'Momentum Texas' Conference Explores Community Development Financing

Community development is vital to the economic health, stability and progress of our communities and our state. Texas must set a goal to increase financing options to meet current community development investment needs and adequately prepare for the challenges of Texas' rapidly changing demographics. Economic progress will be hindered without adequate resources and programs for investment in low- to moderate-income communities; creation of jobs and wealth building for low- to moderate-income people; production of quality affordable housing; and growth of minority- and women-owned businesses.

That was the message of an all-day conference on April 13, 2004, sponsored jointly by the Federal Reserve Bank of Dallas and the Texas Mezzanine Fund.

"Momentum Texas: The Texas Community Development Finance Summit" brought together bankers, government officials, affordable housing and small business lenders, and others interested in enhancing economic and community development lending in Texas. The conference was presented in cooperation with Fannie Mae and the Federal Deposit Insurance Corp., Federal Home Loan Bank, Office of the Comptroller of the Currency and Office of Thrift Supervision.

Ken Dubuque

In his keynote introduction, Texas Mezzanine Fund Chairman and Guaranty Bank CEO Ken Dubuque called on Texas to mobilize national and state resources as well as community development corporations, foundations and financial institutions to achieve real momentum in financing economic and community development.

He stated that as of December 2003, the Texas Mezzanine Fund , which is capitalized by a consortium of Texas financial institutions, had made $11.5 million in loans to 36 businesses, leveraged $27 million from banks and investors, and helped create almost 500 jobs. He said TMF expects to triple this impact over the next four years.

"For our investors, this is part of not only being a good corporate citizen, but it makes good business sense, and it is simply the right thing to do," Dubuque said. He then announced that Guaranty Bank planned to invest an additional $4 million of equity in TMF in 2004.

A conference participant poses questions to the panel.

The summit provided two examples of successful and innovative multibank-funded community development financial institutions. The combined investments made by these two California CDFIs in 2003 in affordable housing, small business and economic development exceeded $30 million. The experiences and best practices they shared serve as a valuable resource and a source of encouragement for Texas to take a significant leap forward in community development finance.

Steve H. Murdock

The conference also explored Texas' rapidly changing demographics and their implications in years to come. State demographer Steve H. Murdock described a Texas population that is aging, is increasingly non-Anglo and is growing faster than the national average. He projected that these changes pose challenges for Texas in the areas of education, taxation, housing and income and cautioned that the socioeconomic future of Texas depends in part on the success of today's minority populations.

Michael T. Hernandez

Michael T. Hernandez, vice president for housing and community development for Fannie Mae's Southwestern Regional Office in Dallas, agreed that rapid population growth will fuel demand for affordable housing and home ownership. Fannie Mae's 2003 National Housing Survey finds that while most Americans view home ownership as a safe investment with a lot of potential, four critical "gaps" must be addressed in order to reach the underserved and close the minority home-ownership gap: an information gap, an affordability gap, a credit gap and an overall confidence gap. Hernandez cited examples of how Fannie Mae is partnering with banks, local housing authorities and community development corporations to increase affordable housing in Texas.

The day's final session was moderated by David Lewis of the Office of the Comptroller of the Currency. Panelists Joseph F. Reilly, manager of the Real Estate Lending Group at JP Morgan Chase Community Development Corp.; Edwina Carrington, executive director of the Texas Department of Housing and Community Affairs; and Jim Reid, president of the Texas Mezzanine Fund, discussed their efforts to meet the challenges facing community development financing in Texas, present and future.

Panelists David Lewis, Joseph F. Reilly, Edwina Carrington and Jim Reid

Jim Reid

Reid saw the day's discussions as a call to action. He emphasized that planning for growth today is critical for ensuring that Texas remains on a path to prosperity. Conference participants agreed that the dialogue must continue at the local, state and national levels. The encouraging response to "Momentum Texas" demonstrates that organizations in Texas are committed to focusing attention and resources to foster increased community and economic development throughout the state.

e-Perspectives, Volume 4, Issue 1, 2004

Federal Reserve Bank of Dallas Community Affairs Office P.O. Box 655906, Dallas, Texas 75265-5906 214-922-5377
Gloria Vasquez Brown Vice President		Alfreda Norman Community Affairs Officer
Jackie Hoyer Houston Branch Senior Community Affairs Advisor
The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Affairs Office.

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'Momentum Texas' Conference Explores Community Development Financing

e-Perspectives, Volume 4, Issue 1, 2004