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Ninth District

April 1986

Number 1

Community Affairs
Evolves in Response
to Information Needs
The Federal Reserve System’s commu
nity affairs function has had an evolu
tionary development, according to
Richard Einan, assistant vice president
and community affairs officer, Federal
Reserve Bank of Minneapolis.
With enactment of the Community Reinvestment Act of 1977 (CRA), federal
financial regulators were required to
encourage lenders to help meet the
credit needs of their communities. To
implement this new responsibility, the
regulators incorporated an assessment
of an institution’s community investment performance into the consumer
compliance examination. “We got the
sense over time, however, that there
was a larger role for the Federal Reserve to play,” Dick explains.
Carolyn Line, community affairs coor
dinator, explains further: “When our
examiners began assessing compliance
with CRA during examinations of state
member banks, they discovered that
many banks were unaware of ways in
which they might contribute more ac
tively to their community. There seemed
to be a need for more information about
government programs and other means
of promoting local economic development.”
In addition, CRA provided a mecha
nism for protesting certain bank and
holding company applications on com
munity investment grounds. There was
a need, therefore, to centralize respon
sibility for managing the progress of
actions brought under CRA. In re
sponse to these information and proce
dural needs, the Fed’s community a!
fairs function was created in 1981.

To Our Readers:
Responsiveness to local needs has always been part of good banking.
Today, meeting your communities’ deposit and credit needs brings
new challenges.
To help you meet these challenges, the Federal Reserve Bank of
Minneapolis inaugurates this periodic newsletter, Ninth District
COMMUNITY. In particular, COMMUNITY will focus on creative
ways of meeting your communities’ credit needs, compliance issues,
and other consumer concerns. It will feature innovative program and
partnership experiences of Ninth District banks.
Most important, COMMUNITY is intended to be a working paper.
Whenever possible, we will make it easier for you to follow up on
featured programs by adding contact names with address and phone
This newsletter is produced as part of the Minneapolis Fed’s com
munity outreach work. We encourage you to contact our community
affairs staff, whose activities are described in this issue.
We also invite your input to make COMMUNITY a more effective
tool for you. With your help, we can identify community issues and
innovative responses District-wide. We look forward to your partici

Gary H. Stern

Continued on page 2

Produced in the Office of Public Information
Federal Reserve Bank of Minneapolis

Continued from page 1

Consistent with the function’s original
charge, a majority of community affairs
activities are educational, involving an
outreach program to lenders, local
governments and community groups involved in community development In
the Ninth District, community affairs is
part of the Office of Public Information.
In some other Districts, it is part of the
Banking Supervision Department
Since community affairs emphasizes
information and education, Dick feels
that it’s an advantage to have the func
tion located in Public Information.
Moreover, as a separate function from
the consumer examination function,
the community affairs office comple
ments the examiners’ supervisory role
by serving as a resource for both com
munities and banks. The community
affairs office is also well-situated to
mediate disputes between banks and
consumer representatives where necessary.
Given the size of the Ninth Federal
Reserve District and the diversity of its
communities, the task of CRA informa
tion gathering and dissemination is formidable. To meet this challenge, the
Bank’s community affairs staff is al
ways looking for more efficient ways to
meet their information-related objec
Consumer examiners are one very ef
fective resource. “While they are doing
examination work, they are also looking for clues, recurring things that
suggest information needs we could
fill,” Dick explains. “They also help us
identify banks that may need assistance in finding ways to better meet
their communities’ credit needs.”
Carolyn meets with community and
neighborhood groups and conducts
seminars which help gather additional
feedback on education needs. Both she
and Dick keep up on CRA activity
through newsletters, newspapers and
attending programs nationwide.
Community affairs personnel throughout the System also gather and share
information. “Our colleagues at other
Reserve Banks are tremendously helpful,” Carolyn adds. “Through them we
can identify issues, opportunities and

About the Staff
Dick Einan brings nearly 18 years ex
perience with the Federal Reserve
Bank to his community affairs position;
Carolyn Line, 13 years with the Bank
plus a diversified background.

Dick holds a Bachelor of Science degree
from Macalester College in St Paul,
MN, and has completed graduate studies in commercial lending and bank administration. His previous experience
includes four years in the savings and
loan industry and serving as the Bank’s
Discount officer. Dick has also been an
active community volunteer, promoting
a self-help partnership approach to
addressing local economic needs.

resources in other Districts. Often,
much of what we learn can be applied
in our District”
This newsletter is another way of shar
ing ideas about community investment
options. Occasionally, some credit
needs are not fully met because finan
cially sound solutions aren’t apparent,”
observes Dick. “But another community
may have solved a similar problem. If
that information can be shared, we
think we’ll see more innovative re
sponses to reinvestment opportunities.

“Through this newsletter, we can share
ideas about successful programs while
stressing the importance of reaching
out into the individual community. Your
own situation, your own community,
always has its own set of special conditions; but often, there are existing
programs and partnership models you
can adapt to fit your needs. You may
find ways to write down risk or iden
tify combinations of government programs that help make funds available
to people you thought you couldn’t
In developing this newsletter, Dick and
Carolyn have had no difficulty identifying banks that do an excellent job of
meeting credit needs. Some of the
leadership exhibited by the banking
community in this area has been very
progressive, not just by the large institutions, but also by rural banks.
Some small banks are doing a terrific

Carolyn Line received a BA. in English
from the University of North Carolina,
Greensboro, and earned an M. S. in
Library Science from the University of
North Carolina in Chapel Hill. After
moving to Minnesota, she entered the
William Mitchell College of Law, earned
her J.D. and was admitted to the Mmnesota Bar in 1978.

Carolyn joined the Federal Reserve in
1973, first as a librarian in the Bank’s
Research Library and then in the Office
of Public Information as government
information representative working
with elected officials and their staffs.

job. (See Peoples State Bank article.)
In saluting them through this newslet
ter,” Dick says, “we expect they will
become a network for other small
“I have a great deal of enthusiasm for
the Federal Reserve’s outreach role,”
continues Dick. “It’s become pretty
clear that what we’re talking about is
just good banking and good business.”
For information on community reinvestment programs, the Community Reinvestment Act and CRA protest procedures, contact Dick Einan at (612) 340-2067 and

Carolyn Line, (612) 340-2048, Community
Affairs, Federal Reserve Bank of Minneap

This newsletter is designed primarily to assist
financial institutions in the Ninth Federal Reserve
District in developing creative responses to consumer issues and to the goals of the Community
Reinvestment Act.
Produced by the Office of Public Information under
the direction of Richard K. Einan, assistant vice
president and community affairs officer, and
Carolyn P. Line, community affairs coordinator.
COMMUNITY is available without charge from the
Office of Public Information, Federal Reserve Bank
of Minneapolis, Minneapolis, Minnesota 55480
(telephone 61 2-340-204 8).
Articles may be reprinted if the source is credited
and the Office of Public Information is provided
with copies of reprints.

Plainview Gears Up
to Meet the Future
When things are going well, it’s tougher
to plan for the future.
Plainview is a relatively prosperous
farm trade center in southeastern Mmnesota. Serving a triangular-shaped
area bounded by Winona, Lake City
and Rochester (home of the Mayo Clin
ic), Plainview generates about three
times the average economic activity of
a town of 2,500. It has two good-sized
banks, and its farming community has
not been as hard hit as in some other
But the economy is changing. “One
problem is that we’ll have fewer farmers
in the future,” according to W.H. (Bill)
Zabel,vice president, Peoples State
Bank, Plainview, “and those farmers
will need more credit and and more
services. It will be a question of wheth
er or not people in Plainview, as mer
chants, bankers and so forth, can meet
that need.”
Bill is a lifelong resident of Plainview
and an unabashed advocate of small
town living. “I probably have the same
ideas as a lot of people in town. Plainview is a really good place to live. We
want to preserve it and to continue the
good economic positioning we have
This takes planning, and while most
townspeople agreed there should be
some kind of economic planning, no one
was acting on it “I look on my job as a
senior bank officer as having a respon
sibility for economic development,” Bill
explains. “In a smaller community, if
there’s going to be any development or
moving force, it’s probably going to
come from a bank. I decided if no one
else was going to do it, I’d better do it”
As past city treasurer and park board
chairman, Bill was familiar with the
various government economic programs
available. Minnesota’s Star City program interested him. “I tend to resist
state and federal programs because I
believe we have to do it ourselves. I like
this program because it makes us do

The Flainview Area Development Corporation’s executive board meets twice a
month. Left to right, John Peterson, Dean Harrington, Don Schultz and Bill Zabel.

Star City is a program sponsored by
the Economic Development Division of
the Minnesota Department of Energy
and Economic Development It is de
signed to strengthen a community’s po
tential for attracting new business, re
taming existing business and for promoting a healthy economic base.
After admission to the program, a
community must complete 11 market,
ing- and planning-oriented tasks to
qualify for Star City certification.
“The program promises nothing other
than if you follow it and qualify as a
Star City, you are recognized as having
met the minimum standards necessary
to be competitive in bidding for new
business,” Bill explains. “You’ve made
your community more dynamic and
better able to market itself.”
Bill got the ball rolling in Plainview
with a town meeting May 3, 1984.
About 100 people, a surprisingly large
turnout, attended. His message was
simple and straightforward: We need
to maintain Plainview’s economic viability and we need to do it now. The
audience was receptive.
As a result, an economic development
planning committee was formed to de
velop strategic planning objectives.
This committee was composed of a cen
tral steering committee and five subcommittees, each dedicated to study
specific areas of concern.

Study results and recommendations
were compiled into a planning docu
ment and presented to the City Council
in the fall of 1984. The recommenda
tions included seeking Star City certifi
cation. The Council endorsed the proposal and set aside $7,500 of its budget
for implementation expenses. The
committee then applied to the State for
admission to the Star City program.
With the Council’s endorsement and
admission to the program, Plainview
began the li-step process. The cornmunity created a local development
corporation, the Plainview Area Devel
opment Corporation, and prepared a
community statistical profile. A larger
fact booklet will supplement the profile.
Star City participants must also de
velop long-range capital plans. These
include a five-year capital improvement
plan and a one-year plan for irnple
menting the five-year plan. Plainview
is now developing its capital plan.
As it nears completion of the 11 steps,
each participating community must
prepare a ten-minute marketing pre
sentation. Plainview is considering a
video format The video, profile and fact
book will be the town’s major marketing tools. Together, they contain the
information any business or private citi
zen would need to know before considering relocation. Farther down the
line, a three-person marketing team
will represent Plainview in meetings
with new business prospects.
Continued on page 4

Continuedfrom page 3

Throughout the process, each commu
nity is in touch with other Star City
participants, exchanging information.
A Star City conference held annually in
the Twin Cities gives participants, both
certified Star Cities and communities
working toward certification, the op
portunity to pick up ideas and sugges
In Plainview, all of these efforts have
been coordinated through the Plainview
Area Development Corporation’s execu
tive board which meets every second
and fourth Thursday of the month. The
board consists of Bill Zabel; Don
Schultz, an implement dealer; Dean
Harrington, another banker; and John
Peterson, a pharmacist. Each board
member is responsible for a subcommittee and acts as liaison between
that subcommittee and the board.
The community expects to achieve Star
City certification by the end of the year.
It will have taken over two years’ time
and about $10,000 to $15,000. And it
doesn’t end there. Star Cities must re
certify every year.
“We will always be in process,” says
BilL “That’s the key to the whole thing.
We will achieve Star City status, and
that will be a benchmark. But it means
that we have achieved minimum standards only. We’ll always be improving.”

Obviously, the Star City program is not
a quick shot-in-the-arm fix guaranteed
to produce economic success. It re
quires a great deal of hard work and
commitment So, is the program worth
“Yes,” Bill maintains. “In a ten-year
period, we might get two or three new
businesses. If we get one, I would consider it worth the effort
“Another important point is that when
you start thinking about what you have
to do to get new businesses, you step
back and look if you’re doing that
much for the businesses you already
have.” Plainview expects over 70 percent of its increased business activity
to come from existing businesses.

During the past year, the board has
worked with and helped several busi
nesses revitalize. When the local bowling alley was in trouble, they helped
look for a good manager who could buy
it and turn it around. Now that busi
ness is doing better than it has in years.
The importance of saving businesses
like the bowling alley, Bill stresses, is
that once they are gone, they may never
be replaced. Witness the number of
empty movie theaters in small towns,
he adds.
According to Bill, the current economic
climate of Plainview is good. When the
planning process was first proposed,
not everyone was convinced of the need
for strategic planning, especially since
the benefits would come years down
the road. Understandably, some people
wanted to see quicker results.
But Bill pursuaded them to take action
by putting their position into perspec
tive. He pointed out some other small
towns which have lost their economic
base and are no longer economically
viable. “I can take you to some towns
and park six semis down the main
street right now. They are economi
cally dead. There are very nice people
living there, but they do their shopping
somewhere else.”
At the other end of the spectrum, other
towns, about the size of Plainview and
a little larger, have already initiated
strategic planning and are making
progress toward their goals, Bill advised. If Plainview doesn’t meet the
competition, it could be left behind.
Certain factors existing in Plainview
have favorably influenced Bill’s drive.
For one thing, the demographics are
favorable. Many of Plainview’s busi
nesspersons are educated and fairly
young, with an average age of 35 to 40.
Not only are they enthusiastic, but they
have a real stake in the town’s future.
Plainview is also in a ideal situation to
capitalize on the trend of movement
from cities into the country. Rochester,
The Minnesota Star City Program’s next annual conference i
schedu1dfor September 16-18,

which is a higher-than-average growth
area, is only 20 miles away. According
to Bill, before the gas crunch of the
70s, people were moving to Plainview
from Rochester “in flocks.”
Given an increase in jobs and services
available, Bill thinks Plainview will
again be an attractive alternative to
city living. “The quality of life you find
in a small town like Plainview is Unbeatable.”
Montana readers should take rnte
ofa similar program Montana
Certified Cities. For information,
Mr. Keith Colbo
Department of Commerce
1424 Ninth Avenue
Helena, MT 59620
(406) 444-3494

Since the initial town meeting in May
1984, Plainview has completed many of
the steps in the Star City program.
There is a greater awareness in the
community and willingness to gear up
for the future. Business and service organizations are cooperating in ways
they had not tried before. Bill continues to serve as the catalyst, working
with a key group of about 30 people.
Whether or not a community seeks Star
City certification, Bill recommends the
program as a basic planning and marketing strategy. “A community is like a
business. If it has no management or
goals, it just kind of meanders.”
With its strategic plan in place, Plainview expects to be economically viable
into the 1990s and beyond. “I think
we’ll always be a farm trade center,”
Bill adds, “but we’ll have to rely less on
that in the future. Whatever farming is
going to evolve into and whatever
Plainview is going to evolve into, we’ll
be ready.”
For information contact:
W.H. (Bill) Zabel
Vice President
Peoples State Bank
300 West Broadway
P.O. Box 607
Plainview, MN 55964
(507) 534-3137

Robert Stern
Star City Coordinator
14 Fifth Avenue South
St. Cloud, MN 56301
(612) 255-4161