Collaboration and community engagement give community development work a good root structure

Successful comprehensive community development needs a garden shed — not just a toolbox — full of handy implements to grow more opportunities for all. It also needs teams of right-minded folks willing to put their backs into the hard but rewarding work.

So, how does the Arizona community development garden grow?

With seed corn (such as capacity building efforts and impact investment) planted with care (inclusivity, collaboration, sustainability) in the right places (underserved, disadvantaged neighborhoods), with plenty of sunshine (systemic review of policy and practices) and by fighting off pests (inequity, gentrification, displacement), it produces what’s expected and then a whole lot more.

On Nov. 19, about 250 people with strong backs and green thumbs attended the LISC Phoenix annual awards breakfast, an event that has become a major celebration of community development work in Arizona. This year’s theme, “Cultivating Community,” highlighted impactful investment tools and strategies, such as the Affordable Housing Fund and the Community Development Financial Institutions (CDFI) Fund.

Arizona Community Foundation received the LISC Phoenix award for exemplary partner for its innovative Affordable Housing Fund, which provides zero interest pre-development loans to nonprofit developers. Since 2008, the $1.5 million fund has recycled three times and has leveraged more than $500 million in development costs statewide.

Foundation for Senior Living, a frequent user of the Affordable Housing Fund, received the exemplary project award for its The Marist on Cathedral project in Tucson. The project for low-income seniors includes a re-purposed Marist College, built in 1915, and a newly constructed seven-story building with apartments and a recreation center.

Keynote speaker Annie Donovan, the former director of the Community Development Financial Institutions Fund at the U.S Treasury Department and now chief operation officer for LISC, is a national expert on community development tools and investment strategies.

The work required to help people where they live often involves systems change, Donovan  said.  Local Initiatives Support Corporation does well in the competition for CDFI funds because of its focus on organizations rather than projects and for its strong relationships at the community level, she said.

“The resources that you are bringing in partnership with LISC, whether they are technical or financial or sometimes just moral support, those are the reasons LISC does well,” Donovan told the crowd gathered in Tempe. “It’s because you’re here today, you show up and you do the work with us.”

Donovan said the Affordable Housing Fund, administered by LISC Phoenix, is an example of an effective tool addressing an impediment to building low-income housing in Arizona. Nonprofit developers didn’t have access to capital to do preliminary work on projects. Once these projects receive long-term lender financing, loans are repaid to our fund — making those dollars available for new projects. The fund has a default rate of less than 1 percent.

“How can it be that the riskiest piece of this business ends up having a default rate of less than 1 percent,” Donovan asked. “If you’re a banker, you’ll take that number any day if you’re lending money.

“The reason is partly because the players, and folks like LISC, have really good due-diligence skills and bring to the table the capacity to understand the dynamics of a deal, to underwrite organizations, to know where their strengths and weaknesses are and to mitigate those. The capacity-building piece of it is really important.”

Donovan encouraged attendees to think more deeply about the nature of perceived risk and how it may stymie community development effort.

“In our society, we live by a certain set of values and our financial system reflects that,” Donovan said. “The thing that we’re proving as community development finance practitioners and what the Arizona Community Foundation and (the Affordable Housing Fund) demonstrates is this stuff is not as risky as we think it is and deserves more investment. … How do we separate the real risk from perceived risk?

“Let’s mitigate the real risk and let’s do away with the perceived risk because it’s keeping capital out of the communities that we care about and it’s preventing us from overcoming those disparities that we see out there.”

In accepting the exemplary partner award Steve Seleznow, president and CEO of the Arizona Community Foundation, said he’s proud of the resource leveraging that has occurred because of the Affordable Housing Fund but he knows it’s not enough. The foundation is working to double the size of the fund to $3 million, which suggests a potential for $1 billion in leveraged financing, he said.

“What makes this community so incredible,” Seleznow said, “is that all of you believe in the idea of collaboration. This is not done by one organization alone. We couldn’t do it without Terry (Benelli) and the team at LISC, and we couldn’t do it without the incredible partners that have invested in this fund and all of you who are committed to providing stable housing to all members of our community.”

It’s that spirit that makes Donovan excited to see what grows here. She noted the new players taking a look at community development work, seeing alignment with their goals and wanting to do some work together. 

“That is super, super exciting,” Donovan said. “Next time I come to Phoenix I’m looking forward to seeing how that’s going to manifest itself in this market.”