Stories of Philanthropic Leadership in Advancing Regional and ...

In the late 1990s, the city of Albuquerque establisheda strategy for downtown revitalization and hadalready made its own significant investments whenHDIC approached. The HDIC sought adevelopment agreement by which the city wouldsupport some of a proposed new mixed-usedevelopment’s up-front risk—a $12 millioninvestment of tax abatement, infrastructure, land,and future parking structures. In exchange, the city,like the McCune Charitable Foundation, receives apercentage of HDIC’s mid- to long-term cash flows(25 percent in years six to 12, 50 percent in years 13to 20), a projected $18 million return to the city (notincluding increased property tax revenues). Thus,two “patient” investors (McCune CharitableFoundation and the city) made a financialcommitment to the HDIC, evidencing a consensusbelief in the mid- to long-term financial performanceof a planned progressive development.Yet questions remained. Could these fairlypredictable future revenue streams be converted to apresent value (i.e., “latched on to”)? Could thatpresent value be made available to acquire a land basefor affordable housing? And what kind of entitywould be appropriate for such activities?In the City-HDIC Development Agreement, the citycommitted that its share of future cash flows wouldbe reinvested in downtown. The HDIC approachedthe Enterprise Foundation, looking for assistance inconvincing the city to pledge, as part of thatcommitment, these future cash flows to a neworganization that would then leverage these funds tosecure additional investments and then issue its ownloans and make its own investments in furtherance ofaffordable housing and other public purposes.The Enterprise Foundation supported the concept ofa new entity but, concerned about undue developerbenefit/control and a lack of involvement from theadjacent communities, insisted that a new operationcome from an inclusive, community-based planningprocess. With initial funding from McCune, latersupplemented by Enterprise and the FordFoundation, Enterprise convened a multi-stakeholderplanning process to determine whether a neworganization was appropriate, what types ofinvestments it might make, and which geographicareas such investments might target. In the end, thisfacilitator-led, Ford Foundation-documented, twoand-a-halfyear process yielded a consensus product,a business plan for a new entity named theDowntown Albuquerque Civic Trust.Now in its first year of operation, the Civic Trust is anot-for-profit, 501(c)(3) organization. It recentlyhired an experienced community developmentprofessional, Joseph Montoya, as its first executivedirector. The Trust’s mission is, “To complementdowntown Albuquerque revitalization through loansand investments which assure the continuedavailability of convenient and affordable housing, aswell as affordable commercial, arts, and public spaceswhile maintaining diversity and social responsibility.”Its 26-member board of directors is composed of thesame stakeholder interests represented in theplanning process: lenders, large downtown and neardowntown employers, downtown business andproperty owners, adjacent neighborhoods, localgovernment, not-for-profit developers, for-profitdevelopers, commercial and residential realtors,foundations, public schools, arts organizations,architects, planners, urban designers, and impactedpopulations.The Trust’s market area includes the downtown coreof Albuquerque and those portions of theimmediately adjacent neighborhoods that couldimpact, or be impacted by, the revitalization ofdowntown. Per the business plan, potential lendingand investment projects include homeownership (30to 60 percent Area Median Income [AMI], 60 to 80percent AMI, 80 to 120 percent AMI—withdifferent investments associated with the differentranges); rental housing (below 30 percent AMI, 30 to60 percent AMI, 60 to 80 percent AMI, 80 to 120percent AMI—with different investments associatedwith the different ranges); and arts, commercial, ormixed-use projects.In this first year of operation, the Trust’s primary goalis securing the all-important current revenue streamwhich would allow it to pursue mission-driven loansand investments. Acquiring program-relatedinvestment, or PRI, is the focus of this goal.Revenues from Trust-funded projects would be thefirst source for PRI repayment and any programrelatedinvestor would also have some right againstthe projects themselves. Lastly, and most importantly,it is anticipated that the city of Albuquerque wouldoffer secondary support for any PRI, secured by itsright to future HDIC cash flows. The City Councilhas passed a resolution in support of this potentialEQUITABLE PUBLIC INVESTMENTPart III: Section 1: Promoting Equitable Public Investment 46