Read "Getting Beyond the Developer Fee" by Jake Blumgart and Miriam Axel-Lute
This article accurately portrays the state of the community development field . . .and it should worry those who are committed to resident-led community development. A strong community development eco-system needs strong CDCs, as well as larger nonprofits, effective government agencies and other players. But we can’t sit passively and hope that strong CDCs survive. We need intentional policies to enable them to survive and thrive. A few thoughts:
1. Over the past 20+ years there has been an intentional and dramatic investment in building the CDFI sector through certification, grants, technical assistance and access to capital. There has been nothing comparable for CDCs. This needs to change.
2. Our housing finance system has become dominated by tax credits – LIHTC, NMTC, Historic. More flexible and easier to use funds like HOME and CDBG have been slashed. These policy decisions have had significant impact not just on who develops housing but on what we develop. Community scaled rental projects, homeownership projects and rehab programs have suffered at the expense of larger, more complicated deals. In Massachusetts, over 80% of our flexible funding is used to fill funding gaps on tax credit deals, leaving almost nothing for other projects. This means our field is less able to meet the diverse housing needs of our diverse communities – and it has hurt smaller developers. And contrary to conventional wisdom, these smaller projects are often cheaper on a per-unit basis than larger deals.
3. We need to structure real estate deals so that owners have the financial incentive to steward those properties over the long term and have access to stable cash flow, year over year. This will help all of us move away from the boom/bust cycle of large developer fees once every several years.
4. Those who argue that smaller CDCs should focus on organizing, resident services, and other non-real estate activities, need to identify sustainable business models to support these activities. The reality is that there is no substitute for owning real estate, even though we have tried to find a partial solution with the Massachusetts Community Investment Tax Credit.
CDCs cannot do this work alone. But I cannot imagine an effective community development movement without CDCs. We should not leave their survival to chance.