Turnarounds at TRF, 25 years on
Some people "romanticize blight." TRF wants to move populations through neighborhoods.
Turnarounds at TRF, 25 years on
Joseph N. DiStefano
The Reinvestment Fund has outlasted most of the Philadelphia-area banks it used to work with when the nonprofit lender was set up by Jeremy Nowak 25 years ago.
Nowak has lately moved on -- he’s the new head of William Penn Foundation, backed by the Rohm and Haas heirs, and the new board chairman of the Federal Reseve Bank of Phialdelphia, succeeding ex-Tasty Baking Co. boss Charles Pizzi. The board, after a "nationwide search," named TRF's veteran lending chief, Don Hinkle-Brown, to the top job. Philadelphia attorney John Summers, partner at Hangley Aronchick Segal Pudlin & Schiller, whose scholarly Main Line family has given the nation a couple of Nobel Prize economists, a couple of Penn professors, and Treasury Secretary, Obama adviser and former Harvard Preident Lawrence Summers, succeeds T/L Ventures chief Robert Keith as board chairman. TRF “has been focused for 25 years on helping low-wealth families and communities,” raising money from small, publicly-minded investors, government grants, and banks required to lend in poor neibhborhoods under the Community Reinvestment Act, first by helping poor people buy rowhomes and small businesses, most recently by funding charter schools, preschools, urban supermarkets, “and we’re thinking about health centers, all that contributes to the value of neighborhoods,” Summers told me. That’s not just loans -- TRF had $159 million in gross loans receivable on the books at Dec. 31, up from $154 million a year earier and $92 million in 2007 -- but also market value assessments, a trove of demographic and transaction research pointing to neighborhoods where investment could make the most difference and best boost property values “on a block-by-block basis,” as Summers put it. TRF targets, not the richest or poorest neighborhoods, but “the perimeter,” the blocks of marginal properties that might go either way.“Drive around Philadelphia, you can see the areas we’ve touched: the lights on Boathouse Row, Piazza at Schmidt’s, Avenue North, Progress Plaza,” with developer Bart Blatstein, with the development group started by Rev. Leon Sullivan, and others, as Summers notes. Why should Philadelphia need a group like TRF to target government, charitable and bank loans and grants? Why not stand aside and let the private property market do its work? "There are lots of costs in repurposing pre-built space in urban environments,” Hinkle-Brown told me. “It’s appropriate for the public sector to assist in repurposing. You want to get a project at the end that is a positive contributor to the community, with taxes, with jobs.” The disappearance of Philadelphia’s banks in the 1980s and 1990s has made the out-of-town banks that now dominate Philadelphia lending rely more, not less, on TRF, as local "boots on the ground," according to Hinkle-Brown. But it’s tough getting to the next step. National financial companies want nationwide partners. S
What’s the impact of TRF-style neighborhood rehabilitation on old-time corner bodegas, church-run schools and other institutions that lack financing? Does TRF worry about “gentrifying” poor people out of the city? “Philadelphia was locked in amber for way too many decades,” Hinkle-Brown told me. “There’s been a romanticization of blight among some folks. But cities are alive. Cities, before 50 years ago, were dynamic, they changed all the time. Populations moved through neighborhoods. That happened here. "Then it all stopped after the war, and it atrophied. People forgot you could make money from your home appreciating, and move to a different nieghborhood. In Philadelphia that just stopped." The property boom of the 1990s sparked a housing boom in Northern Liberties, Fairmount, Schuylkill, parts of Germantown. TRF wants to keep that going and spread to larger and commercial properties. "It can be scary to see change come back," Hinkle-Brown added. "W make sure there’s a strategy for the whole population." If TRF funds projects by ShopRite developer Jeff Brown, it also “worked with the Food Trust to reach dozens of corner stores and give them grants to buy refrigerator tubs, so they’re selling fruit salad next ot the Snickers,” Hinkle-Brown said. “We finance stores to move from smokes and Cokes and lottery tickets," to fresh food. “In Brewerytown, we didn’t just invest in (developer John) Westrum’s homes. We worked with the city" replacing roofs and electric systems in neighborhood rowhomes. "There’s less you can do for the renters who get forced out. So we reserved a piece of the old Acme warehouse for affordable housing. Middle income (construction) plus affordable longterm rentals." The whole neighborhood. "We think we put a good package together.”
For that kind of investor, TRF is a real estate play: “We’ve made quite a lot of hay out of the fact that over the last 10 years an investment here did better than the S&P 500.”
