Fifth Third Bank recently launched a $180 million program that pledges to support growth within nine majority-Black neighborhoods in seven states, including Russell in Louisville’s West End.
On Tuesday, city and program officials touted the initiative and announced the neighborhood would get up to $20 million to advance efforts of increasing home and business ownership in the neighborhood.
Leaders of Russell: A Place of Promise — a neighborhood development project run alongside Metro Government, and Fifth Third’s chosen partner in administering its program — said they were excited about the grant, but didn’t specify that just $2 million of the Cincinnati-based bank’s commitment would be philanthropic funds.
In an email, Theresa Zawacki, a Metro employee and co-leader of the Russell project, said the remaining investment dollars will be available for use within the neighborhood but not controlled by Russell: A Place of Promise.
Louisville Mayor Greg Fischer said he was thankful Fifth Third included Russell in the program.
Thankful that @RussellPromise will be part of the @FifthThird Neighborhood Investment Program! Russell’s renaissance offers re-birth for our collective hopes and dreams for an equitable society. We cannot afford not to deliver on the promise that is Russell! pic.twitter.com/VDCsPiezxO
— Mayor Greg Fischer (@louisvillemayor) October 19, 2021
“[Russell: A Place of Promise] will be helping us to understand what the priorities of the neighborhood are, and how we can overcome obstacles and barriers to make sure that they can benefit from the access to capital that we're creating,” Adam Hall, leader of community and economic development at Fifth Third in Kentucky, told WFPL News.
The majority of the money will be conditionally distributed over the next three years in the form of loans, products and services, including backing private developers’ affordable housing projects through state and federal Low Income Housing Tax Credits. That program gives builders tax credits to offset the cost of construction and is intended for housing units that are below market rate.
“If a developer is awarded tax credits, then they can sell those tax credits on the open market. And investors, typically financial institutions, will buy those tax credits to reduce our tax liability,” Hall said. “The dollars that we pay for [the tax credits] are then used to fund the equity to build the project.”
Hall didn’t say how affordable the projected developments would be.
Some housing advocates warn incentive programs that parse land off to private developers in the name of affordable housing can accelerate gentrification in an area.
In Louisville, housing affordable enough for those making 30% or less of the area’s median income is scarce. For a family of four, that’s $23,050 a year. In Russell, the median household income is $20,400.
Fifth Third is running its program in partnership with national financial agency Enterprise Community Partners, which is a nonprofit bank that could take on what Hall called “risky loans.”
“What they're designed to do is to help create a bridge between a customer who may be unbanked or underbanked, and not able to take advantage of traditional financial services,“ Hall said. “And help them to establish credit.”
According to 2017 data from the U.S. Federal Reserve, the rate at which Black businesses’ loan applications were rejected was nearly double that of white companies. While Fifth Third representatives say the effort aims to address an existing barrier for Black entrepreneurs and homebuyers, details about the banks’ loan amounts, interest and application approval rates for this program are not yet available.
The majority of Russell residents are renters, and less than one in five households own their homes, according to the Metropolitan Housing Coalition. Hall said Fifth Third is partnering with the Louisville Urban League’s Center for Housing and Financial Empowerment to inform residents about the homeownership process and help them reach good financial standing.
“If there are barriers, like credit issues or savings or whatever their barrier might be, to being able to qualify for a mortgage, we'll be helping them to overcome those barriers and then qualify for loans that would be traditional financial services,” Hall said.
Russell: A Place of Promise officials declined WFPL’s interview requests.
Discriminatory past
Fifth Third Bank has a history of settling lawsuits related to decades of prejudiced lending practices, including ties to redlining, allegedly discriminating against disability income recipients and for charging Black and brown borrowers higher auto loan rates.
Hall declined to comment on these issues, citing restrictions against discussing litigation, whether pending or settled. He said Fifth Third’s investment in Black communities is one piece of a $2.8 billion agency initiative aiming to “advance racial equity, equality and inclusion.”
Fifth Third is hardly the only financial institution with a problematic history, and not the first to attempt to make up for subjecting majority-Black neighborhoods to decades of racist lending practices.
In 2019, JPMorgan Chase granted Metro United Way $3 million to expand access to financial literacy resources and workforce development training across six of Louisville’s low-income neighborhoods. Russell: A Place of Promise received $358,000 as part of that initiative.
Hoping for a renaissance
The Russell neighborhood was once considered the Harlem of the South, known for a thriving commercial strip and Black-owned businesses. But that all changed by the 1960s, when the once-booming area declined under the pressure of racist policies like redlining, the federal Interstate Highway Act of 1956 and gentrification efforts that persist today.
Russell: A Place of Promise predicts the neighborhood will experience a renaissance. The initiative’s stated mission is to build up wealth within Russell through homeownership and workforce development — without displacing its residents. Officials said the neighborhood initiative has been engaging residents in discussion and feedback sessions over the last three years in an effort to move Russell forward.
At Tuesday’s announcement, the Russell project’s co-lead, Cassandra Webb, said residents played a role in applying for Fifth Third’s neighborhood investment program. She also called on community members to be a check on the financial giant. .
“We at [Russell: A Place of Promise] and residents ask community members for their support to make sure Fifth Third and other funders and organizations that state their intentions for equitable investments — hold them to those commitments,” Webb said. “We invite Russell residents and those looking to authentically build with residents, follow the lead of residents and partner with the residents to sign on to our partnership pledge.”
But researchers with the Urban Institute argue bringing residents to the table isn’t enough. Instead, they propose investing money directly into the community and equip residents with the tools they need to stay in Russell. Tools like a land trust — a way for residents to have oversight over changes made in their community and keep housing affordable.