State Strategies to Attract Community Capital

These are heady times for Wall Street, with the Dow quickly ascending to dizzying heights of record profitability. But despite the record run of the bulls on Wall Street, many communities’ prospects for attracting the capital necessary to spur economic revitalization remains downright `bearish.’

CPA’s groundbreaking work on community economic development has highlighted policies that lead to greater investment in traditionally underserved and neglected neighborhoods. State leaders can prod employee pension funds, who control over $7 trillion in assets, to invest in low-income communities to spur small business development and create affordable housing. Policymakers can also leverage community-based collaboratives—partnerships of the private, public and nonprofit sectors—to attract and target capital to build local capacity to effectively manage community development efforts. CPA’s 1996 report, Capitalizing on Collaboratives: New Partners for Community Development Finance, describes how community-based collaboratives are leveraging greater investment in urban and rural areas.

Several state legislatures have introduced innovative approaches to revitalizing communities in this year’s session:

Pension Fund Investments for Community Development

• Maryland. State Senator Clarence M. Mitchell, IV introduced SB 627, a bill that would require the state’s retirement and pension fund to launch a pilot program to invest $25 million in mortgage loans to low and middle-income persons.
• Hawaii. State Senator Carol Fukunaga introduced SB 967, a bill that requires the investment of employees’ retirement system funds in economically targeted investment venture capital enterprises to spur job creation and diversify the state economy.

Banking Reform

• Maryland. Co-sponsored by Delegates Elizabeth Bobo, former CPA Board member Ken Montague and Flemming alumni Rushern Baker III (Flemming `98) and Salima Marriott (Flemming `95), HB 952 requires banks to make low cost banking services available to consumers by reducing the amount required to open the account; eliminating minimum average balance requirements; limiting account fees and ATM fees; and disclosing and explaining bank charges and fees to consumers in periodic bank statements.

Public-Private Partnerships

• Missouri. State Representative Vicky Riback Wilson (Flemming `99), introduced HB 995 establishing the Family and Community Investment Trust, a public-private partnership to improve the lives of Missouri’s working families. The Trust creates an action plan in collaboration with community and state agencies to provide technical support and training for state agencies and communities. The Trust will also make recommendations to the governor and general assembly on state policy or budget changes that facilitate greater community involvement in local decision making and bring public services closer to where families live and work, and children attend school.