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In this issue of Cascade we write about community development efforts from the perspective of a banker, a builder, a funder, a community developer, and a resident. All of them are committed to reviving the cities or neighborhoods where they work or live by building and financing commercial corridors, retail, mixed-use, or residential projects.
Pam Woodell of Sovereign Bank talks about using new markets tax credits and the value of this new source of equity for community development projects. Bill Streuver talks about what it takes to redevelop an urban neighborhood. The William Penn Foundation, LISC, the City of Philadelphia, and the Commonwealth of Pennsylvania are all supporting commercial corridor revitalization, and we highlight three Philadelphia efforts to strengthen commercial strips. In the case of AchieveAbility, we write about rebuilding human capital.
While the newest efforts are always important, the big news over the past few months has been the implosion of the nation’s largest subprime lenders. To many people this may simply be a market correction, and it is hard to feel sorry for the owners and investors who made lots of money and have now lost it.
But those of us in the community development business know this market correction has a human side — namely, the unsophisticated borrowers who believed the promises of mortgage brokers or subprime lenders. As foreclosure filings increase, it is clear that low- and moderate-income (LMI) communities will feel a substantial amount of pain. Ira Goldstein of The Reinvestment Fund has done a great deal of work on this issue in the past few years and recently detailed his findings in a book, Lost Value, released this month.
Ten years ago when LMI people and communities were the fastest growing segment of the mortgage market, we all felt pleased that lenders had finally figured out how to serve this market. We didn’t understand then how bad it could get. As we use new markets tax credits and other tools to rebuild LMI communities, let’s not forget that initial success does not necessarily mean success down the road. We have to understand what defines success and remember that constant vigilance is important to keep the successes we have achieved.