It is not easy being a non-profit community development corporation (CDC).
The economics of non-profit affordable housing and community oriented commercial development are tricky even in the best of times, and policy issues CDCs confront in their efforts to promote community economic empowerment and social equity often require resources beyond the organizations’ neighborhood bases.
For real estate development, “The upside is limited. There are caps on how much compensation you can get for a project” as a non-profit developer, Richard Thal, head of the Jamaica Plain Neighborhood Development Corporation (JPNDC), one of JPs two CDCs, told the Gazette. “The downside is unlimited,” he said.
JP’s other CDC, Urban Edge has been experiencing that downside for a while—carrying debt, including mortgages on land it owns in Jackson Square that it has been working to develop for years.
CEO Kornegay said that Urban Edge’s financial burden largely stems from “having to take on what it had to take on with Jackson Square.” But she also cited the financial downturn that has taken place since Urban Edge’s 2007 restructuring as a reason recovery has been slow. [See related article.]
Heading into the downturn, CDCs across the Commonwealth were beginning a conversation about the future of the field, under the guidance of the Massachusetts Association of CDCs (MACDC) and the Boston Office of the national Local Initiatives Support Corporation, known as the Community Development Innovation Forum.
The first phase of the forum, which took place in 2008 and 2009, looked at a host of issues affecting CDCs. Those conversations included discussions about reforming state rules that limit how much CDCs can earn from real estate development projects. They also included looking broadly at how “mature” CDCs—many of which have grown into large multifaceted organizations with missions that include affordable, locally focused real estate development, community organizing and providing social services—can be more efficient and effective.
“It was a good thing we had already started” when the financial crisis hit, Thal said.
Joe Kriesberg, head of MACDC, told the Gazette he sees the CDC movement heading toward a more market-driven model. When the movement started in the 1970s “CDCs were seen as being an extension of local government,” he said. But he now sees the movement growing to resemble “a dynamic, diverse [business] sector.”
That means increased collaboration and competition, he said.
Both Urban Edge and JPNDC have large real estate portfolios and diverse, multifaceted programs. And both have embraced the new spirit of collaboration to varying degrees.
The two non-profit developers are both members of Jackson Square Partners, the multi-developer team working to redevelop Jackson Square—a project they initially issued independent proposals for. While that project is years behind schedule, the development team has maintained the project’s momentum and this month started roadway, streetscape and infrastructure work in the neighborhood.
JPNDC has done things like hiring out its bookkeeping staff to Southwest Boston CDC. “It’s nice we can earn a little extra money because we have specialized knowledge they find useful,” Thal said.
Urban Edge has developed an even closer relationship with Roxbury’s Lena Park CDC. That organization was forced to close its offices last year, and Urban Edge has signed a three-year contract for its staff to provide “executive management services” for the CDC, reporting to its neighborhood-based board of directors.
Urban Edge is providing financial management services, doing fund-raising, managing the real estate portfolio and has staffed development projects for the Roxbury CDC. Lena Park’s first-time homebuyer classes are being run out of Urban Edge’s headquarters, Hacobian said.
Hacobian and Kornegay both declined to comment on what the future might hold for Urban Edge’s relationship with Lena Park, or with the Allston Brighton CDC, another CDC that Urban Edge board chair Anne McKinnon said the CDC is in talks about collaborating with.
Carl Nagy-Koechlin, former head of Boston’s Fenway CDC and author of the Innovation Forum report “Joining Forces: Community Development Collaborations In Greater Boston,” told the Gazette he has heard Urban Edge and Allston Brighton CDC are potential merger partners.
All-out mergers are being encouraged by funders and CDCs can realize significant savings by combining staffs, he said, but there have been no recent all-out mergers between CDCs serving different neighborhoods. In the history of the CDC movement “It’s notable how few there have been,” he said.
A merger between Urban Edge and Allston Brighton might makes sense because Allston Brighton has “had a hard time sustaining a housing development staff,” a resource Urban Edge has on hand, he said.
A merger between the Fenway and Allston Brighton CDCs had been in the works but fell through just prior to his leaving Fenway CDC last year, Nagy-Koechlin said.
That merger made sense “because they are kind of contiguous neighborhoods” and they face similar “institutional pressure” from universities and other institutions looking to expand, he said.
“We put a fair amount of thought into collaboration” and received a one-year grant to hire someone to coordinate between the two neighborhoods, he said.
But funding for that position dried up and “the executive staff maybe got a little ahead of the membership. We got reigned in,” he said.
CDCs are membership organizations, open to anyone who lives in the organization’s neighborhood catchment area. The membership elects the board.
Allston-Brighton and Fenway are “different neighborhoods. They have things in common, but the residents did not feel an affinity,” Nagy-Koechlin said.
Still, he said, he sees increased inter-community collaboration as the wave of the future. Many of the programs CDCs run—from job training and placement to advocacy for affordable housing and transit-oriented development—take them beyond the confines of their community bases.
“The struggle is to find the best of both worlds, maintaining local accountability even while developing the scope and scale to take on larger issues,” he said.