other property owners, we process for many owners, but we business owners, and the financial offer countless opportunities know that more than 1,000 units are institutions that support them. These for a strong financial return. currently under construction. We are funds supplement an almost $7 billion working with financial institutions to set aside for infrastructure repairs by At the LRA, we are eager to help use our “conditional award letters” FEMA, of which the state has disbursed match your investment appetite with to back financing for these landlords, more than $3 billion to reimburse the right business opportunity. We many of whom have had difficulty local governments for their repairs. know Louisiana cannot thrive based securing loans for their repairs. on government investments alone. The LRA has directed its focus to Our partner agency, the Louisiana It is through banks believing in the implementation of longer-term Housing Finance Agency (LHFA), is our state and investing in our small strategies and the coordination of also working to produce about 7,500 businesses, our property owners, and resources and partners to carry out units across the state through its tax- our future that we will meet our goal that goal. As such, the LRA should be exempt bond and HOME Investment of rebuilding a better Louisiana. a useful partner for banks seeking to Partnerships programs. Additionally, invest in the future of Louisiana. Our For more information, contact the LRA at GO Zone tax credits have already planning efforts, many of which are firstname.lastname@example.org. produced about 2,200 rehabilitated or newly constructed rental units. 8 Community Developments Section 1: A View of the Landscape Public and Private Programs Support Homeownership Kristopher Rengert, Community Development Expert, OCC D espite significant obstacles, • Raising some existing homes public and private onto a required raised foundation institutions—including above the flood plain. banks—have offered a wide range of • Paying for the increased resources to support homeownership cost of insurance. in the Gulf Coast. Some programs took effect immediately after the • Covering the increased cost 2005 devastation had occurred. Many of building supplies. forbearance programs, for example, • Obtaining mortgage loan automatically suspended mortgage products in the face of payments without penalty for several tightened underwriting. months. Longer-term programs helped Michelle Miller-Freeck/FEMA homeowners weigh their options: How public and private institutions New elevated housing in Bay St. Louis, Mississippi. repair damaged homes, dispose responded during these trying of them, and find new housing. times has certainly been debated its protections for borrowers with over the years. But this much is FHA-insured loans, including Easy answers were hard to come by, true: these institutions developed requiring its servicers to extend given the landscape at the time. More an array of programs to support forbearance provisions for 90 days. than 300,000 housing units suffered homeownership immediately after major damage or were destroyed in Subsequently, FHA provided several the storms, and many programs the 2005 storms. Over 190,000 of extensions of this forbearance program continue to provide much-needed these units were owner-occupied. through June 2006, for borrowers support for those already owning (See charts on page 12 for details on that committed to working with homes as well as new home buyers. damage to housing units.) Although the their servicers to repay outstanding majority of these homes carried hazard Immediate Support for payments. The U.S. Department of and/or flood insurance, the coverage Agriculture and the U.S. Department Mortgage Borrowers was insufficient to compensate of Veterans Affairs instituted similar most owners for their losses. Realizing that many homeowners were forbearance policies (see page 15 of unable to return to severely damaged the spring 2006 issue of Community If the magnitude of loss was great, homes and could be without access to Developments). Many banks also so were the obstacles for moving their home mail or telephone services, provided similar forbearance provisions forward. Gulf Coast homeowners banks and other financial institutions to their borrowers. (See Capital faced these types of challenges: holding or servicing mortgage loans One article on page 13 and Whitney • Repaying mortgages on damaged reacted quickly by implementing National Bank article on page 16.) properties, while operating automatic forbearance programs. often with reduced income These gestures of goodwill typically Longer-Term Support to from job loss or disruption. allowed borrowers to suspend Preserve Homeownership • Dealing with insecurity as mortgage payments for several Programs Supporting planning organizations decide months. Sometimes, extensions were Existing Homeowners which severely damaged granted and payment plans were neighborhoods will have reduced. Fannie Mae and Freddie The federal government provided their infrastructure repaired Mac implemented these policies special allocations totaling and services provided and for loans they guaranteed or owned $16.7 billion to Alabama, Florida, when this will happen. in the hurricane-affected area. Louisiana, Mississippi, and Texas through the U.S. Department of • Negotiating insurance claims. The Federal Housing Administration Housing and Urban Development’s (FHA) has a standard set of • Locating and paying for skilled (HUD) Community Development protections for Presidentially Declared labor to renovate their homes. Block Grant (CDBG) program. Disaster Areas. The FHA extended Fall 2008 9 Section 1: A View of the Landscape properties for redevelopment or not compensated by FEMA, private conversion to open space. insurance, or other sources. This phase served more than 20,000 To qualify, an owner would have had homeowners through April 2008 with to prove that he or she owned and grants amounts averaging $71,000. occupied the property as a primary By the time all grants have been residence before August 29, 2005, made, phase one will have used and the home must have been in approximately $1.28 billion out of the a single- or double-unit structure. The owner must have registered for $3.24 billion that the state Federal Emergency Management allocated for its Homeowner NeighborWorks Agency (FEMA) Individual Grant Assistance Program. A new home being constructed in McComb, Assistance, and the home must be Phase two is still in operation and is Mississippi. categorized by FEMA as having been expected to have made 5,100 grants destroyed, having suffered major after it finishes processing approved The bulk of this funding went to damage, or be verified as meeting the applications. This part of the program Louisiana, which received more FEMA damage classification at the provides compensation grants of up than $10.4 billion, and Mississippi, destroyed or major damage levels. to $100,000 to homeowners whose which received $5.5 billion. The maximum funding under the primary residences were damaged. As described in greater detail below, program is $150,000 per homeowner. In addition, phase two provides grants both states dedicated substantial Actual maximum funding may of up to $30,000 to eligible applicants portions of these resources to help be less and is the gap between to help them elevate their homes above existing homeowners rehabilitate the required resources for repair, the flood zone. Applicants must have their homes. The legislation rebuilding, or resettlement and the a household income at or below 120 providing the special allocations resources available from insurance, percent of the area median income lowered the normal CDBG income- FEMA, or other sources. Individual (AMI) and agree to a covenant on targeting requirement for activities homeowners often may not receive their property that establishes building to benefit low- and moderate-income this maximum funding under the Road code, homeowner insurance, and persons from 70 percent to 50 Home program because the assistance elevation requirements for them and percent of the special allocations. available to the program is capped. any future owner of the land. This In addition to providing this CDBG program is intended to ensure that The Louisiana Recovery Authority funding through the states, the grant recipients protect their properties (LRA) runs this program (see federal government, through the from flooding from future storms. article on page 6), and applications FHA and private mortgage lenders, were due July 31, 2007. The assists families whose homes were FHA’s Rehabilitation Mortgage program has assisted 105,000 damaged or destroyed through Insurance Programs homeowners through April 2008. mortgage programs. As described HUD’s FHA 203(k) program provides below, the FHA administers two For more information, visit the LRA’s refinance loans covering both the mortgage programs that support Web site at www.lra.louisiana.gov. existing mortgage and the cost of homeowners’ efforts to rehabilitate needed rehabilitation. For owners of their properties or, in cases where Mississippi’s Homeowner Grant Assistance Program homes affected by the hurricanes, HUD their housing units were rendered increased the amount of rehabilitation uninhabitable, that help homeowners The Mississippi Homeowner Grant that could be financed under the and renters to purchase new homes Assistance Program includes two program and extended the time for phases to help rebuild homes destroyed completing financed rehabilitation Louisiana’s Road Home by the 2005 storms. Some homeowners Homeowner Assistance Program activity. (See Capital One article will receive grants under phases one on page 13 for more details.) The Road Home program helps and two. homeowners repair or rebuild their Another HUD program, FHA 203(h), Phase one provided up to $150,000 homes, buy or build replacement provides mortgage financing for in compensation grants for damages homes, or sell unwanted families whose homes are destroyed or to a primary residence that were severely damaged in a Presidentially 10 Community Developments Section 1: A View of the Landscape Declared Disaster Area. This financing and construction management to the targeted economically distressed is available to families who had been owners. (See the NeighborWorks census tracts or in targeted parishes homeowners or renters and if their America article on page 22 for an impacted by hurricanes Katrina or homes were destroyed or damaged example of how the Neighborhood Rita. The requirement is also waived to such an extent that reconstruction Housing Services of New Orleans for buyers who had owned a home or replacement is necessary. has partnered with banks.) as of August 28, 2005, that was Insured mortgages may be used to rendered uninhabitable by hurricane Mortgage Revenue Bond Katrina. Since the hurricanes, the finance the purchase or reconstruction Programs for First- LHFA has issued more than of a one-family home that will be the principal residence of the homeowner. Time Home Buyers $200 million in MRBs, helping over The mortgage amount is limited to the The Louisiana Housing Finance 1,700 families buy homes in 2006. standard FHA insurance limit for the Agency (LHFA) operates several The Mississippi Home Corporation area where the home is purchased or mortgage revenue bond (MRB) used $157 million in tax-exempt bond reconstructed. Participants may buy programs and one program that authority to issue MRBs to support homes anywhere in the United States. combines HOME Investment Mississippi home buyers, many of For more information, visit www.hud. Partnership and MRB funds (HOME/ whom were affected by hurricane gov/offices/hsg/sfh/ins/203h-dft.cfm. MRB program) to support first- Katrina. Qualifying home buyers are time homeownership for low- and eligible for below-market interest rates, Banks have partnered with nonprofit moderate-income families. and the program helps pay for a portion organizations to finance the rehabilitation of owner-occupied The first-time home buyer requirement of closing costs. More than 2,700 units. In these partnerships, the banks is waived for the MRB-financed low- to moderate-income families, provide construction financing, and programs (not for the HOME/ including 400 in the coastal counties, nonprofits offer financial counseling MRB program) for those buying in have purchased their first homes Gulf Opportunity Zone Act Extends Reach of Tax Credit Programs T he Gulf Opportunity Zone Act (the Act), passed by Congress in 2005, increases the resources available under three federal tax credit programs to support Gulf Opportunity Zones by State Mississippi Alabama the rebuilding effort in the Gulf Coast region. These programs are the: Louisiana Texas • Low-Income Housing Tax Credit (LIHTC), which allows developers of low-income housing to sell Florida federal tax credits equal to a large percentage of the cost that is incurred when building the low-income units in a rental housing project. • Historic Tax Credit (HTC), which provides a tax credit applied to the rehabilitation Katrina GO Zone only costs of historic buildings. Wilma GO Zone • New Markets Tax Credit (NMTC), which permits tax Rita GO Zone only Katrina and Rita GO Zone credits for investments in Community Development Entities serving low-income communities. Source: U.S. Government Accountability Office (GAO) presentation of Internal Revenue Service information. Map originally published in a July 2008 GAO report to the Committee on Finance, U.S. Senate, and the Committee The Act increases the tax credit available under LIHTC on Ways and Means, U.S. House of Representatives. Report is titled Gulf Opportunity Zone: States Are Allocating Federal Tax Incentives to Finance Low-Income Housing and a Wide Range of Private Facilities. Original map in those 2005 hurricane disaster areas, also known as appears on page 8 of the GAO report, which can be downloaded from www.gao.gov/new.items/d08913.pdf “GO Zones,” designated by the President to require individual and public assistance under the Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act). The Gulf Opportunity Zone Act also provides that properties placed in service during 2006-2008 in any of the hurricane disaster areas be considered to exist in a difficult development area, which increases the amount on which tax credits are calculated. The designation of any community as a difficult development area under the Act will extend through 2010. The Act authorizes the issuance of bonds to finance the construction and rehabilitation of residential and nonresidential property located in those hurricane disaster areas deemed to require assistance under the Stafford Act. Fall 2008 11 Section 1: A View of the Landscape through this program. Mortgages are Insurance Commissioner to reduce the nominal interest rate charged by the originated by participating lenders. increase in wind and hail insurance HOME/MRB program is 4.85 percent. rates, from a requested 400 percent As the borrower makes mortgage Additional Funding for increase to a 90 percent increase, payments, the loan servicer deposits Increased Insurance saving the affected homeowners an two percentage points of the interest Premiums average of more than $2,000 a year. into the borrower’s escrow accounts The “wind pool”—officially known By 2007, the wind pool had doubled for insurance and sends the remaining as the Mississippi Windstorm to include 32,000 policyholders. That 2.85 percent to LHFA. According to Underwriting Association—is year, Mississippi passed the Mississippi LHFA, 35 buyers participated in the a wind and hail insurer of last Growth and Redevelopment Act of first five months of this program. resort for homes and businesses in 2007, which created the Mississippi Looking Forward Mississippi’s coastal areas, including Windstorm Underwriting Association Harrison, Hancock, Jackson, Stone, Reinsurance Assistance Fund. This Many homeowners and prospective George, and Pearl River counties. fund created long-term resources to home buyers are reticent to invest help the state keep wind pool premium in Gulf Coast real estate. Indeed, The wind pool is funded through many still have not addressed storm increases at a manageable level. The customer premiums and assessments damage to their properties. fund is set up to operate through 2010. from every insurance company in Mississippi. In 2006, the 16,000 In 2006, LHFA created an innovative Yet public and private partnerships policyholders insured for wind addition to its HOME/MRB program continue unabated, programs and hail damage, almost all by creating an insurance assistance continue to offer important financial of whom had already incurred program that provides for two assistance, and hope remains. As the devastating personal losses, faced percentage points of the interest planning processes in Gulf Coast the prospects of huge increases in paid by borrowers to be placed in an municipalities are completed and their their annual wind pool premiums. escrow account to be used to prepay plans executed—and as economic the homeowner’s insurance premiums. conditions strengthen regionally and To offset the increased cost of nationally—homeownership in the Gulf This subsidy is covered by the HOME/ reinsurance associated with the Coast should reach a new equilibrium. MRB program in the form of a lowered wind pool, Mississippi set aside interest rate charged to the borrower. For more information, contact $50 million in CDBG funding. Kristopher Rengert at (202) 874-4798 or For instance, as of August 2008, the This action enabled the Mississippi email@example.com. Hurricane Damage to Housing Owner-Occupied Units Damaged Rental Units Damaged Alabama Alabama Florida Florida Louisiana Louisiana Mississippi Mississippi Texas Texas 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Housing Units Housing Units Severe Damage or Destroyed Major Damage Source: FEMA Note: Major damage refers to units that sustained between $5,200 and $30,000 in damages. Severe damage indicates units with over $30,000 in damages. 12 Community Developments Section 2: How Banks Contribute to the Recovery Effort How Banks Contribute to the Recovery Effort Capital One Bank: Meeting the Needs of Section 2 includes two articles Customers, Employees, and the Gulf Coast Region examining how Whitney National Dorothy Broadman, Head of Community Development Banking, Bank and Capital One responded to Capital One Financial Corporation the hurricanes of 2005. The articles I describe how the banks reacted to support their local employees and n 2005, Capital One acquired their customers in the immediate Hibernia Bank, the largest aftermath of the storms, as well financial institution in Louisiana. as how they have adapted their Headquartered in New Orleans, Capital business lines to support the medium One Bank associates soon found and longer-term recovery of the themselves literally and figuratively in region. Section 2 also presents the the eye of Hurricane Katrina when it experiences of Wisznia Associates, hit landfall that year. Critical issues of Capital One a New Orleans architectural and survival and restoration immediately The Park at Lemoyne in D’Iberville, development firm, working with its Mississippi, a LIHTC housing development confronted us, our customers, and by the Park Companies, created with lending partners, in adapting various the communities we serve. construction funding by Capital One. federal funding programs to support mixed-use developments in New The unparalleled dimension of the Orleans. We also present a sidebar on crisis wreaked by Katrina required a estate, mortgage, consumer, community the Gulf Coast Opportunity Challenge comprehensive and proactive response. development banking, and community program organized by Promontory Building on Hibernia’s 140-year history relations. Interfinancial Network to channel of serving New Orleans, Capital One large-scale investments into FDIC- Each of these units played a role in the Bank mobilized resources across the insured deposits in community banks immediate aftermath of the disaster, company, including retail banking, all in the Gulf Coast area. and they continue to assist with the of our lending areas including small region’s recovery today. business, commercial, commercial real An Affordable Development in D’lberville, Mississippi T he Park at Lemoyne is a development of The Park Companies, the third-largest affordable-housing developer in the nation, according to Affordable Housing Finance. The Park at Lemoyne will have 160 new rental units, all designated as affordable. Construction began in October 2007 and should be completed by July 2009. The Park at Lemoyne is located in D’Iberville, Mississippi, just north of Biloxi and about halfway between New Orleans and Mobile. Thirty-two units will be affordable to 50 percent of area median income (AMI) at rents from $360 to $488 per month, and 128 units will be affordable to 60 percent of AMI at rents from $450 to $610 per month. These affordable rents compare favorably with market rents of $800 to $1,016 for older properties that are generally fully occupied. The financing for The Park at Lemoyne consists of a construction loan and low-income housing tax credits (LIHTCs). When the property is built and leased, the construction financing will be replaced by a permanent loan from Charter Mac/Fannie Mae. Centerline Capital syndicated the tax credits. Capital One is providing the construction loan and a standby letter of credit (LC) to secure the permanent loan rate lock. The Park at Lemoyne Capital One studied many competing affordable complexes Sources of Funds in the Biloxi/Gulfport area when it underwrote The Park at Capital Sources - Construction Amounts Lemoyne development plan, and it found no vacant units. Construction Loan (Capital One N.A.) $ 8,922,000 Almost all of the comparable properties have a substantial list Standby LC (Capital One N.A.) 106,000 of prospective tenants—some at as high a level as 20 percent LIHTC Equity 14,930,000 of total units. Based on these findings, Capital One believes that The Park at Lemoyne, like Riverchase, may be one of Total $23,852,000 Source: Capital One the most needed developments it has financed to date. Fall 2008 13 Section 2: How Banks Contribute to the Recovery Effort no reporting to the credit bureaus. In thousands of housing units. The extent addition, the bank provided mortgagors of damage to housing required that with 18-month forbearance, established banks and regulators rethink mortgage a skip-pay in September for credit rehabilitation products. cardholders, and lowered interest rates Along with the Finance Authority of and minimum payments for six months. New Orleans, Capital One employees Access to Branch Service took the lead in advocating for changes Capital One to the Federal Housing Administration Riverchase in Gulfport, Mississippi, a Recognizing that all bank customers in (FHA) 203(k) rehabilitation product LIHTC housing development created with the affected areas, not just Capital One and the FHA Streamline product, construction funding by Capital One. customers, needed access to banking specifically for hurricane-affected services, the bank, in an unprecedented Supporting Associates areas. The resulting modifications collaboration, provided space to extended the permitted rehabilitation Immediately Before competitor banks that were unable to period and expanded the types of and After Katrina open their own offices. We arranged construction allowed for the 203(k) bus service to Capital One branches As the likelihood of a hurricane product and increased the dollar limit and to our competitors’ branches so became apparent, the bank’s first for the Streamline product. local residents could cash Federal priority was assisting our employees. Emergency Management Agency Approved in October 2006, more than The bank expedited payroll to assist (FEMA) checks, and we waived 550 families have benefited from these with evacuation costs. Immediately foreign automated teller machine modifications through May 2008. As after the hurricane, we located and (ATM) fees. Additionally, the bank: homeowners become increasingly assisted 3,100 displaced employees able to address a myriad of challenges by establishing emergency hotlines • Established an emergency hotline presented by the hurricane, including to provide answers to individual to provide the latest update on the access to federal recovery funds, the questions. status of efforts to restore customer availability of qualified contractors, service. Additionally, the bank broadcast radio weakened credit scores, and increased and television advertisements with • Created and distributed disaster insurance and construction costs, we information updates, and it made recovery fact sheets in branches. anticipate a significant increase in the $30 million available for bank • Distributed stored-value cards for number of families who will benefit employees’ housing and emergency Red Cross disaster relief assistance. from the modified products. shelter needs. The bank spent an • Provided spare checks and ATM/ Capital One also led the advocacy additional $2.7 million on other debit cards. to increase first-time home buyer emergency expenses, such as food, subsidies from the city of New Orleans child care, and car rentals. Capital One was the first bank to for low- and moderate-income families Helping employees address basic restore banking in New Orleans East, still struggling to find housing post- life needs and cope with personal one of the city’s largest neighborhoods Katrina. The additional subsidies, trauma enabled the bank to reopen and one of the areas hardest hit. The increased from $25,000 to $50,000, branches quickly and ensure that staff bank was also one of the first to open were needed because of significant members were available to provide a temporary branch in the heavily increases in housing and insurance much-needed banking services. impacted St. Bernard parish. costs following the hurricane. Supporting Borrowers Public Policy Advocacy Small Business Lending and through Forbearance Enhancing Home Economic Development Forbearance was a key principle in Mortgage Lending Small business needed as much meeting customer needs in the wake Following the hurricane, Capital One attention as homeowners did in the of the hurricane. Capital One deferred joined other banks and regulators in recovery period, and Capital One payments on all consumer and most meeting the needs of bank customers pursued a number of small business small business loans and lines of credit. recovering from the disaster. One initiatives. These included participating Consumer loans were deferred until of the priorities was supporting the in two rounds of the Louisiana January 2006, and mortgage loans were housing market in the wake of storms Emergency Bridge Loan Program by suspended for up to three months with that severely damaged hundreds of 14 Community Developments Section 2: How Banks Contribute to the Recovery Effort providing nearly $8 million to 183 to refer declined small business small businesses. The bank accounted applicants to select nonprofit partners. for 30 percent of loans extended in Our partners have technical assistance the first round of the program and programs and provide access to capital 10 percent of the loans in the second through micro-business loan funds. round. The bank also participated in the Louisiana Society of CPAs’ New Markets Tax Disaster Recovery Seminar series, Credit Financing which disseminated information about Providing capital to commercial governmental assistance programs to businesses continues to be an essential Holy Cross School business owners. element of recovery efforts. In June Rendering of new Holy Cross School campus in New Orleans. The bank provided payment deferrals 2006, the bank received an allocation to all small businesses located in of $100 million in new markets Community Development hurricane-affected areas for 90 to 120 tax credits (NMTC). This program provides loans to businesses investing Finance days following the hurricane. Finally, Capital One issued updated disaster- in low-income communities across the The bank continues to work with planning guidelines to help businesses country. Capital One’s allocation was developers throughout the Gulf prepare for future hurricane seasons. targeted to communities located in the Coast region to provide capital This information was disseminated Louisiana GO Zone. The bank used this for developing new housing and through press releases; the guidelines program to provide financing to various rebuilding homes that were lost. are available at www.capitalonebank. commercial borrowers that offer health, We have coupled the knowledge of com/disasterplanning. educational, and other services. our local bankers with the expertise Capital One also supported a number Many of the bank’s NMTC projects of the bank’s national community of strategies to assist small businesses have involved redevelopment of development division to fund needing loans that did not meet vacant or abandoned buildings in investments in low-income housing standard banking credit requirements. inner-city areas. Capital One has tax credits (LIHTC). In 2007, Among these strategies was the implemented an innovative program Capital One invested $66 million in establishment of the Baton Rouge that couples NMTCs with funds from LIHTCs in Louisiana, and we expect Micro and Small Business Fund FEMA and other public agencies. to invest as much as $150 million created in partnership with the mayor in the Gulf Coast region in 2008. Because the public monies are not of Baton Rouge and other financial available until completion of the Examples of recovery lending and institutions. The fund promotes projects, the bank added a bridge loan investing activities include: economic development by providing component to its NMTC product, technical assistance and financing to • $14 million LIHTC investment thereby making these important non-bankable, small businesses that in New Orleans East, an area rebuilding projects feasible. As create jobs. The Baton Rouge fund is that suffered substantial damage, one example, the bank used this an important part of the recovery effort to replace a National Housing combination of products to support because many New Orleans small Partnership Foundation housing the development of the Holy Cross business owners seeking to start anew development. (See article on School originally located in the Lower relocated in Baton Rouge after Katrina. NHP Foundation on page 26.) Ninth Ward of New Orleans. Capital Capital One also invested in the fund One made a $42.1 million investment • $9 million loan to D’Iberville and provided an operating grant. This to help finance the rebuilding of the Partners, LLC, in D’Iberville, fund is just beginning and already has school in the Gentilly neighborhood Mississippi, to construct 160 a substantial pipeline of projects and and created 375 construction affordable rental units. These units a few loan closings. Seedco Financial jobs and 27 permanent jobs. will be affordable to low- and Services, a national community moderate-income families in a development financial institution In addition to the bank’s own tax credit market where virtually no available (CDFI), has been retained as the fund allocation, Capital One has invested an rental units exist today (see sidebar operator. additional $200 million in other NMTC on page 13). A second $7.3 million projects in the Gulf Coast, including In Baton Rouge and New Orleans, loan was provided to a related areas designated as a GO Zone. the bank also implemented a program entity to construct an additional Fall 2008 15 Section 2: How Banks Contribute to the Recovery Effort 216 units of affordable housing in the Riverchase development Whitney Bank: Helping Our in Gulfport, Mississippi. Communities on the Road to Recovery • $5 million participation in the Liza Copping, Assistant Vice President, Whitney Bank Louisiana Loan Fund, LLC, a W product of the Local Initiative hitney National Bank’s 90-day deferral period on all consumer Support Corporation (LISC); and in business footprint extends loans in certain areas of Alabama, the Enterprise Louisiana Loan Fund along the Gulf Coast Louisiana, and Mississippi. Payments LLC, providing predevelopment from Houston, Texas, to Tampa, were automatically suspended and funding for local developers to build Florida, with more than 150 branches no credit reporting was required. affordable housing. (See articles on and 2,500 employees. In 2005, LISC on page 25 and on Enterprise Consumers with first mortgage hurricanes Katrina and Rita inflicted loans serviced by Whitney were Community Partners on page 28.) massive devastation and dislocation offered a deferral of loan payments Through 2009, Capital One will throughout South Louisiana and the for up to three months. In addition, have supported the rehabilitation and coastal areas of Texas, Mississippi, Whitney bankers worked with construction of over 939 housing and Alabama, including dozens individual business clients to craft units throughout the Gulf Coast of Whitney branch locations. deferral arrangements designed region. Most of these units are in These two storms caused widespread for each unique situation. These the form of affordable housing. programs provided a much-needed property damage, required the Philanthropic Support relocation of an unprecedented number lifeline for the many customers in of residents and business operations, the affected markets displaced and Soon after the hurricane, the bank and severely disrupted normal incurring unexpected expenses. provided philanthropic support for economic activity in the affected educational needs and social services. Later that year, Whitney participated in areas. Many Whitney customers and a U.S. Small Business Administration– In May 2006, we announced grants more than 800 Whitney employees backed Gulf Opportunity Loan totaling $3 million to help support suffered staggering losses. Through program that was designed to help Orleans Parish and communities it all, Whitney and its bankers relied expedite financing for recovery and across Louisiana. The grants included upon their fundamental strengths rebuilding efforts in areas affected $125,000 to restore the libraries at two while continuing to serve customers. by hurricanes Katrina and Rita. charter schools in New Orleans that were heavily damaged by Katrina Meeting Customer Needs Whitney originated loans totaling Committed for the Long Term $370,000 in the Houston area, $227,500 Immediately following the storms, in the New Orleans assessment area, By employing a comprehensive and Whitney offered loan assistance and and $100,000 in Mississippi. Whitney proactive approach to rebuilding payment deferral programs, including a the Gulf Coast region, Capital One is having a substantive impact on the lives of residents today, as well as in the future successes of these communities. For us, rebuilding New Orleans and other affected areas is an imperative, not a choice. With our 140-year legacy in New Orleans, we are committed to being a catalyst for recovery and an integral part of the future of this historic market. For further information, contact Dorothy Broadman, Capital One Community Development Banking, at Barry Bahler/FEMA (703) 720-2368. A new elementary school - public library combination in the lower 9th Ward, St. Bernard Parish of New Orleans. 16 Community Developments Section 2: How Banks Contribute to the Recovery Effort America article on page 22). “DASH” stands for “Dependable, Affordable, Sustainable Housing.” WCDC extended other lines of credit in excess of $1 million to enable nonprofit developers to renovate houses in New Orleans’ Ninth Ward and the Central City area. Since the storms, WCDC has also financed several nonprofit developers to build single-family homes in Lake Charles, Lafayette, and Boutte, Louisiana. Charlie Simokaitis Photography/LISC LIHTC development by M&T Development in South Rayne, Louisiana. Federal Home Loan Bank In early October 2005, the Federal also originated 61 loans totaling fund administered by Community Home Loan Bank (FHLB) of Dallas $2.9 million through the Louisiana Development Capital (CDCapital), offered disaster-relief grants designed Department of Economic Development, a certified CDFI. This fund provides to address housing and community which established a bridge loan predevelopment financing to developers investment needs of areas in Louisiana, program for small businesses affected of affordable housing to cover Mississippi, and Texas affected by by the hurricanes. Loan proceeds acquisition, environmental, demolition, hurricanes Katrina and Rita. As an could be used only for maintaining or and other predevelopment costs. FHLB member, Whitney obtained restarting a business in a designated grants totaling over $284,000 through This predevelopment financing area or in a temporary location in the three components of the program: supports these developers’ ability to one of the qualifying parishes that the Economic Development Disaster access more conventional financing sustained damage or interruption of Relief Grant ($20,000), the Disaster for construction and permanent operations as a result of the storms. Relief Partnership Grant ($18,000), financing, thereby increasing the Whitney is also among several other supply of affordable housing in New and the Housing Disaster Relief financial institutions participating in Orleans and southeast Louisiana. Grant ($246,000). For families that the Baton Rouge Small Business Loan Since the hurricanes, CDCapital has were uninsured or underinsured, the Fund, a $2.5 million fund through made six loans totaling $1.85 million, Housing Disaster Relief Grant quite Seedco Financial Services, a certified resulting in 225 completed units literally put a roof over their heads. community development financial and 147 additional planned units. Whitney also participates in the institution (CDFI). As described Whitney Community FHLB of Dallas Affordable Housing in this newsletter’s “This Just Development Corporation Program. Since the storms, the bank In ...” article on page 31, this fund is has sponsored and been awarded designed to serve small businesses Another part of Whitney’s GO Zone five grants in the GO Zones, totaling that previously have been unable to strategy is to use Whitney Community $654,000, to provide homeownership obtain start-up or operational financing Development Corporation (WCDC) opportunities for 59 low- and moderate- through traditional sources. It provides to fund the interim construction of income families and assistance with below-market-rate loans ranging from affordable housing. WCDC extended home repair for another 15 families. $5,000 to $150,000 with flexible $2.9 million in lines of credit to repayment terms to eligible Baton the local NeighborWorks America GO Zone Investments Rouge entrepreneurs who employ nonprofit partner “DASH for the Whitney Bank invested $40 million fewer than 50 employees. Since its Gulf Coast” to construct homes in in Mississippi General Obligation inception in the fourth quarter of Mobile, Alabama, and Pascagoula, Gulf Tax Credit Bonds, otherwise 2007, the fund has closed seven loans Mississippi, in participation with known as GO Zone bonds, and totaling $441,000 and is currently Neighborhood Housing Services of another $25 million invested in processing over 50 loan applications. America—CDFI (see NeighborWorks similar bonds issued by the state of Whitney also participates in the loan Fall 2008 17 Section 2: How Banks Contribute to the Recovery Effort allocatee also decided to fund a 100 percent scholarship for a low- income minority student. This will allow up to five students to attend all eight years of school at no cost. WNMF has many more projects in its pipeline, of which it hopes to finance at least seven—four of which would involve nonprofit borrowers. From these, WNMF estimates that its NMTC allocation will create Whitney National Bank Whitney National Bank volunteers participating in park cleanup with “Katrina Krewe.” approximately 1,933 permanent jobs and 400 affordable for-sale units of housing in low-income Louisiana. These GO Zone bonds economically disenfranchised citizens. areas throughout the GO Zones. were unique in that they did not pay a WNMF has committed the majority of traditional semiannual cash coupon. the 2007 NMTC allocation to funding WNMF seeks projects that would these organizations, including schools, not be viable without the subsidy The federal government paid nursing homes for the indigent, provided by the NMTCs, of which the interest on these bonds via a nonprofit developers, and others. the King Edward Revitalization quarterly tax credit in an amount The effect of funding these nonprofit Project is a prime example. Despite equal to what a fair market rate programs will be to strengthen these a total project cost of more than on the bonds would equal. This community stakeholders and enable $80 million, the property appraised federal-state partnership provided them to continue indefinitely to at only $40 million, creating a gap of funds to local municipal entities to serve the low-income communities $40 million. Conventional financing service their outstanding debt. and populations they benefit. would not cover such a situation Ensuring that the affected jurisdictions when the project costs were so high To date, WNMF has funded two could continue to make timely relative to the appraised value. projects. The first project was the payments of principal and/or interest redevelopment in downtown Jackson, This was part of the reason the on their debt enabled them to focus Mississippi, of a blighted property, property sat vacant for so long. their limited resources on immediate which had been vacant for more than But with many different subsidies problems, such as the repair, 40 years. Named the King Edward cobbled together from various local, renewal, and rebuilding of municipal Revitalization Project, it will include state, and federal sources (including infrastructure and meeting operating a 186-room Hilton Garden Inn, NMTCs), the project achieved expenses. In essence, these tax-credit 3,000 square feet of retail space, 64 financial feasibility and moved ahead. bonds helped municipal agencies to get market-rate apartments, and a parking Ultimately, community development and keep essential services operating. garage. This project was the result of finance added to the community New Markets Tax Credits a request for proposals issued by the jobs, services, and an economically Jackson Redevelopment Authority. productive facility in place of a In 2007, the bank created the Whitney blighted, long-vacant property. New Markets Fund (WNMF) and The second project is the rebuilding successfully applied for a $50 million of the Holy Cross School, which, Community Lenders new markets tax credit (NMTC) to after 125 years in New Orleans’ Ninth and Philanthropy more holistically meet the needs of Ward District, was decimated by Whitney has designated specific its most vulnerable and economically Hurricane Katrina. The school serves mortgage originators as “community distressed communities. Applications grades 5 through 12. WNMF financed lenders” who work with first-time for this funding from developers have the acquisition and construction of a home buyers in the GO Zones. These surpassed the available capital. new school campus in conjunction lenders conduct home-buyer training with several other NMTC allocatees. WNMF investments focus on lending programs and use bond programs, In addition to the acquisition and to nonprofit community facilities as well as the bank’s in-house, construction financing, each NMTC to support the most vulnerable and 18 Community Developments Section 2: How Banks Contribute to the Recovery Effort affordable mortgage product. Whitney bankers throughout the Gulf Coast have devoted many Whitney participates in the United hours volunteering for numerous Way Individual Development Account organizations. Volunteers have program, along with other partners, constructed homes with Habitat for promoting homeownership and Humanity, built playgrounds with encouraging financial independence KaBOOM!, cleaned neighborhoods by enabling participants to start or alongside the Katrina Krewe (see expand child-care facilities or purchase photo on opposite page), bought an automobile. The program was and distributed school supplies (see rolled out in the fall of 2007 with photo), participated in regional more than 60 accounts opened so far. Whitney National Bank recovery boards, volunteered at the The program expects to support 619 Children receiving school supplies from local chamber, and so much more. Whitney National Bank volunteers. participants at full capacity. Displaced residents can take advantage of these Whitney allocates a portion of These contributions take the form of programs to help them rebuild and its revenue each year for cash grants that support critical services; return to hard-hit neighborhoods. contributions to the community. housing initiatives; and innovative programs delivered by not-for-profit Helping Employees While Serving organizations, schools, universities, and Customers in Need community organizations located in our markets. Since the storm, a substantial O nce it became clear that Hurricane with their needs. portion of these grants have been Katrina’s path would affect bank Hundreds of Whitney bankers had branches along the Gulf Coast, allocated to recovery efforts, housing damage to their homes, many with Whitney implemented its comprehensive initiatives, and charter-school support. severe damage or total destruction. disaster recovery plan, and key personnel In response to this unprecedented started evacuation to safe areas, devastation, the bank established Future Investments principally Whitney’s backup facilities in the Whitney Employee Lifeline Loan for Whitney Bank Houston. Program to provide no-interest loans to While it will take a long time for the As evidence mounted that the relocation employees pending receipt of insurance Gulf Coast to fully recover, partnerships could be lengthy, operations were proceeds or other sources of recovery between banks; local, state, and federal expanded at backup sites in Houston, funds. Chicago, Atlanta, Baton Rouge, and organizations; private corporations; To date, the program has originated Mobile. Many Whitney relationship and neighborhood associations can over $13.1 million of such Lifeline loans officers were deployed to safe locations for Whitney bankers who wanted to accelerate the revitalization. Whitney’s throughout the company’s business purchase new homes or who suffered strategy throughout the Gulf Coast is footprint, staying as close to their uninsured residential and/or personal to create sustainable growth for long- customers as possible. property losses. term community recovery. Whitney As a result of this experience, Whitney has In addition, Whitney established the is committed to continuing efforts relocated its principal computer systems Whitney Employees Disaster Assistance to keep investment capital flowing, to a specialized, secure center in Dallas. Fund through the Baton Rouge Area In addition, it has established backup while nurturing partnerships with local Foundation with an initial contribution computer systems in Atlanta and Chicago. leaders and community organizations. of $500,000. The purpose of this fund, Whitney’s main focus was on serving which can accept contributions from Over the next few years, prospects customers during these unprecedented anyone, is to provide assistance in the for business and consumer growth dislocations. As soon as communications form of grants to Whitney employees are significant, relying not only on could be established, Whitney bankers who have suffered significant economic began contacting their clients. Branch loss that will not be reimbursed by restoring what was but also creating damage was quickly assessed, and, insurance or other sources. This fund new opportunities throughout the Gulf as electricity was restored, damages will remain active to serve employees Coast. For Whitney Bank, investing repaired, and offices staffed, they were should disasters strike in any Whitney in the future of the Gulf Coast is not quickly reopened. Whitney bankers, many markets in future years. only a priority—it’s a responsibility. who had lost everything themselves, worked extra hours to assist customers For more information, contact Richard Ainsworth, CRA Officer, at firstname.lastname@example.org or at (504) 586-3473. Fall 2008 19 Section 2: How Banks Contribute to the Recovery Effort Wisznia Associates: Deploying Creative Financial Solutions for Redevelopment Marcel Wisznia, President, Wisznia Associates T o help New Orleans recover Downtown New Orleans clearly a master lease structure. This means from the devastation fits the strategy Wiznia had in mind that the real estate owner borrows caused by Hurricane because this is where the multistory the project debt and undertakes the Katrina, Wisznia Associates, an and historic structures are located. It rehabilitation activities, and the architectural design and real estate also presents a chance to maximize master tenant operates the project and development firm headquartered tax credits as a source of equity. enters into subleases with end users/ in New Orleans, decided to use its occupants of the individual units. A design capabilities and business Creatively Combining “pass-through” provision of the Internal experiences to help shape a smarter Funding Sources Revenue Code (Section 50(d)) permits redevelopment strategy for the city. Nearly the entire Downtown the owner and the master tenant to Development District falls within share the federal HTCs. Maximizing In doing so, the firm developed and two historic districts, and, as a result, the benefit of the HTC requires that applied a creative technique for development projects in this area may investors have a primary interest in combining different federal funding apply for federal HTCs and Louisiana profits associated with the project. programs that previously were rarely combined due to conflicting HTCs. Because of the devastation The structure of the NMTC differs programmatic requirements. Wisznia caused by the hurricane, most of this considerably from that of the federal combined federal historic tax credits same area falls within census tracts HTC. Under the NMTC program, (HTC), federal new markets tax that qualify for federal NMTCs (see a community development entity credits (NMTC), and Federal Housing sidebar on page 11 to read how recent (CDE) receiving the NMTCs lends Administration (FHA) financing— changes to the federal NMTC program to, or invests in, qualified low-income together with state programs—to expanded the number of eligible tracts community businesses (QALICB) support the adaptive reuse of multistory inside the GO Zone). Louisiana has that are “unrelated” to the CDE. The commercial buildings into mixed- implemented its own NMTC program, NMTC system prohibits investors use structures with the residential which is also available in this area. from owning more than half of units safely above the flood zone. Using multiple federal and state tax the profits or capital interest in the credits to raise equity is an essential business receiving the investment. As a cornerstone to implementing this strategy and as a first application element in Wiznia’s development The pass-through lease structure of its creative financing, Wisznia projects, as is FHA financing allows the CDE to make NMTC decided to transform the historic (specifically Section 220 and 221(d) qualified loans or investments directly Maritime Building—a vacant, storm- (4) insured loans, which are based on a to the real estate owner/QALICB. At damaged, 10-story commercial 40-year non-recourse, fixed interest rate the same time, the CDE owns all or structure—into offices for the firm, that is assumable), because construction most of the profits or interest in the plus additional offices available for costs increased after Hurricane Katrina master tenant entity and thus avails lease, ground-floor commercial space, by roughly 40 percent. The prime itself of the HTCs passed through and 105 market-rate apartments. reason for these higher construction by the real estate owner (see April costs was the increased cost of supplies 2008 issue of the Novogradac New Restoring the Maritime Building is the and labor. Additionally, insurance rates Markets Tax Credit Report). In this first of several adaptive reuse, mixed- climbed as much as 500 percent. way, the benefits of the NMTC and use projects on Wiznia’s agenda. Its The technical requirements of the HTC programs are combined. strategy is simple—focus development opportunities in areas that remained FHA loans and the NMTCs and HTCs, Previously, the Department of Housing high and dry in Katrina’s aftermath which conflict in some respects with and Urban Development (HUD) did not and adapt and reuse existing historic each other, compounded the complexity allow properties with master leasing multistory structures by providing of this financing package. Federal structures to use FHA-insured loans new housing units on upper floors and HTC projects typically incorporate because HUD required a mortgagor commercial space on lower floors. to own and operate the property, 20 Community Developments Section 2: How Banks Contribute to the Recovery Effort subject to the HUD Regulatory Agreement. Wiznia successfully petitioned HUD to allow the company to use a master lease ownership structure so that it could combine HTCs, NMTCs, and FHA financing. Maritime Building Project Restoring the Maritime Building supports the revitalization of New Orleans’ downtown area by helping to replace the dwindling supply of rental housing in this area as well as by replenishing the supply of market-rate housing units in the Wisznia Associates New Orleans metropolitan area. Maritime Building in 1956. Maritime Building in 2008, being The number of downtown rental redeveloped by Wisznia Associates. residential dwelling units has declined over the past six to eight years, as many historic buildings have been converted of which will add to the fabric of from rentals to condominiums. This the neighborhood and vibrancy of Maritime Building Project conversion process, combined with the historic downtown district. the destruction of tens of thousands of Uses of Funds Amounts The Maritime Building project uses an single and multifamily units throughout acquisition bridge loan from Wachovia Land $6,800,000 greater New Orleans by Hurricane Bank, which assisted in maintaining Hard Costs 16,639,999 Katrina, has created a tremendous site control as the additional financing Soft Costs 4,796,249 need for affordable rental housing. was arranged. Project financing Other Costs 8,298,212 Since the hurricanes of 2005, most consists of equity from the state and Total $36,534,460 developers have focused on mixed- federal NMTCs and HTCs described or low-income developments but above and permanent/construction Sources of Funds Amounts few 100 percent market-rate projects financing in the form of FHA FHA Mortgage $16,422,100 have begun construction. Maritime 221(d)(4) and 200 loans. Wachovia Federal HTC Equity 6,811,980 will be only the fourth downtown also will be the FHA lender. A local Louisiana HTC Equity 3,500,000 market-rate residential development community bank partner, Omni Bank, Federal NMTC 1,800,000 announced since the storm (two have is providing tax credit bridge financing. Deferred Architect and 1,050,000 been completed and construction (See chart at right for financial details.) Developer Fees on the third has just begun); all Builder’s Profit 1,919,464 This financing effort has taken a four projects total only 400 units. year longer to accomplish than the Owners’ Equity Contribution 5,030,916 The residential density in downtown traditional 6 to 12 months required for Total $36,534,460 New Orleans must increase the preliminary and final applications Source: Wisznia Associates dramatically because it is one of that are typical in the FHA lending only a few areas in the city on higher process. Wachovia’s patience as the ground. Additionally, the existing acquisition bridge lender has been Wiznia has two other projects urban condominiums and rentals essential. The relationship with planned, totaling another $65 need more downtown amenities, Wachovia began with the bridge million in downtown New Orleans such as restaurants, grocery stores, loan to purchase the building and development—part of the continuing and bookstores. The Maritime will ultimately culminate in a HUD recovery of a great American city. Building’s ground floor will include closing, through Wachovia. The project a regional bank, a coffee shop/ is on pace to close in fall 2008 and For more information, contact Marcel Wisznia at bakery, and a pizza restaurant—all construction will be completed in 2009. email@example.com. Fall 2008 21 Section 3: How Nonprofits Contribute to the Recovery Effort How Nonprofits Contribute to the Recovery Effort NeighborWorks® Leverages Section 3 examines how nonprofit Partnerships to Rebuild from organizations throughout the Gulf Coast have supported the recovery the ‘Neighborhoods Up’ effort. Here we include feature Tom Deyo, Senior Advisor for Gulf Rebuilding and Green Strategies, NeighborWorks America articles about NeighborWorks R America and the NHP Foundation. ebuilding the nation’s Gulf NeighborWorks America brings Coast region represents perhaps together financial resources one of the greatest challenges from banks and other sources to to the community development support local partner organizations industry in recent years. Nearly in repairing and replacing 900,000 owner-occupied homes affordable rental housing and and 1.2 million housing units across owner-occupied housing. NHP Louisiana, Mississippi, Alabama, Foundation is engaged in replacing Texas, and Florida sustained damage its affordable rental housing stock NeighborWorks in New Orleans and in expanding or were destroyed by hurricanes Single-family modular homes under its inventory of affordable rental Katrina and Rita in 2005. Low- and construction by NeighborWorks America’s housing in the Gulf Coast region. moderate-income families occupied partner, DASH for the Gulf Coast, in Mobile, a substantial portion of these, a Alabama. We also present sidebar articles summarizing the recovery major segment of the workforce national leader in the development, activities of the Southern Mutual that cannot return without safe and preservation, and management of Help Association, Local Initiatives healthy affordable housing options. affordable housing, NeighborWorks Support Corporation, and NeighborWorks America, a has a 30-year track record of Enterprise Community Partners. congressionally chartered nonprofit strengthening the performance and organization that focuses on capacity of affordable housing and community revitalization, has been community development organizations working since the storms to restore to respond most effectively and affordable housing for homeowners and efficiently to local community needs. renters in the region. NeighborWorks’ NeighborWorks has built its capacity efforts have been grounded on in the Gulf region by opening field the principal of rebuilding “from offices in Jackson, Mississippi, and neighborhoods up,” working with local New Orleans. Don Phoenix directs organizations and financial institutions the organization’s Gulf rebuilding to restore the bedrock of thriving initiative from the Southern District communities—safe neighborhoods that region. He says that the organization is families would be proud to call home. committed to supporting organizations NeighborWorks NeighborWorks America is well with grants and investments to provide Completed modular housing by DASH for the Gulf Coast, in Mobile, Alabama. positioned for implementing a long- 100,000 families with financial term Gulf rebuilding strategy. A counseling and to support the building or rehabilitating of 10,000 affordable NeighborWorks America Organizations in homes in the region by 2010. Alabama, Louisiana, and Mississippi A Partnership Approach Organization Contact Person Phone Number Community Service Programs of West Alabama - Tuscaloosa, AL Cynthia Burton (205) 752-5429 x231 Although the challenges have been Neighborhood Housing Services of Birmingham - Birmingham, AL John Colón (205) 328-4292 great and the needs enormous, Neighborhood Housing Services of New Orleans - New Orleans, LA Lauren Anderson (504) 899-5900 NeighborWorks America has Southern Mutual Help Association - New Iberia, LA Lorna Bourg (337) 367-3277 made significant progress in the Voice of Calvary Ministries - Jackson, MS Erma Driver (601) 857-1256 22 Community Developments Section 3: How Nonprofits Contribute to the Recovery Effort region working with local partners. track record of doing these types of Over the past three years, it has transactions and doing them well.” developed more than 30 strategic NHSA-CDFI’s success in these partnerships with local organizations transactions stems from its expert throughout Alabama, Louisiana, role as a financial intermediary, and Mississippi. NeighborWorks’ managing financial investments grants of more than $10 million in local nonprofit developer since the storm to its partners are partners using capital provided by helping to build the capacity of these its investors, including banks. organizations as well as advance the development of more than $150 A Desire to Have NeighborWorks million in new and rehabilitated People Come Back Building neighborhood playgrounds single and multifamily units. with “KaBOOM!” Whitney Community Development A linchpin of NeighborWorks’ Corporation, a subsidiary of the planned 300-unit, single-family success in the region is its work with Whitney Holding Corporation, is housing development in the Hillsdale Neighborhood Housing Services of providing key investments to capitalize neighborhood in Mobile, Alabama, America-Community Development NHSA-CDFI funds for Gulf Coast and the Chipley neighborhood Financial Institution (NHSA-CDFI). rebuilding. With headquarters in New in Pascagoula, Mississippi. NHSA-CDFI has committed to raising Orleans, and branches throughout The new modular homes are $30 million for an interim development Alabama, Florida, Louisiana, 1,400–1,700 square feet and built to financing fund for land and property Mississippi, and Texas, Whitney is withstand a Category 5 hurricane (see acquisition, predevelopment financing, highly motivated to be involved in photos on opposite page). Grants and site and infrastructure development, and recovery efforts (see Whitney article on subsidies from the city, county, and construction financing for development page 16). The storms damaged many state governments, as well as from of affordable housing in the region. of its branches, but more than that, the the Federal Emergency Management storm destroyed their communities. Agency and NeighborWorks America, To date, NHSA-CDFI has secured $7 million in investments toward “There is a tremendous desire on will ensure that the new homes are the fund from banks, insurance the part of most of those displaced affordable, with prices ranging from companies, and a regional health care by Katrina, and who have been about $90,000 to $150,000. The total system. The organization is soliciting separated from their family and project value will exceed $28 million. additional investments from banks, friends, to return home and rebuild,” insurance companies, foundations, and said Richard Ainsworth, Vice Reducing the Risk in corporations. NHSA-CDFI has used President of Community Affairs Rehabilitation Lending these investments to make more than for Whitney National Bank and Several banks, including Whitney $7 million in interim development President of Whitney Community National Bank, Fidelity Homestead, loans to locally based Gulf Coast Development Corporation. “The lack and Standard Mortgage, are working nonprofit developers, with of housing opportunities has also with another NeighborWorks $3 million more pending. Loans prevented a number of employers organization, Neighborhood include predevelopment financing, from hiring more workers.” Services (NHS) of New Orleans, property acquisition, and construction With Whitney’s support, NHSA-CDFI on rehabilitation and construction financing for affordable housing has made three interim loans totaling management projects for homeowners. development in Alabama, Louisiana, nearly $2 million to NeighborWorks Mississippi, and Texas. “We make it easier for banks to do partner Dependable, Affordable, rehab lending,” said Lauren Anderson, “We are working with really strong Sustainable Housing (DASH) for the CEO of NHS of New Orleans. “It nonprofits that are getting the work Gulf Coast, a nonprofit developer is sometimes difficult for banks done,” said Jack Gilbert, President of affordable housing based in to invest in renovation financing and Chief Executive Officer (CEO) Mobile, Alabama. The loans will because there is greater risk. Jobs of NHSA-CDFI. “We have a proven help fund the development of a can take longer than expected and Fall 2008 23 Section 3: How Nonprofits Contribute to the Recovery Effort there can be cost overruns. But NHS develops a detailed scope of NHS of New Orleans is also working we’ve never had a situation where work. NHS helps the homeowner with Freddie Mac on a special loan we have been unable to deliver a select general contractors (who have product that is being piloted in the project on time and on budget.” been qualified by NHS) to invite to Broadmoor, Gentilly, and Pontchartrain a pre-bid conference at the house. Park neighborhoods in New Orleans. NHS of New Orleans has been Named “Rebuild New Orleans,” this supporting homeowner rehabilitation The homeowner selects the contractor is a conventional loan product that projects, including their bank financing, based upon this competitive bid allows a lender to make one loan for since it began operations in 1976. NHS’ process. NHS develops a contract acquisition/rehabilitation or refinance/ construction management services between the homeowner and the rehabilitation. It is similar to a product include the development of an initial contractor. NHS monitors the work Freddie Mac created to support the feasibility study with the homeowner and issues progress payments to recovery effort following the 1994 to determine the approximate scope the contractor. Since 2006, NHS Northridge earthquake in Los Angeles. and cost of the construction work. has completed the renovation Once NHS and the lender have of 54 homes, 20 of which were Through this product, NHS of New determined that the project is feasible, projects in partnership with banks Orleans will provide counseling, or mortgage companies. home-buyer training, and construction management services. This product Southern Mutual Help Association Aids enables the lenders—Chase, Countrywide Bank, and Standard Neglected Rural Communities Mortgage Corporation—to be O ut of the public eye, an equity equivalent product (EQ2), a more secure in making what might rural Louisiana suffered long-term deeply subordinated loan otherwise be considered very risky tremendous hurricane-related with features that make it function like loans through pre-purchase counseling damage to homes and businesses. equity. It was the first time this financial that ensures borrowers are better Aiding in the state’s recovery is the tool had been employed in Louisiana. financial assistance provided by the prepared and construction management The EQ2 was invested with no interest Southern Mutual Help Association that helps ensure construction goes obligation, increasing SMFS’s ability and its lending arm and wholly to provide affordable mortgage according to plan and budget. This owned subsidiary, Southern Mutual financing to low- and moderate-income pilot, still in its early stage, is an Financial Services (SMFS). families and individuals. Making this example of how banks are using the Through its Rural Recovery Program, commitment won MidSouth Bank the expertise of nonprofit developers the association worked to restore coveted Spotlight Award from the to facilitate lending, particularly more than 800 homes and businesses Federal Home Loan Bank of Dallas. in low-income communities. across the 11 rural parishes most Recently, the Southern Mutual Help affected by the hurricanes. Association returned to its founding Financial Counseling Plus Established in 1969, the association objective—providing affordable ‘BestFIT’ Equals Success collaborates with Louisiana banks rural housing. Teche Ridge, its latest through SMFS, a community venture, will be a mixed-use, mixed- In another innovative partnership, development financial institution (CDFI), income development providing 184 NeighborWorks America worked to encourage investment opportunities housing units in phase one and 370 with Mississippi-based Enterprise and strengthen poor families and housing units in phase two, of which Corporation of the Delta, one of the communities throughout the southwest 138 units will be earmarked for low- nation’s leading CDFIs, to provide portion of the state known as Acadiana. and moderate-income families. direct financial counseling and SMFS concentrates on affordable The $150 million Teche Ridge project ongoing support to families. As part mortgage financing. Banks can help will help to counter developing patterns their communities by investing in in rural Acadiana that segregate housing of this effort, an innovative tool was CDFIs like SMFS; at the same time, by income, geography, and design. The developed that allows counselors they earn consideration with regulators association is seeking partnerships with to identify which of several loan under the Community Reinvestment banks and other financial institutions products a family might qualify for, Act investment and lending tests. to secure funds for the new initiative’s if they have a financial gap and need MidSouth Bank, headquartered in infrastructure development. additional funds. Just Price Solutions, Lafayette, Louisiana, did just this with For more information, visit a nonprofit subsidiary of NHSA, a $75,000 investment in SMFS through www.southernmutualhelp.org. developed the “BestFIT” tool. 24 Community Developments Section 3: How Nonprofits Contribute to the Recovery Effort This Web-based technology allows depth and breadth of our homeownership counselors and work,” said Anderson, lenders to streamline and centralize of NHS of New Orleans. the process of finding the right loan “Working in tandem with product for borrowers. Born out of the qualified nonprofits, banks counseling efforts in Mississippi, this can meet the needs of solution is now being used nationally, communities and reach including by actor Brad Pitts’ “Make the underserved market It Right Project” in New Orleans. while lowering risk.” “Nonprofits play a unique role in For more information, visit www.nw.org/gulfrecovery or facilitating lending, particularly to contact Tom Deyo at low-income communities, and we firstname.lastname@example.org. SAS Photo/LISC are always looking for new ways The Swainer family in Pass Christian, Mississippi celebrates to partner with banks to expand the moving into its new home. Local Initiatives Support Corporation Stays Focused on ‘Local’ T he business of rebuilding states, such as Teche Ridge, a economic conditions and a significant devastated communities has 100-acre mixed-use, mixed-income, market shift have significantly made significant progress in traditional neighborhood development reduced the available investment the last three years, but the work is on the outskirts of New Iberia, dollars. Other adverse market factors far from complete. Local Initiatives Louisiana, and Frenchmen’s Hope, have been dramatic increases in Support Corporation (LISC) was a homeownership project for low- property and flood insurance and among the first agencies in 2005 to income families in New Orleans. tightened credit markets affecting assess needs in the storm’s aftermath, LISC, together with its tax credit commercial developments and support local groups best able to affiliate, National Equity Fund Inc., has single-family mortgage finance. affect recovery, and channel funds supported many low-income housing LISC is eager to expand its existing to the organizations and projects tax credit (LIHTC) developments. partnerships with banks and other that could have the greatest impact. In Mississippi, LISC is supporting investors as it continues to support That work continues today, though a new health clinic in D’Iberville, the recovery effort in the Gulf Coast difficulties in the credit and investment collaborating with the Biloxi Housing and to connect these resources with markets are creating new challenges. Authority to support a major mixed- the local organizations engaged in the Since 2005, LISC has infused $180 use development that revitalizes bricks-and-mortar work of recovery. million in grants, loans, and equity into Main Street, and working with the LISC can facilitate bank investments devastated Gulf Coast communities, state to create a predevelopment through its Gulf Region Rebuilding while providing extensive technical and acquisition loan program Initiative, which delivers funds assistance and pressing the region’s supporting the state’s Long Term and technical assistance to local needs with prominent national funders. Work Force housing strategy. development partners; through High among LISC’s accomplishments A critical source of funds supporting participation in the Louisiana is cooperating with other groups LISC’s efforts have been banks Loan Fund; and through LIHTC to create the $47 million Louisiana like JPMorgan Chase, Capital deals syndicated via the National Loan Fund, a public/private One, and Deutsche Bank, along Equity Fund Inc. (NEF). partnership focused on affordable with some of the country’s leading For more information, contact Evelyn Brown, and mixed-income housing. foundations and public entities. LISC Senior Vice President, at The partnership is working with email@example.com or Darrell Hubbard, NEF Current market conditions are developers helping to rebuild 4,500 Senior Vice President, at complicating ongoing redevelopment homes with low-interest loans. firstname.lastname@example.org. work, however, most notably the new LISC has supported dozens of pressures on the LIHTC market, where projects throughout the affected Fall 2008 25 Section 3: How Nonprofits Contribute to the Recovery Effort NHP Foundation Contributes to Affordable Housing Ghebre Selassie Mehreteab, Co-Chairman and Chief Executive Officer, The NHP Foundation A merica’s affordable housing housing units primarily throughout crisis has been most visible the East and the Gulf Coast states. in the aftermath of hurricanes Integral to the provision of housing Katrina and Rita. The storms is NHPF’s Operation Pathways, drastically affected the housing stock which offers programs to empower in the Gulf Coast region, resulting residents and surrounding communities in the displacement of hundreds by providing skills necessary of thousands of people without to break the cycle of poverty adequate and secure housing. through community building, child NHP Foundation With so many homes ruined by the enrichment, and adult education. The community center under construction at storms, the demand for affordable NHP Foundation’s Walnut Square development. Since 1994, NHPF has acquired and housing has increased exponentially. preserved 46 properties in 14 states. In the New Orleans metropolitan While LIHTC developers might Today, NHPF spans 23 communities area alone, 89,444 affordable have raised 95 cents to one dollar in 11 states with 28 properties, serving homes and apartments suffered per credit in early 2007, by early more than 25,000 residents in nearly major or severe damage from 2008 they were typically able to 6,000 units. Prior to hurricanes Katrina Katrina and Rita. Of that number, raise only 80 to 85 cents per credit. and Rita, this inventory included only 22,806 homes and apartments nearly 900 units of affordable rental Declining equity from tax credits are in the rebuilding pipeline. housing in four developments in New would require developers to either The NHP Foundation (NHPF) became Orleans. Over the next three years, find some way to cut project costs immediately involved in the recovery NHPF plans to acquire, rehabilitate, or to raise additional financing. Both because Hurricane Katrina destroyed or and develop an additional 9,000 of these remedies are difficult in the severely damaged nearly 900 units of housing units, of which one-third current economic climate for affordable the organization’s housing stock in New will be in the Gulf Coast region. housing developments, which are Orleans. As the demand for affordable typically already on very tight budgets. housing in the Gulf Coast region NHPF’s Response to a Changing Environment Material changes to a project, such became apparent, NHPF decided to add as reducing the number of housing to its affordable housing inventory in Post-Katrina units produced to reduce costs, would the region in keeping with its mission, The storms severely damaged all generally require the developer to which is to provide quality, affordable, three properties NHPF owned prior submit an amended application to rental housing and resident services for to Katrina. Walnut Square (209 the credit-allocating agency. Thus, low- and moderate-income families. units) needed reconstruction. Forest the developer would run the risk Who We Are Park (284 units) and Tanglewood I that its project would no longer be and II (384 units) needed significant competitive and could lose its credits. In 1989, the National Housing renovation. Organizing the financing This conundrum has led to some Partnership—a congressionally to cover these large-scale construction projects being shelved, as developers chartered corporation—created the projects was complicated. were unable to cover the gap left foundation. NHPF is a national In a cruel coincidence, the period by the weakened LIHTC market. nonprofit with the rigorous financial discipline of a real estate company and since the hurricanes saw a dramatic NHPF has been able to adapt to this the mission of a charitable organization. decline in the prices offered for low- challenging market environment NHPF leveraged $6 million in income housing tax credits (LIHTC), through its strong reputation as a initial contributions from 24 major a principal source of funding for national affordable housing developer corporations, including six banks, affordable housing development. and manager and its deep network into more than 9,000 affordable rental of financial partners in the public, private, and philanthropic sector. 26 Community Developments Section 3: How Nonprofits Contribute to the Recovery Effort NHPF bridged the financing gap development that will serve as a social to replace its existing New Orleans hub for the surrounding community. affordable housing stock through In addition to constructing 209 mixed- philanthropic grants from The Ford income housing units and an acre of Foundation, The John D. and Catherine commercial space, the $37.8 million T. MacArthur Foundation, Bush- rebuilding project will provide this Clinton Katrina Fund, Louisiana neighborhood with a playground, Disaster Recovery Foundation, surface parking, laundry facilities, Qatar Katrina Fund, and others. And a community center, and more. residents have begun to move back NHP Foundation The total development cost was into the Gulf Coast properties. In the New residences under construction in the obtained from a combination of public future, NHPF plans to create 3,000 Walnut Square redevelopment. and private sources, as well as grants affordable units in the Gulf Coast from philanthropic entities. These area at a total cost of $300 million. financial partners include Louisiana, Making Progress The 2005 Gulf Opportunity Zone Act Bank of America, Capital One, The NHPF’s work in the Gulf Coast defines the entire three GO Zones for Ford Foundation, NeighborWorks region has allowed residents not Katrina, Rita, and Wilma as difficult America, and the Bush-Clinton Katrina only to obtain affordable and safe development areas (DDA) for the Fund. The property is scheduled to housing but to begin to rebuild their purposes of the LIHTC program (see be completed in December 2008. lives and their communities. These sidebar on page 11). This definition efforts required the support of banks NHPF’s post-hurricane rebuilding increases the amount on which tax and other financial partners. NHPF extends beyond properties in New credits are calculated to 130 percent sees appropriately priced equity and Orleans. NHPF also plans to purchase of new construction or rehabilitation below-market rate predevelopment 1,115 affordable units in Baton Rouge expenditures. Outside of DDAs, loans for projects in the Gulf Coast and Lake Charles to prevent those tax credits are calculated on 100 region as major areas that banks units from being converted to market percent of these expenditures. can best contribute to the needs for rate. These rental units will be used This tax-credit provision temporarily affordable multifamily housing. to maintain affordable housing to adds to the value of LIHTC used to help meet the demand created by the It is important for banks and other create or replace affordable rental thousands of relocated families. investors to be patient partners, housing throughout these GO Zones. because arranging the financing The acquisition and rehabilitation will Before 2006, Louisiana and the for affordable housing projects is be financed using 501(c)(3) bonds, affected areas of Mississippi did a complicated and time-intensive which will require these units to not contain DDAs. The expiration process in the best of conditions. remain affordable in the long term. of this provision at the end of 2010 Seventy-five percent of the units must In return, NHPF, through its may reduce the areas in the Gulf be rented to families earning below strong construction and property Coast likely to receive LIHTC 80 percent of the area median income, management history, offers its investments because, at best, only and 20 percent of the units must be investors financial return and some small subset of the GO Zones rented to families earning below 50 enhanced community relations by will likely remain defined as DDAs. percent of the area median income. participating in projects that may Rebuilding After the also receive positive Community In addition to 501(c)(3) bonds, NHPF Storm: Walnut Square Reinvestment Act consideration will employ LIHTC, traditional and the satisfaction of assisting in One of NHPF’s most ambitious post- loans, philanthropic support from the recovery of the Gulf Coast. hurricane projects is the redevelopment corporations and foundations, as well as program-related investments. For more information, contact of the 11-acre Walnut Square in New Ghebre Selassie Mehreteab at Orleans East (see photos above). NHPF plans to increase its portfolio GMehreteab@nhpfoundation.org. NHPF is working to revitalize Walnut significantly over the next few years Square and convert it to a mixed-use and has several projects in progress. Fall 2008 27 Section 3: How Nonprofits Contribute to the Recovery Effort Enterprise Community Partners Provides Immediate and Long-Term Assistance E nterprise Community Partners arrived in the to sell to people with low to moderate incomes. This is Gulf Coast following the hurricanes of 2005 a part of Mississippi’s Long Term Workforce Housing prepared to provide disaster relief to dislocated program, which is one component of the state’s families and technical assistance to local leaders. recovery program funded with a special allocation of federal community development block grant funds. Enterprise has committed to working with local partners to invest $200 million in the Gulf Coast to build 10,000 Banks with single-family foreclosure properties in affordable homes. To date, Enterprise’s efforts have led the Gulf Coast can work with such nonprofits as to $63 million invested through low-income housing tax Enterprise to return those homes to productive credit (LIHTC) equity and more than $14.5 million in loans use by participating in bulk-rate purchasing and grants. These investments include nine developments agreements for the foreclosed homes. for families and seniors in Louisiana and Alabama For more information, visit www.enterprisecommunity.org. that will provide homes for nearly 750 households. To contact Enterprise’s office in the Gulf Coast, call Local Office One of Enterprise’s major commitments in New Orleans is Director Michelle Whetten at (504) 821-7242. For further information to the Lafitte public housing redevelopment in the historic on how banks can contribute to Enterprise’s investment funds on a Tremé neighborhood. With local partner Providence regional or national scale, contact Doug Able, Senior Vice President Community Housing, Enterprise has promised one-to-one of Capital Markets for Enterprise Community Investment, at (410) 772-6005. replacement of all affordable units lost to storm damage. The project is expecting to require $100 million in LIHTC equity and is designed to ensure that the homes will be affordable, safe, and environmentally and economically sustainable. The mixed- income development will include market-rate and subsidized rental housing and for-sale units. Banks and other investors can enhance this and similar efforts by investing in tax credits and construction lending, supporting homeowner assistance programs and financial training, and providing single-family mortgages suitable for residents’ incomes. Enterprise created the Louisiana Loan Fund in conjunction with Louisiana and the Local Initiatives Support Corporation (LISC), drawing from Enterprise’s experiences in managing similar funds in other states. The $47 million fund offers predevelopment and acquisition financing to developers that are rebuilding affordable homes destroyed by the hurricanes. The fund recently approved its first acquisition loan for $3 million to the Renaissance Neighborhood Development Corporation to acquire property for a new mixed-income, high-rise development on the banks of the Mississippi River. Banks and other investors can increase the fund’s impact by providing take-out financing for projects using the fund. This will help recycle fund resources so more developers can participate. Enterprise Mississippi recently awarded Enterprise $20 million to Redevelopment of St. Martin Manor, a historic 140-unit purchase and rehabilitate 300 bank-owned properties senior residence damaged by Hurricane Katrina. 28 Community Developments Compliance Corner: Recent CRA Amendments and Agency Guidance Kristopher M. Rengert, Community Development Expert, OCC T he combination of the expanded stabilize a designated disaster area activities that occur in the broader definition of community if it helps to attract new, or retain statewide or regional areas surrounding development from the 2005 existing, businesses or residents and a bank’s assessment area may also amendments to the Community is related to disaster recovery. receive positive consideration. Reinvestment Act (CRA) regulations Additionally, an activity will be However, owing to the unprecedented and the geographic flexibility for considered to revitalize or stabilize impacts from hurricanes Katrina consideration of CRA-related a designated disaster area if it is and Rita, examiners have been activities in the hurricanes Katrina consistent with a bona fide government given additional flexibility when and Rita-designated disaster areas revitalization or stabilization plan or evaluating the geographic aspect enhances the ability of banks to disaster recovery plan. Accordingly, of CRA-related activities in these receive positive CRA consideration examiners give greater weight to particular designated disaster areas. for support of the Gulf Coast recovery activities that are most responsive OCC Bulletin 2006-6, “Community effort. This article discusses the CRA to community needs, including the Reinvestment Act: Hurricanes Katrina treatment of types of investments needs of low- or moderate-income and Rita,” provides guidance regarding banks might make in support of individuals or neighborhoods. how national banks located outside recovery from major disasters. Activities that may qualify for the designated disaster areas may Community Development consideration as revitalizing receive positive CRA consideration Redefined or stabilizing a designated for activities that revitalize or disaster area include: stabilize the designated disaster areas Effective September 1, 2005, the CRA related to those hurricanes (provided regulations expanded the definition • Financing to help retain businesses in the area that that the banks have otherwise of community development for the adequately met the CRA-related purposes of the CRA. The definition employ local residents, including low- and moderate- needs of their assessment area). added consideration for activities that revitalize or stabilize designated income individuals. In this regard, national banks may disaster areas to the list of community • Financing to attract a major, provide CRA-related activities directly development activities qualified for new employer that will create or through a third party. A national positive CRA consideration. Such long-term job opportunities, bank also may receive positive disaster areas must be “major disaster including for low- and consideration for activities benefiting areas” as designated by the federal moderate-income individuals. people who have been displaced government, typically the Federal by these hurricanes, including • Financing for essential Emergency Management Agency. evacuees relocated to other states. communitywide infrastructure, These qualifying activities will community services, and CRA consideration for qualified be considered by examiners for rebuilding needs. activities benefiting the designated 36 months following the date of disaster areas related to hurricanes • Activities that provide housing, designation, although this period Katrina and Rita should be discussed in financial assistance, and services may be extended when there is a the narrative section of a bank’s public to individuals in designated demonstrable community need to performance evaluation if they are disaster areas and to individuals assist in long-term recovery efforts. outside of the bank’s assessment area. who have been displaced from For the Gulf Coast, this period was those areas, including low- and The OCC’s District Community Affairs recently extended until 2011. moderate-income individuals. Officers (DCAOs) can provide technical In March 10, 2006, the OCC, along assistance to national banks seeking Geographic Flexibility further information about how their with other financial regulators, issued interagency guidance on this additional CRA performance is evaluated support of the recovery effort in the CRA consideration. The 2006 CRA primarily in the context of how its Gulf Coast region might receive positive Q&As explained that an activity CRA-related activities help meet credit CRA consideration. will be considered to revitalize or and community development needs in DCAO information can be found at a bank’s assessment area. CRA-related www.occ.treas.gov/cdd/contacts.htm. Fall 2008 29 This Just in ... the OCC’s Districts Report on New Opportunities for Banks Vonda Eanes (704) 554-7082 Central District Paul Ginger (312) 360-8876 Bonita Irving (617) 854-6547 Norma Polanco-Boyd (216) 447-8866 Denise Kirk-Murray (212) 790-4053 Affordable Housing Low-Income Housing Tax Northeastern District Assistance in Rhode Island Credit Investing for Indiana Community Banks Rhode Island Housing is a statewide public housing agency focused on creating and preserving affordable owner-occupied and rental The Indiana Community Investor Fund (ICIF) is a new low-income housing in Rhode Island. The agency offers below-market interest housing tax credit (LIHTC) pool designed with several features rate loans and home-buyer education classes for first-time home intended to have particular appeal for community banks in Indiana. buyers. To encourage homeownership, the agency offers special financing options for home buyers purchasing homes in certain ICIF has a $250,000 minimum investment requirement, which is targeted communities within the state. low compared with other LIHTC funds, and ICIF will invest only in affordable housing developments in Indiana. ICIF was developed Rhode Island Housing provides a number of loan programs and by the Great Lakes Capital Fund (GLCF), a 15-year-old regional services to existing homeowners to assist them in maintaining and nonprofit LIHTC syndicator that has placed $1.2 billion of equity retaining their homes. The agency also oversees the management in 325 development projects, creating more than 19,000 units of of a number of affordable rental apartments for low-income senior affordable housing and 100,000 square feet of commercial space in citizens and families, and for persons with disabilities. Illinois, Indiana, Michigan, and Wisconsin. Rhode Island Housing offers loan products and services that can Among the 24 investors in the other funds of GLCF are approximately be used by participating lenders to increase access to affordable 20 banks, including some of the largest banks in the country as housing. The agency also issues single-family and multifamily taxable well as regional and community banks, all of which have invested at and tax-exempt bonds and administers the federal Low-Income various levels, and many of which have invested multiple times. Housing Tax Credit, HOME, and Section 8 Voucher programs. For more information, visit www.capfund.net or contact Fred Hash at For more information, contact Rhode Island Housing at (401) 457-1234, or email@example.com. Also, contact Mark McDaniel at firstname.lastname@example.org or visit www.rhodeislandhousing.org. (317) 423-8880. Foreclosure Assistance in New Jersey Wealth+Education+Collaboration+ HANDS Inc., a local New Jersey community development Opportunity=WECO Fund in Ohio corporation, is taking a leadership role in reducing the community impact of foreclosures. HANDS (Housing & Neighborhood The WECO Fund, a community and economic development Development Services) is leading a task force in Essex County that is agency, was established in 1971 in Cleveland, Ohio. Through a working to develop a new special-purpose entity, Community Asset continuum of comprehensive services, participants receive financial Preservation Corporation (CAPC). education, long-term support, and access to capital. WECO runs the CAPC is designed to preserve homes and prevent a decline in Microentreprise Center that, aside from entrepreneurship training, communities from foreclosures. It would address the blight caused administers a number of “microloan” funds. by foreclosed, vacant properties. CAPC will identify communities WECO allows banks to provide community development loans by affected by subprime mortgage foreclosures and negotiate with lending to the fund. Typical terms are at four years and interest- the lenders and servicers to purchase, at a discount, pools of the free loans. In addition, WECO administers a statewide individual vacant and at-risk properties in the targeted area. The initial target development account (IDA) program. IDAs are matched savings is to acquire title to 1,000 to 1,500 properties. CAPC is expected to accounts that enable low- and moderate-income families to save and develop relationships with realtors, lenders, servicers and property build assets. WECO is seeking $250,000 in private funds to match its management companies. public funds. HANDS has also developed a pilot program called, “Time is the For more information, contact Christine Henry, Executive Director, at Enemy.” With this program, the organization will partner with one (216) 458-0250 or email@example.com. lender at a time, which holds a number of foreclosed properties in a targeted area. HANDS will work with that lender to develop solutions to minimize the impact of the foreclosures on the neighborhoods. The community organization will purchase the mortgages from the lender, service the loans, and manage the properties, ensuring that the properties remain affordable. For more information, visit www.handsinc.org. 30 Community Developments Scarlett Duplechain (504) 828-6555 Susan Howard (818) 240-5175 Southern District Karol Klim (678) 731-9723 x252 Dave Miller (720) 475-7670 David Lewis (214) 720-7027 Small Business A Growing Loan Pool in Western District Financing Tool Debuts Washington State in Baton Rouge In 1990, a group of 19 Washington state financial institutions joined Baton Rouge, Louisiana, announced a new tool to assist small together to create a revolving, shared-risk loan pool to provide a businesses with start-up or operating capital. The Small Business renewable source of permanent financing for multifamily affordable Loan Fund provides a nontraditional source of financing and targets housing, as well as to reduce the underwriting and administrative especially women and minority entrepreneurs. The loan fund provides costs for this complex financing. below-market-rate loans ranging from $5,000 up to $150,000, with In 1992, this shared-risk loan pool began operation as the flexible repayment terms. Washington Community Reinvestment Association (WCRA). Today, The fund is intended to aid in stimulating the city’s current economic membership has grown to 46 financial institutions, and the original development efforts and create or preserve jobs by providing flexible loan pool has been expanded into three lending pools, raising financing, helping to make East Baton Rouge Parish a stronger WCRA’s lending capacity to $105 million. market for entrepreneurs. The new fund does not compete with Since 1992, the WCRA has funded and committed to $199 million in existing funding sources but is designed to enhance the financial loans representing nearly 8,000 units of affordable housing and nearly services already available to small businesses. 30,000 square feet of economic development projects throughout the The initial funding pool of $2.5 million was supplied by seven banks state of Washington. and credit unions, Seedco Financial Services, the city of Baton WCRA provides multifamily permanent loans, special needs Rouge, and other corporations. The loan fund is actively seeking financing, assisted living financing, and economic development additional loan capital. The fund is managed by Seedco Financial loans. It also makes available tax-exempt bond financing for Services, a national nonprofit community development financial affordable housing and economic development. Investor banks have institution. also provided construction and bridge financing for WCRA-funded For more information, contact Robin Barnes at (504) 520-5727 or projects. firstname.lastname@example.org. For more information, contact WCRA’s President Susan M. Duren at (800) 788-6508 or visit www.wcra.net. Lone Star CRA Fund in Dallas This private investment partnership is being formed to make REACH CDC in Portland, Oregon $5 million to $15 million equity-oriented investments in middle-market REACH CDC Inc. is one of the most successful affordable housing Texas-based companies. providers in Portland, Oregon. REACH focuses on providing As of June 2008, the Lone Star CRA Fund LP (LS CRA) has total affordable rental housing targeted at low-income residents of capital commitments of $57.5 million out of a goal of $75 million. All Portland, many of whom were previously homeless. of the funds committed to the LS CRA partnership will be invested in The projects range from single-room-occupancy structures and companies located in low-income areas of Texas. multifamily properties to single-family housing. REACH develops and The fund intends to bring jobs to low-income areas by investing in manages its projects throughout the city. Since its inception in 1986, companies already located there or by acquiring businesses and REACH has added more than 1,000 units to the city’s affordable moving them to low-income areas. LS CRA expects to complete housing stock. However, the organization is considering expanding fundraising during the balance of 2008 and plans to invest in seven to its services into the surrounding areas. 10 Texas-based companies. In addition to its housing efforts, REACH runs a home-repair program For more information, contact Arthur W. Hollingsworth, Managing Partner, Lone called the Community Builders Program for homeowners who have Star New Markets LP, at (972) 702-7390. low income or are disabled. To date, more than 3,500 repairs have been provided for more than 1,000 families. REACH also provides other services for its tenants including job training and an individual development account or IDA program for its teen residents called YouthSave, which provides financial literacy and matched savings accounts. REACH’s program support comes from public and private partnerships including loans, investments, such as equity equivalent investments, and grants from local government, financial institutions, and philanthropic organizations. The organization continues to entertain new partnership opportunities especially in construction and permanent financing for new developments. For more information, visit www.reachcdc.org. Fall 2008 31 Comptroller of the Currency Administrator of National Banks US Department of the Treasury What’s Inside Comptroller Dugan on How Banks Are Supporting the Recovery Effort in the Gulf Coast Articles on the Gulf Coast Recovery Landscape • Louisiana Recovery Authority • Support for Homeownership Articles on Banks and Their Private-Sector Partners Investing in Recovery • Whitney National Bank • Capital One • Wisznia Associates Articles on Nonprofit Organizations Rebuilding in the Gulf Coast • NeighborWorks America • NHP Foundation Compliance Corner—CRA and Recovery Efforts in Federally Designated Disaster Areas The OCC’s Districts Report on New Opportunities for Banks Visit the OCC’s Web site—www.occ.treas.gov/cdd/resource.htm—for additional information.