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Volume 6, Number 2
August 1989

A newsletter from the Philadelphia Federal Reserve Bank about consumer credit and community reinvestment

PNHS Opens New Era
With New Headquarters
And Revived Spirit

PNB, Continental Have New Partners in North
Philadelphia: Nine Community Organizations

"This dedication ceremony is concrete
evidence of the rebirth of the
Philadelphia Neighborhood Housing
Services after a period of difficulty
and dormancy. It is a revitalization
which represents hope for our city
through continuation of the mission
which is at the core of the NHS
operation ."

In an unusual initiative, Philadelphia
National Bank has brought together
nine community organizations in a
deteriorated neighborhood and is
working with them as equal partners
in addressing community needs.
Continental Bank has joined the
initiative as well.

That was Fred Manning, Assistant
Vice President and Community Affairs
Officer of the Philadelphia Fed, at the
recent dedication of the new head quarters on Broad Street. Hosted by
Meridian Bancorp, Inc., and the PNHS
Board of Directors, the event highlighted not only new space but a new
era for the organization .
"May this new office be a symbol
both of a fresh spirit for this affiliate
and of the collaboration of those
people in this room, and the organizations they represent, which made the
renewal possible," Manning added .
" It is thrilling to be in on a new
beginning, particularly when it
contains the promise of improving
our neighborhoods and extending
the spirit of brotherhood to deserving
members of our society. "
(continued on page 2)

Tom Patterson, Vice President at
PN B, explained that the initiative was
started about 18 months ago when
the bank's Public Responsibility
Department began to explore ways
to participate in the Mayor's plan for
North Philadelphia. To maximize
results, PNB decided to concentrate
on a limited area of about 2.5 square
miles. The bank formed an internal
advisory committee and met with
oriented towards community development, community organizing and
social services. (PNB and Patterson
have a long history of urban lending,
and the groups generally have long
track records in community development.)

National Bank, Continental Bank and
three community organizations which
are part of the North Philadelphia
Initiative are shown in front of the
Leithgow Street house. St. Edward's/
Committee, Inc., will take the lead in
the project. Left to right are: James F.
Young, Executive Director, Neighborhood Action Bureau, Inc.; John M.
Toland, Executive Director, St.
Edward's/Hartranft; Denise Cummings,
One of the first needs which emerged
Vice President, Continental Bank; Tom
was for computers. PNB purchased
Patterson, Vice President, PNB; Luis
McIntosh systems for each of the
Mora, Assistant Vice President, PNB;
groups and arranged for training,
and Guillermo Salas, President of the
Hispanic Association of Contractors
and Enterprises.

Some of the guests at the dedication were (left to right): Steven P. Kurtz; Fred
Manning; Ceane Rabada; Jeffrey Cruse; Carolyn Flint; Harry E. Cerino; Edward
A. Schwartz; and Stephen B. Mygatt, Corporate Secretary and Senior Counsel,
Fidelity Bancorporation.
Federal Reserve Bank of St. Louis

while Continental paid the membership fees for each group to access an
energy-related "bulletin board." The
groups then used their computers to
compile an exhaustive inventory of
the condition and tax status of all
buildings in the initiative area.
At that early stage, there still was
some rivalry among the nine groups,
which competed for funding. PNB
arranged for the groups to attend a
day-long team-building seminar
which it normally employs for its own
(continued on page 11 )

Community Ventures Plans Project with PNB Loan
"We plan to develop one neighborhood at a time, acquiring and
rehabbing vacant houses in cooperation with community groups, and then
putting the houses in the hands of
Stephen J. Kaufman, President of
Community Ventures.
This is no dream. It's a reality, because
Philadelphia National Bank has just
given the non-profit developer innovative equity financing . Initially, Community Ventures plans to do gut rehabs
of 120 units in Francisville, a neighborhood near downtown Philadelphia.
In the first 35-unit phase of this project,
Community Ventures has commitments from PNB, which is investing
$1 .9 million in equity and $720,000
in construction financing; the
Philadelphia Housing Development
Corporation, for $945,000 in lowinterest secondary financing; and
CIGNA, which is providing a $455,000
first mortgage.
Next will come rehabilitation of 20
units for homeless women and
children who are living at Project
Rainbow, a transitional housing
facility. The final stage involves
rehabilitation and long-term leasing
of dwellings owned by the Philadelphia Housing Authority.
PN B has committed to provide equity
totaling up to $3.5 million in the
Francisville project, an investment
made in association with the Corporate
Equity Investment Program of the
Urban Affairs Partnership (UAP).
The UAP packages equity projects,
identifies and helps firm up other
financing sources, and identifies

corporate investors, according to H.
Ahada Stanford, Deputy Director.
The UAP has a 1989 goal of encouraging corporate investors to invest
$15 million in equity and produce
more than 300 units of lower-income
rental housing.
"PNB's Urban Lending Department
supported our operating budget from
the organization's inception," Kaufman
said. "Tom Patterson provided moral
support as an active board member.
This is a model for one-stop financing
where the lender provides both debt
and equity. These deals get too
complicated with too many actors."
Kaufman, in a previous position with
Self-Help Ventures, oversaw the
conversion of the Darrah School into
27 low income rental housing units.
He said that he would like to see more
banks team up with developers in
distressed neighborhoods. "A bank
can make a reasonable rate of return
commensurate with risk, using the
tax credits," he said. "The credits are
sufficient incentive to enable an investor to fund up to 60 percent of
project costs when acquisition costs
are low and rehabilitation costs are
high, as is often the case in Philadelphia."
In addition to Patterson, Community
Ventures board includes another
banker, Louis P. Bell, Chairman of
Hamilton Reliance Savings Association, Norristown, Pa. Community
Ventures, formed in 1987, has
received funding from The Pew
Charitable Trusts, PNB, Provident
National Bank, the Fels Fund and the
Philadelphia Foundation . For information, contact: Stephen J. Kaufman,
President, Community Ventures, Inc.,
1501 Cherry Street, Philadelphia, PA
19102, (215) 564-6004.

Need a Speaker?
Recent developments related
to the Community Reinvestment
Act (CRA) arising within the
Federal Reserve, the banking
industry, legislative circles, and
community organizations, have
occasioned questions on many
points. Subject to availability,
these issues can be presented
in talks to various audiences,
ranging from boards of directors
of banks to neighborhood and
civic groups, by Fred Manning,
the Philadelphia Fed's Community Affairs Officer. Another
speaker from the Community
and Consumer Affairs Department who may be available for
guidance on consumer banking
legislation, is Phil Farley, Manager of the Regulations Assistance function . For details,
phone(215) 574-6458.

PNHS Opens New Era with New Headquarters ...

Stephen J. Kaufman (left), and Herman
Bigham, construction manager, look
over architectural drawings for a vacant
building in Francisville.

Federal Reserve Bank of St. Louis

In addition to Executive Director
Ceane Rabada, who explained "the
new PNHS," other speakers were
(from the Board of Directors) Irene
Wright, Co-Chair; Jeffrey Cruse,
Executive Director, Philadelphia
Council for Community Advancement,
Vice Chair; Albert Mandia, Chief
Treasurer; and Steven P. Kurtz,
Executive Vice President, Corporate
Banking, Meridian Bank. The audience

also heard from Carolyn Flint, neighborhood representative from Fern
Rock/Ogontz/Belfield; Edward A.
Schwartz, City of Philadelphia
Housing Director; Harry E. Cerino,
Vice President for Programs, The
William Penn Foundation; and Lee
Bowman, District Director, Neighborhood Reinvestment Corporation.
For additional details, write PNHS,
511 N. Broad Street, Suite 601,
Philadelphia, PA 19123 or phone
(215) 829-9899.

Profiting from a CRA Challenge: One Banker's Experience and Advice
(CASCADE interviews Marshall L.
Wolf, Executive Vice President of
Midlantic National Bank. Don Kelly,
Senior Community Affairs Specialist,
asks questions.)

Finally, bankers should be pro-active
rather then reactive with community
contacts, government, and the press,
since it is better to be perceived in a
positive, rather than defensive, way.

You had a CRA protest in 1986.
How did you feel about Midlantic's
community involvement prior to the
I thought it was pretty good. We contributed to community organizations
and our people belonged to various
boards. So it came as a shock when
we heard that the Community Development Coalition was making a protest.
But we gradually recognized that they
were putting their fingers on areas
where we could improve, or where
there was a perception that we could
make more of an effort than we thought
we were making.

How have you re-oriented bank
management and staff to operate
more effectively?
When senior people are enthusiastic
about doing business in urban areas,
and announce that it is important,
people down the line pay attention .
We also try to involve key people in
successful experiences. They are
enthused and pleased when they see
how an inner city loan can improve

What is your view about community
advocates? Were the protest
leaders different from the community leaders you had dealt with
The protest leaders were younger than
the community leaders we had dealt
with previously, and were more involved with tenancy rights. My first
impression was that they would be
hard to deal with, and well coached to
press us into giving things away. Not
so. I found that they were trying to do
things in their communities out of
frustration and a sincere desire to see
beneficial change.
What would you tell bankers who
are beginning to face the challenge
of community reinvestment?
They should do their own internal
inventory. Do they truly have a basic
banking program? Are they making
mortgage loans to inner city residents?
They should document their CRA
activities. They should know and listen
to community leaders . (Although I
was surprised to find [from the community leaders] the perception that
Midlantic was not interested in doing
business in the area, I realized that
we were part of a problem that goes
back to a time when institutions were
not as interested as they are today, as
a result of CRA, in reaching out to
inner city people.)
I would advise setting up a community advisory committee to obtain
advice on credit and banking needs,
and to establish useful relationships .
Federal Reserve Bank of St. Louis

What ingredients for success have
emerged from your own experience?
A commitment to marketing services
in urban areas is essential, with the
recognition that it is not necessary to
alter credit standards. Many people
qual ify for loans if they are given
encouragement. Setting lending goals
is important, too. People respond to
targets and challenges.
We learned how to use the resources
of other organizations. Because some
of the loans are complex, it may take
a combination of efforts to bring a
deal to economic viability. A number
of coalitions can be ve ry helpfu l here:
the New Jersey Urban Housing Partners Program, the Delaware Valley
Community Reinvestment Fund, the
Community Loan Fund of New Jersey,
and Minority Enterprises Small
Business Investment Companies .
Finall y, there has to be a genuine
feeling that community people are a
resource to work with. If you feel they
are antagonists, that will come across
and inhibit productive relationships.
Let me add that others who may at
first feel branded by being given the
assignment of CRA will find, as I
have, that it is fun, exciting---and can
be a money maker for the bank.

Marshall L. Wolf

Tell us about your urban markets.
We are making a construction loan
for a mixed-use development in
Newark's central ward to a black
developer; a permanent loan to turn
an old warehouse into a Peddler's
Village; and we have made almost
100 small business loans . We make
unsecured home improvement loans
of $3,000 or less at 11 percent, even
though we could not find a co-sponsor,
as cal led for by our community agreement. Since April we have made about
100 of these loans. We now have over
10,000 basic checking accounts in
New Jersey. No income requirements
apply, and we integrate these customers into the bank's mainstream.
Also, we endeavor to weave CRA
awareness into every component of
our business, and not shunt it aside to
one department. We want all of our
people to 'think CRA.' This seems to
be working, but it is not perfect, and
constantly needs to be talked about.

Mid/antic, Fannie Mae
Make A wards to
Heart of Camden
"We feel good about the Heart of
Camden and the work they are doing,"
said Marshall L. Wolf, Executive Vice
President of Midlantic National Bank,
Edison, N.J. "That's why it seemed
appropriate to Midlantic to make a
contribution of $20,000 to this
Camden organization which provides
affordable housing for the poor."
Another recent contribution to the
Heart of Camden organization was
an award of $25,000 from the Federal
(Fannie Mae). Heart of Camden was
applauded for its use of volunteer
labor sources to rehabilitate 16 row
houses, which were acquired through
purchase and donations, then
rehabbed for a cost of under $10,000
each. (This CDC was profiled in the
1988 issue of CASCADE.)

National Council tor Urban Economic Development Hears Manning Discuss CDCs
(Within the Federal Reserve System
exchange of information can occur
when the Community Affairs Officer
speaks at a national conference.
Below are excerpts from remarks by
Fred Manning, Community Affairs
Officer, Philadelphia Fed, who spoke
recently on the contribution of CDCs
to community revitalization at the
annual conference of the National
Council for
Development, meeting in Washington,
Many economic development leaders
are salespeople for the idea of establishing community development
corporations through financial institutions to make a contribution to the
revitalization of our towns and cities.
Within the bank regulatory agencies
both the Federal Reserve and the
Office of the Comptroller of the
Currency are encouraging their constituents to take a look at this concept
and to evaluate its possibilities.
What we are talking about is setting
up a subsidiary of either a bank
holding company or a bank to address
the unmet needs of low-income areas,
small businesses or to further important municipal development objectives
that might otherwise not be carried
out. CDCs set up by financial institutions have distinctive capabilities to
invest in and finance these efforts so
long as they generate public benefits.
These could be in the form of job
creation, furthering the development
of infrastructure or in the improvement
of the housing stock, especially if it
enables low-and moderate-income
areas to prosper.
In the eighteen years since banking
law was changed to accommodate
the formation of these entities fewer
than five dozen CDCs have been
started by banks or bank holding
companies . Approximately 30 have
been launched under the auspices of
the Fed and the rest have been with
the blessing of the Comptroller of the
Currency. Many of the ones which
have been formed , moreover, are not
terribly active. Overall, despite a recent
show of interest in the subject, CDCs
are pretty much a well-kept secret.
Their numbers pale beside the
thousands of banks and holding
companies in the country .
We are most familiar with the CDCs

Federal Reserve Bank of St. Louis

which are active in Trenton, Philadelphia, Harrisburg and Williamsport.
Each has a different history and
The Trenton operation is a subsidiary
of First Fidelity Bancorporation, a
major holding company headquartered in Newark. This CDC
began operation in 1983 in Atlantic
City. Its existence came about because
of recommendations of the Comptroller of the Currency at the time of a
bank merger. When a regulator makes
a suggestion like that it's a wise
management which follows through.
The original purpose of the CDC was
to help revitalize parts of Atlantic City
by offering below-market mortgages
to local residents of modest income.
In addition to doing this, the CDC
engaged in a variety of ventures in its
early years which were relatively
unusual for a financial institution . It
bought some vacant lots in the city
and placed on them new prefabricated homes.
It also purchased and rehabbed
existing dwellings in areas of town
where preservation was still possible .
Credit counseling services were
provided to first-time homebuyers. In
more recent years the activities,
location and focus of the CDC have
changed. It now does what is essentially a mortgage banking business,
originating below-market long-term
mortgages which are sold to a state
housing finance agency. And it has
just relocated its offices to Trenton.
From there the CDC will be doing a
business in that city and in such other
low-i ncome areas as Camden and
Newark in addition to Atlantic City .
Another CDC is one that was estab1ished in Pittsburgh by Mellon Bank
Corporation in 1986 with a focus which
is state-wide. Here again regulatory
people were active in encouraging its
creation although I believe the idea
originated with the bank's government
relations staff and some of their
associates in charitable foundations .

units in a project supported by several
agencies of government. The CDC
also does some lending to first-time
borrowers starting medical businesses
in situations where conventional bank
credit isn't available.
In Philadelphia the CDC teamed up
with the Ford Foundation, a local
insurance company and non-profits
to fund the renovation and construction of mixed-use property in an area
of the city which is battling adversity.
While the volume of business that the
CDC has produced is small it's not an
insignificant venture considering that
the projects helped would all normally
be thought of as nonbankable. Mellon
derives benefit from the CDC's close
relationships with neighborhood
leaders and small business people
as well as with friendly funders from
the foundation sector. The CDC has
not had any delinquencies since its
Mellon's officers will tell you that a
CDC has both advantages and limitations to its operation. The deals that it
puts together are time-consuming
both as to their design and the subsequent hand-holding they require.
While the participation of other players
is usually sought to spread the risk
this course has its own time delays
and adds to the runup of staff costs.
Mellon CDC people believe that it's
very vital to have that cooperation
and access to the resources of the
parent bank. They will admit that the
CDC can be an expensive operation
when it stands on its own as a separate
ccrporation . Wh ile theirs is showing
at present a modest operating profit
that's really an accounting fiction
since the bank picks up most of the
staff costs of the CDC. What is not
captured by any balance sheet,
however, are the public relations
benefits Mellon believes it has gained
with its community and with the
regulators from making this kind of
commitment to revitalization .

A third CDC in our District is one
which was set up in Williamsport, Pa.
The CDC's financings range from a few years ago by Commonwealth
small loans to neighborhood organi - Bancshares Corporation to assist in
zations for the soft costs associated redeveloping a burned-out block in
with the construction of low-income the downtown commercial district. It
housing to a large commitment with also provided working capital for the
the parent bank in developing 300 expansion of two small businesses.

National Council for Urban Economic Development...
While this CDC is still feeling its way
forward it's interesting to note an
unusually strong spirit and alliance
between government and the private
sector in this town concerning
economic development possibilities.
In such a climate the CDC may yet
grow to be a major player.
The final one from back home is
rather recently-formed in Harrisburg
by Keystone Financial, Inc. This CDC
has as its goal the purchasing and
upgrading of deteriorated residential
properties in the inner-city area of
our state capitol. To management's
credit they voluntarily set up this CDC
following their entry into town and
their becoming acquainted through a
challenge with some of the needs in
the low-income minority neighborhoods.

marketplace, out of which may in
time come all sorts of ancillary
Bankers who have worked for their
organization's CDC will admit that
they have unusual risk characteristics
if the vehicle is going to be true to its
purpose and take on difficult situations.
Because of their entrepreneurial
characteristics CDCs can make a
number of traditional
uncomfortable. One cannot gainsay
that the CDC often is dealing with
problems that are not easily solvable.
This is especially so if other partners
aren't brought into the CDC's projects
or if the parent bank has a lot of shortterm debt which drives its way of
approaching funds management.
At the same time the CDC's officers

How To Start a CDC
CRA challenges help to concentrate
the attention of lenders on the
possibilities of launching a CDC.
When that happens the subsidiary
can provide a firm focus and a visible
symbol for the organization's commitment to resolving local problems .
Community group leaders usually
welcome this approach so long as it
doesn't substitute for the type of aid
they expect banks to provide through
their existing facilities . Usually, however, it is the aspect of an unhealthy
local economy and the presence of
unmet credit or social needs that
inspires study of the CDC mechanism.
Ordinarily, there is little interest by a
bank in setting up a CDC if local
business conditions and the relationship with the community are both
good. Prosperity and necessity are at
counterpoint in this matter.
Most of the CDCs that have been set
up since 1971 were to facilitate the
execution of single projects in the
housing and small business fields.
Generally speaking, CDCs are not
large nor are they remarkable in their
profitability. Indeed, profitability is
not even sought in many of the cases .
The position of the regulators about
this is that CDCs should not be viewed
through the conventional screen for
profits as you would do with a bank or
other subsidiaries. They should instead
be seen as a catalyst for getting the
process of revitalization started and
as a long-term investment in the
Federal Reserve Bank of St. Louis

How can a bank holding company help its community? By
a community
development corporation (CDC).
To form one, a bank holding
Federal Reserve Bank. What
this application should include
and what a CDC can do, are explained in a free brochure, Community Development Corporations and the Federal Reserve.
To order it, phone the Community Affairs Department,
Philadelphia Fed, at (215) 5746037 .

necessarily have to possess a good
bit of creativity as well as personal
courage, traits not unlike those which
our forefathers had in the building of
our nation. Reclaiming our abandoned
heritage takes a large measure of the
same characteristics along with a
hard-headed knowledge that it makes
good sense, economically and
socially, to try to improve one's
hometown and trade area.
Just this sort of thing happened in
Minneapolis when a CDC developed
a grocery store in a small shopping
center in the inner-city. This initiative
proved to be the key element in the

subsequent revitalizing of the commercial district. The CDC has gone
on to provide the debt capital for a
low-income housing project and to
finance the creation of a transitional
housing facility for women .
In Indianapolis a CDC purchased,
rehabbed and sold a handful of homes
to residents of a moderate-income
area. When other residents saw what
was happening near them they liked
the example and went ahead to fix up
their own properties. The result was
that vast improvements took place in
the rest of the neighborhood.
A dramatic illustration of the capability that CDCs offer is present in the
story of one established by North
Carolina National Bank. The CDC
and its parent took the lead in assisting
the municipal redevelopment of a
largely abandoned residential area
near the central city. In the relatively
short period of five years they invested
$30 million into the area. This
leveraged almost twice that much
from other parties. The combined
resources of the private and public
sectors then were extended beyond
the housing category to the development of commercial and retail projects
in nearby locations. An effect of this
concentrated effort was a 40-fold
increase in the area's ratables.
In St. Louis Mercantile Bank and its
CDC were the major force behind the
economic renaissance of that city's
downtown and the improvement of
low-income housing stock nearby
and in other parts of the city. They
also led a business sector-driven
campaign to improve those quality of
life issues which need to be managed if
we are to have healthy, attractive and
safe communities . They did all this,
incidentally, in a city which lost fully
half of its population in the last
So the point is that the CDCs can
produce important results even if
they are not for everybody and will
not be solutions for each problem in
our society. They do deserve much
greater attention and encouragement
by all of us . I am cautiously optim istic
that , despite their slow pace to date,
they will receive growing consideration
by the financial community.

Keystone Takes Community Development
One Step Further

"To help revitalize New Jersey's low
and moderate income neighborhoods
by providing mortgages and construction loans to individuals and developers." That's the goal of the First
Fidelity Community Development
Corporation (FFCDC) which was
established in 1982, and recently
relocated from Atlantic City to Trenton.
(The CDC is a subsidiary of First
headquartered in Newark.)

The $2.3 billion Keystone Financial,
Inc., headquartered in Harrisburg,
has entered the community development field in a way reminiscent of the
field's original, capacity-building
The two CDC subsidiaries created by
Keystone are geared toward revitalization and homeownership for low
and moderate income people through
bricks and mortar development. However, Keystone CDC, Inc. (not-forprofit) and its sister, Keystone
Financial Community Development
Corporation (for-profit), go a step
beyond the usual approach. A third
concept is a partnership.
Don Williams, Keystone's Community
Affairs Officer and Executive Director
of the CDCs, explains: "What is critical
is that ccmmunity-based organizations take charge of development,
rather than rely on the initiatives and
resources of government and business. Most people agree that this
capacity is lacking in Harrisburg. We
are trying to give the organizations
the skills and resources to control
their communities by teaching them
how to be developers."

Thus far in its 16-month history the
Keystone CDC has undertaken both
the usual and the more sophisticated
approaches. In the first instance each
of the CDCs acquired a vacant, deteriorated sing le-family house in
Harrisburg's Allison Hill neighborhood. Acquisitions were in April, 1988,
and renovation was completed in
September. The first building was
sold in May, 1989, to Melvin and
Janis Harris for $31,000, a price just
sufficient to cover costs. An attractive
$500 down financing package was
part of the deal that allowed a cashpoor, moderate-income couple to
become homeowners. The second
property is still available for sale at
The Keystone CDC, lnc.'s second
effort was also in Allison Hill, a
neighborhood that was carefully
chosen because of the feasibility of
strategic moderate rehab in its market
the reinforcement provided by ~
variety of targeted government
programs, the potential benefits to

Federal Reserve Bank of St. Louis

First Fidelity CDC
Helps Home Buyers

Melvin and Janis Harris recently became first time homeowners via the
Keystone CDC.

low and moderate income people,
and most importantly, the support of
the local civic association, the Central
Allison Hill Community Organization
CAHCO became joint venture partners for the acquisition, rehab and
sale of five vacant properties. CAHCO
agreed to establish a ten person
building committee, to assume the
role of developer, and to assign
members to work directly with Keystone's experienced staff. Keystone
CDC committed to administrative and
technical assistance required at no
cost. It also made available a $50,000
construction loan at zero interest. The
City of Harrisburg provided a $25,500
grant to CAHCO for holding costs
and agreed to improve the sidewalks.
The Commonwealth of Pennsylvania's
Department of Community Affairs
granted $150,000 to write down
development costs.
"It is the hope of the Keystone bankers
(holding company President Carl L.
Campbell, Senior Vice President
Ben G. Rooke, and Williams), that
this hands on experience, monitored
by Keystone CDC, will give CAHCO
the confidence and skills to become
a community developer in its own
right," Williams said .
For more information contact: Donald
Williams, Executive Director, Keystone
CDC, Inc. , The 225 Market Building,
P.O . Box 1653, Harrisburg, PA 171051653, orphone(7 17) 233-1555.

Total investments of the CDC are
approaching $10 million, according
to William R. Reeves, Executive
Director. This includes over $7 million
in mortgages for first-time homebuyers, $2 million in interim loans
for residential developments, and
$500,000 worth of moderately priced
new ownership housing. FFCDC has
prepared a 45-minute audiovisual
presentation which explains each
step on the path to homeownership, from home search to the closing.
Groups or individuals interested in
this, or who wish information about
FFCDC, should phone Reeves at
(609) 599-1857 or (toll-free) 1-800624-5140.

William R. Reeves stands ready for
business at the entrance to the First
Fidelity CDC, Trenton.

Paying a Loan Off Early - Things
You Should Know is the title of a new
pamphlet published by the Federal
Reserve Bank of Philadelphia. Written
by Phil Farley, Manager, Regulations
Assistance, Community and Consumer Affairs Department, the booklet
will help borrowers understand how
the early pay off amount on a loan will
be determined. It supersedes an earlier
Public Information pamphlet on the
Rule of 78. Individuals or financial
institutions may order this pamphlet
by phoning Public Information, (215)
57 4-6115. There is no charge for
ordering up to 50 copies.

Philadelphia Bankers Hear Housing Advocates
"Many CDCs are working in neighborhoods where conventional financing
doesn't fit," said Michael Tierney,
new Program Officer of LISC (Local
Initiatives Support Corporation) . He
joined three other housing advocates who addressed a recent meeting
of the Philadelphia Community Affairs
Officers Council, sponsored by the
Community Affairs Department of the
Philadelphia Fed. Tierney was introduced by Jerry Fensterman, who has
left Philadelphia to become a fulltime LISC Program Officer in
"We have raised one and one-half
million dollars from local banks,
corporations, and foundations for
CDC ventures here," Tierney said.
"We hope to broaden our focus from
business development to residential
and commercial real estate, and to
make more short term, below market
rate loans."
Susan Trusty-Holman, Director of
the Philadelphia office of The Enterprise Foundation, said : "In 1987 the
Foundation established a local
presence, Philadelphia Neighborhood Enterprise (PNE), to increase
its impact. We sought input from some
40 housing providers, foundations,
city officials, lending institutions, and
social service support agencies. PNE
gave six promising CDCs technical
assistance. Currently, we have in
various stages of development more
than 65 scattered site units. And
we've only just begun."
Executive Director Ceane Rabada of
the Philadelphia Neighborhood
Housing Services (PNHS) described
how "we started all over again with
the active involvement of our parent

organization, Neighborhood Reinvestment Corporation and our Board of
Directors . We have received grants
and contracts from The William Penn
Foundation, Pew Charitable Trusts
and the City's Office of Housing and
Community Development. Banks are
back with us . The Philadelphia
National Bank, Fidelity Bank, Meridian
Bank, Continental Bank, Citicorp,
PSFS and Horizon Financial have
contributed time and money. Representatives from PNB, Fidelity,
Meridian, Continental and Horizon
are active members of our Board and
have helped to shape the new NHS.
We are resuming work in Fern RockOgontz-Belfield and other areas . We
will provide new curbs and side-walks,
home improvement loans, exterior
paint projects, retaining walls, block
clean-ups, weatherization materials,
tool banks, home repair workshops,
and vacant house rehabs ."
"Community Development is good
business," said Marie Nahikian,
Associate Executive Director for
Development, Philadelphia Redevelopment Authority. "For example,
banks who have become limited
partners in low income housing are
realizing a 17 to 21 percent rate of
return on their investments." She
outlined a model in which a developing
CDC could identify a person to be
project manager for a three-year
period, with the financing partnership
raising half of a neighborhood-based
person's salary, and providing experts
to work with the neighborhood
developer. "The only way for lenders
and organ izers to be successful
community developers is to do deals,
do deals and do deals," she
concluded .

Host Fred Manning, Community Affairs Officer (left), is pictured with panelists
who spoke to the Philadelphia Community Affairs Officers Council. They are
(left to right) Ceane Rabada, Marie Nahikian, Jerry Fensterman, Susan Trusty
Holman and Michael Tierney.
Federal Reserve Bank of St. Louis

The Little Diner

In the fork of the road, outside
of Lima, Ohio, there stands a
tiny diner. It is sparkling and
homey and boasts two employees. There are no tables and
chairs---just a counter with eight
stools. Above the counter on
the wall there is a sign that says ,
"We can feed 8,888 people,
eight at a time."
Think about it. One meal at a
time. One day at a time. One
housing unit at a time. It requires
patience to check the cancerous
growth of dehumanizing conditions in our neighborhoods. But if
we willingly share our resources,
our minds, and our expertise
we can turn opposition into
opportunity, grief into gladness,
ramshackle into resplendent,
and tragedy into triumph .
(Contributed by Susan TrustyHolman.)

HUD Makes Grants to
Logan CDC, Others
"Without this grant, we could never
have started our first big development project---the first time we
have developed anything!"
That's Michelle Coleman , Executive
Director of the Logan Community
Development Corporation, discussing
a recent HUD grant of $50,000, which
enabled her group to purchase a
block of 14 abandoned properties on
Philadelphia's North Broad Street.
"We're going to turn this area into low
income rentals, and rehab the under
utilized commercial strip," she said.
"We're proud that we are the first
community-based organization that
Urban Partners has agreed to partner
with; we are each 50 percent development partners . This will give us
credibility and save us money. One
(continued on page 10)


"Come to the Fair"
They came to the fair---600 bankers
and neighborhood people---and they
stayed into the evening. It was Bank
Fair '89, sponsored by ACORN and Fidelity and Continental Banks, a
recent day-long event at the Arch
Street Methodist Church, Philadelphia.
The goal was to "help foster better
relations betwen the banking and low
and moderate income communities,"
according to La Verne Butts, ACOR N's
banking committee chairperson . The
Bank Fair included workshops in
various bank services. Other banks
participating were: First Pennsylvania,
Germantown Savings, Liberty, Mellon

National, Provident and PSFS.
Bank representatives informed visitors
about the gains of the past three
years from CRA agreements and
addressed the financial questions of
first time home buyers. Program
participants included Pastor L. M.
McClain; George Butts, President of
ACORN Housing Corporation; Larry
Pirollo, Fidelity Bank; Ray Desiderio,
Continental Bank; Donald Smith, President of Philadelphia ACORN; Reba
Brown and Ida Wilson, Neighborhood
Chapter, Southwest Philadelphia.

Heidi Singer (left) meets ACORN Bank Fair booth workers from Philadelphia
National Bank. They are (left to right) Aubrey Kenney, banking officer and
branch manager of the Germantown/Lehigh office; Mary Butler, mortgage
processor, Urban Lending division; Ron Allen, banking officer and branch
manager, Fairhill office; Leonora Mccoach, banking officer and branch
manager, 1910 N. Front Street office; and Marlene Rossi, coordinator of
redevelopment and action loans, Urban Lending division.

Talking to booth visitors are representatives from Continental Bank. They are
(left to right) Denise Cummings, Vice President; Ray F. Desiderio, Senior Vice
President; Joan Daughen, commercial loan assistant; and Steve Santini,
management trainee, Small Business Administration unit.

Digitized for
Federal Reserve Bank of St. Louis

Why Did They Come
to the Fair?

"From the viewpoint of a firsttime participant, we were
delighted that we were able to
answer questions about home
mortgages and other bank
products. I'm sure the people
attending were glad to see
bankers in their shirtsleeves. The
fair will, I hope, help the
community understand bankers,
and the bankers, the community." Harold C. Sundby, Jr.,
Vice President, Community
Affairs, Germantown Savings
"This was our second year of
participation. We are always
looking for the opportunity to
go out and meet customers and
potential customers, and to
explain what we have available.
The fair is one vehicle that helps
us understand community
needs." Phillip R. Goldsmith,
Provident National Bank

Diane Lackey (left) discusses personal
banking with Alina Majka, assistant
bank officer, Mellon Bank (East) and
Albert Lubawy,
Assistant Vice
President, Mortgage Lending, Mellon

Camden CAO Council Hears Commissioner Villane, Fair Share Housing Executives

Peter J. O'Connor (left photo) and Robert W. Shaffer, of the Fair Share Housing Development, Inc. discuss housing
problems and solutions at the Camden Community Affairs Officers Council meeting.

"We have two societies; one rich, one
poor. One white and the other black
and Hispanic. Their housing needs
are not being met." These points
were echoed again and again in the
remarks of two Fair Share Housing
Development, Inc. representatives,
Peter J. O'Connor, Executive Director,
and Robert W. Shaffer, Director of
the Development Fund. They
addressed 27 members of the
Camden Council of Community Affairs
Officers at a recent meeting at the
University of Medicine and Dentistry
of the State of New Jersey, Camden.
"With the elimination of federal
programs, the state cannot meet the
needs of lower income families. And
cities have no money. Bankers should
look at entry level hiring and skill
training. Private industry must retrain people to read. Many public
programs have failed because people
are facing neighborhood stress (theft,
fire burned out houses) and shelter
stress (substandard housing)."
Shaffer showed slides of Northgate,
"308 units for the elderly and handicapped, adjacent to Camden's worst
area. Residents keep an eye out for
drug dealing, and turn in criminals.
Northgate took 12 years to complete,
primarily due to fear and concern
about outsiders coming in. But there
were NO outsiders coming in. The
people came right from the
"We ask banks to step in with small
annual grants to us to help with administrative costs while we solicit from
Federal Reserve Bank of St. Louis

churches, corporations, foundations
and business," O'Connor concluded.
Anthony M. "Doc" Villane, Commissioner of the New Jersey Department
of Community Affairs, emphasized
that housing is the biggest problem in
the state. The price of houses, even
rentals, is demoralizing. There is also
an economic effect: companies are
moving out of the state. It's not taxes,
or lack of talented workers. It's because employees can't find housing.
"What is the government doing? We
are looking for initiatives. My biggest
problem is actually rental housing,
which has just about disappeared.
The State of New Jersey has committed $10 million to get developers.
We have a '2 for 1' program, which
means building two-family houses
and selling them to moderate income
people with the stipulation that the
other half be rented to a low income
(Section 8) family. We did 24 units as
a pilot project in Camden under this
system. Also we want to utilize nonprofits. They range from superior to
well-meaning, but some have no
expertise. We wantto provide staffing
and help them become more
Ending on an upbeat note, Villane
said, "We are will ing to help banks
with CRA, and will be surveying local
areas where banks can work with good
non-profits and with us. Bankers and
responsible banks are sticking it out.
Newark is coming back; Camden is
on its way back. Businesses will return
to the city."

Homeless Women Find
Hope, Housing at Center
The program is called Project
Rainbow because a rainbow is a sign
of hope. Many women with children
find hope at Project Rainbow, located
in the Drueding Center, 413 West
Master Street, Philadelphia.
Says Sr. Sharon Walsh, Director of
Family Services: "Some earn high
school equivalency degrees, study
computer technology, learn secretarial
skills or nursing, and many attend
counseling sessions. We provide
day care for children of residents and
graduates. And as the women get
jobs and save money, we make
housing connections for them. We
have helped more than 200 women
in the past two years, and have
(continued on page 12)

Paula Joseph is a "graduate" of Project
Hope. She now holds a full-time job
and is living independently. Pictured
with her is her son, Marvin.


Elizabeth Dole Meets Youth Services
Corps at Habitat tor Humanity

Habitat Has A Party
An " Awareness Party" given by
Habitat for Humanity recently
introduced guests to its work and its
organization. The work is the
completed and in-process rehab
and new construction at 19th and Wilt
Streets, North Philadelphia. The
organ ization means people. The
non-profit organization, which makes
affordable homes avail able for sale
to low income people at no interest or
downpayment. Catherine Bailey,
President of the Board of Directors of
North Central Habitat for Humanity,
introduced the speakers following a
tour of houses conducted by uniformed members of the Philadelphia
Youth Services Corps.

Pictured above (left to right), are Charles Stroman, who has completed his ninemonth tenure and is now in a full-time job; Anthony R. Fairbanks; Elizabeth Dole;
and Ronald Williams.

The Hon. Elizabeth Dole, Secretary
of Labor, got a close up view of the
youth labor market during a recent
visit to North Philadelphia. She met a
crew of young adults from the
Philadelphia Youth Services Corps
(PYSC) who were rehabbing houses
for Habitat for Humanity.
PYSC is for men and women 17 to 22
years old who are out of school but
unemployed and who want to "take
charge of their lives," according to
Anthony R. Fairbanks, Executive
Director. Habitat is one of many "work
sponsors" for the young crew. The

GSB Designs Four-Year
Index of CASCADE Issues

"To tap CASCADE as a resource, I
asked Pam Witherspoon , Community
Affairs Assistant, to design an index
as a reference guide to find articles in
a hurry," said Harold C. Sundby, Jr.,
Vice President, Community Affairs ,
Germantown Savings Bank.
The index, which begins with the first
issue in 1984, is divided into four
categories: subject of article, headline,
date of issue, and page number.
GSB will provide one copy per bank
upon request. Contact P. Witherspoon ,
Community Affairs, GSB, City Line &
Belmont Avenues, Bala-Cynwyd, PA

Federal Reserve Bank of St. Louis

latter learn work skills on site, under
the leadership of Darryl Hinton, PYSC
crew leader, and Marshall McBride,
of Habitat.
PYSC is federally funded through the
Job Training Partnership Act, and
Philadelphia allocations are made by
the Private Industry Council. An
average of 45 to 50 young adults are
PYSC members at any given time,
according to Sonya Enoch, recruiter.
For details, write PYSC, 33 S. Third
Street, Philadelphia PA 19106, or
phone(215) 238-5200 .

"In Habitat's hands, the partnership
with the city will grow," said Edward
A. Schwartz, City of Philadelphia
Housing Director. "The mark of a city
is not measured by its convention
center or Penn's Landing. The
measure of success means how many
are living in affordable housing, with
jobs and a decent life for their
Habitat leaders introduced to the
audience included Board members
Clarence Good, Vice President; John
McClintick, Secretary; Brenda Liechty,
Treasurer; and Willie Mae Bullock,
Renee Garland, Dr. Joseph Stewart,
Rosemary Thomas, and Rose Howe.
(Ms. Howe, who coordinated the
event, is Consumer Affairs Representative in the Community and
Consumer Affairs Department of the

HUD Makes Grants ...

Philadelphia Fed.)

ordinarily has to hire these
experts." The HUD grant is a matching
grant, but the match with Logan CDC
is not dollar for dollar. "We plan to
raise about $125,000," Coleman explained . "Mellon Bank has committed
to providing the construction loan;
CIGNA will do the long-term financing;
and Provident and Meridian banks
are interested."

The audience also met staff members:
Woody Jenkins, Executive Director;
Leigh Irvin, Operations Manager;
Ted McBride, Construction Superintendent; and Marshall McBride, Assistant Construction Superintendent.
Others introduced were : Barbara
Wysochanski, Volunteer Coordinator;
Marsha Tyree,
Selection Committee; and Linda Behmke ,
Mid-Atlantic Regional Administrative
Assistant. Cited for special recognition were: the Reverend Paul M.
Washington, Board member of the
Advocate Community Development
Corporation and Rector Emeritus of
the Church of the Advocate ; and Bilal
A. Qayyum, Chief Executive Officer,
North Philadelphia Plan . For details,
write Habitat for Humanity, P.O. Box
6860, Philadelphia, PA 19121, or
phone (215) 765 6070.

Other HUD grants to Philadelphia
community-based organizations went
to Kensington Action Now ($35,000);
Frankford United Neighbors ($50,000);
and National Temple Nonprofit Corporation ($50,000). Watch future issues
of CASCADE for articles on these
groups. For information on the Logan
CDC, write to 5119 N. Broad Street,
Philadelphia, PA 19141 or phone
(215) 329-0980.

Wilmington Bankers
Learn About
Reinvestment Programs

The Team: Community Affairs and Consumer Banking

"Homelessness and its upstream
partner, affordable housing, are
problems. The Delaware Community
Investment Corporation (DCIC) is one
response," said Francis J. Ackerman,
Vice President of Wilmington Trust
Company. He addressed a recent
meeting of the Community Affairs
Officers Council of Wilmington , held
at the University of Delaware's
Conference Center. The 33-person
audience represented 19 banks and
government agencies.
"Representatives of several financial
institutions determined that a loan pool
would be an efficient idea," Ackerman
continued. "The result was a $5.3
million pool that provides a nine and
one-half percent fixed rate loan for a
term of 15 years, with a 25-year
amortization. DCIC was formed to
admin ister that loan pool originally,
and its Board of Directors was and is
a mix of civic, social service, housing,
and financial representatives ."
(continued on page 12)

PNB, Continental...
executives. The groups started to get
to know each other, and an open
style of discussions with much give
and take has carried over into
meetings. A part-time consultant
began helping the groups assess the
financial feasibility of projects and
the initiative has begun the procedure
for incorporation and is discussing
the hiring of an executive director.
While PNB's Luis Mora facilitates
meetings, the groups see PNB as an
active, equal partner.
Four participating groups commented
favorably on the banks' involvement,
agreeing that the computer system
was valuable. They pointed out,
though , that the initiative was still
coalescing, and that it remained to be
seen how projects would be selected
and financed.
Guillermo Salas, President of the
Hispanic Association of Contractors
and Enterprises (HACE) , said , " It's
exciting! This is one of the first times
the private sector has come to the
commun ity to look at problems and
Federal Reserve Bank of St. Louis

These are the people at the Philadelphia Fed who deal with consumer credit,
explanations of banking regulations, and the many aspects of community
reinvestment. They are (left to right): Don Kelly, Senior Communications
Specialist; Harriette Behringer, Editor, CASCADE; Deborah G. Greene,
Department Secretary; Fred Manning, Assistant Vice President and Community
Affairs Officer (seated); Keith Rolland, Economic Development Analyst; Betty
Carol Floyd, Secretary to Fred Manning; Rose Howe, Consumer Affairs
Representative and Department Administrator; Larry Murdoch, Vice President
and Secretary (seated); Phil Farley, Manager, Regulations Assistance; and
Grace Theveny, Senior Regulations Analyst.

needs. Tom Patterson is attuned to
the needs of the community. The
initiative contains groups with organizing and development capability."
John M. Toland, Executive Director
of St. Edward's/Hartranft Neighborhood Advisory Committee, Inc. , said
that he saw PNB's interest as "a
sincere effort to lend a hand to what
we're trying to do." He added that the
groups' total effort was strengthened
now that they were "aligned and supporting each other" and that the
initiative was leading towards "a
more professional way of working ."
James F. Young, Executive Director
of the Neighborhood Action Bureau ,
Inc. (NAB) , said , " PNB is providing
the type of leadership that's needed."
He saw growing confidence and
knowledge among the groups which,
he said, are "building each other up."
Pedro Rodriquez, Organizer with the
Kensington Joint Action Council
(KJAC), observed that the groups are
starting to think of drawing on each
other's strengths. Leticia Saucedo ,
KJAC staff person who is overseeing
a KJAC-initiated land trust, noted that
KJAC had led a Community Reinvestment Act (CRA) challenge against
Fidelity Bank and said , "We want to
see if other models work. " In fact,
many initiative groups have worked

with Fidelity for about two years on a
CRA agreement, which covers a larger
area of North Philadelphia than the
initiative. Whereas the relationship
with Fidelity was forged in an
adversarial situation , the relationship
with PNB and Continental has been
developed in a cooperative atmosphere.
" I believe that it's possible for banks
and community groups to work together with mutual trust, to work on
joint plans and to have a healthy
respect for each other. There doesn't
need to be a confrontation ," Patterson
commented . Denise Cummings, Vice
President at Continental Bank and
the bank's representative to the initiative, agreed and added : " Neighborhood groups can work with banks yet
not lose their own identity."
Three projects at an early stage of
consideration by the initiative are a
commercial project on the Germantown Lehigh commercial corridor, a
housing project on Leithgow Street,
and a service center. Initiative
members are: Continental Bank;
Dorado Neighborhood Improvement
Co .; East of Broad CDC, Inc.; HACE;
KJAC; NAB; Open, Inc.; PNB; St.
Edward 's/Hartranft; United Hands
Community Land Trust; and the
Women's Community Revitalization

Wilmington Bankers Learn About Reinvestment Programs ...
"We think that this initial loan pool will
be used up quickly, and we want to
begin Loan Pool Number Two. We
want to see an additional $10 million
by this time next year, so we are
looking for wider bank participation,"
he said.
Ackerman was joined in his remarks
by Thomas K. Kerstetter, President
and CEO of the Wilmington Savings
Fund Society, who is the current
DCIC chairman. Banks who are
DCIC participants include the
Wilmington Trust, Bank of Delaware,
Mellon Bank/Delaware, Wilmington
Savings Fund Society, Artisans
Savings Bank, and Beneficial Bank.
Emilie M. Barnett, Executive Director
of the Interfaith Housing Task Force,
who was credited as the catalyst for
DCIC, commented: "We had stayed
away from the for-profit developers
for years, the thinking being that they
don't always have the interests of the
low income people at heart. But now,
through DCIC, we've been able to
identify some developers who have a
good track record in low and moderate
income housing."
The next speaker, Ray Desiderio,

Senior Vice President of Continental
community responsibility department.
"We have 11 people, seven of whom
are commercial lenders. We have
extensive outreach: about 45 percent
of our time is spent 'on the street'
working with community organizations, public and private agencies,
foundations and the like. We work
closely with community job banks,
and we formed an advisory committee
of people from the bank and from
community-based organizations.

In answer to a question: "Tell us
about how your people came to work
with you?" he said, "We didn't have
to look for people to come to the
department; everyone who works for
me has volunteered for the job. These
people are very upbeat---and give
more than lip service to community

"Within our department we have a
housing loan unit, and another unit
that deals with developers; we loan
both to for-profit and non-profit
developers. Other units are the
commercial loan function and urban
development. We have a management
trainee program that sensitizes
management trainees to community
reinvestment. We have a speakers'
bureau, and we publish brochures to
market our services. Our quarterly
newsletter describes our activities
and goes to every employee of our
bank. We advertise in community
newspapers and on community radio
stations, including Spanish language
ads ."

moved 52 families into permanent
affordable housing in cooperation with
such agencies as the Philadelphia
Housing Authority, Philadelphians
Concerned About Housing, Community Ventures, Resources for Human
Development, Lutheran Women's
Program, OSHA, and Committee for
Dignity and Fairness." Project
Rainbow also receives contributions
from Mellon (East), PNB and
Provident banks. For further information, contact Sr. Sharon Walsh, at
(215) 769-1830.

Federal Reserve Bank of Philadelphia
Ten Independence Mall
Philadelphia, PA 19106-1574

Federal Reserve Bank of St. Louis

Homeless Women ...

Philadelphia, PA
PERMIT No. 529