Development groups turn blight into beauty, despite the challenges
A plan to redevelop a blighted North Side block that once housed the Garden Theater was nearly in place two years ago when fallout from the financial crisis stalled the project.
“We had picked our developer for that block, then our efforts to secure financing and tenants were set back because banks were afraid to make investments,” said Barbara Talerico, president of Central Northside Neighborhood Council, which is shepherding the $15.6 million commercial/residential development.
Today, community reinvestment groups are working as hard as ever to draw dollars into neighborhoods to improve housing and commercial properties. But they operate in a different, more challenging environment than they did a decade ago, say industry experts.
Spiraling unemployment dampened demand for home mortgages. Fannie Mae and Freddie Mac pulled back on mortgage purchases amid the housing crisis, which deflated banks' mortgage originations. Burned by bad loans during the recession, many banks tightened lending standards.
“Now, the banks are being more cautious (about lending) because of the mortgage crisis,” said W. Dennis Keating, professor of urban studies at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University.
Yet Pittsburgh community development corporations are “probably ahead of other markets,” in terms of what they get done, said John Taylor, president of the National Community Reinvestment Coalition in Washington.
“They have more robust development,” Taylor said.
Despite obstacles, the Garden Theater project lined up financing from two banks, though Talerico wouldn't name them.
“The project is pretty much on track,” she said.
In the past five years, unemployment increased and “low- and moderate-income people who are not working are not in a position to buy homes,” said Ernie Hogan, executive director of the Pittsburgh Community Reinvestment Group, or PCRG.
The Central Northside Neighborhood Council is one of more than 90 community development groups in the Pittsburgh area, according to the PCRG, a coalition of about 40 of them. Such groups typically are affiliated with neighborhoods, churches and banks.
The Community Reinvestment Act of 1977, or CRA, requires that banks lend money in communities where they take deposits. Bank regulators review and grade banks for community lending, charitable contributions and commercial project investing.
“Going back three or four years, I've seen lending decline in (Pittsburgh's) low- to moderate-income neighborhoods,” said PCRG research analyst David Benitez, although he couldn't readily quantify the overall decline because of the way the organization keeps data.
Given the decline, said Benitez, it's difficult to reconcile the satisfactory grades area banks receive from regulators. He questioned how committed banks and regulators are to CRA lending and investing.
But Cathy Niederberger, managing director for PNC Community Development Banking, disagrees, “I don't think there's been any devaluation of CRA,” she said.
The PNC Financial Services Group unit had $75 million in loans to Pittsburgh communities at the end of 2011 and $31.3 million invested in Pittsburgh projects, she said. For example, PNC invested $7.7 million in low-income housing on Dinwiddie Street in the Hill District.
Niederberger cited lower loan demand across the industry these days, including for CRA-type loans. So PNC stepped up its financial education efforts.
Dollar Bank operates the only in-house credit counseling program in the region, said Ben Benack Jr., marketing vice president. The bank recently funded commercial projects in Lawrenceville and residential projects in Garfield and Brighton Heights.
“Lending has tightened up for commercial and residential loans since the financial crisis and you can't get a loan for vacant property at all,” said Tracey Evans, executive director of the Wilkinsburg Community Development Corp.
Marimba Milliones, executive director of the Hill Community Development Corp., said the group focuses on projects likely to lead to more development. The Crawford Square, Bedford Hill, and Oak Hill residential projects are examples; they targeted median- and lower-income residents.
“They transformed the neighborhood because they brought a mix of incomes, which is needed to stabilize a neighborhood economy and spur commercial development,” said Milliones.
One change Milliones noticed in the past five or six years is a shift toward rental housing “and less of a focus on home ownership.”
“We've seen a deterioration of existing housing stock, which led to the demolition of housing,” she said.
The “bank pendulum” swung from credit too easily obtained in the 1990s to 2005 to credit that became “too tight” in the past five years, Taylor said.
Hogan said the PCRG still challenges bank mergers. It challenged FNB Corp.'s June 2011 deal to acquire Parkvale Financial Corp. because it objected to the institution's levels of lending in Pittsburgh's lower income neighborhoods, Hogan said. As a result, FNB more than doubled its community-based lending last year, he said.
The merger closed in January. FNB pledged in March to invest $300,000 over the next six years to revitalize business districts in the North Side.
“Whether it's affordable housing or commercial lending, we should be doing the right things for growth in our communities,” said FNB President Vincent Delie Jr.
Thomas Olson is a staff writer for Trib Total Media. He can be reached a 412-320-7854 or at email@example.com.