CEDAM Blog

http://cedam.info/news/blog/

Lansing SAVEs For the Future

header

Earlier this year 365 kindergarten students in the Lansing School District received a seed investment in their future. Each student was automatically enrolled in an education savings account by the City of Lansing.

Lansing SAVE (or Student Accounts Valuing Education) is the first universal, automatic education savings platform in Michigan, a joint initiative of the City of Lansing, the Lansing School District and Michigan State University Federal Credit Union. Moving forward, every entering class of kindergarteners at LSD will be enrolled in education savings accounts.

Lansing-SAVE-launch

Kindergarteners on Lansing SAVE launch day

You can watch (and hear!) the excitement of the kindergarteners on launch day when they heard they were each getting an account to help them continue school beyond high school graduation. Lansing SAVE is designed to harness that excitement and give kids and their families a tangible way to save and plan for the costs of college and other postsecondary opportunities. Students, parents and other family and friends can deposit into students’ accounts any time at MSUFCU branch locations, online, by mail or direct deposit. What’s more, students will receive in-school financial education and parents will be linked to financial empowerment services in the community, such as free financial counseling and free tax assistance.

Opting kids into education savings accounts became a priority when research found students with dedicated education savings are four times more likely to attend and complete a post-secondary degree. This finding is especially important for low income students, as currently less than one in ten will complete a degree by age 26. In contrast, about a third of low income students with college savings complete a degree.

Lansing SAVE follows a national trend of local and state governments automatically investing in student’s post-secondary education through seeded savings accounts, starting in 2010 when the City of San Francisco launched Kindergarten to College. Since then several state and local governments have followed suit, including Nevada, Maine and Cuyahoga County in Ohio.

The opt-out vs. opt-in structure of this new trend of education savings programs is a critical component. Many opt-in programs have take-up rates of 10% or less. While people may have the best intentions, life gets in the way. Creating an automatic enrollment structure removes this barrier and ensures programs touch nearly every child.

CEDAM hopes Lansing SAVE is just the beginning of community-based education savings platforms in Michigan. Already, the Barry Community Foundation in Barry County has stepped up to lead a similar, county-wide education savings platform to launch in Fall 2015. CEDAM provides technical assistance to both Lansing and Barry County for these initiatives and is looking to help new communities create their own education savings platforms.

If you’re interested in bringing this model to your community, please contact Megan Kursik at kursik@cedam.info.

Save the Date – August 5, 2015

CEDAM will host the second annual Michigan Financial Empowerment Summit on August 5, 2015, to focus on education savings platforms and feature Jose Cisneros, Treasurer of the City and County of San Francisco, as our keynote speaker. Registration will be available soon.

 

 

The National Housing Trust Fund

the-gateway-fremont

The Gateway Senior Apartment project in Fremont, Michigan. The building was repurposed from an old abandoned school into affordable housing for Michigan seniors.

Part of the Housing and Economic Recovery Act, the National Housing Trust Fund (NHTF) became law on July 30, 2008. The NHTF is a federal program for collecting and distributing dedicated funds as a block grant to the states, District of Columbia, Puerto Rico and the U.S. territories. The purpose of the NHTF is to increase and preserve the supply of housing, principally rental housing for extremely low income households.

The NHTF was to receive .042% of its start up funds from Fannie Mae and Freddie Mac. However, funding was suspended when the 2008 banking crisis hit and was not lifted until January 1, 2015. On December 11, 2014, FHFA Director Mel Watt sent letters to Fannie Mae and Freddie Mac informing them he was terminating the temporary suspension of the allocation the companies are to make to the NHTF. The companies were directed to begin setting aside the required funds in FY2015 and each year thereafter.

In accordance with the NHTF formula, funds will be distributed to states based on the following:

  • Shortage of rental properties affordable and available to extremely low income (ELI) and very low income (VLI) households
    • ELI is considered to be less than 30% of area median income
    • VLI is considered to be between 30% and 50% of area median income
  • Number of ELI and VLI renter households paying more than 50% of their income for rent and utilities
  • Priority is given to ELI households

The amount of money that each states gets will depend on the individual state’s affordable rental housing market. However, each state and DC will receive a minimum of $3 million. Moreover, states must choose a state agency to administer its program, and it can be administered in the form of loans, grants, interest subsidies, and equity investment. The money must be committed within two years and spent within five.

NHTF is majorly focused on ELI households. In fact, when there is less than $1 billion in funding, 100% of the funds must benefit ELI. When there is more than $1 billion available than a minimum of 75% must benefit ELI and the other 25% can be allocated to VLI households.

NHTF law requires strict guidelines:

  • At least 90% of a state’s NHTF money be used to produce, preserve, rehabilitate, and operate rental housing
  • Up to 10% may be used for homeowner activities
  • 75% of a state’s NHTF used for rental housing benefit ELI households, or households with income below poverty level
  • Limits to 25%, the amount of a state’s NHTF used for rental housing to benefit VLI households
  • No more than 10% may be used for homeowners
  • The money may be used to help first-time homebuyers with down payment and closing cost assistance

Furthermore, households must meet the following requirements in order to be eligible for NHTF funds:

  • Household income at or below VLI
  • Be first-time homebuyer
  • Have homeownership counseling
  • Use as principal residence
  • Home must be occupied by an income-eligible for at least 30 years
  • Grantee has options if home is sold before 30 years

Allocations will be based on:

  • Geographic diversity
  • Extent rents affordability
  • The amount of time the apartment will remain affordable
  • The merit of the project
  • Applicant’s ability to obligate money and carry out projects in a timely way
  • Extent project will use non-federal funds

Generally, NHTF funds are designed to help those who are in ELI households. For more information, visit the website here.

Housing Trust Funds in Michigan

The Michigan Housing and Community Development Fund (MHCDF) was established in 2008 but it currently has no dedicated funding. One of CEDAM’s top priority policy goals is to find and secure dedicated funding for the Michigan Housing and Community Development Fund. Over the next few years, much of our energy will be devoted to developing and maintaining a stable funding source in order to allow the MHCDF to meet the housing and community economic development needs of Michigan neighborhoods and communities.

Read CEDAM’s blog post about the MHCDF: Funding Housing: A Look at the Michigan Housing Trust Fund and watch Episode 15: MHCDF of the Bright Side Television Show to understand more about how it works and some of the projects that are a direct result of the program.

3 Free Ways to Get Ahead This Tax Season

Whether you have disposable income or or are living paycheck-to-paycheck, there are many legitimate resources available to help you lower debt and increase savings. Below we have detailed three FREE ways to improve your financial situation in 2015.

1. Participate in a local Show Me the Money Day event

MoneyDay2015LoctionsHeld in 15 communities across Michigan in January and February, these are free community events that connect Michigan residents with free financial education and community resources to help people keep more of their hard earned money in their pockets. Event activities can include free tax preparation, Affordable Health Care enrollment, homeownership workshops, budgeting, financial coaching, food, prizes and more!

Visit ShowMetheMoneyDay.org for a full list of event locations.

2. Get Your Taxes Done for Free

VITA or TCE (Tax Counseling for the Elderly) sites provide free tax preparation by IRS-trained and certified volunteers. The free internet-based tool myfreetaxes.com allows tax payers to prepare their own taxes and includes the ability to access assistance over the phone. To locate a tax assistance site in Michigan, or connect with volunteer assisted self-preparation tools, visit MichiganFreeTaxHelp.org or dial 2-1-1. When scheduling an appointment, please be sure to take note of all required documentation that you will need to bring with you.

FinancialEmpowermentLoctions3. Make an Appointment at a Financial Empowerment Center

Michigan has four Financial Empowerment Centers that offer one-on-one professional financial counseling free of charge. Services include budgeting, debt reduction, understanding credit and more. Visit the Michigan Communities for Financial Empowerment website to discover more about each location.

We can all use a little help, advice or some tips to get ahead. With so many obstacles or unforeseen expenses, it can feel overwhelming, but it is possible to get out of debt, feel more financially secure and maybe even go on a vacation! These simple tools can help you plan for that future. Make 2015 your year to get ahead.

National Disappearance of CHDOs due to HOME

Recently CEDAM attended a national summit for community economic development associations. One of the roundtables focused on HUD’s HOME program and the 2013 HOME rule change that has resulted in mass disappearance of CHDOs across the country.

Summary of HOME Rule Change State Impacts [PDF]

The conversation covered problems states are facing with the HOME rule change, a “Super CHDO” as a potential solution and the direction national HOME policy advocacy should take. Present at the table are representatives from CED associations across the country.

Illinois – The rule change has resulted in CHDOs disappearing, mostly because of the lack of access to operating support. Many CHDOs are very small and are board driven, so they use consultants to carry some of the work. Without operating support, the CHDOs can’t hire consultants, so they cease to exist.

Michigan – We have no recertification process. Unlike other states [like Illinois and Texas], once you apply you are then a CHDO forever.

Illinois – Another problem is that CHDOs that are larger and don’t depend on the operating support from HOME can’t expand to cover new service area. HUD says that if the organization wants to be certified as a CHDO in that new area, they need to work there for at least a year before they can apply. That is at the top of our list for action: to get that requirement relaxed.

Georgia – We have CHDOs that are serving other counties. Are they going to have this problem with getting certified in new areas?

Illinois – It won’t apply to any CHDO that is already certified for an area. It’s only going to apply to CHDOs that want to expand now or in the future. They will need to have a presence in any place they want to be certified in for at least a year prior to applying for CHDO status there.

We’ve found in our efforts to talk about these issues, if we can tell the story of an individual person or organization, it’s more effective.

National – Then there are two things we should address today: talking to HUD about the changes we would like made, and if nothing is going to change, how to work with what we have now.

Ohio – The impacts are different around the country. In Ohio, the HOME rule change will dismantle our CHDO existence completely. At one point in time we had 64 CHDOs. Now we have 3. We had thousands of dollars in grants and now that will be gone.

Indiana – We haven’t had any input from our members on this. At this point, the HOME rule change hasn’t been an issue for us. Like in Texas, the CHDOs started being certified on a project-to-project basis.

South Carolina – Same here. Many CHDOs are not seeking recertification. All of our members have just resigned to the fact that they either can still get the certification or they can’t.

Texas – The organizations here that continue to be CHDOs either have to raise their own money to do the next project or collaborate. A lot of private developers have been able to do it, but for the most part many have been backing away from community development.

A Texas CDC – I am a CHDO, and I’ll say that there won’t be any new CHDOs. We’ve been doing CHDO work for years. Those who can continue to still do it will, but it’s going to be hard. Our organization has been certified for about 14 years.

Ohio – One thing that will get congressional attention is when the smaller CHDOs can’t use their 15% of funds and it gets sent back.

Illinois – It’s a double edged sword. If they think that the money isn’t spent because there are no projects to do, then they will just take the funding away thinking it’s not useful anymore.

The rule that was a killer for us was the rule saying PHA (Public Housing Authorities) CHDOs could no longer use their PHA staff for CHDO work.

Michigan – We have no idea how many CHDOs there are. In Detroit we haven’t heard anything about how many there are either. Plus we have the issue that the CHDOs that go out of business, we don’t know because we don’t hear anything from our membership about it. Our current issue is that we simply don’t have organizations with CHDO status and the capacity to use the funding.

Washington DC – In DC we haven’t heard anything from our members either. Many of them are focused on local issues. I looked up how many we have. I thought we had 8 and we only have 5. Our conversations involve the loss of operating funding due to the HOME rule change. The lack of CHDO dollars play into the overall lack of operating support.

National – The gut reaction from advocates in our industry right now is to play defense. Our fear is that HOME will be eliminated completely. It’s not likely, but it could, and every year congress nips off more funding from HOME. So it could go away completely at any time. To stick with the advocacy side, money going back to DC is a bad sign. We don’t want that. So do we want to continue playing defense, or do we just want to quit advocating here and take our chances?

Pennsylvania – One of our staff people brought up the Washington Post article. It was in 2010 and it still hurts: the article about bad CHDOs and how HOME is a stained program. That’s still harming our efforts to make changes. It’s an uphill climb within HUD itself because this program is viewed as Congress hates it, it got bad press, etc.

In the end I feel like we can’t let this program go because we’re not getting more funding. If it goes away, it’ll be gone and there will be nothing new to replace it.

Ohio – With the current political leadership, it’s going to be difficult to hang on to.

National – There’s a HOME coalition in DC that has about 17 organizations that participate in it. That’s pretty small. It’s NCSHA (National Council of State Housing Agencies). They play very defensive, go to the same senators every year, put up the benefits, don’t talk about what needs to be changed. There is openness though to changing things and being more bold, because the rule change is killing CHDOs.

Ohio – My understanding is that HUD’s legal department is very opposed to this rule and still is. I’m not sure of what the rationale is, but I’ve heard from three different sources that it’s an issue for them, perhaps because the rule change affects certain communities more than others (rural for example).

National – Okay, now say that the rule stands as it is. What do we do?

Illinois – We are looking at finding other sources for CHDO operating support. The idea is to create a Super CHDO. Each person on this organization’s board would be one of the former CHDOs, and together they would be able to hire one staff person at this Super CHDO to handle CHDO work. Instead of five or six organizations each developing a project and all of those being sent to the HFA, the Super CHDO would send one that is very strong.

All of our CHDO organizations agreed and all sent a memorandum to do this. The issue has been that this new organization can’t hire a staff person until a year of operation according to the HOME rule change. So we are looking to find the private capital to hire someone to staff the Super CHDO.

National – The politics of that are just fascinating. How did you get all of them to work together?

Illinois – In Rockford, organizations were able to put their individual concerns aside for the greater good. That’s why it’s so important to find the capital to make this happen. The organizations need to be rewarded for what they did.

Michigan – What are the demographics of Rockford? Dying industrial city, sure, but this makes me think of Flint, where the CHDOs have all closed up but there’s a possibility for them to rally together to keep going in this way.

Illinois – They all share an interest in bringing these funds to their community to improve it.

So if you know of anyone interested in funding this really collaborative idea, let us know!

Washington DC – How many units? That’s the key question. How many units would you develop?

Illinois – We can’t tell you that today. At the current point there won’t be any units built, if we can’t get this off the ground. With the HOME rule changes and the impact on CHDOs, if people won’t take a chance, there will be no units built.

Ohio – And five units in a rural area is a big deal! I don’t know if HUD looks at it that way, but it really matters in a rural area.

Illinois – We’re dealing with that also, especially since the same effort to 5 in a rural area creates 57 somewhere else.

National – So we need to be more creative than we used to be, and play less defense. We will look into CHDOs being able to expand to new areas. We will be cognizant of how much money is going back to DC. If money is being sent back let us know.

 

Great Lakes Capital Fund (GLCF)This article is made possible by the Great Lakes Capital Fund. Thank you for sponsoring our attendance at the national NACEDA Summit in San Antonio, Texas so we can bring these best practices back to Michigan and our members.

Auto-Title Lending: What it Means for You

Marketed as a quick and easy solution when you are in a money pinch, auto-title loans are a type of predatory lending that uses the borrower’s car as collateral. Lenders assess the value of the car when determining the loan, however, the customer’s ability to repay the loan is not taken into account. The repayment period can vary between 10 days, a month, or longer and interest can run as high as a 300% APR.  Furthermore, lenders make about $2 billion worth of loans while customers pay more than $4 billion in fees making the auto-title loan market about the same size as the market of payday loans. The Center for Responsible Lending reports that the average borrower renews their loan 8 times and on a $500 loan, this average customer will pay back $650 in interest over eight months; the principle borrowed will be in addition.  Additionally, they estimate that 1 in 6 borrowers incur repossession fees on top of loan fees.  If a customer’s car is repossessed then how could they get to work or get groceries or take their kids to school? These quick and easy loans are only quick and easy in perpetuating a debt trap for customers worsening their financial situation.

Michigan is one of 29 states that do not allow auto-title lending. However, their legality was jeopardized when Senate Majority Leader Randy Richardville and Representative John Walsh proposed bills that would add a loophole to the state’s 1917 Pawnbrokers Act. Under the proposed bill, Detroit News describes that pawnbrokers could add a 20 percent monthly usage fee for vehicles, meaning that a 12-month, $1000 auto title loan would cost the borrower $2760 in interest, on top of the original $1000 borrowed. The APR would eventually total out to be 276% and endanger Michigan’s must vulnerable citizens. In a state were there is very limited access to public transportation in the urban, rural, and suburban areas, repossession of a car would be devastating.

CEDAM circulated a letter signed by more than 50 organizations opposing the bill. Even the state pawnshop industry was not on board with the bill. Although the bill has been killed, it is expected it will be brought up again next term – maybe in another form.

To help identify and prevent predatory auto-title loans, the Center for Responsible Lending provides the following information:

How to identify an auto-title loan

  • High annual interest rates
  • Quick due date
  • Car used as collateral
  • Debt trap

Protect yourself from these high interest rate loans:

  • Pay attention to the APR
  • Look at all options and alternatives
  • Keep a savings account
  • Stay clear from all predatory loans
  • Avoid forced arbitration clauses
  • Advocate for a 36% cap on interest rates

Solutions to auto-title lending:

  • Ask family and friends for a loan
  • Look into other alternatives such as banks and credit unions
  • Ask for an advancement payment from your employer

**Information taken from Center for Responsible Lending and Detroit News

The Bright Side: Blight Elimination

Witness drastic change in Michigan places that were abandoned and deteriorating. Get ideas on how to transform vacant spaces. Featured revitalization projects range from the 60 acre “Chevy in the Hole” brownfield in Flint to a tax foreclosed, blighted commercial property in Kalamazoo.

1-introBlight Intro

[watch now]

Businesses closed. People walked away from their homes. Blight is everywhere, so what do we do?

2-chevyChevy Commons, Flint

[watch now]

Sixty acres of pavement is all that remains where the lumber, carriage and auto industry flourished, and where the 1936-37 Flint sit down strike against General Motors changed the course of history. With the factories gone, people in Flint decided it’s time to do something new here and to recognize that history. With a former Chevrolet employee, the Genesee County Land Bank, Flint Mayor Dayne Walling and Flint River Corridor Alliance.


3-riverviewRiverview Launch, Kalamazoo

[watch now]

Tour a refreshing project in Kalamazoo that has turned a large foreclosed property into community space, a “natural playground” for kids, demonstration gardens and a native bee condo. Riverview Launch.


4-dequindreDequindre Cut, Detroit

[watch now]

An abandoned rail corridor that leads to the Detroit Riverwalk is now an awesome biking/walking path that features murals. The Dequindre Cut path is being extended to reach Eastern Market.


5-vacantVACANT Lansing, Lansing

[watch now]

A mystery event takes place each year in Lansing in a vacant space. Can you decipher the clues with your ticket to figure out where the fun will be?


6-mfpcMichigan Foreclosure Prevention Corps

[watch now]

One way to prevent blight is by preventing foreclosure. The MFPC is an AmeriCorps program where members spend a year in service at organizations around the state to help people stay in their homes.


7-mvpcMichigan Vacant Property Campaign

[watch now]

The MVPC is a campaign to help Michigan communities address vacant, abandoned and blighted properties.

8-blightEnd of Blight

[watch now]

Vacant properties present unique opportunities to bring people together and improve the places we live in.

10 Place-Based Holiday Activities in Michigan

Whether you celebrate Christmas, Hanukkah, Kwanza or some combination of many holidays, it is a time of year where the hustle and bustle is in high gear and the holiday spirit is shining. People exchange gifts and laughs, holiday parties are constant and many people take time off to spend with family and friends.

capitol-tree

Photo copyright David Marvin.

Placemaking initiatives have enhanced the unique culture, geography and personality of places across Michigan. This holiday season, we encourage you to discover fun, local events that support the uniqueness of which Michigan is made. Discovering new places or what your own hometown has to offer helps to build a sense of place while supporting a local economy. Who doesn’t want to live in a fun place?

Here are 10 wonderful ways to enjoy the holidays and explore your community:

1. See the Official State of Michigan Christmas Tree at the Capitol Building in Lansing.

2. Ice skate in Downtown Detroit at Campus Martius.

3. Enjoy the Bavarian experience in Frankenmuth, including lights and holiday shops.

4. The Frederick Meijer Gardens in Grand Rapids features a world of winter magic celebrating Christmas traditions around the world.

sleigh

Farm by Lantern Light, Grayling. (Photo from City of Grayling www.grayling-mi.com)

5. Farm by Lantern Light in Grayling is a full evening activity including a sleigh ride, a visit to the historic farm and a full length play all rolled into one.

6. Walk around and experience the winter Zoo Lights in zoos across Michigan, including Binder Park Zoo in Battle Creek, Potter Park Zoo in Lansing and the Detroit Zoo.

7. Take in the beautiful views of the Soo from 210 feet in the air at the top of the Tower of History in Sault Ste Marie.

8. Take in a lantern lit ski or snowshoe trail. With no shortage of parks across the state, the beautiful Porquipine Mountains offers one unique opportunity to take in nature.

sault-ste-marie

Light up the Soo (Photo from saultstemarie.com)

9. Embrace arts and culture with a play, musical, concert or story-telling. The Nutcracker Ballet is at the Ramsdell Theatre in Manistee. The Detroit Theatre has a full list of holiday show including the Trans Siberian Orchestra, The Great Russian Nutcracker and a Christmas Carol. Stories will be read in Leland. Holiday concerts will be performed by the

Flint Symphony Orchestra, and a variety of up north locations  to name a couple.

10. Watch holiday classic movies at the Historic Michigan Theatre in Ann Arbor.

These are just a few ideas.  What else are you planning to do in your community this holiday season?

Happy Holidays to you and yours, and we for a safe and healthy 2015!

 

Market Alternative to Payday Lending: It’s Working in Texas

payday-loan

Payday loans: you too can give your money to the man in the window. For a two-week $100 loan you pay $15, an APR of 400%. Photo by Taber Andrew Bain

“Once payday lenders in Texas get a hook on you, the system is designed so that you can never get out of it. Other states have rate caps. We have nothing. It is very much the wild west. For a 14 day $500 loan, the fees in Texas are $115, two times what it is in other states.”

The fee for a $500 payday loan in Michigan is $65. That has done little to curb this type of predatory lending in our state.

Matt Hull, Executive Director of the Texas Association of CDCs (TACDC), went on to say that in 2013, Texas payday lenders extracted $1.49 billion from Texas residents – the ones who make so little they have to rely on a 14 day loan at 400-700% APR to cover emergency costs. In other words, payday lending is massively successful at profiting off the poor.

When the TACDC brought this up with the legislature, payday lenders pushed back by stating they were actually doing a wonderful service for low-to-moderate income people by providing quick cash. Policymakers agreed.

“The legislature is not going to do anything about it,” Matt Hull said.

An Alternative to Predatory Lending

Very well. If low-to-moderate residents need “quick cash,” why not beat predatory lenders at their own game? TACDC and Citi Community Development researched alternatives to payday lending that could be brought to scale. They found one program at a local CDC in Brownsville, Texas, adapted it, used startup funds from Citi and piloted the Community Loan Center Small Dollar Loan Program.

“It’s a market-based approach. There is no storefront. It’s an employer-based loan to workers. They are fairly priced small-dollar loans with reasonable terms. It will offer direct competition to high cost lenders. It’s nonprofit driven; that’s the key component.”

These small loans work as follows: Texas Community Capital, a nonprofit loan fund TACDC started 10 years ago, operates the program and distributes the copyrighted loan software. TACDC then recruits local nonprofits to participate in the program. Each nonprofit is in charge of loan origination, processing and servicing. The nonprofits recruit local companies to participate in the program. Participating employers offer small loans to employees via payroll deduction, which is all done through computer software. Employees can apply online.

Loan terms:

  • Max $1,000 loan (or up to ½ of borrower’s monthly gross pay)
  • One year loan term, with no prepayment penalty
  • 18% interest
  • $20 origination fee
  • Repayments are $23/week or $94/month
  • May only take out one loan at a time
  • Can’t refinance until six months later

No credit history is required, approvals are quick, there is no collateral and the loan money is placed directly into the employee’s bank account usually within 24 hours. Free financial counseling is available to anyone taking a loan through the program. Counseling is not required, since required education causes people to avoid the program and continue going to predatory lenders. Plus, the Community Loan Center needs to make a large number of loans in order to break even financially.

“This is a volume business. Since margins are thin, volume has to be high. In order to make this work, you need to do about 150 loans a month. You need companies that have 5,000-6,000 employees. Here that’s not hard to do because a single school district can have 10,000 employees.”

The Pilot Yields Positive Results

The three year pilot program in Brownsville, Texas originated 3,600+ loans through 50 employers with 10,000 total employees. During the first year of the pilot they made almost 800 loans without trying; that’s how great the need was. At the end of the second year the program was breaking even. The current default rate is 5%, and the only time default happens is when the employee separates from the employer – they lose their job, for instance.

money-piggy-bank

The Loan Center saves borrowers $782 per $1,000 loan. Photo by Tax Credits

The Brownsville pilot saved borrowers about $782 per $1,000 loan for a total of $2,000,000 in savings.

Most people in the program take out the $1,000 maximum. In fact, people are taking out loans through the Community Loan Center to pay off payday loans. Though, “We don’t know yet if people are both using this program and payday lenders,” Matt Hull said.

Employers in the program haven’t been wary or resistant to joining, especially since they are already used to getting calls from payday lenders to verify employment. Many employers like the Community Loan Center because it’s online. Employers sign a MOU that they can leave the Community Loan Center program at any time.

TACDC and Citi Community Development are rolling the Community Loan Center out to several new Texas communities and aspiring to grow to other states soon.

“We’re very interested in making a fund to bring this to scale,” Citi’s Community Officer Mark Nerio said. “Even if we can’t fund a particular state for CRA credit, we could attribute it to NACEDA [a national organization], and NACEDA could distribute it to those other states as an intermediary.”

Bringing this model to Michigan would involve:

  • Preliminary research on compliance requirements for Michigan. TACDC had to be licensed as a lender, which took about six months.
  • $500,000 in loan capital for year one.
  • A full time staff person completely dedicated to the project.
  • Copies of the licensed loan software.
  • Nonprofits that can be local lenders and recruit employers. (CDFIs, for example.)
  • For market viability, a statewide reach of about 10,000 employees in order to generate 150 loans a month.

Great Lakes Capital Fund (GLCF)Do you want to see this in Michigan?

This article is made possible by the Great Lakes Capital Fund. Thank you for sponsoring our attendance at the national NACEDA Summit in San Antonio, Texas so we can bring these best practices back to Michigan and our members.

RESOURCES
Community Loan Center website.
See what the loan application looks like.
Download the program brochure.

loan-vs-payday

Payday loans trap people in a cycle of debt and poverty. This chart compares the pilot loan program with payday loans in Texas.

Development Without Displacement

trash-dumped-by-lake_w725_h488With the rise and fall of different economies nationwide and changes in where people choose to live, we’ve witnessed disinvestment of commercial districts, neighborhoods and even whole parts of cities. Resulting vacant property becomes the dumping ground for garbage and toxic waste, and are not only unappealing to potential residents or businesses, but are also, unsafe. But eventual re-investment in these areas can result in displacement of the people who stayed during the tough times if rents rise and redevelopment of residential spaces forces them out.

To combat this risk of displacement, local initiatives across the nation are considering values that should guide decision-making and ways to integrate community-minded strategies with development policy. Government planning, corporate investment and community-based visions paired together can collectively change the resulting patterns to advance development. Communities can revitalize and develop while benefiting all residents and stakeholders.

Community Land Trusts As an Option

Community Land Trusts (CLTs) are nonprofit organizations that use various sources of public and philanthropic capital to acquire homes in a geographic focus area. Residents own their home outright, but lease their land from the CLT. Their annual fee supports operations and the CLT retains permanent ownership of the land. Homeowners are free to update and change their home or sell it to whomever they choose. However, the home prices are set by the CLT and remain affordable. New residents agree to the same requirements around resale and home maintenance. CLTs are governed by a mixture of community residents, stakeholders and experts, and are designed to stabilize neighborhoods while keeping community control and public interest as the major strategy for future growth.

The Dudley Street Neighborhood Example

mural

Photo from the DSNI website: http://www.dsni.org/

In the 1980s, the Dudley Neighborhood in Boston was vacant, abandoned and a garbage dump for the rest of the city. In an effort to take control of their own future, they created a bottom-up revitalization plan and led the efforts to reclaim vacant property. Dudley Neighbors, Incorporated (DNI) was created to serve as player in the housing development portion of their comprehensive master plan drafted by the residents. In 1988, the Boston Redevelopment Authority (BRA) granted DNI’s status as a 121A Corporation, allowing them the power of eminent domain to acquire privately-owned vacant land in the area designated as the Dudley Triangle. Through this, the DNI structured a CLT and has changed the entire face of the community with a total of 225 new homes and two community spaces or micro-centers built on DNI land.

Detroit Development

Last month, Detroit stakeholders collaborated at the Financial Institutions Community Development Conference (FICON) to collaborate and share proactive initiatives focusing on two things: community involvement and the avoidance of displacement. While Detroit has lost 60% of the population over the past 60 years, the transformation that is in action right now is a partnership and collaboration of land banks, city and county government agencies, community development and block groups, Detroit Future City, individuals and others. There is a resurgence of growth and momentum sparking engagement and a public forum for activity. The City of Detroit progressively works to turn the lights back on, maintain parks and find alternative solutions for vacant property that involves investment and adoption by existing neighborhood residents. Community-based groups such as the North End Woodward Community Coalition (NEWCC) take matters into their own hands by obtaining funding and installing solar lighting throughout the neighborhood to increase visibility and safety.

The Possibility of a CLT in Detroit

Reimagining vacancy is an opportunity to analyze possibilities from a new perspective. Partners want to grow by adding jobs and higher density development. Neighborhood stabilization and improved, yet affordable, quality of life for all current and future residents is critical. Transforming open areas into safe spaces for public gatherings, gardens or some other yet to be determined use is desired and on the table.

Would a CLT benefit Detroit? As the path toward a brighter future is defined, it is important to note the existing work that is taking place. The City of Detroit is actively trying to use the limited available resources as proactively as possible to merely get back to the starting line. Through this, stakeholders are not standing by as spectators. Instead, momentum grows each day with engaging activities working to empower residents and collaboratively define what Detroit will become. Maybe it will ultimately take form as a CLT in some neighborhoods. The concept has positive results in Boston and other areas. Detroit might just benefit from it too.

For additional information, check out The City-CLT Partnership Report: Municipal Support for Community Land Trusts.

What do you think?

Vote With Every Dollar

By Guest blogger Jon Barth, Southwest Detroit Business Association

Paying with Debit CardThe days are getting shorter, the leaves are falling and most Americans are gearing up for their annual holiday shopping spree. Last year, Americans spent more than $600 billion on gifts. A well-known superhero was once told “with great power comes great responsibility;” I’d say that $600 billion is a lot of power and responsibility. That’s enough money to buy 600 billion fast food cheeseburgers. Or 30 billion pairs of clearance rack jeans. Or you could even pay off the City of Detroit’s pre-bankruptcy debt 33 times.

Every dollar is a vote. When I buy a $1 cookie from the bakery down the street, I’m voting for that bakery to continue making cookies. I’m also voting for the company that supplied the bakery with their flour, the farmer that grew the wheat, the governments that the bakery pays their taxes to and so on.

Choosing to purchase the cookie from the bakery over one from a grocery store even if the price is a little higher and the quality is the same means that I value my community and want those dollars to benefit those within it. When a package of cookies is purchased from a grocery store owned by a company based out of California, a portion of the money spent goes to California, some goes to the bakery that made the cookies and some goes to all the supply-chain folks in between. Also, that’s a dollar I won’t be spending in my community, because I only have so many dollars, and I only need so many cookies.

Last year the average American spent a little over $700 on holiday gifts. While it pales in comparison to $600 billion, $700 is nothing to sneeze at. With $700 you could cast a major vote for American manufacturing, innovation in Silicon Valley or small-scale goat farming in Vermont. Every dollar you spend on a particular business makes it a little more likely that they will succeed in the marketplace and continue to do what they are currently doing. For example, if everyone in America buys goat cheese for someone on their list this year, next year we will still have farmers making the cheese, and the supply may even increase. But if nobody gives the gift of goat cheese, goat farmers may choose to focus on other pursuits.

Holiday shopping is small potatoes when compared to the impact of our day-to-day spending choices.  A couple of weeks ago I was ordering office supplies online for my office. I had my choice of products and a variety of opportunities use my organization’s dollars to vote. I work in Southwest Detroit, which happens to be home to the second most polluted zip code in the state of Michigan. Further, my office is located adjacent to the most polluted zip code in Michigan, and I experience the effects of this on a daily basis. My need for office supplies granted me the opportunity make my purchasing decisions around small, but very deliberate, votes. For example, I opted for non-toxic oil-based soap rather than a competitor’s floor-cleaning product that contained toluene, a toxin known to harm the central nervous system when inhaled. It only cost a couple of dollars more, and in doing so, I voted for non-toxic cleaning products and better air-quality in my office building.

Nobody’s perfect. Even the most principled individuals have to compromise on their values from time to time, especially when your ideal choice is cost-prohibitive. Sometimes, we don’t have enough information to know we’re making the right choice. Sometimes there really isn’t a choice. Regardless, we all have the power to make at least a small difference.

What are your values?

Think about how your spending habits might be voting for or against some of those values. Are there any ways that you might be able to change your spending habits to better support those values? If you want to keep American manufacturing alive, maybe it means spending a little more on your next TV to get the American-made set. If money is tight, maybe it means cutting back on non-essentials so that your spending on necessities can be more in line with your values.

What I’m really saying is that every dollar you spend is a vote for the kind of world you want to live in. I’m not trying to tell you how to spend your money, but am asking for you to think a little bit about how you are wielding your spending power.

Remember, with great power comes great responsibility.

Jon Barth works with the Southwest Detroit Business Association (SDBA). The SDBA is a coalition of businesses and community interests committed to facilitating the continuation and enhancement of a stable, economically healthy Southwest Detroit. The SDBA employs strategies that support existing business and industrial enterprises, enhance the climate for public and private investment and economic growth and act as a vehicle for cooperative ventures that support economic development in Southwest Detroit. For more information, visit www.southwestdetroit.com.