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In Community and Economic Development
Federal Reserve Bank of Atlanta
Volume 3, Number 2

Atlanta SRO project tests patience
Welcome House
provides housing
for Atlanta's
By Pat Simms
ruce Gunter, president of
Progressive Redevelopment Inc. (PRI), can smile about
the two-and-a-half year effort to
build Welcome House, the first
Single-Room Occupancy (SRO)
facility to be built in the city in
He can smile because Welcome House is finally open , as
of December. Lease-up is
going well, and the financing
According to Gunter, "I
don't think we skipped any
problem . We had rain . We
had environmental cleanup .
We had politics."


Born In protest
Welcome House is a $3 .3
million, 209-unit joint venture,
developed by PRI, a non-profit
affordable housing corporation, and Central Atlanta Civic
Development Inc ., a non-profit
subsidiary of Central Atlanta
Federal Reserve
Bank of St.

Progress, in conjunction with
developer-consultant Gibraltar
Land Inc., a private development company that is a part of
H. J. Russell and Company.
But the project was born
from a headline-grabbing
protest. "The genesis was an
occupation by homeless
squatters of a downtown abandoned hotel in July of 1990",
Gunter says . "It made headIi nes . The mayor (Mayor
Maynard Jackson) made a
series of promises." In fact,
Jackson promised production
of 3,500 SRO units in Atlanta
by the end of his first term.
The Welcome House
project had momentum.
Gunter says he was optimistic because the project
had serious , substantial backing . "Then we began and even
with the mayor's support, even
with this and such, we encountered a lot of difficulties."
As it seems with all low-inc om e housing tax credit
projects, part of the problem
was the complex nature of the
financing, he says . "It was the
first new SRO to be built in
Atlanta in maybe two decades .
The banks were very, very
"And it was going to be located downtown. It was born
out of that confrontation, so
right off the bat, it had a very
high symbolic value. The

Welcome House, a 209-unil SRO facility, opened on
December 31, 1992.



·I! ~1ni,,~l~;f
/119ss D,v,/o~t

and f{.lnc/Jng tor $ltUi.ll bttsfne$Ses. 7

• • Atlan~ MO(f.g~,- 0on~ott1,~i~····· 9




.l_ ••_

,·., .,· bimkfng Industry ........................... 11

See SRO, page 3



King Center promotes
community development
CCD forms partnership
with NationsBank

By Courtney Dufries
early 30 years
after Dr. Martin
Luther King, Jr.
delivered his famous "I
Have A Dream"
speech on August 28,
1963 in Washington ,
D.C., the King Center is
still pursuing his goal of
nonviolent social
change and economic
Dr. King 's dream
included a vision of a
"beloved country ,"
free of racism, poverty, and violence. The
King Center has established a Center for
Community Development (CCD) to assist
community-based organizations in low-income neighborhoods address problems
caused by poverty by enhancing their capacity to engage in
effective community development programs .
As James Oxendine ,
deputy director of the CCD
describes it, "We see community development as nonviolent social change."
In April 1993, through CCD,
the King Center established a
collaborative partnership
agreement with NationsBank
Corporation, the fifth largest
banking company in America
with total assets of $122 billion
as of March 1993. The purpose of the initiative is to pro-

vide the Nations Bank staff with
training, education, and research services pertaining to
community development. Ac-


The Dr. Martin LuJher
King, Jr. Center for Nonvwlent Social
Change is located on
Avenue, Atlanta, Georgia.
Federal Reserve
Bank IN
of St.

cording to Mr. Oxendine, "The
NationsBank initiative is an oppo rt unity to enhance the
region's leading community
development lender's capacity
to do community development
The bank-funded $674,000
two-year initiative began with a
series of four three-day interactive work-shops with
NationsBank's key staff and
with consultants from the
The workshops featured
lending experts who discussed
the latest community development financing tools and techniques . In addition, the
workshops included sessions
on using the Principles of Non-


violence to promote community development. As Mr.
Oxendine says, "We provide
initial training, but the longterm effect is education."
The initiative also
provides funding for
the installation of a
economic development database at
NationsBank's Community Investment Program offices . The
database was developed by Community
Information Exchange,
Washington, D.C. The
CCD builds on the
computer resource to
form a stronger network with banks,
government agencies,
regulators, and community development
The CCD's training for
senior staff of NationsBank's
Community Investment Program occurred during May and
June i~ Charlotte, N.C., Dallas,
Washington, D.C., and Atlanta.
The CCD has several other
initiatives underway, including
a comprehensive technical assistance program for nonprofit
organizations funded with a
$2.1 million HUD grant. For
more information on these initiatives, contact James Oxendine at the Center for Community



SRO: Welcome House project encounters many difficulties
Continued from page 1

18 Month Construction and LNse-Up

Construction Loan
Housing Trust FLn! Loan
Affordable Housing Program Grant
Tax Credi Equiy (at clomg)
Fooodation Grant
City of Atlanta Slbsidy

S 1,984,287 (1)
400,000 (2)

Total Construction Financing

$ 3,309,287

Land Acquisition
Design and Other Consultants
Dry Utiities
Special Construction
(including Furnishings)
Project Administration Fees
Matketing and Lease-Up
Hard Construction Costs
Hard Construction Contingency
Construction Loan Interest
Other Finances, Insurance, and Legal
Operating Contingency
Envirorvnental Cleanup


Total Construction Costs


tS,604 (3)
250,000 (4)

(1) Will convert to permanent loan of $1,250,_000 upon stabilized occupancy.
(2) Total equity investment of $1 ,239,000 paid-0ut over live years.
(3) $450,000, 40- year lease not included.
(4) Does not include $50,000 consulting lee or $64,000 development lee.

whole process was very
visible. The city had to donate
the site. We had a series of
deadlines that had to be met.
Then there was the soil contamination. It just seemed that
we were almost lurching from
one crisis to another
throughout the project.·
In fact, Stan Goldsboro , a
LIHTC specialist with the
Georgia Housing Finance
Authority, says the project just
made the deadline for carrying
over the $258,359 in 1990 tax
credits received .
"The project received the
carryover allocation December 31 , 1990 ," Goldsboro
says. "They had two years
from that point to get the
project in service . Literally and
figuratively, they got it done at
the midnight hour. The 8609
was issued on December 31 ,
Federal Reserve Bank of St. Louis

In the beginning
But in the beginning, the
problem was money. Ray
Kuniansky, now vice president
of Bank South, was with
HomeBanc, a small community-based bank, when the
project began two-plus years
"I got involved when the
package was first put together.
They were trying to obtain conventional financing, and they
really did not have a lot of
background information on
how a bank wo:.ild underwrite
this kind of project," Kuniansky
stated .
Kuniansky says part of the
difficulty was cash flow . "You
had a budget of $4 million, but
the income stream from the
property, as far as a permanent loan went, would only
support $1.5 or $1 .6 million in
debt. The reason, of course , is

that they were targeting people
that could only pay $7 a day.
So you had a big gap between
how much income there is, and
what it costs to run, and what
is left over to pay the first
Kuniansky says it became
obvious other sources of funds
had to be found. "One of the
ideas was that we would go to
the city and get them to set up
a funding mechanism to help
pay the first mortgage," he
At the same time,
Kuniansky says he applied for
and got a Federal Home Loan
Bank grant-worth $350,000
to the project. And, under a
variety of different pressures,
"the city is getting ready to establish a half-a-million-dollar
fund that will pay $35,000 a
year of debt service.

Everybody at the table
In the end, Wachovia Bank,
through the Atlanta Mortgage
Consortium, provided the permanent loan and the construction loan to the tune of $1.9
million, Kuniansky says. "Part
of that is bridged money that
covers the tax equity that
comes in at certain points of
In addition to the tax credits,
the Georgia Housing Finance
Authority also put in a
$250,000 subordinated 20year mortgage loan from the
Georgia Housing Trust , he
Goldsboro, the Enterprise Social Investment Corporation is
buying the credit, which will
generate more than $2 .5 million in tax credit over 10 years.
But the variety of funding
sources put the project in a
constant state of flux,
Goldsboro says.
"The number of funding
sources and the constant
changes in financing and the
See SRO. Page 4



SRO required gap financing


Continued from page 3 - - - - - - - - - - - - - - -

This excerpt
is reprinted
with permission from
twice monthly
report for participants and
advisors in
the low-income housing
tax credit program.

unexpected costs in terms ~f
having to scramble for additional funding for environmental cleanup did make it difficult."
"And it was one of the first
SROs to be completed in the
city. The concept had to be
accepted politically. This is in
the downtown area. It may not
be the most prime land, but
anything in the downtown area
tends to have certain types of
perceptions by the business
community. There had to be
mutual education on how it
was going to be managed and
what type of impact, soci'.3-!IY
speaking , this type of facility
would have on an area so
close to downtown."
"It took a while to reach
comfort levels acceptable to all
parties involved," says
And every time a new
source of funding came on
board, he says , the rules
changed. "Every source was
trying to protect their part of the
action . When you have so
many funding sources, ea~h
has their own requirements in
terms of underwriting ."
Then they found a buyer for
the credits, Goldsboro says.
"And their requirements were
more stringent than ours in
terms of set-asides and percentages, so we had to go
back and underwrite it again."
"It was a pretty dynamic
process for a period of years."
In fact, construction was
shut down in June due to
delays in the clos!ng . . Construction restarted In mid-July
when the financing closed .

Compliance monitoring
One somewhat unusual
factor of the project, says
Goldsboro, is the large compliance monitoring fee the
Welcome House project is
paying to the state.
"This project has a compliance monitoring fee of
$66,394. That's a fairly hefty
compliance monitoring fee."
Federal Reserve Bank of St. Louis

Goldsboro says the state
had been waiting for guidance
from the IRS before collecting
it. Now, the state is going
ahead, though the Welcome
House project has asked that
it be allowed to restructure the
payment of $50,000 of the fee.

Soll contamination
Most people agree, however, that the unexpected soil
contamination on the site was
a downer.
The land, in an industrial,
warehouse-type area, was
provided on a ground lease
from the city to the Urban
Residential Finance Authority. The ground lease was
then sold to PAI, Kuniansky
Gunter says the groundbreaking ceremony took pla~e
in early March . "We took pIctu res , shook hands and
smiled. Then we started."
Gunter says a Phase I environmental test and soil surveys had been done, but apparently they didn't test deeply
enough. "When the backhoe
got out there and started digging down 10 or 12 feet, the
odor was a clear indication of
They found a 100-year old
abandoned sewer. "It cost us
$150,000 to haul the bad soil
out, and we had to take two
industrial oil tanks out."
In the end, the city agreed
to reimburse PAI $150,000 for
the cost of environmental
cleanup. "I went on a handshake," says Gunter.

Welcome home
The project itself, offers 163
singles and ~6 doubl_es, _fully
furnished with a twin-sized
bed, dresser, desk and ch_air,
refrigerator, and lavatory sink.
Bathrooms are shared, and
there are common kitchens on
every floor.


See SRO, page 12

The Greater Huntsville
Loan Fund, Inc., had a lot to
celebrate on its first anniversary. As of June 30th, the
Fund had approved 12 loans
totaling $374,200. Northeast
Alabama Regional Small
Business Development Center administers the program,
which has $1 million in
loanable funds for small businesses needing short-term
financing. Six banks are participating: AmSouth, Central
Bank of the South, Colonial,
First Alabama, First Command, and SouthTrust. For
further information, contact
Jeff S. Thompson, NEAR
Small Business Development Center, Huntsville,
Alabama (205) 535-2061.
The Delta Partnership, a
five-year program formed to
assist the Delta regions of
Mississippi, Louisiana, and
Arkansas, has been formed
with the assistance of a $6.6
million contribution from the
Pew Charitable Trusts of
Philadelphia. The Foundation for the Mid South in Jack
son, Mississippi, will be the
managing partner of the
projected $11.8 million
budget. For more information, contact the Foundation
for the Mid South, Jackson,
Mississippi (601) 355-8167.
Jackson State University,
Jackson, Mississippi, has
been selected as one of nine
historically black colleges
and universities to receive
$500,000 as part of a $4.5
million HUD program for
neighborhood revitalization,
housing, and economic
development activities in fiscal 1992. The grant will be
used to acquire and
rehabilitate 40 vacant homes
in Jackson that will be sold to
low- and moderate-income individuals with the proceeds
used to establish a revolving
loan fund for future development.


Minority Business
Development Centers
Technical assistance providers
reach out to serve minority

By Jennifer Grier
w people would dispute
hat the small business
sector is vital to the nation 's
economy. Accord ing to the U. S.
Small Business Administration
(SBA), small firms employ 57.3
percent of our work force and
create 45 percent of the new
jobs. However, more work is still
needed to achieve an equitable
representation of minorities in
business ownership.
Although the trend is improving , the number of
minority-owned businesses in
the U.S. is significantly less
than their proportionate share
of the population . For example , the 1987 Census
Bureau's Survey of MinorityOwned Business Enterprises
states that African-Americans
account for only 3.1 percent of
businesses in the U.S., while
African-Americans account for
almost 12 percent of the U.S.
population. However, there
are formidable challenges
facing minority entrepreneurs
that perpetuate the underutilizat ion of their growth
Many m i nority entrepreneurs lack the initial capital
or financial and managerial
skills to start a business. As a
result , they may not qualify for
conventional debt financing,
and they experience problems
procuring government and

SUMMER St. Louis
Federal Reserve Bank of1993

corporate contracts . Fortunately, there are agencies
that can provide technical assistance to businesses that will
prepare them to anticipate and
overcome these barriers.

Minority Business
Development Agency
Since its inception in 1969
by Executive Order of the U.S.
Department of Commerce, the
mission of the Minority Busi ness Development Agency
(MBDA) has been to increase
opportunities for racial and
ethnic minorities to participate
in the free enterprise system .
The MBDA seeks to fulfill this
mission by forming and
developing competitive
minority-owned and -managed
firms through its business
development center program .
The agency is headquartered
in Washington, D.C., and has
regional offices in Atlanta,
Ch icago, Dallas, New York,
Franc isco,
Washington, D.C.
Minority Business Development Centers (MBDCs)
are located in 100 metropolitan
statistical areas (MSAs) . The
centers are funded by MBDA
grants, also known as
cooperative agreements, that
are awarded on a competitive
basis to for-profit and non profit compan ies. The agreement with the center operators
is renewable each year for a
total of five years. Conse-

quently, the MBDA requires a
quarterly progress report from
each MBDC to determine
whether the terms of the
agreement will be extended .
Counselors at the centers
provide cl ients with a variety of
services includ ing accounting,
inventory control, bid estimat ion , bonding, personnel
management ,
negotiations , and marketing .
The services are offered for a
nominal fee based on the size
of the business.
The MBDCs do not provide
direct capital loans or legal services . However, the centers do
assist clients in assembli ng
financial packages for submission to lenders. In addition,
government agencies and
private corporations utilize the
MBDCs to identify qualified
minority-owned businesses to
procure contracts.

Orlando Minority
Business Development
MBDCs strive to identify
financing gaps and obtain
funding sources to fill those
gaps . For example , many
small businesses have trouble
obtaining small dollar ($5 ,000
to $50,000) start-up and working capital loans because the
administrative costs for banks
to book these loans may exceed a fair rate of return.
See MBDC, page 6



MBDCs: Financial intermediaries
Continued from page 5 - - - - - - - - - - - - - - - - - - - - - - - - The Orlando MBDC recognized this problem and helped
formulate a program designed
to make financing more accessible to minority businesses
through the coordinated effort
offinancial institutions, the City
of Orlando, and the Orlando
The Orlando MBDC serves
as an intermediary to the
banks by referring completed
loan packages of its qualified
clients . A loan committee
comprised of representatives
from the community and each
participating bank makes the
loan decision based on established lending criteria. The
loan is then funded by one of
the banks on a rotating basis.

The Orlando Minority Business Loan Program (MBLP)
has commitments totaling
$11 .4 million fr;:,m eight local
banks: Barnett Bank of Central
Florida, N.A., First Union National Bank of Florida, Liberty
National Bank, Metro Savings
Bank, NationsBank, Orange
Bank, Security National Bank,
and Sun Bank, N.A.
According to Jack Perkins,
Project Director of the Orlando
MBDC, "This program is
providing a great stimulus for
the minority-businesses in Orlando. I feel that this model
can be duplicated by all the
The Orlando
pledged to make 40 loans
totaling $4 million in the first

year. Since March, the program has approved and
funded eight loans. "We are
very pleased with the success
of the program. Jack Perkins
is able to give the individual
assistance to these clients that
we can't always provide. Best
of all, the MBDC is providing us
with workable deals", says
Sandra Jansky, executive vice
president, Sun Bank, N.A., Orlando, Florida.
The Orlando MBLP is
designed to reduce financial
barriers confronting minoritybusinesses. In an increasingly
competitive business environment, the importance of intermediaries like MBDC's cannot
be understated.

Federal Reserve Bank of St. Louis




for success
Nonprofit promotes
small businesses

By Hank Helton
espite the many opportunities, the odds are still
against the small business person. The Office of Advocacy of
the U.S. Small Business Administration reports that as of
January 1992, 62.2 percent of all
small businesses are dissolved
in their first six years for a number of reasons, not all of them
financial. Many small businesses are marginally capitalized from the beginning, while
others meet their demise when
operational problems go unnoticed or uncorrected, forcing
the owners to close or sell. Fortunately, the Greater Atlanta
Small Business Project
(GRASP) is working to channel
the excitement, ideas, and energy of the entrepreneurial spirit
into sound management practices to create viable small businesses.
Formed in 1985 as a
partnership between the city
and county governments, in
1988, GRASP became an independent, non-profit organization whose mission is to
expand and stabilize the local
economy by fostering and
developing small businesses.
Working with both the public
and private sectors, the organization targets economically distressed areas in metro

Federal Reserve
Bank of1993
St. Louis

GRASP concentrates its efforts in three major areas.
First, it provides technical assistance to existing small businesses as they grow. Second
it trains and empowers low-income individuals, minorities,
women , and others to achieve
economic self-sufficiency
through small business ownership. Finally, it promotes community economic development
using a comprehensive approach aimed at creating thriving neighborhood business
districts. GRASP has also established a small service business incubator that currently
serves 14 businesses.
GRASP's assistance, from
1988 through 1992, helped
client firms secure $5.4 million
in debt and equity capital, and
helped create, stabilize, or expand 578 businesses and
generate 550 jobs . GRASP intends to assist 160 businesses
helping create about 110 new
jobs in 1993.
According to Maurice Coakley, executive director, "We attempt to analyze the behavior
of our prospective clients as it
relates to the behavior of successful entrepreneurs, and the
higher the match between
those two, the higher the success rate will be for that individual."
Through its education and
training services, GRASP offers Project Enterprise, a sixmonth entrepreneurial lifestyle
and business skills training
course. This program is avail-

able to public housing tenants and unemployed
per~ons. To qualify, participants must pass a
basic skills t~st and participate in psychological
and personality tests, as well as a personal interyiew. The top graduates are awarded 3 percent
interest, 36-month loans ranging from $1,500 to
$4,000 to be used towards start-up costs. These
loans are funded through a U.S Department of
Health and Human Services Project lndepe~dence grant and are administered by GRASP.
This program graduated 120 students in 1992 and
1993, of which approximately 50 have initiated
new businesses.
GRASP has also been chosen as one of 52
new lenders participating in the SBA Microloan
Demonstration Program. These loans will benefit
women, low income, and minority entrepreneurs,
and very small businesses (less than 1o
e~ployees) located in economically distressed
neighborhoods. GRASP anticipates average
loans of $7,500 and maximum loans of $25,000.
The average term is expected to be 3 years with
a 6 year maximum maturity. Interest rates will be
See GRASP, page 9

Recent graduates of GRASP's Entrepreneurial
Training Program.



Atlanta Mortgage Consortium
By Chuck Scheid


hen lenders and community groups see
news of loan discrimination
(i.e., Washington Post - June
8, 1993) conversations always
lead to current working solutions on delivering a loan
product to low-income
households who probably
have credit problems . The
best known solution is that of
"lender consortia."
Currently the Atlanta
Mortgage Consortium (AMC)
is one of the largest singlefamily consortia in loan volume
in the country . At approximately $60 mi llion in
closed loans and some 1,200
families , the average borrower
is an African -American , single
female head-of-household
with 1-2 children with
household income of $22,700 .
The downside on consortia
lending-lending w ith expanded credit criteria-has
been the lack of a secondary
market purchaser, until now!!
Freddie Mac has purchased
$16.6 million in AMC loans and
in so doing, opens the door to
the creation of lender consortia
nationally .
To explain how th is purchase was accomplished one
should understand the mission, history and production
process of the AMC .

The mission of the AMC is
to provide single-family loans
for individuals with household
incomes of less than 80% of
the median income (i.e ., less
than $37,200) .
Chuck Scheid
is executive
director of
the Atlanta

The AMC was originated as
a single-family and multifamily
lender in April 1988. Originally, eight lenders created the
Federal Reserve Bank of St. Louis

AMC honors its 1,000th client al a reception held al the Hoosier
United Methodist Church in Atlanta, Georgia.

consortium with Trust Company Bank assuming the
original lead bank position . To
date there are nine members:
Bank South, First Union , Georgia Federal, The Merchant
Bank , Nat ionsBank , The
Prudential Banks, SouthTrust
Bank, Trust Company Bank
and Wachovia Bank.

The consortium has closed
approximately 1,200 loans and
reports a 7 .0 percent delinquency ratio . For comparison
purposes, the Georgia delinquency for FHA products as of
March 1993 was 8.25 percent.
A Federal Home Loan Bank
study of some 600 loans conducted in 1991 shows the
AMC's portfolio performance
has improved since its 1990
figures because of the strong
emphasis on buyer education
and good management controls.
When we review our delinquency ratios , we recognize
that some families may have
problems caused by loss of
work, excessive medical bills,
or other unplanned family
problems that create a
mortgage non-payment prob-


lem . Our 90 day-plus delinquency shows households
where we are working with
families, allowing them to get
back on their feet. In some
cases, however, they follow
the advice of TV attorneys who
preach the gospel of
bankruptcy. We currently
carry a total of 21 bankruptcy
cases, which we do continue
to pursue for resolution.
AMC loans are originated
by any member branch office.
Loans are mailed/faxed to our
central processing/underwriting office. Loans are closed
according to AMC lending
criteria. Closed loans are serviced by Standard Mortgage
To continue now with our
process, we might liken it to
turning a battleship around on
a narrow river. One needs a
pilot who is familiar with the
river and a captain familiar with
the ship. The battleship, USS
Freddie Mac was piloted by
Ray White. Ray is the local
Atlanta regional marketing
representative for low-income
Freddie Mac products . With
Ray as the captain and the
AMC as pilot, the procedures
See AMC, page 9


AMC: Selling unconventional loans to the secondary market
Continued from page 9

for meeting Freddie Mac
charter requirements were
reviewed and examined as to
how Freddie Mac could purchase a consortium portfolio
that included no mortgage insurance.
Because of Ray White's
perseverance, the dedication
of all participants with Freddie
Mac, and the AMC Board of
Directors' professional guidance, it was discovered that
a consortium portfolio, with no
mortgage insurance could be
securitized if the consortium
established a reserve account
to guarantee payment of
This type reserve account
had never been tried, yet it met
the charter requirements of
Freddie Mac. Therefore, at
the time of sale, a 5 percent
reserve account of all loans
with LTVs over 80 percent was
established as a one-time payment. The AMC has been
making loans since 1988, so
this reserve equaled about 3.8
percent of the total $16.6 million, since a large percentage
of loans were now less than 80
percent LTV.
The AMC is not a Freddie
Mac seller/servicer, so all
loans were assigned to our
servicing company, Standard
Mortgage Corporation.
The actual pricing of the
loans was based upon the
market value of each loan
coupon rate. All of this was
Mortgage Corporation, and
specifically, Kevin Kingsman,
the general manager and
myself reviewed pricing.
As single-family consortia
continue to develop, each organization should meet with
Freddie Mac and include this
in the discussion on how to
create an consortium product.
Remember to create the
product so it meets the needs
of the low-income community
and not necessarily the secondary market.
Federal Reserve Bank of St. Louis


Residential Mortgage Loans
Past Due Rates
as of March 31, 1993







Over 90 Days









All Loans

Data from Mortgage Bkrs. Assoc. of Amer.
Natl Delinquency Survey, except AMC.
Chart prepared by FRB Community Affairs.


All Loans

AMC has foreclosed on 3 .24%
of its loans since inception.

GRASP: Serving small businesses
Continued from page 7
12 percent annually. Funding
should be available in the fall.
GRASP pursues funding for
development programs mainly
targeted at disadvantaged
populations and non-traditional entrepreneurs. GRASP has
received Community Development Block Grant funds and
special purpose grants from
the Departments of Labor,
Commerce, and Housing and
Urban Development, Health
and Human Services, and the
U.S. Small Business Administration (SBA).
Since 1991, federal grants
have averaged $900,000 annually. In addition to bank and

other corporate donations, GRASP recently
secured a fee-based contract with the Macon
Georgia, Housing Authority to provide training
and technical assistance to its residents.
The ov~_rall mission is to empower people who
have trad1t1onally been left out of the economic
mainstream by providing them with the necessary
tools to compete. As Mr. Coakley says, "If you
give a man a fish he will eat for a day. If you teach
a man how to fish he will eat for a lifetime. That's
what economic empowerment is all about."
Any_ small business owner or prospective
owner in the metro Atlanta area can participate in
GRASP. Most of the programs operate on a fee
for service basis. However, grants and local
government funds are available for qualified participants. For more information on GRASP and
its programs, call, Mr. Maurice Coakley Executive
Director, (404) 659-5955.



Reading File

Taking Note of Annual Reports
The Enterprise Foundation: Seeds of Change, 1992
Annual Report, features a colorful "Grassroots Activity"
report that summarizes some of the foundation's many activities in 28 states. Six community development organizations in Florida, one each in Georgia and Louisiana, two in
Mississippi, and four in Tennessee were featured. At yearend 1992, Enterprise assets totaled $46.3 million, which
included a 26.8 percent increase in loans to neighborhood
housing groups from 1991 . The fund balance totaled $18.7
million, an increase of $4.3 million from the prior year. The
profitable year can be attributed in part to a $1.4 million
increase in grants received and a $1 .6 million increase in
equity in subsidiaries. Program activity expenses also increased 32.3 percent. According to the report, cumulative
loan losses (from neighborhood groups) since its inception
11 years ago totaled only $287,000 and amount to less than
1 percent of the approximately $40 million in loans.

Neighborhood Reinvestment Corporation : Critical Investments for Critical Times, 1992 Annual Report, features exceptional photography and skillful graphs to supplement its financial statements . At fiscal year-end September
1992, assets totaled $9.1 million and included $3.6 million in
congressional appropriations to fund neighborhood
revitalization organizations with revolving homeownership
capital available until September 1994. Although congressional appropriations increased 21.8 percent from September 1992 to 1993, a $245,000 dollar operating loss was
reflected because of lower interest income earned and a
higher level of grants and grant commitments made . NRC
reports a total fund balance of $1 .04 million, which measures
11 .46 percent of total assets.

Seedco: Partnerships for Community Development,
1992 Annual Report, provides a highly informative narrative
report on its activities to forge partnerships among community-based groups and "anchor public benefit institutions"
to promote revitalization of impoverished inner-city neighborhoods. Supported by a major grant from the Ford Foundation, and many other grants from public and private sources,
Seedco has been active throughout the district, especially
with Historic Black Colleges and Universities. Anchor public
benefit institutions are those whose primary mission is serving a public interest, such as hospitals, utilities, colleges , etc.
Seedco is an acronym for Structured EmploymenUEconomic
Development Corporation. Seedco is currently active in 26
cities, including Atlanta, Jackson, MS, and New Orleans.
With total assets of $6.9 million as of September 30, 1992,
Seedco grew 36.8 percent from fiscal-year 1991 and increased its fund balance by 37.5 percent to $2.3 million.
Federal Reserve Bank of St. Louis



Closing the Gap : A
Guide to Equal Opportunity Lending, 27
pps., Federal Reserve
Bank of Boston. For
copies, call (617) 9733459.


Banking in a Changing World, speech by
Susan M. Phillips,
Governor, Federal
Reserve Board, June


Detecting and eliminating possible discrimination in finan c i a I institutions ,
speech by John LaW a re, Governor,
Board, March 1993.


Tools for Lenders: A
guide to Successful
Community Reinvestment, the Woodstock
Institute has prepared
this publication to help
guide financial institutions as they assess
their CRA compliance
(1990). The manual is
available for $50 for
the first copy, $25 for
additional copies. For
copies, call (312) 4278070.


A Path to Community
Development: The
Community Reinvestment Act.Lending Discrimination, and The
Role of Community
Development Banks is
the sixth public policy
brief published by The
Jerome Levy Economics Institute of
Bard College. For
copies, call (914) 7587412.

Cop ies of materials
roduced by the Federal
Reserve System can be obtained by writing or calling the
ommunity Affairs section at
(404) 589-7307.


A changing social landscape


Excerpted from a speech by
Federal Reserve Board Governor
Susan Phillips on June 23, 1993,
before the American Bankers
Association's Graduate School of

Unless you've been
sojourning in a cave for the last
few years, you've already
heard a speech about the
changing environment for
banking. I will not replow that
particular ground . Instead I do
want to talk about a related but
less visible set of changes
facing banking today . These
are social and cultural changes that are slowly but surely
transforming our society.
The social trends I will focus
on will dramatically influence
how your institutions approach
three fundamental issueswho will be the bank customers of the future; what
products and services will they
need and demand; and how
will those products and services be marketed and
When we think of change,
we often tend to think in terms
of technological change . And
it's true that technological advances can be dazzling . But
isn't it equally striking to realize
that about one out of every four
U.S. residents now claim
African, Asian, Hispanic or
American Indian ancestry? In
fact, racial and ethnic minority
groups are growing seven
times as fast as the majority.
Most social and cultural
shifts occur relatively slowly
and, as a result, are not so
obvious as technological
Federal Reserve
Bank of 1993
St. Louis

changes. But they can have
implications perhaps more
profound than changes in
technology or industry consolidation. And that is precisely why bankers must be attentive, not only to the newest
technological innovations and
systems , but also to the wider
social landscape .
Strategic planning that incorporates societal changes is
prerequisite to a successful
business future .

Aging of America
Among the most significant
of these societal trends is the
aging of the population. In
1990, there were 2.7 retirees
over age 60 for every 10
workers. By some estimates,
that number will increase to 4.3
retirees for every 10 people
working by the year 2025. The
dramatic shift to an older
population of customers will
have affected every type of
business-including banking.
All phases of planning will be
touched-product development, physical design of
branch facilities, marketing
and so on .
The full extent of how this
aging of our population will affect banking is not very clear
but is likely to be significant.
For example, one aspect of the
aging of America is the transfer
of wealth. As the World War II
generation dies, "boomers"
will receive what FORTUNE
magazine calls "the biggest intergenerational transfer of
wealth in U.S. history."
Some believe that this
windfall income will be used to
pay off existing debts. Others
predict that a good deal of the
money will be used for business start-ups. Both impact
lending opportunities. And, of
course, many of these
recipients of sizable assets will
need financial advice on a
scale not typically provided to
middle class customers.

An aging population also
puts a focus on retirement
financing. This will stimulate
the market for financial planning products and investment

Diversity In America
While the aging of America
will have profound effects on
our economy, America's growing diversity could also
reshape our economic life. It
has been estimated that by the
year 2056, most U.S. residents
will trace their roots to Africa,
Asia, Hispanic countries, the
Pacific Islands, or American
Indian tribes. In about 100 of
the 500 or so largest U.S .
cities, minorities are, in fact,
reported to be already in the
The increasing racial and
ethnic diversity of our population will continue to stimulate
minority business development. A growing number of
entrepreneurs representing a
multitude of racial, ethnic and
cultural groups will be looking
to financial institutions for
financing and other services.
Another dimension of our
growing diversity is the
dramatic emergence of
women as active participants
in the nation's working
economy .
figures indicate that in the 5
years between 1982 and
1987, the number of womenowned businesses grew 58
percent to a total of 4.1 million.
During that same period, it is
estimated that annual receipts
for women-owned firms grew
from $98 billion to $278 million .
Some institutions have begun
to focus on this market, but
clearly others have not.
Ethnic diversity in our
society will obviously translate
to our national workforce. A
high percentage of new
workers in the next decade will
be blacks, Hispanics, and
See PHILLIPS, page 12




SRO: Serving the "working poor''
Continued from page 4

Florida Association of
Mortgage Brokers, August 2528, Boca Raton, FL, Annual
Convention. Contact (904)
National Housing &
Rehabilitation Association,
August 26-29, Martha's
Vineyard, MA, 1993 Summer
Institute. Contact (202) 3289171

provided on
events and
other organizations
should be
viewed as
strictly informational and
not as an endorsement of
their activities.

Ms. Foundation for Women
(MFW), September 9-13,
Peachtree City, GA, 6th Annual
Institute on Women and
Economic Development. Contact (212) 353-8580.
Institute for Professional and
Executive Development, September 22-23, Washington,
D.C. , "Housing the Non-Wealthy Elderly." Contact (202)

It is designed to serve the
"working poor". Welcome
House residents sign sixmonth leases and pay between $7 and $9 a night for a
10-by-10 carpeted room . To
move in, residents must pay a
$20 application fee, a $5
phone deposit, and the first
week's rent.
Unless applicants can show
proof of employment or some
prior rental history, they must
undergo six months of counseling services .
Residents also share
laundry facilities, a television
lounge and weekly maid service.
All the rooms in the brickan d -s tu cco building are
restricted to 50% of area
median income.

Project model
Goldsboro says the
process for Welcome House

was so tortuous because it
was a first and because so
many people were involved.
"You have a lot of different
homeless groups vying for involvement. You got a lot of
players, a lot of stakeholders,
but now that we've gotten this
one under our belt, the next
one can become a little easier.
We have a model now, and we
brought people to the same
table and achieved comfort
According to Goldsboro,
"It's sort of a monument to a lot
of people's hard work."
Gunter agrees. "Right now,
I couldn't be more pleased.
People are happy with the appearance of the building . We
are happy with the lease up,
happy with the house rules .
"We even ended up with
$30,000 in donated landscaping plants. It's going well right


Phillips: Ethnic diversity in the workplace
Continued from page 11

Ron Zimmerman

Cynthia Goodwin
Courtney Dufries

Free subscription and additonal copies are available
upon request to Community Affairs, Federal Reserve
Bank of Atlanta, 104 Marietta St., N.W., Atlanta, Georgia
30303-2713, or call 404/589-7307 ; FAX 404/589 -7302 .
The views expressed are not necessarily those of the
Federal Reserve Bank of Atlanta or the Federal
Reserve System. Material may be reprinted or
abstracted provided that Partners is credited and provided
with a copy of the publication .

recent immigrants. Banks-in
fact all of corporate Americawill face the challenge of diversifying a primarily white
managerial team to supervise
a work force that will be increasingly Hispanic and nonwhite.
Business will also have to
develop the wherewithal to
train a workforce that is
capable of dealing effectively
with a diverse customer base.
Hopefully, every banker in this
room is aware of-and concerned about-the racial disparities in mortgage lending
demonstrated by publication of
the Home Mortgage Disclosure Act data.
Much of the problem may
be due to subtle cultural bias.
No doubt some of this problem
could be diminished if lending
officers better match the diver-
Federal Reserve
Bank of

sity of bank customers. But
even further, bank management must examine its practices and policies to assure
that the chances of mortgage
discrimination are minimized .
This can be done through intensified analysis of lending
practices, second review
employees education and outreach marketing efforts.
Overall, I am suggesting
something rather straight forward. Those banks that anticipate and understand the
dynamics of social and cultural
diversity will be ahead of the
curve. Those banks that
respond effectively with appropriate research, product
development, marketing and
employment practices will be
the leading institutions in the
future .