Investment Category

Winner
Investment Category

Key Bank (Seattle)
Program: Pioneer Social Ventures, LLC

Pioneer Human Services

Key Community Development Corporation, in concert with a group of other financial institutions, is nominating Pioneer Human Services for the 2000 CRA Awards Program for successfully creating Pioneer Social Ventures, LLC. This acquisition fund was created to give Pioneer Human Services, an entrepreneurial nonprofit organization, access to private equity from investors interested in both supporting community reinvestment and receiving a reasonable financial return. Capital will be used to acquire one or more businesses in which Pioneer will train and employ its clients. The investment has been structured to allow Pioneer Human Services to acquire the investors' interest in Pioneer Social Ventures within ten years, leaving Pioneer as the sole owner.

Investors in Pioneer Social Ventures include Key Community Development Corporation ($562,500; 12.9%), U.S. Bancorp Community Development Corporation ($500,000; 11.5%), Rockefeller Foundation ($500,000; 11.5%), InterWest Bank ($200,000; 4.6%), and Pacific Northwest Bank ($500,000; 1.15%). Pioneer Human Services, as the managing partner, is investing $1,550,000 or 35.5% of the total $4.4 million. At this point, the fund has successfully closed and possible business acquisitions are being considered.

Pioneer Human Services provides rehabilitation, housing, training, and employment for persons at the margins of society, particularly former substance abusers and ex-offenders. Pioneer's mission is to create opportunities for personal, economic, and social development for those people who might otherwise be a threat to society. Originally formed in 1962, Pioneer has provided a "chance for change" to tens of thousands of socially and economically disadvantaged people. Today, Pioneer serves more than 6,000 clients a year and employs 1,100 people.

Even more innovative than what Pioneer does is how it does it. Pioneer Human Services is frequently recognized as a national model of "social enterprise" in applying business practices to the social service sector and for operating successful business enterprises in which clients are trained and employed. As Forbes magazine recently noted, "Pioneer is no standard nonprofit . . . it is entirely self-funding-no government giveaways, no rich benefactors."

Pioneer's enterprises currently include two manufacturing plants, a printing and mailing firm, a value-added distribution center, a food buying service, an economy hotel in downtown Seattle, construction services, and the Mezza Caffi, a catering and food delivery business. Many of the people being trained and working in these businesses are referred from Pioneer's programs, including community corrections, chemical dependency, residential recovery services, low-income housing, and welfare-to-work services.

In order to expand the number of people it can serve, Pioneer needs to increase both the number and type of services it offers. Currently, only about 525 of Pioneer's 6,000 clients are being trained in its business ventures. One of the ways Pioneer can increase the number and type of training and employment slots it has for clients is by acquiring additional businesses in which they can work. These businesses also provide additional revenue to support the Pioneer programs that are at the heart of its nonprofit mission. In an article carried by Reuters on this "novel venture capital fund," a Senior Vice President of U.S. Bancorp is quoted as saying that "Pioneer has a strong record of being successful in ventures and providing critical services to the community."

In addition to providing a financial return on investment, this unique collaboration will also result in a social return on investment, through decreased criminal recidivism, increased sobriety, and improved employment outcomes. The impact of this innovation will be measured by Pioneer's outcome measurement system, which Professor Vic Murray of the University of Victoria has described as "without doubtthe most comprehensive system for tracking results in any nonprofit." This novel partnership will meet a "double bottom line": financial and social.

E-mail inquiries regarding this project may be directed to Janet_Credo@keybank.com

Certificate of Merit
Investment Category

Wells Fargo (Oregon)
Program: Qualified Zone Academy Bond

Portland Public Schools

On February 15, 2000 the Wells Fargo Portland Regional Commercial Banking Office successfully closed the "first-ever" QZAB in the State of Oregon and one of the first on the entire West Coast. The School District No. 1J, Multnomah County, Oregon (The Portland Public Schools), had been granted authorization to issue a Qualified Zone Academy Bond (QZAB) in the amount of $6,052,477. The proceeds were used to upgrade and replace materials in science and mathematics, such as textbooks and instructional manuals, upgrade and replace equipment, and provide training for teachers in schools in economically distressed areas. In addition, the district will use QZAB funds to support full implementation of the technology bond approved by voters of the city of Portland some three years ago.

The US Congress enacted the Taxpayer Relief Act in 1997, which contained a no-cost financing tool for public schools that establish qualified zone academies. These academies offer, through cooperation with the private sector, enhanced academic curriculums that will increase graduation ratios and better prepare either college- or employment-bound high school graduates. The enhancement is achieved through additions of state-of-the-art technology and vocational equipment, market-driven teacher training, volunteer mentorships, or student internships. Financing for such programs is accomplished through QZABs. They are designed to allow school districts, such as Portland Public Schools, in economically distressed areas (empowerment zones) to collaborate and partner with the business community in developing programs that are more relevant in the working world. Portland Public Schools has greater than 40% of its student body on a free lunch program.

Recipients of the QZAB proceeds benefit because the allowance of a tax credit acts like a payment of interest on the bonds. Therefore, the schools may use their financial resources for needs other than debt service. Lenders such as Wells Fargo that invest in QZABs are allowed annual federal income tax credits in lieu of periodic interest payments on the QZAB. A QZAB can be issued if (a) 95% or more of the bond proceeds are used for a qualified purpose; (b) the State or local government issues the bonds; (c) the bonds are designated QZAB; and (d) the term of each bond is established by the Secretary. This has been a relatively little known and/or little used financing-investment medium for banks to support their schools situated in economically distressed areas. The national limitation for the calendar year 1999 was $400 million.

I am pleased to submit this description of a CRA product for consideration given the uniqueness of the QZAB financing/investment arrangement established between Wells Fargo Bank and the Portland Public Schools and recognizing the educational benefits that will accrue to the students in the District as a result of this financing/investment vehicle. In closing, I would like to say this project required the close collaboration between the district, state and federal tax personnel, and internal and external bond, legal, and tax counsel.

E-mail inquiries regarding this project may be directed to kronbeb@wellsfargo.com

U.S. Bank

Various

U.S. Bank offers an innovative grant program that helps low- and moderate-income individuals purchase their first homes. A grant equal to 1% of the home's sale price is available to assist with down payment or closing costs. This grant can be used with most first mortgage loan products.

Grant dollars are administered by local nonprofit organizations, including HomeSight (Seattle), Spokane Neighborhood Action Program, Network for Oregon Affordable Housing, Sacramento Home Loan Counseling Center, Consumer Credit Counseling Service of Northern Nevada, and Mountainlands Community Trust (Utah).

Rising home prices throughout the Western United States make home ownership a challenge for many low- and moderate-income families. Funds for down payments and closing costs are often identified as a barrier to home ownership. U.S. Bank's down payment assistance grant program helps increase the number of first-time homebuyers in its markets. In 1999, U.S. Bank distributed down payment assistance grants totaling more than $725,000 to nonprofit organizations. These grants will help many low- and moderate-income families purchase their first homes.

E-mail inquiries regarding this project may be directed to Yvonne.Blumenthal@usbank.com

Bank of Hawaii
Program: Agenda for Building Communities Fund (ABC Fund)

Various

The purpose of the ABC Fund is to support the development of healthy communities through strategic grantmaking to communities that have a vision and a plan for achieving that vision.

The ABC Fund was formed in 1999 through a partnership of eight funders, including Bank of Hawaii, Aloha United Way, Consuelo Foundation, Wilcox Foundation, Harold Castle Foundation, Hawaii Community Foundation, HMSA Foundation, and McInerny Foundation. A total of $500,000 was pooled by these funders for distribution in 2000.

Grants were awarded under the program to eight low-income communities in January 2000. These grants provide funding for a broad base of projects designed and driven by the communities. These projects include development of a community benchmarking project, formation of a community development corporation, and purchase of a community center from a government agency. Initiatives funded will address systemic issues within these communities and result in long-term improvement and increased capacity to achieve future community goals.

The ABC Fund has three major objectives:

• To support the development of stronger and healthier communities through strategic grantmaking that targets community-driven initiatives;
• To extract lessons that may be replicable about how communities grow stronger and improve their own conditions; and
• To develop a stronger local funding community that is better able to target resources at important community issues and identify the results of its efforts.

Community building is used by the ABC Fund to describe a set of strategies that is not limited to a specific field of interest, e.g., health, housing, etc. Community building initiatives are led by and have the support of people within the affected community. ABC Fund organizers view the general principles of community building to include:

• focus and build on community strengths;
• require racial equity;
• value cultural strengths;
• focus on specific improvement initiatives in a manner that reinforces values and builds social and human capital;
• be community driven with broad resident involvement;
• be tailored to neighborhood scale and conditions;
• be collaboratively linked to the broader society to strengthen community institutions and enhance outside opportunities for residents; and
• consciously change institutional barriers and racism.

This program helps Bank of Hawaii to achieve its community reinvestment goals by providing a vehicle for making charitable contributions that result in positive, sustainable improvement in communities. Bank of Hawaii provided $50,000 to the ABC Fund, along with planning and consultation, to support initiatives designed and implemented by people from within low-income communities. The innovative ABC Fund is the only source of funding designed specifically to serve community-building goals in Hawaii.

The impact of this program will be seen in the success of funded communities in achieving their planned goals. This will be measured through a formal evaluation process, periodic site visits, and quarterly workshops for community representatives sponsored by the ABC Fund. The ABC Fund will also serve as a model of collaboration for community partners.

E-mail inquiries regarding this project may be directed to kwalsh@boh.com

National City Bank (Kentucky)
Program: Business First Stop Development

Mountain Assn. for Community Economic Development

National City believes that when our neighbors prosper, we prosper too. That's why we are involved in a myriad of community projects throughout our markets. Through various programs, our corporation shows that we are committed to enhancing the quality of our communities, and also therefore our lives. Involvement in the economic development of the cities and rural areas where we do business means more than just providing money; it includes providing leadership as well.

A service project that we are especially proud of is Business First Stop. Business First Stop is a new, web-based resource designed for entrepreneurs. At Business First Stop, business owners can locate information, resources, and services quickly without the restraints of time or location. This is especially helpful for small businesses and farms, whose owners are typically more isolated from supportive services because of lack of time, internal resources, and financial capacity.

Business First Stop is distinguished from other resources by its extensive local content and emphasis on creating a business community that is not limited by time or geography. Accessed through the Internet at www.bizfirststop.com, Business First Stop serves as a value-added service that directs users to relevant, high-quality information. At one interactive location, business owners can determine if they are OSHA compliant, learn how to qualify for special state incentives, and find the most convenient means to get ISO-9000 certified. Entrepreneurs can sharpen their business expertise and prepare for a loan application with confidential and convenient financial diagnostics. The site is a free service.

The goal of this interactive web site is to help businesses survive and grow so that they can create employment opportunities and retain wealth within the region. National City partnered with the Mountain Association for Community Economic Development (MACED) to launch the site. MACED is a nonprofit organization that provides opportunities and resources to help citizens build healthy, sustainable, equitable, democratic, and prosperous communities in Kentucky and Central Appalachia. MACED works with communities to create the conditions for people to work together voluntarily, to understand the larger system they are part of, and to make informed choices about where they want to be in the future and how to get there. National City's investment of $100,000 helped MACED to create and launch Business First Stop.

Research conducted by MACED revealed that successful business owners rely on the advice of service providers, but sometimes have difficulty locating the type of professional help they need. Business First Stop is a solution to the problem. The site links interested business owners with service providers in the area that provide exactly the needed service. This saves the time and energy of both parties by cutting down on inappropriate collaborations.

Business First Stop builds a more entrepreneurial culture that helps new and existing businesses be more successful. The number of site users will be one measure of achievement. Ultimately, business startups and the continued prosperity of existing businesses is our measure of success.

E-mail inquiries regarding this project may be directed to kstratton@maced.org

California Federal Bank
Program: Small Business Technical Assistance

California Federal Bank ("Cal Fed" or "the Bank"), in partnership with the Latin Business Institute (LBI), is providing entrepreneurial training programs and support services to low- and moderate-income Latinos seeking assistance in the start-up and operation of small businesses. The LBI assists the immigrant Latino population seeking self-sufficiency through self-employment by providing entrepreneurial training programs and technical support services. The program also provides participants with access to the financial resources needed to sustain or expand their businesses. The development services provided include linguistically appropriate and culturally sensitive educational programs, counseling, and assistance in applying for loans and other essential services.

In addition to its standard programs, the LBI sponsors a program for women called "Adelante Mujer De Negocios" (Women Getting Ahead In Business). This provides all of the standard workshops and services and includes an additional psychological and motivational component that has proven essential for many Latinos striving for self-sufficiency.

Many of the business owners that participate in the LBI programs have previously owned a business in their countries of origin. They come to the LBI seeking assistance in using previously developed skills to successfully transition to small business ownership in the U.S. Upon graduation, each entrepreneur will have learned business-planning strategies and how to complete a business plan that they can use to obtain financing, expand their business, and guide their operation and future growth.

Cal Fed has funded classes that offer 36 hours of intensive training in twelve subject areas identified as critical to the success of a small business. Participants are also counseled by Bank staff and assisted in applying for loans and other essential services.

Cal Fed has not only supported this program by providing operating capital and individual counseling, but also by donating office space for workshops. In these ways, we are able to make CRA-qualified investments that are complemented by the provision of CRA-qualified service activities.

By supporting LBI, Cal Fed is facilitating an increase in the number of successful businesses operating in lower-income, disadvantaged Latino communities. By assisting in the creation of sustainable small businesses, we are also providing a positive impact in the community related to job creation. Small business owners currently produce 90% of the new employment opportunities in the U.S., and by providing these jobs in communities where unemployment rates have exceeded national and state averages, the program fosters a cycle of economic development.

The impact can be measured in terms of the number of participants and program graduates, the number of businesses that are formed and successfully operated, and the level of job creation. For Cal Fed, a measure of success is the level of banking services provided to program graduates in the future.

E-mail inquiries regarding this project may be directed to dbroadman@calfed.com

Bank of America (Oakland)
Program: The Rotunda Building

The Rotunda Building is an investment that demonstrates Bank of America's commitment to urban revitalization and the broad scope of Bank activities that make a real difference in our communities. Bank of America made a strategic tax credit investment in October 1999 of nearly $7 million to restore this important historic structure and to make a meaningful impact in the revitalization of downtown Oakland.

Originally built in 1910 as a major department store, the Rotunda closed in 1985 after the store went out of business. A significant example of the Beaux Arts architectural style, the building is characterized by a rotunda that rises from the basement floor up to the seventh story, where it is capped with a glass and plaster dome. For many years, this rotunda was the largest west of the Mississippi.

The historic nature of the Rotunda was not its only significance for the City of Oakland. The structure is also prominently located on City Hall Plaza, the physical keystone to Oakland's urban rebirth.

After the 1989 Loma Prieta earthquake, it took the City nearly ten years to raise the funds and complete the work that allowed it to reoccupy City Hall and the other buildings in the civic center. During that period, the City also worked hard to make progress on its downtown revitalization effort that is finally beginning to see results. Oakland's downtown is now becoming the Bay Area's most important governmental employment center, the nucleus of East Bay commerce, and a prominent new urban residential area.

A restored Rotunda was a missing piece in the City's revival, however. The vacant Rotunda loomed over the restored civic center, casting a pall over the City's bright future. An attempt at restoring the Rotunda failed in the early 1990's when the real estate market suffered a recession. But in 1998, the City was successful in finding a new developer for the property and committed a substantial investment of its own to get the project started again.

The developer had identified a tax credit investor before Bank of America got involved, but four weeks before the investment needed to close in October 1999, that investor decided not to take the deal. The developer came to Bank of America, which had only recently expanded its investment capability in California. Bank of America stepped in and, working under severe time pressure, underwrote the deal and got the investment approved in only four weeks, thereby averting significant, costly, and demoralizing delays for the project. This extraordinary effort by the Bank to underwrite and close this large deal in such a short time ensured that the developer met the funding requirements of the City and the construction lender, retaining the integrity of the project's financial structure and enabling this high-visibility project to proceed.

The Rotunda, now under construction, should be completed by June 2001 to take its place as a beautiful cornerstone for retail and commercial space in the re-energized downtown Oakland.

E-mail inquiries regarding this project may be directed to James.D.Mather@bankofamerica.com

Washington Mutual
Program: Merrill House

Pasadena Heritage

The city of Pasadena, located just a few miles north of Los Angeles, California, is rooted in a tradition of spectacular historic homes, many of which are located in low-income neighborhoods. Among rows of tree-lined streets are houses that showcase important cultural and architectural resources for the city and also serve as affordable housing opportunities. Pasadena's success in restoring and maintaining historic property is undergirded by strong private-public partnerships aimed at upgrading neighborhoods in need of community assistance to wonderful places to live, work, and raise children.

Many of Washington Mutual's community reinvestment goals parallel those of the City of Pasadena and Pasadena Heritage, a nationally respected historic preservation organization, by focusing on those endeavors that will help restore and build vibrant communities in all the markets where we do business. The bank's community lending and investment department's purpose is not only to seek out key investments for the company, but to help strengthen the work of community- and faith-based organizations that work to improve their constituents' neighborhoods, with a particular emphasis on low- to moderate-income communities.

The Samuel Merrill House, designed for the conservationist in 1910 by architects Charles and Henry Greene, was a foreclosed property that Washington Mutual had prepared for sale at a purchase price of $130,000, an attractive figure and lot that appealed to many rental property developers. Alarmed that such a significant piece of property could possibly lose its historic value and tradition by being transformed into a multifamily unit, concerned neighbors and members of Pasadena Heritage began a grassroots campaign to negotiate the purchase from Washington Mutual. Included in those negotiations was a request that the bank discount the purchase price so that as much of the organization's funds as possible could be spent on rehabilitation and restoration. Since the property had been vacant for many years, it had become a target for transients and drug dealers and required significant funds to repair damage, including foundation work.

Another main goal of the organization was, through its line of credit from the National Trust for Historic Preservation and funding from the City of Pasadena, to preserve the architect's original design hallmarks, including broad overhanging eaves, distinctive casement windows, clinker brick, Arroyo stone piers, and retaining walls. In keeping with its CRA goals of increasing the availability of affordable housing by working closely with its community partners, Washington Mutual responded with a plan that exceeded the group's expectations and immediate goals. After negotiations, Pasadena Heritage members walked away with a Washington Mutual commitment to sell them the three-bedroom, one-bath house for $40,000, well below the appraised value.

Subsequently, the bank also made a $1 million contribution to the National Trust for Historic Preservation so that other organizations in the bank's CRA markets, like Pasadena Heritage, will have access to funding for projects that will help build more vibrant communities and preserve historic property.

E-mail inquiries regarding this project may be directed to bettyewilkes@compuserve.com

Community Savings Bank (Chicago)
Program: Humboldt Park Reinvestment Group

ACCION-Chicago

One of the investments the Bank has made that has furthered our community reinvestment goals has been to a group known as ACCION-Chicago. ACCION-Chicago is a nonprofit community development financial institution that specializes in providing micro-loans to small businesses. They are also an affiliate of the ACCION-International U.S. Network. Their office is located on the south side of Chicago, but originates loans through the Chicago area. They specialize in providing micro-loans from $500 to $25,000 to small business owners who have been unable to access traditional forms of credit. Individuals who have received loans include car mechanics, carpenters, accountants, and photographers. Loans have also gone to owners of restaurants, jewelry shops, and other businesses, many of which are home-based.

In 1996, the Federal Deposit Insurance Corporation (FDIC) began focus group discussions between lenders and community groups within the Humboldt Park neighborhood. This neighborhood is a predominately low-income Hispanic community. The purpose of these discussions was to have a better understanding of the credit needs of this community and to create loan programs that would help meet these needs. One of the needs that was brought forth was small business lending. It appeared that many of the small businesses within the Humboldt Park community were being turned down for credit because of lack of documentation and loan requests being too small for lenders.

From these discussions the Greater Humboldt Park Reinvestment Group (GHPRG) was formed. It consists of four lenders, two community groups and ACCION Chicago. After further discussions it was determined that the GHPRG would form a loan pool that ACCION would use to fund micro-loans to these businesses. In addition, the lenders would sponsor a small business class at a local community college to provide entrepreneurs training in bookkeeping, business plan formulation, and basic small business law. This pool was funded in 1998, with total contributions equaling $125,000. The Bank's contribution totaled $25,000. Our contribution is a loan to ACCION, with a term of two years at 4% interest.

The impact of this program has been tremendous. ACCION has originated a total of 38 loans from this pool, which has resulted in 33 small businesses either being created or expanded. This has not only provided an economic stimulus to the community, but has also resulted in two of the borrowers returning to ACCION for larger loan amounts to expand their businesses further. In addition, the success of these entrepreneurs has allowed them to also become homeowners. Also, these small businesses are beginning to employ residents of the areas where they are located.

All of this information has been provided to the community through ACCION-Chicago. ACCION-Chicago is doing constant follow-up with its customers to assure that the businesses they lend to are viable and still in operation. ACCION-Chicago also meets bimonthly with the lenders of the Greater Humboldt Park Reinvestment Group to discuss new loans, delinquencies, and new products being offered.

E-mail inquiries regarding this project may be directed to csb@communitysavingsbank.com.

Multibank (Minnesota)
Program: Venture Fund (ASCCF)

Anoka/Sherburne County Capital Fund

In 1994, six banks that have a presence in Anoka County, Norwest, Firstar, U.S. Bank Corporation, Northeast State Bank, Century Bank, and Marquette, formed a multibank CDC. Later, First National Bank of Elk River, the Bank of Elk River, Reliastar Bank and Princeton Bank joined. The purpose of the CDC is to assist and attract technology-based start-up companies and their good-paying jobs to our area. What we did was create a unique CDC that serves as a community-based venture fund that makes high-risk/high-reward investments in early stage technology companies that are or will be located in Anoka and/or Sherburne County. Anoka County is in the Minneapolis / St. Paul Metropolitan Statistical Area (MSA), and Sherburne County is more rural than, although adjacent to, Anoka County.

The ASCCF is managed by the Anoka County Economic Development Partnership (ACEDP), which is a 501(c)3 nonprofit corporation that was created in 1985 by the Anoka County Board of Commissioners and area businesses to do the economic development work for Anoka County. The ACEDP is managed by a board of directors representing the larger corporations located in Anoka County, such as Medtronic and United Defense, as well as utility companies, banks, government, and education leaders. The ACEDP has focused almost exclusively on assisting and attracting emerging technology-based companies. They have done this because start-up companies represent new jobs, not just moving companies and their jobs around as so many economic development efforts do. Secondly, technology jobs pay the best wages.

The impact to the area is measured by the success of the companies the ASCCF invests in and the jobs created. To date, the fund has invested over $1 million dollars in 30 companies that now employ approximately 200 people with projections for many more as the companies grow and expand. In a recent survey, the jobs created by our program averaged approximately $16 an hour, or $59,000 for salaried positions.

What really makes this economic development effort even more unique is that the fund has collaborated with a for-profit business incubator developed by the ACEDP in collaboration with Genesis Business Centers, a private-sector company that is focused on growing start-up technology companies. This incubator barters furnished space and business and technical assistance in exchange for stock. This results in the start-up company getting the benefit of a corporate presence, needed business and/or technical assistance from our large pool of public and private sector providers, all for little or no cash outlay. The ASCCF also has a special interest in investment in early stage technology companies that are founded by women and minorities.

The banks looked upon participation in the fund as a way to help the community by attracting new good-paying jobs to the area. Norwest, as the lead nationally chartered bank, spent a lot of time working with the Office of Comptroller of Currency (OCC) in preparing its application, which was the blueprint used by most of the other banks.

E-mail inquiries regarding this project may be directed to Roger.Jensen@worldnet.stt.net

World Savings (San Francisco)
Program: World/BRIDGE Initiative

BRIDGE Housing Corporation

The World/BRIDGE Initiative was launched in 1994 by World Savings and Loan Association and BRIDGE Housing Corporation to create one of the largest pools of funds ever made available to a nonprofit affordable housing developer. The Initiative was a catalyst to tap, for the first time ever, public pension fund monies to produce affordable housing. The result was a $340 million pool of construction financing from both traditional and nontraditional funding sources.

The Initiative was launched to address an acute shortage of construction lending that limited affordable housing production at a time when demand far outstripped supply. BRIDGE had about reached its borrowing limitations with conventional lenders, hampering its ability to increase its production. BRIDGE and World Savings worked together to create a unique proposal to mobilize resources from lending institutions and nontraditional investment capital sources to respond to the growing housing crisis.

In keeping with its commitment to increase the availability of affordable housing, World Savings seeded the Initiative fund with a $15 million interest-free investment. This significant demonstration by World Savings spurred CalPERS (California Public Employee Retirement System), the nation's largest publicly funded retirement system, to invest $150 million in construction funds, and CalSTRS (California State Teachers Retirement System) to extend $75 million in credit enhancements. Wells Fargo Bank, Bank of America, and the Ford Foundation soon followed suit.

Through the Initiative, BRIDGE enjoys expedited construction lending, streamlined and customized origination and administration guidelines, and discounted fees and interest rates below the best available terms offered in the market.

Since the inception of the World/BRIDGE Initiative, BRIDGE has increased production by 165% and has been involved in the development of over 3,000 units. 1,500 homes have been funded directly from the Initiative, enabling BRIDGE to use more conventional sources of financing to boost its production from an annual average of 450 up to 750 units per year after the fund's creation. To date, projects sponsored by the World/BRIDGE Initiative have housed over 4,000 individuals in the San Francisco Bay Area and Southern California, where the cost of living is among the highest in the nation.

Not only did World Savings' investment jumpstart an unprecedented partnership among funders, the investment is made at 0% interest and constitutes 10% of the construction loan made to a particular project. This lower cost of capital results in significant cost savings to a project, which increases feasibility and affordability. Nearly $600,000 in foregone construction loan interest can be attributed to World Savings' 0% interest-rate investment.

The Initiative also supported the leveraging of additional subsidies to BRIDGE projects, such as funding through the Federal Home Loan Bank's Affordable Housing Program. Most notably, the Initiative opened the door to $10 million in project-based Section 8 budget authority through the Section 8 Community Investment Demonstration Program, available only through pension fund participation. The addition of project-based Section 8 subsidies assured that many more homes were made affordable to the lowest income households. The average annual income of households benefiting from this resource is approximately $7,000.

E-mail inquiries regarding this project may be directed to etacata@bridgehousing.com

Wells Fargo (Nevada)
Program: First Generation Scholarship Program

Nevada High School

Wells Fargo Bank, in cooperation with the University of Nevada, Reno, and the University of Nevada, Las Vegas, established the First Generation Scholarship Program in the fall of 1999.

The program awards $80,000 annually to forty Nevada high school graduates. Ten freshmen, ten sophomores, ten juniors and ten seniors are provided $2,000 Scholarships annually. Scholarships are awarded to students under the following criteria:

• Students must demonstrate financial need
• Students must be among the first generation of his/her immediate family to attend college
• Students must demonstrate a minimum 3.0 GPA
• Students must be full-time with a minimum of 12 units
• Wells Fargo officers will be paired with our Wells Fargo scholars and will serve as mentors throughout their college careers.
• Two juniors will be offered a summer paid intern opportunity (one in northern Nevada and one in southern Nevada) to assist with the coordination of the bank's United Way Campaign.
• Students are required to perform ten hours of community service each month during the school year.

This program is a tremendous opportunity for our bank officers to work directly with these students. The emphasis of the program is to instill the importance of volunteerism. We are also hoping that these students will be role models for other youth who come from moderate financial circumstances. Our Wells Fargo scholars are volunteering in a multitude of diverse organizations, including Boys and Girls Clubs, Women's Crisis Center, Opportunity Village (handicap providers), and the Northern Nevada Literacy Council.

Our officers are taking an active role with these students. We are celebrating with our scholars their hopes, their dreams, but most importantly, their accomplishments. The program was developed with the spirit of our bank's strategy to support the communities in which we live. We feel that a financial and voluntary investment of people is the way to make a difference. We are hoping that these students will understand and embrace the importance of volunteerism and will carry their experiences with them as they enter the workforce.

E-mail inquiries regarding this project may be directed to Nancy.Hamilton@wellsfargo.com

Chase Community Development Corporation
Program: Economically Targeted Investment Program

N.Y. City Comptroller

The five New York City pension funds use a portion of their considerable assets to make secure investments in the development of affordable housing and the stimulation of economic growth in New York City. These carefully designed Economically Targeted Investment (ETI) programs have produced tangible benefits for both the pension funds and the City.

The five funds and their assets as of December 1999 are:

• New York City Employees Retirement System (NYCERS) ­ $43.4 billion
• Teachers Retirement System (TRS)-$28.0 billion
• Police Department Pension Fund-$18.1 billion
• Fire Department Pension Fund-$6.5 billion
• Board of Education Retirement System (BERS) ­ $1.9 billion

Institutional investor organizations define an ETI as one designed to produce a competitive rate of return commensurate with risk, while creating collateral economic benefits for a targeted geographic area, group of people, or a sector of the economy.

As with all investment decisions, the City pension funds make prudent and responsible determinations in selecting ETIs that are carefully researched and planned to insure they earn a rate of return at market rate or higher. All ETI programs to date are tailored to take advantage of applicable guarantees or insurance and to direct investments to benefit community projects.

In every case to date, the City pension funds' ETIs have been safeguarded by guarantees or government-backed securities provided by government programs including Fannie Mae, Ginnie Mae, the SBA, the State of New York Mortgage Agency (SONYMA), the New York City Residential Mortgage Insurance Company (REMIC), and HUD.

The pension funds usually make capital available by agreeing to buy up insured mortgages, guaranteed loans, or mortgage-backed securities. The pension funds do not directly issue loans. The mortgages are originated by banks and then sold to the pension funds. The pension funds provide long-term financing with a forward rate commitment of up to 24 months. This provides stability against interest rate fluctuations, which could make many community development projects unaffordable at their completion should interest rates rise during renovation or construction.

The impact of our programs is measured by the monies invested, the rate of return to the funds' beneficiaries, and the number of housing units, stores and facilities that have been created. The pension funds have invested more than $726 million in loans. Average yearly annual returns on the pension funds' ETI investments over the last five years have been 10.03%. Over 30,000 units of housing have been financed (22,775 have been completed with 7,428 under construction) for a total investment of $460 million. Recognizing that in many of the low- to moderate-income neighborhoods where affordable housing is being upgraded, stores and services are in short supply, we developed a commercial component. Project developments have been completed or are underway for 506,000 square feet of commercial space for an investment of over $25 million.

Recognizing that many people require specialized facilities and support services along with housing, the funds have financed such facilities. Two examples are housing for victims of domestic violence and their families and a residential facility for people with AIDS. Housing is being provided for more than 500 people with over $13 million invested. Adequate childcare is another crucial need. The funds have committed $12.5 million in mortgages for the renovation and expansion of facilities for 1,400 children.

E-mail inquiries regarding this project may be directed to igoldfi@comlan.cn.ci.nyc.ny.us