Community First Fund expanding executive team

Expecting a record year for lending and more growth, the Lancaster-based Community First Fund has been adding staff and restructuring its executive team.

The nonprofit economic development organization recently hired Michael Carper, the former CEO of the Housing Development Corp. MidAtlantic, to be its chief credit officer.

Community First Fund also contracted with a finance expert from Chicago to serve as CFO until it hires someone to the post full-time.

“We’re adding and growing dramatically,” said Dan Betancourt, the organization’s president and CEO.

Community First Fund provides financing for small businesses, affordable housing projects and nonprofit organizations located in low-income communities and serving disadvantaged groups, including Latino and African-American entrepreneurs. And the need for services is rising.

The organization, which started out serving Lancaster, now covers 15 counties in Central Pennsylvania, the Lehigh Valley and suburban Philadelphia. Its staff has grown from 20 to 40 over the past five years and it is making more direct loans to businesses, with volume rising from about $10 million to $30 million in the past three years.

The nonprofit also has opened new loan offices in Allentown and Philadelphia where it would like to add more people to expand lending.

“We expect to go deeper into markets we are in,” Betancourt said.

But depth, he said, requires a bigger team. That starts at the executive level.

In addition to adding new execs, the nonprofit has made some internal promotions.

COO Joan Brodhead was recently named senior executive vice president and chief strategic initiatives officer, while senior vice president of lending James Buerger was elevated to executive vice president and chief lending officer.

Community First also has hired staff to work under each of the C-suite executives.

The growth comes at a time when Community First has been positioning itself as a go-to resource for investors and developers interested in the federal opportunity zone program, in which investors can get a tax break on capital gains by investing in projects in qualified distressed areas, dubbed opportunity zones.

The investments typically will flow through what are known as qualified opportunity funds. Community First has been working to develop such funds, which could work in combination with other state and federal incentives.

Among the most notable of those is the New Markets Tax Credit program, a federal tax credit program operated by the U.S. Treasury Department that helps support large urban redevelopment projects.

Community First is one of two local organizations that can apply for those federal tax credits.

The other — Harrisburg-based Commonwealth Cornerstone Group, a subsidiary of the Pennsylvania Housing Finance Agency (PHFA) — recently was awarded $55 million in the latest round of funding.

Community First was shut out but hopes its clients still can take advantage of the incentives.

“We plan to work with clients and try to help them find an allocation through another organization,” Betancourt said.

Community First and Commonwealth Cornerstone have worked together on other tax credit-funded projects, including the redevelopment of the former Bulova building in downtown Lancaster.

Both organizations said they are optimistic about partnering again.

In the meantime, a collaboration with PHFA may happen a bit sooner in the area of affordable housing.

Community First recently received a $1.5 million federal grant from the Treasury’s Capital Magnet Fund, a grant program that helps finance low-income housing projects.

Betancourt said the plan is to use that grant as seed capital in the form of low-interest loans to support developers who receive Low-Income Housing Tax Credits from PHFA.

Community First, meanwhile, will kick in $4.5 million of its own funds, bumping the total to $6 million. Betancourt said he hopes to be able to help finance about 400 affordable housing units across the organization’s footprint.

Community First also has rolled out an online application for small businesses looking for loans. Betancourt said this will help the organization process applications more quickly and at a higher volume, hopefully steering some small businesses away from predatory online lenders that charge higher interest rates and fees.

Community First is looking to cut a 60-day application process down to about 30 to 45 days, Betancourt said.

“I think we will be able to work with more clients,” he said.

Tax credit plan

After being shut out in the last funding round in 2017, Central Pennsylvania will receive a share of 2018 tax credits under a new round of funding from a federal program designed to support large urban redevelopment projects: the New Markets Tax Credit.

The U.S. Treasury Department last month awarded $55 million in tax credits to the Pennsylvania Housing Finance Agency’s Commonwealth Cornerstone Group, based in Harrisburg.

Commonwealth Cornerstone’s executive director Charlotte Folmer said the funding will help the nonprofit tackle a hefty pipeline of projects seeking funding.

“We have over 40 projects requesting over $700 million,” she said, noting that the requests come from across the commonwealth.

Folmer said she hopes the tax credits will be able to support about seven projects this year — likely mixed-use, commercial and community service projects — with a focus on those that exceed $5 million.

Developers often have to spend more money to buy and fix up vacant and blighted properties than they can expect to get back in rental rates once construction is completed. The New Markets program takes private equity from investors, usually banks, and turns that money into gap financing to help developers offset some of the construction costs and keep rents in line with what a local real estate market can support.

The investors receive tax credits in return, which count against their federal income taxes.

Investors can receive credits totaling 39 percent of their investment. They can use the credits over seven years as such: 5 percent per year for the first three years and 6 percent for the next four years.

Folmer said it will be several weeks until Commonwealth Cornerstone receives its federal allocation, the organization’s eighth. The previous seven allocations have helped fund 38 developments in the state, including the Hamilton Health Center in Harrisburg, Lancaster’s Keppel Building and the renovation of Gettysburg’s Schmucker Hall.

In the meantime, officials are narrowing down mixed-use and commercial projects across the state that could receive the tax credits. Part of that selection process could include working with Lancaster-based Community First Fund, which did not receive tax credits this year but has its own backlog of projects.

The two midstate nonprofits have partnered on tax-credit projects in the past, including the redevelopment of the former Bulova building in Lancaster. Commonwealth Cornerstone poured $10 million in tax credits into the project, while Community First added another $8 million.

Folmer said project announcements could come this fall.