Nonprofit To Funnel Millions into Russell Project
A Lexington-based nonprofit is using its share of a $2.6 million grant from JPMorgan Chase as leverage to garner millions more in new investments in Louisville’s Russell neighborhood.
Community Ventures used its portion of the payment — about $867,000 — as a reserve enabling it to obtain a $15 million loan from the U.S. Treasury Department, said Kevin Smith, the group’s president.
About $6 million of that loan will go toward efforts to boost homeownership rates and entrepreneur successes in a nine-block area surrounding Cedar Street, he said.
The effort comes as new investments in Russell are beginning to intensify.
Community Ventures is already leading a push to build 30 market-rate houses in the Cedar Street corridor and is seeing early successes in its kitchen-incubator project, Chef Space, which provides resources for food industry entrepreneurs.
The group will look to use about $4 million of the funds to provide financing to residents interested in buying the soon-to-be-built homes along Cedar Street, Smith said. The rest will be put toward helping the entrepreneurial incubator program grow.
Low property values in the corridor are preventing prospective homebuyers and business owners from securing traditional loans from banks, Smith said.
“Our goal isn’t to take the place of banks, it’s to come in and kickstart the economy in these neighborhoods so that the banks can do their lending,” he said.
The U.S. Treasury Department divvied up $327 million in 2015 among groups like Community Ventures, which is considered a Community Development Financial Institution, or CDFIs.
CDFIs are commonly nonprofit, private lenders that focus on issuing loans within economically depressed areas that banks often avoid. In the Cedar Street corridor, for instance, current home values aren't high enough for traditional banks to justify issuing loans to prospective business owners, homebuilders or current homeowners, Smith said.
CDFIs are important tools for bringing economic vitality to communities, said Cathy Hinko, executive director of the Metropolitan Housing Coalition. They can catalyze new growth and investment, she said, as well as help restore value in current residents' properties — a high priority in any worthwhile revitalization effort.
"We absolutely have to increase the real estate value for any kind of significant improvement in the assets and the lives of the people who live there," she said.
Once property values begin to rise, private investors will notice and want to get involved. And that, she said, is the tipping point.
Smith said he's confident the market for homeownership and business growth is waiting to be tapped within the Cedar Street area. He points to the success of the kitchen incubator project, Chef Space, which is housed at the former Jay's Cafeteria. Nearly 10 tenants have already taken up space in the incubator, looking to gain the elements needed to branch out on their own.
"Clearly, people will come to the area to do business," he said.
The homeownership program is growing quickly. Smith said 10 families have qualified for financing assistance and are moving into the land tract selection process. They'll soon own their own homes in the Cedar Street corridor. About 40 more families are going through the counseling process to determine whether they qualify.
Construction is expected to begin by the end of this year at the earliest, he said.
Hinko praised the project for its intense focus in one area, rather than scattering redevelopment efforts across the community. If the project is successful and prices do begin to rise, she said longtime residents need to be protected from being gouged or ousted because they're unable to keep up financially.
The effort to revitalize this slice of the Cedar Street corridor comes as city officials work to revamp Russell in a broader sense.
Nearly 62 percent of Russell residents live in poverty and 40 percent live in subsidized housing, according to the federal department Housing and Urban Development. Last year, city government secured a federal Choice Neighborhood planning grant to provide resources for officials and community leaders to hash out a plan to redevelop the area.
This summer, Louisville Mayor Greg Fischer announced free WiFi would be offered across the westernmost portion of the neighborhood. And officials continue to work on plans to bring the much-anticipated West Louisville FoodPort to a swath of blighted property near 30th Street and Muhammad Ali Boulevard. A Walmart is planned for a similar lot at the corner of 18th Street and Broadway.