June 2013

Jacqueline King: Welcome to the Federal Reserve's Economic Development podcast series. I am Jacqueline King with the Minneapolis Federal Reserve Bank.

While economic development efforts have largely been focused at the state, county, or city level, an emphasis at a smaller geographic level can also yield important economic development gains, including jobs and increased investment across a city or region. These neighborhood-based strategies, when merged with community development efforts, build upon unique assets and address chronic challenges, and are often led by community development corporations, or CDCs.

Philadelphia's community development corporations are among the most respected in the nation. According to a report commissioned by the Philadelphia Association of Community Development Corporations, over the last 20 years, CDCs have contributed more than $3.3 billion to Philadelphia's economy through housing and commercial development and a range of community services while also increasing household wealth, building the local tax base, revitalizing neighborhoods, and creating thousands of jobs.

Photo of Rick SauerToday we're speaking with Rick Sauer and Lynn Martin Haskin of the Philadelphia Association of Community Development Corporations [PACDC]. This organization provides policy and advocacy and member services, including technical assistance to 50 CDCs throughout Philadelphia. Welcome, Rick and Lynn.

Rick Sauer: Thanks for having us.

Lynn Martin Haskin: Thanks for the opportunity, Jacqueline.

King: As we begin, let me first ask about the history of CDCs in general. Why were these organizations formed, what do they do, and how have they evolved?

Sauer: The first CDCs were created back in the 1960s to address challenges faced by disinvested communities and lower-income households. The industry has since grown to thousands of community-based organizations working in urban, suburban, and rural areas across the U.S.

Photo of Lynn HaskinOverall, they initially may have focused on a particular issue area like creating opportunities for homeownership or doing job training to increase the self-sufficiency of neighborhood residents, but it's evolved over time to taking a more comprehensive approach to community development in looking at the range of issues affecting low- and moderate-income communities.

King: So according to your report, CDCs have contributed to the revitalization of Philadelphia in a number of areas, and the $3.3 billion of economic impact over the last 20 years is a strong metric. What have been some of the important successes of CDCs in Philadelphia? Also, can you talk briefly about a couple of key projects that contributed to this $3.3 billion impact?

Martin Haskin: I can tell you that tremendous differences and progress have been made in various communities because of the work of CDCs, and collectively as an industry we knew that qualitatively, but we really didn't understand it quantitatively. So that is why we engaged in this survey of all of the CDCs in Philadelphia.

Sauer: There are a lot of great examples here in Philadelphia of creative or innovative community development projects that are having significant on-the-ground impact for both the neighborhoods they are based in as well as the residents and other stakeholders that are based there.

A great local example here in Philadelphia is APM, or the Asociacíon Puertorriqueños en Marcha, a transit-oriented development at the Temple University regional rail station. APM is just completing a $48 million development in partnership with a for-profit developer that's right at a transit station on the regional rail line that is both mixed use, so it has 120 rental units, about half of which are market rate and the other half are affordable, and it also has 30,000 square feet of commercial space that's going to house a pharmacy, social service space for youth, as well as a health center and other offices. So there's an excellent example of a CDC partnering with a national developer, leveraging significant resources to have positive impacts for the community, and providing direct connection to local transportation options for the residents that will be living and working there in the facility.

Another innovative example is in West Philadelphia. There's an organization called the Enterprise Center that has been working around different aspects of food access, and they recently completed the Center for Culinary Enterprises, which is a sort of state-of-the-art incubator kitchen facility for culinary entrepreneurs. So they provide start-up business support to entrepreneurs that used to work out of their house so they can create a sustainable business that also increases local access to quality food and goods. And tied into that center they also have a whole health and nutrition resource aspect of that to educate neighborhood residents around quality food and access to food and link to a community garden.

King: Given increased community and economic development challenges, how might CDCs adapt their models to be successful in the future?

Sauer: I think CDCs are continuously adapting their model, not just because of changes in their communities, but also funder requirements change as well. And so, while I was saying before you may have seen initially a CDC might have focused on just housing or one aspect of their work, what they realized over time in order to address the range of challenges that are in their community they need to take a more comprehensive approach. And that doesn't mean they need to do everything themselves directly, there might be some things that they're good at, but then they need to go out and partner with other entities that can bring in and, say, address the education piece or the health piece.

So locally here in Philadelphia, given the decreasing federal resources, in particular, we've worked to put new local resources in place to enable CDCs to innovate and continue to do their productive work. So two quick examples around that: we have a local tax credit program that encourages a business to partner with a CDC, provide 10 years of funding, and in turn they get a credit against their city business taxes. That gives a CDC [the] ability to plan long term, to hire staff, and to have flexible funding to address a range of economic development issues based in their communities.

On the housing side, we realized that federal funding for housing was declining so we worked to create a Philadelphia Housing Trust Fund back in 2005 that has since raised over $83 million to support the development of new homes, repair existing homes, and to prevent foreclosure and homelessness.

King: "Vibrancy and diversity" are key components of your mission. Why are vibrancy and diversity important to Philadelphia's economic development efforts?

Sauer: We have many communities here that were disinvested over the years, and what we want to do is attract new investment, attract new residents, and attract new businesses into those communities to improve the quality of life, but we want to do it in a way that's also going to benefit the long-term residents. You need to be strategic in how you engage local stakeholders to make sure they have a say in what the future vision of that community is going to be. And I think what we are trying to move toward is to actually have a diverse mixed-income community that can be sustained over time. People from different backgrounds and ethnicities working together can learn from each other, can create a richer community environment that will benefit not just those immediate neighborhoods, but the broader city and region.

Martin Haskin: At a membership meeting this morning, in fact, one of our members—APM, a very large and successful CDC, the one near the regional rail station, which is adjacent to Temple University—the executive director said that local people were unaware that that regional rail station just a block or two from homes was for them. They thought it was only for the university students. And clearly, by the creation of the transit-oriented development project that Rick talked about, it would make the neighborhood tremendously more vibrant and diverse by bringing together all those partners. And in terms of partnerships, APM is partnering with Temple University to teach classes on cooking nutritional food and other things that will benefit their residents.

King: Many of the Philadelphia CDCs have economic development as part of their mission. How do CDCs work in tandem with the city and other local economic development organizations?

Sauer: There are an increasing number of CDCs that are engaged in economic development in Philadelphia, and part of that was because of the resources we were able to put in place like that CDC tax credit program and other funding sources from the city. And what we've really tried to do is to bring those different stakeholders together so that we can work toward addressing some of the key challenges, whether it's what's facing the local neighborhood shopping districts, or what we call commercial corridors, or other folks that are engaged in job training/workforce development type of activities.

So on the commercial corridor front, we have a commercial corridor working group here at PACDC that we convene that brings 20 or so organizational staff that are working on the day-to-day basis to improve those neighborhood shopping districts together, to share best practices, and we bring in city representatives from city agencies to talk about some of the challenges that groups face, how we can change city programs to better address those needs and challenges.

King: Thank you, Rick and Lynn, for speaking with us today. This concludes our podcast. We've been speaking to Rick Sauer and Lynn Martin Haskin of the Philadelphia Association of Community Development Corporations.

The International Economic Development Council will host its annual conference in Philadelphia on October 6–9 of this year, 2013. The theme of this year's conference is "Transformation, Innovation, Reinvention: Creating Tomorrow's Community Today." We hope you will join us there.

For more podcasts on this topic and others, please visit the Atlanta Fed's website at frbatlanta.org. If you have comments or questions, please e-mail us at podcast@frbatlanta.org. Thank you for listening.