Full text of Banking and Community Perspectives (Federal Reserve Bank of Dallas) : Third Quarter 1997

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BANKING & COMMUNITY

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Secretary of the U.S. Department .
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of Housing and Urban Development .
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Perspectives asked newly appointed
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HUD Secretary Andrew Cuomo to
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discuss his goals and priorities for the
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department as well as programs and
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issues that affect community and
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economic development.
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INSIDE
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A Touch (Up) of Class
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Ä
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Flying to New Heights
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Ä
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Did You Know…?
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An interview with
Andrew Cuomo

FEDERAL RESERVE BANK OF DALLAS

THIRD QUARTER 1997

erspectives

PERSPECTIVES: Since becoming
Secretary, what priorities have you
set for the Department of Housing
and Urban Development?
SECRETARY CUOMO: As HUD Secretary, I
have four major priorities, and they touch
on the Department’s most important
responsibilities: we must avert a crisis in
the Section 8 program; expand opportunities for affordable housing; make
welfare reform work; and restore public
trust in our agency.
As you know, before President Clinton
asked me to be his Secretary of HUD, I
served as HUD Assistant Secretary for
Community Planning and Development.
We accomplished much in the President’s first term, and the Department
once again became a partner with
America’s communities.
But serious challenges remain: one
out of five American children still lives in
poverty. Over 5 million families spend
more than 50 percent of their income on
rent. And because of the genuine need
to get control of federal spending and
balance the budget, we face these challenges at a time when the Federal government has fewer and fewer resources.
So we have another, governmentwide
priority: meet our fiscal responsibilities
and at the same time address the important social issues that face our nation. I
think we can meet our priorities and
accomplish our goals with a government
that is smarter and smaller, and a
Department of HUD that is more sharply
focused and better managed.
We will never lose sight of our goals,
but we need to examine and reject failed
means. We must be willing to admit that

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some programs don’t work and take
action—like we did with old, high-rise
public housing ghettos, and actively work
to eliminate them and replace them with
mixed-income housing built to the scale
of the neighborhood. We must help
create new partnerships between government at all levels and the private sector in
our cities—like we have in our Empowerment Zone and Enterprise Communities
program, where these new partnerships
are creating results all over the country.
PERSPECTIVES: A record number of
Section 8 contracts are expiring, and
millions of people are in danger of
losing their homes either through
eviction or sharp rent increases.
What steps is HUD taking to preserve
Section 8 housing?
SECRETARY CUOMO: I’m hopeful Congress
will renew these Section 8 contracts
because not renewing them would put
4.4 million people at risk of losing their
homes—either through evictions or
unbearably sharp rent increases. In FY
1998 alone, contracts on 1.8 million
units—each one helping to pay the rent
for a low-income family or senior citizen
living in poverty—will begin to expire.
They represent more units than have
expired from 1992 to 1997 combined,
and this is at the heart of the crisis. Many
of these people are the working poor.
None of us would advocate a policy
guaranteed to push hundreds of thousands of elderly, children and disabled
Americans into homeless shelters and
onto the streets of our communities.
The Section 8 renewal crisis is occurcontinues on page 2

2

Cuomo continued from page 1
ring, in large part, because 15- and
20-year subsidy contracts for tens of
thousands of units are expiring for the
first time, and contracts with shorter
terms—less than five years—also are up
for re-renewal. We have asked Congress
for the funding we need to avert a crisis.
The budget we have proposed for our
next fiscal year, 1998, meets this
potential crisis head-on. In FY 1998, we
propose to renew expiring Section 8
contracts on 1.8 million units that house
4.4 million low-income people.
President Clinton has done the hard
work to help us get a balanced budget
agreement with balanced values that
will help Americans buy a home, start
a business, save for retirement and send
their kids to college. The budget agreement gives us the funding necessary
to avoid the Section 8 crisis for the
immediate future and 5-year authority for
contract renewals, basically advancing
all our priorities and giving poor families
a hand up to move from welfare to work.
In addition, within a decade virtually
all of HUD’s roughly 3 million Section 8
project- and tenant-based units will be
converted to 1-year terms. As part of
the contract renewal process, HUD
also intends to stop paying excessive
subsidies to owners of Section 8
properties whose rents are well above
those for comparable housing in their
neighborhoods.
Throughout the country, more than
800,000 units in about 8,500 projects
have been financed by FHA-insured
loans and supported by project-based
Section 8 subsidies. About two-thirds
of these projects—500,000 units of
housing—have rents in excess of market
rents. HUD wants to use market discipline
to control the spiraling cost of Section 8

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renewals, and we are working with
Congress and the Treasury Department
to restructure our multifamily portfolio
and mark rents to market.
By restructuring the projects so that
Section 8 rents reflect “real” rents in the
area, we will realize cost savings that
can be used to support other properties,
where the subsidies are truly needed.
This policy will reduce rents on more
than half of all project-based Section 8
units that receive FHA insurance.
Projected savings from our “mark-tomarket” proposal would save $1.4 billion
over five years.
PERSPECTIVES: HOME and CDBG
funds have been successfully used
in partnership with private-sector
investments and loans to spur economic development and new affordable housing. As the federal budget
decreases, do you envision any
significant changes in the Community
Development Block Grant and HOME
Investment Partnerships programs?
SECRETARY CUOMO: CDBG and HOME
are two of HUD’s most successful
programs, and because of their block
grant nature, they produce excellent
public–private partnerships. Mayors in
every state in America—big cities and
small cities alike—tell me these are the
HUD programs most important to the
long-term health of their communities.
I don’t see a need for legislative
or structural changes to CDBG or
HOME, because we made important
administrative changes in 1993 and
1994 to improve and streamline both
programs. What is more important for
their continued success is that all of
our community development programs
are integrated into a local, computerbased, comprehensive planning

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • THIRD QUARTER 1997

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approach. We developed this approach
because we wanted to link local
needs—human services, environmental
health, economic development, physical
renewal—into a seamless community
revitalization plan.
All of our community development
programs are working better than ever at
the local level, and I’d like to integrate
more of HUD’s programs into this
“community-friendly” planning approach.
PERSPECTIVES: Partnerships among
financial institutions, businesses and
local government are often formed to
foster economic development and
increase jobs. Does HUD have any
strategies in place to encourage
workforce development through
public–private partnerships?
SECRETARY CUOMO: HUD has become
well known for emphasizing partnerships
through existing programs like CDBG and
HOME, and our strategies continue that
approach through newer programs like
Empowerment Zones and Enterprise
Communities. One unique partnership
we recently launched is called “Bridges
to Work,” and it’s part of HUD’s Welfare
to Work strategy. Bridges links inner-city
welfare recipients with jobs in the
suburbs—right now it’s a demonstration
in five cities: Baltimore, Chicago, Denver,
Milwaukee and St. Louis.
I’ve never had anyone ask me for a
welfare check—people want a paycheck.
Bridges to Work helps people in the
inner city become part of the growing
suburban job market by helping them
with transportation, placement and
supportive services.
Rapidly growing suburban employers
need good workers, and low-income
people in America’s cities need good
continues on page 7

3

P

ublic & Private Partnership

A Touch (Up) of Class
Teamwork restores Amarillo
apartment complex

Time can be cruel to buildings.
Glory can fade. And once-elegant
housing developments can grow old and
deteriorate. The reasons this occurs are
complex, but the fact is that no city
is immune. When yesterday’s wonderful
apartment complex becomes today’s
eyesore, communities can face a difficult
choice: tear it down or renovate it. Sometimes, though, the choice to renovate is
clear. This was the case with Astoria Park
in Amarillo, Texas.
Even from its construction shortly
after World War II, Astoria Park has
occupied a unique place not only in the
hearts of the people of Amarillo but also
near the heart of the city of Amarillo
itself. “Astoria Park was the first garden
apartment complex of its size and
stature in Amarillo,” says Dale Cook,

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chief financial officer of the Amarillobased American Housing Foundation
(AHF), a nonprofit corporation dedicated
to the promotion, creation and preservation of housing for low- and moderateincome families and individuals. “It was
where a lot of young couples lived in the
early years of their marriages, raised
families and began their careers. Over
the years, many of them, as their families
outgrew the complex’s two-bedroom
apartments and their careers prospered,
moved on to other parts of Amarillo.”
As it turns out, in a small twist of fate,
one of the couples who lived in Astoria
Park in those early days were the parents
of Steve Sterquell, who founded the
American Housing Foundation in 1989.
Sterquell had seen Astoria Park deteriorate over the years, a victim of time,
economic changes and poor management. So, in 1995, when the opportunity
arose to purchase the troubled property
—which by this time was only about a
third occupied—from the Resolution Trust

.Gathering to review the plans of the newly remodeled
.Astoria Park complex are (from left) Ellen Dunn of Bank
Steve Sterquell of the American Housing
.One–Amarillo,
Foundation, John Mullaney of Midland Mortgage
.Investment Corp., Bill Davies of Bank One–Amarillo
.and Dale Cook of the American Housing Foundation.
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. Corp., Sterquell and the AHF were willing
. to commit the funds and tackle the
. rehabilitation of Astoria Park.
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The rehabilitation work would be
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. daunting. Astoria Park consisted of eight
. buildings, more than 170 apartments, a
. swimming pool and a playground—all
. outdated, dilapidated or in various
. stages of disrepair. Moreover, 60 units
. were still occupied, so construction
.
. would have to take place around them.
. By the time the rehabilitation is complete
. in September, Astoria Park will have 164
. apartments (148 two-bedroom and 16
. three-bedroom), and each will have new
. plumbing, individually controlled central
.
. heating and air conditioning, new doors
. and windows, an all-electric kitchen with
. dishwasher and new cabinets. In addi. tion, the pool and the playground will be
. refurbished. And finally, there will be one
. new building: a clubhouse/community
.
. center. Clearly, right from the beginning,
. the AHF knew that rehabilitating Astoria
. Park would be an ambitious undertaking
. and that a substantial financing package
. would be required.
.
For this financing, AHF turned to
.
. Bank One–Amarillo. “We had worked
. with Bank One before,” says Sterquell,
. “and we knew that they could satisfy
. our banking needs. We also knew that
. the bank could put together complex
. deals that require layered financing.
.
. Moreover—and this is important for us—
continues on page 4
.

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • THIRD QUARTER 1997

4

A return to glory: one of the eight buildings that make
up Astoria Park. Located near downtown Amarillo,
the garden apartments will be affordable for low- and
moderate-income individuals and families.

A Touch (Up) of Class continued from page 3
while the bank naturally maintains a
focus on the bottom line, it also makes
certain that it does the right thing for the
people who will eventually move into the
rehabilitated housing.”
Bank One is experienced in providing
both construction financing and equity
investment through the purchase of
low-income housing tax credits. In fact,
the bank had just recently provided
construction and equity funding for the
rehabilitation of the 38-unit Bel Aire
Apartment complex, also in Amarillo. The
Bel Aire rehabilitation was completed in
1996 and is now fully occupied. However, the Astoria Park renovation was larger
than most renovation projects—not only
because of the amount of money
involved but also because of the sheer
size of Astoria Park and the in-depth
nature of the repairs.
“Putting together financing for a
development like Astoria Park is often a
very drawn-out, time-consuming
process,” says Bill Davies, president of
Bank One–Amarillo. “It can take five, six
or even seven months of hard work, and
a lot of things really have to fall into place
correctly, given the wide range of fairly
complex regulations that have to be
complied with, approvals that must be
obtained and diverse groups that must
work toward a common goal. Typically, a
transaction like this falls apart not
because of a lack of effort or will but
because someone can’t take care of
some detail or meet a deadline.”
In this case, though, all the pieces fell
into place, thanks largely to the energy
and determination of Ellen Dunn, a commercial banking lender for Bank One–

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Amarillo who arranged the $2 million construction loan, and Wayne Koehler, vice
president of the Columbus (Ohio)-based
Banc One Community Development
Corp., which provided an equity investment of $1.348 million by purchasing the
low-income housing tax credits allocated
to the project by the Texas Department
of Housing and Community Affairs.
“For us,” says Koehler, “the project
makes a lot of sense, and our involvement is a logical decision. It’s a good
investment opportunity for us. However,
equally important is that Astoria Park
means a lot to the city of Amarillo, to the
developers, to the investors and to the
people who will live there. And, because
of the experience and commitment of the
American Housing Foundation, we know
the job of rehabilitation will be done right.
This is a project we’re proud to put our
name on.”
John Mullaney, vice president of Midland Mortgage Investment Corp., which
provided the $2.5 million, 25-year mortgage loan, agrees with Koehler that the
decision to invest in Astoria Park was a
logical and sound business decision.
“Although rehabs can occasionally be a

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • THIRD QUARTER 1997

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problem, a good rehabilitation project
can be more economically sound than
new construction. This project lent itself
to rehabilitation because Astoria Park is
so aesthetically pleasing. In addition, the
economics are favorable, and it’s near
downtown—an employment center.”
Now, as the project is near completion
and ready for tenants— one building,
completed in March, is already
occupied—Astoria Park is once again
an asset to the community, something in
which the city can have pride. As Bank
One’s Davies says, “It was a win–win
situation all along.” Ä

Adding the finishing touches....

5

DID YOU KNOW...?

Fast Facts

ASTORIA PARK

McAllen Affordable Homes

.
. unoccupied multifamily
Astoria Park, a deteriorated and largely
.
housing complex in Amarillo, Texas, has been redeveloped through a
.
public–private partnership into 164 safe,
. modern and affordable two- and
three-bedroom apartments for low- and
. moderate-income individuals and
families (148 two-bedroom units and 16
. three-bedroom units). Astoria Park
was financed through two sources of .funding from Banc One Corp. Bank
. loan, and Banc One Community
One–Amarillo provided the construction
.
Development Corp. provided equity financing through the purchase of
.
low-income housing tax credits. The complex
was developed by a non.
profit developer, American Housing Foundation,
and the permanent
.
financing was provided by the Midland
. Mortgage Investment Corp.
. Group Trust.
through the Midland Affordable Housing
.
Sources of funds
.
Bank One–Amarillo construction loan .
$ 2,000,000
.
Banc One Community Development Corp. equity participation
.
(Purchase of low-income housing tax credits)
1,348,000
.
Midland Mortgage Investment Corp. permanent loan
2,500,000
.
Southwestern Public Service utility rebate
86,044
.
American Housing Foundation acquisition
. costs and
.
capital advances
1,433,688
.
Total sources of funds
$ 7,367,732
.
Use of funds
.
.
Acquisition of property
$ 925,000
.
Construction/rehabilitation costs
3,112,351
.
Soft costs, such as architects, closing fees and
.
application fees
150,000
.
Construction interest (estimated)
135,300
.
Construction contingency reserve
150,000
.
.
Operating reserve fund
125,000
.
Reserve fund for replacements
150,000
.
Payoff of Bank One–Amarillo construction loan
2,000,000
.
Partial payment of development fee to .
American Housing Foundation
620,081
.
Total use of funds
$ 7,367,732
.
.
For more information:
.
Dale Cook, Chief Financial Officer
.
.
American Housing Foundation
.
P.O. Box 7606
.
Amarillo, Texas 79114-7606
.
(806) 372-7500
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Receives Maxwell Award

McAllen Affordable Homes Inc. (MAHI)
has received a Maxwell Award of Excellence
from the Fannie Mae Foundation for the Los
Encinos Community project. MAHI, a nonprofit organization based in McAllen, Texas,
received a $25,000 grant from the foundation
in recognition of its exemplary accomplishments in creating affordable housing for
low-income citizens.
MAHI planned and built the Los Encinos
Community on 60 acres of land near McAllen
in a Foreign Trade Zone along the Texas–
Mexico border. Although there are employment opportunities for residents of the area,
adequate housing and amenities have been
in short supply. MAHI plans to construct 246
single-family homes in Los Encinos. To date,
20 of the homes have been completed. The
new development is located near a new elementary school, and the city will soon construct recreational facilities nearby, including a
jogging trail, and baseball and soccer fields.

Social Compact Award Goes
To Fifth Ward Community Redevelopment
Corp./Bank United Partnership

The Fifth Ward Community Redevelopment Corp. and Bank United have received
a Social Compact Outstanding Community
Investment Award. The theme of this year’s
awards was “The Business of Rebuilding
America’s Neighborhoods.”
The Fifth Ward Community Redevelopment
Corp. teamed up with Bank United in an effort
to revitalize the Fifth Ward, one of Houston’s
poorest neighborhoods. The partnership has
already built 77 single-family homes that are
being purchased by low- to middle-income
families. The partnership is offering more
residents an equity stake in the community
and attracting middle-income families to
move into the community, which has a rich
history and is located near downtown.Ä

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • THIRD QUARTER 1997

6

Flying to
New Heights
San Antonio addresses economic
development challenge

Four years from now, San Antonio
will still have the distinction of possessing the world’s largest free-standing
airplane hangar. However, it won’t have
Kelly Air Force Base, where the C-5
military aircraft hangar is located,
because the base is scheduled to close
and be privatized on July 13, 2001.
One might expect the loss of a major
economic engine—and the consequent
wrenching social and economic impact
on the city and the region—to be met
by shock, handwringing and a “what’ll
we do now?” attitude. Not so, however,
in San Antonio, where a coalition of
banks and civic development groups
have sprung into action to provide
funding and planning options for the
base and the surrounding areas. They
are determined to be proactive, to have
plans in place and money available for
new development, retraining and
conversion before the base closes.
The keys to the response of San
Antonio—where the military is a major
employer—have been teamwork and
speed. Shortly after the base closing
was announced in mid-1995, 166 leaders representing all aspects of San Antonio’s civic and social life drew up a
strategic plan, including long- and shortterm goals and objectives for the privatization effort. “The committee was able to
put aside special interests and work to
create a plan that was best for all of San
Antonio. We’re almost two years into the

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ESOURCE

plan and, because it was so well conceived and so balanced, it continues
keeping us on course and focused,”
says Paul Roberson, executive director
for the Greater Kelly Development Corp.
GKDC was established by the city of
San Antonio in early 1996 to coordinate
all privatization activities, including Air
Force contracts that will be awarded in
the next few years, and will eventually
commercialize the base and lease facilities out to major corporations, as well as
small businesses.
GKDC will learn about its prospects
for success as soon as the Air Force
contracts with major aerospace firms as
tenants for the base’s major facilities—
including the C-5 overhaul facility,
engine overhaul facility and warehousing
complex, all of which will act like
anchors in a shopping mall and serve as
a magnet to attract smaller businesses.
Meanwhile, Judy Ingalls, director of the

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • THIRD QUARTER 1997

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(From left)
Mike Bonham of
Broadway National
Bank, Genny Rakowitz
of Frost Bank,
Paul Roberson of
Greater Kelly
Development Corp.,
Judy Ingalls of
Kelly Small Business
Assistance Center
and Bill Hudnell of
Frost Bank stand in
front of GKDC, which
will coordinate the
privatization of
Kelly Air Force Base.

Kelly Small Business Assistance Center,
which is funded by a consortium of
local, state and federal agencies, is
working with some of the 10,000 civilian
Kelly employees whose jobs will be
affected by the closure and who are
considering starting their own businesses. Since January 1996, Ingalls has
been conducting classes and seminars
for employees who may be interested in
small business opportunities that they
can use to their advantage. “So far,”
says Ingalls, “almost 4,800 people have
attended our classes, and we’re doing
our best to guide them to the local
resources that will help them make the
transition to self-employment.”
Among these resources is the $130
million Kelly Redevelopment Small
Business Loan Program. This program,
established by 10 banks—Bank One,
Broadway National Bank, CaminoReal
continues on page 8

7

Cuomo continued from page 2
jobs. As part of the Administration’s
larger welfare reform efforts, we want to
make Bridges to Work a nationwide
initiative in 1998. We expect we can help
as many as 100 metropolitan areas
develop strategies for Bridges to Work
programs, with a preference for communities designated as Empowerment
Zones and Enterprise Communities.
Once Bridges to Work programs are
in place, they will be eligible for funding
under the President’s $3 billion welfareto-work jobs initiative, HUD’s Community
Development Block Grant program and
public housing social services block
grants and other federal funding sources.
In addition, the President has proposed
tax credits for private-sector partners
who hire long-term welfare recipients.
And we are helping to build economic
opportunity through our Section 108
Economic Development Loan Fund. We
recently awarded about $22 million to
eight cities—funds that will bring in at
least $60 million in private investment,
and result in hundreds of jobs for lowand moderate-income people. Our
Jobs-Plus program is a new partnership
we’ve established with the Rockefeller
Foundation and the Manpower Demonstration Research Corporation, with additional financial support from the Surdna
Foundation. Jobs-Plus is a welfare-towork demonstration project designed to
significantly increase employment and
income of public housing residents in
seven cities across the country. Still
another initiative, $31 million in Economic
Development and Supportive Services
grants, will help 45 public housing
developments give people the training,
education, child care, transportation and
other services to help them get jobs and
become self-supporting.

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PERSPECTIVES: You have spoken in
the past about the impact that cities
and suburbs have upon one another.
How do you view the interrelationship
between a city and its suburbs with
regard to economic development
and housing?
SECRETARY CUOMO: It’s difficult to
understate the importance of regional
cooperation. Today, neither the city nor
the suburb can stand alone and thrive.
Our national economy has been
transformed. The old growth engines
like manufacturing— which provided a
good third of all “city” jobs just 30 years
ago— are gone either overseas or to the
suburbs — or gone for good. But new
industries have sprung up all over

“Today, neither the city
nor the suburb can stand
alone and thrive.”
America, and they compete in a new
global economy. The most successful
of these industries get their strength
from a regional base, not from any one
city or suburban location. The most
obvious example is California’s Silicon
Valley, which is successfully linked to
the region’s transportation systems,
financial infrastructure, workforce and
educational institutions.
Industries benefit from strengths
throughout the entire region, and the
entire region benefits back from the
industry. In economic development,
metropolitan areas that came together
as one region benefited first from the
new American economy. Many of those
that were slow to see the change now
understand—and are working to

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create—regional cooperation for
economic growth.
There is a parallel in housing. Just
as many cities relied on old-growth
industries to provide jobs for residents,
they relied on traditional public housing
to shelter the poor. But the nature of
poverty changed: with more femaleheaded households, more social
and behavioral problems—more
homelessness. Public housing became
warehouses of the poor.
Today, the most successful lowincome housing programs address the
variety of problems faced by the poor—
from job training to life skills—and help
these families move to new opportunities.
HUD has worked to encourage this
approach by changing national
policies to make low-income housing
programs more flexible and more
regional in nature.
We’ve begun to demolish and
replace those old high-rise public
housing projects, and given low-income
residents more opportunities to move
throughout the region. At the old sites,
we’re helping build mixed-income
low-rise developments that better reflect
a community’s broader economic base
and serve families with a wide range
of incomes.
Contemporary HUD programs
support expanded regional housing
opportunities. Low-income families can
use a Section 8 housing voucher to find
rental housing wherever employment and
education opportunities are greatest. We
see time and again that families who
move out of the concentrated poverty of
the inner city—the kids do well in school,
the parents do better economically—do
better than most families who can’t or
don’t seek out that opportunity.
continues on page 8

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • THIRD QUARTER 1997

8

Cuomo continued from page 7
At the regional level, metropolitanwide solutions to affordable housing have
grown. In some places, this has been
through unifying their local governments
—where surrounding areas are annexed
by the central community. In regions
that are too large and complex for formal
unification, it’s happening through
increased support for “fair share”
housing. HUD will continue to encourage
metropolitan cooperation throughout
the country, because when access to
housing and economic opportunities is
opened at all levels, families benefit and
the entire region benefits.
PERSPECTIVES: What would you like
as your legacy when you leave the
Department?
SECRETARY CUOMO: Let me talk to you
about my goals for the Department;
legacies are for others to decide. Our
goal should be to create a future unlike
any that has come before; a future that
is open to all and in which no person is
left behind, and in which no community
is forgotten; a future in which everyone
who is willing to do his or her part will be
empowered with the tools to reach as
high as their talents and hard work will
take them.
While I’m here, I want to help more
families, especially young couples and
people with moderate incomes, become
homeowners. I’d like to see American
communities become stronger and
healthier, with more and more inner city
neighborhoods taking a bottoms-up,
empowerment approach to their physical
and economic development problems. I
want to see an end to America’s problem
with homelessness. Ä

. Flying to New Heights continued from page 6
. Bank, First National Bank of South
. Texas, Frost Bank, InterContinental
. National Bank, McMullen County State
. Bank, NationsBank, Norwest Bank and
. Texas Commerce Bank—will run until
. August 31, 2001. It is intended to help
. small businesses that will be involved
. in the redevelopment of the base,
. businesses that will service the major
. corporations that will be coming to Kelly
. when it is privatized, businesses within
. five miles of Kelly that may want to or
. need to change their direction and Kelly
. employees trying to start their own
. business. The loans, which will range
. from $10,000 to $2.5 million, will be
. made available to businesses with sales
. or revenues of less than $5 million.
.
Genny Rakowitz, vice president and
. Small Business Administration loan coor. dinator for Frost Bank—whose chairman,
. Dick Evans, took the lead in establishing
. the loan program—notes that the pro. gram offers a number of advantages.
.
.
.
Symposium on
.
Microlending
.
An economic development
.
lending symposium
.
.
Sponsored by the
.
Federal Reserve Bank of Dallas
.
.
July 23, 1997
.
Omni San Antonio Hotel
.
San Antonio, Texas
.
.
For more information:
.
Telephone: (214) 922-5276
.
Toll Free: (800) 333-4460, ext. 5276
.
.
E-mail: claudette.small@dal.frb.org
.

FEDERAL RESERVE BANK OF DALLAS • PERSPECTIVES • THIRD QUARTER 1997

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“Bank loan-origination fees have been
waived,” says Rakowitz, whose bank
has already provided one of the first of
the loans to a tortilla factory that wanted
to expand. “In addition, the interest rates
are quite favorable; for short-term loans
of a year or less, the rate is prime floating, and for long-term loans, up to seven
years, the rate is floating at prime plus
one or fixed at prime plus two. And finally,
these loans can work in conjunction with
other loan programs offered through
other agencies helping small businesses.
It’s really a good deal for businesses, for
Kelly and for the city of San Antonio.”
Mike Bonham, vice president
of Broadway National Bank, agrees
with Rakowitz. “The loan program can
be a source of optimism for everyone
involved in the commitment to
redevelop Kelly.”
And ultimately, that’s the key to how
San Antonio is responding: teamwork
plus planning plus commitment—all of
which add up to justifiable optimism.Ä

Perspectives
Federal Reserve Bank of Dallas
Community Affairs Office
P.O. Box 655906, Dallas, Texas 75265-5906
214-922-5276

Gloria Vasquez Brown
Vice President
gloria.v.brown@dal.frb.org

Nancy C. Vickrey
Community Affairs Officer
nancy.vickrey@dal.frb.org

Ariel D. Cisneros
Community Affairs Specialist
ariel.cisneros@dal.frb.org

Jim V. Foster
Community Affairs Specialist
jim.foster@dal.frb.org

Bobbie K. Salgado
Houston Branch, Community Affairs Specialist
bobbie.salgado@dal.frb.org
Writing: Lee Shenkman Design: Patti Holland
The views expressed are those
of the authors and should not be
attributed to the Federal Reserve Bank of Dallas
or the Federal Reserve System.
Articles may be reprinted on the condition
that the source is credited and
a copy is provided to the Community Affairs Office.
Internet website: www.dallasfed.org