NEWARK-Newark’s economic development engine, Brick City Development Corp., has been certified by the US Department of Treasury Community Development Financial Institutions Fund as a Community Development Financial Institution. The CDFI designation will give BCDC access to $2.5 million in additional monies from the Federal government and even more credibility with large institutions as it tries to finance major redevelopments, BCDC CEO Lyneir Richardson tells GlobeSt.com. Such a designation remains an uncommon achievement for cities, economic development expert Jeffrey A. Finkle tells GlobeSt.com.
“This allows us to access capital from the federal government” to finance projects, including some that might be considered slightly riskier, Richardson tells GlobeSt.com. “Typically, you go to the big banks and say, “We got this from the Feds. Can you match it?”
The result, he says, could increase BCDC’s $18 million in loan capital to some $30 million. “There are a lot of potential projects that need capital in Newark,” he continues. “And we have feet on the street to know which.”
CDFIs provide capital, credit and other financial products, as well as technical assistance, to community-based, private, for-profit and nonprofit financial institutions, with the primary goal of assisting economically distressed communities. Cities such as Chicago, San Francisco, Miami, and Philadelphia have leveraged CDFI investments to help catalyze major reinvestment and economic growth, BCDC says.
“What this designation really means is more capital and funding making its way into the hands of Newark small business owners,” says Adam Zipkin, Newark’s deputy mayor for economic and housing development and BCDC’s chairman, in a statement. “As a Community Development Financial Institution, BCDC will be able to lend more and foster Newark’s next generation of homegrown entrepreneurs.”
Though New Jersey has several CFDIs, it is still a relatively rare designation, explains Finkle, president and CEO of the International Economic Development Council, based in Washington, DC. “When we think about economic development organizations, we think about what tools they have in their tool kit,” Finkle says. “This is one not many have.”
Brick City applied for the designation in the summer, hoping to join a number of CDFIs in the state. “We spent the last two years bolstering our internal operations, and showing that there are good, finance-able projects in Newark,” Richardson says. “And the US Department of the Treasury agreed.”
Formed in 2007, BCDC has provided over $13 million dollars in loans and financial support to a variety of businesses and projects in Newark, including the development of two new hotels, a new grocery store, neighborhood retail and new restaurants in Newark’s downtown. Minority-owned businesses have received over 32% of BCDC loans.
With the designation in hand, Richardson says he is eyeing another hotel, and perhaps two or three more grocery stores. “The great news is that they’ve got the designation,” says Finkle. “But now the hard part begins.”
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