Increasing the Resiliency of Community Development ... Shannon...Increasing the Resiliency of Community Development Corporations in the ... Increasing the Resiliency of CDCs: ... Interview

Increasing the Resiliency of Community Development Corporations in

the Portland, Oregon Metropolitan Area: A Path Forward

Shannon Wilson

June 2013

EMPA Capstone Project

Dr. Matthew Jones, Advisor

Increasing the Resiliency of CDCs: A Path Forward Shannon WilsonPage 2

TABLE OF CONTENTS

Page #

Table of Contents …………………………………………………………………………………………………………….. 2

Executive Summary ………………………………………………………………………………………………………….. 3

Study Overview …………………………………………………………………………………………………………………. 4

Background ……………………………………………………………………………………………………………………… 7

History of Community Development in Portland Metropolitan Area …………………….. 12

Definition of Affordable Housing …………………………………………………………………………… 16

Study Methodology ………………………………………………………………………………………………………….. 20

Study Analysis …………………………………………………………………………………………………………………… 21

Analyzing the Challenge of Funding ………………………………………………………………………. 29

Analyzing the Challenge of Policy ………………………………………………………………………….. 33

Analyzing the Challenge of Leadership ………………………………………………………………….. 36

Recommendations ……………………………………………………………………………………………………………. 40

Addressing the Challenge of Funding …………………………………………………………………….. 40

Addressing the Challenge of Policy ………………………………………………………………………… 43

Addressing the Challenge of Leadership ………………………………………………………………… 44

Reflections on Personal Implications of Study for Professional Practice ……………………………. 46

Sources ……………………………………………………………………………………………………………………………... 49

Appendices ……………………………………………………………………………………………………………………….. 52

Appendix A: Interview Questions ………………………………………………………………………….. 52

Appendix B: Affiliations of Interviewees …………………..…………………………………………… 53

Appendix C: Toolkit for Practitioners: A Path Forward ……………....…………………………. 54


EXECUTIVE SUMMARY

From the beginning, community development advocates have pursued the vision of a truly comprehensive strategy, one that would integrate approaches and overcome the barriers between types of services and the government and non‐government entities that provide them. Now, in the 21st century, the vision of broadly collaborative approaches seems more feasible than at any time in the long and rich history of community development. Any yes to fulfill this vision the community development field must overcome the worst economic and financial circumstances its supporters have faced in the last 25 years (Federal Reserve Bank of San Francisco, 2012, p. 11).

Housing is a fundamental need. Providing housing that is affordable to all individuals,

families and seniors is crucial not only for the wellbeing of those less fortunate, but for the

community as well. This is the reason Community Development Corporations (CDCs) have

focused on affordable housing development for over 50 years. Unfortunately, ongoing

disinvestment in CDCs, along with changes in policy, and the reality that many Executive

Directors of organizations are reaching retirement age at the same time raises significant

concern for the future of CDCs. These challenges are particularly acute in the Portland area,

which has been identified by Executive Directors and funders alike as being a very resource‐

poor area. With the economic downturn and housing crisis of recent years, resources have

diminished even more, policies have made housing development increasingly complicated, and

with many long‐term and founding Executive Directors at the helm of their organizations there

is potential for a serious crisis within the CDC industry in the Portland area.

Many around the country have begun to explore what is next for the CDC industry –

how organizations can be sustainable and move forward to serve more low‐income households.

This study, through literature review and interviews with local industry leaders explores

specifically how CDCs in the Portland area can remain resilient in the face of those three

challenges: funding, policy and leadership.


STUDY OVERVIEW

“We all have a stake in building stronger communities and giving everyone the opportunity to succeed. Housing is the foundation for that opportunity. Decent, safe, and affordable housing, and the stability it offers, helps us to build better lives and stronger communities (Oregon Housing Alliance, 2013).”

When examining challenges facing Community Development Corporations (CDCs) both

nationally and particularly in the Portland area, three areas seem to emerge – funding, policy,

and leadership development – that are detrimental to the resiliency and sustainability of CDCs.

Based on this notion, the research question addressed is: What changes need to be made with

regard to funding, policy, and leadership development to increase the resiliency of CDCs in

Portland and better position them to meet the need for affordable housing in our region?

Other research on the future of CDCs or about increasing their resiliency have a national

focus, with several case studies from organizations in different parts of the country, or they

focus on an individual neighborhood. This project concentrates the research on the CDCs of

Portland, Oregon. Often when case studies are taken from around the United States they

cannot be directly applied to organizations in other areas because of differences in size and

demographics of the target population, local resources and politics, and the local economy and

housing market. By focusing on a specific geographic region, I have been able develop

recommendations for enhancing Portland CDCs’ resiliency that are directly applicable.

This research is also significant because it will help CDCs in Portland build upon the

successful positive impacts in local communities that they have already had. A key example of

how a local CDC can dramatically improve a neighborhood is that of REACH CDC, one of the

oldest CDCs in the Portland area. In the early 1990s, REACH CDC, “Initiated a new approach to


community revitalization, which involved the creation of target redevelopment strategies for

specific subareas in SE Portland (Galster et. al., 2004, p. 520).” They chose the Belmont area

because they had already developed some affordable housing in that area, and partnered with

the local business association to make improvements to local businesses (Galster et. al., 2004).

This encouraged further development by private, for‐profit developers, creating an active and

safe neighborhood and sharply increasing single‐family home values in the area (Galster et. al.,

2004).

This research project was qualitative in design, drawing upon the expertise of ten

individuals who participate in Portland’s community development industry in a variety of ways.

Interviews were held in person except for two that were held by telephone due to scheduling

constraints during April and May 2013. The interviews lasted an average of 45 minutes and,

focusing on the core advantage of qualitative research, were based on a number of open‐ended

questions using the framework of viewing organization sustainability as a function of funding,

leadership, and policy. This resulted in more candid and detailed responses than a survey or

other research instrument likely would have resulted in. The list of interview questions is

included as Appendix A of this report, and the list of interviewees and their affiliation is

included as Appendix B of this report. During the interviews I took detailed written notes and

compared responses to each interview question to look for trends among the responses. I then

compared these trends to those found in the relevant literature.

From these trends recommendations that address the research question of this study

emerged. These recommendations were grouped into the three challenge areas of funding,

policy and leadership. The recommendations were further distilled into a toolkit for community


development practitioners in the Portland area. This toolkit is designed to be easily readable

and disseminated to front‐line community development staff, funders, and partners.


BACKGROUND

For the past fifty years, Community Development Corporations (CDCs) have addressed

neighborhood blight and lack of affordable housing in communities around the United States.

The CDC industry was created by federal funding provided in the Title VII of the Office of

Economic Opportunity in the mid‐1960s, and has continued to grow throughout the country

(Walsh & Zdenek, 2009). Main programs and activities of CDCs include: affordable housing

development, homeownership programs, commercial business development, workforce and

youth programs, community facilities, and open space (parks and gardens) (Walker, 2002).

Many CDCs began this work as small, grassroots nonprofit organizations with just a

couple staff with a mission of improving the condition of a single neighborhood. Some small

CDCs continue today, addressing the needs of a small geographic area and are very connected

to the community it serves. This connection to the community can evidence itself by the

number of board members that are low‐income and are members of the affected community.

A number of CDCs have grown over time, increasing the number of affordable units in their

housing portfolio and size of their geographic service area, but are still small enough to stay

engaged in local politics and community processes. A handful of CDCs throughout the U.S. have

grown (often by merging with other CDCs) to form multi‐state groups with tens of thousands of

units. These organizations have a broad clear impact with regard to the number of individuals

in housing but, many argue, they have lost connection with the local communities they set out

to serve (Walsh & Zdenek, 2009). Combined, there are an estimated 4,600 CDCs in the United


States, and together they have built and renovated more than 1.25 million units of affordable

housing since the late 1960s (Walsh & Zdenek, 2007).

What makes CDCs unique from the public housing authorities of local jurisdictions is the

variety of partnerships CDCs can forge in a way that combines community representation,

public‐purpose projects, and “the disparate programs needed to respond to neighborhood

problems effectively (Walker, 2002, p. 2).” However, since their inception, CDCs were designed

to rely heavily on government funding and programs because the projects CDCs typically take

on are complex and located in stagnant and/or declining markets (Walker, 2002).

Because of this strong connection with, and reliance on government funding and

programs, several key housing policies have been integral to the continued growth of CDCs over

the past fifty years. After 40‐50 CDCs were created and largely funded by the Office of

Economic Opportunity in the mid‐1960s, President Reagan eliminated the entire office in the

early 1980s (Walsh & Zdenek, 2009). This support was eventually replaced late in that decade

with the creation of the Low Income Housing Tax Credit (LIHTC) Program and the National

Community Development Initiative (Walsh & Zdenek, 2009). The LIHTC Program was initiated

by the Tax Reform Act of 1986 (U.S. Dept. of Housing and Urban Development, 2013).

Other key federal policies underpinning community development throughout the U.S.

have been the Housing and Community Development Acts of 1974 and 1977 (U.S. Dept. of

Housing and Urban Development, 2013). The first act created the Community Development

Block Grant Program that provides funding for capital and public services projects. The second

included the Community Reinvestment Act (CRA), which requires banks to invest in and support


community development organizations based on the banks’ profits (U.S. Dept. of Housing and

Urban Development, 2013).

These and other federal policies caused a major shift in responsibility from the federal

to the local levels, resulting in county and municipal government agencies assuming primary

responsibility for, “the design and implementation of community development strategies and

programs (Walker, 2002, p. 6).” This multiplied the number of governments involved in

projects led by CDCs, increasing the layers of regulatory requirements involved in the

development of affordable housing.

In addition to this very government‐dependent aspect of CDCs there is another more

grassroots activist dimension. The Housing Act of 1949 created a new federal program that

came to be known as Urban Renewal (Federal Reserve Bank of San Francisco, 2012). This Urban

Renewal program demolished many of the government‐identified “blighted and slum” areas,

and then allowed the area to be rebuilt by private developers (Fed. Reserve Bank of SF, 2012).

Those low‐income households living in the demolished areas could not afford to live in the area

after it was redeveloped.

The 1949 Housing Act also renewed the public housing program, which had been on

hiatus during World War II (Fed. Reserve Bank of SF, 2012). While the public housing that was

constructed during this time did house low‐income households, far more units were

demolished than were replaced, and there was no relocation plan for those displaced as there

is today in any government funded rehabilitation project (Fed. Reserve Bank of SF, 2012).


In 1956 the U.S. Interstate Highway Program began and was the third wave of

demolition of low‐income, inner city areas (Fed. Reserve Bank of SF, 2012). While the program

created an important network of transportation routes around the country, “it probably

demolished more low income neighborhoods, if it were possible, than either urban renewal or

public housing (Fed. Reserve Bank of SF, 2012, p. 15).”

It was following all this demolition that the CDC industry first began in the 1960s

alongside the Civil Rights Movement (Fed. Reserve Bank of SF, 2012 & Newman, 2006). There

was a penchant for activism in the beginning of community development and citizens sought to

take back their neighborhoods, both from blight and crime, as well as demolition – “the spirit of

resistance that flourished in the 1960s also inspired citizens to take to the streets to stop large‐

scale urban renewal and highway projects. Across the nation, they rallied to stop the

government from tearing down their homes for a small number of public or luxury housing and

from slicing 10‐lane expressways through their neighborhoods to benefit suburbanites (Fed.

Reserve Bank of SF, 2012, p. 19).”

As CDCs received government funding to complete affordable housing and other

projects enhancing local communities in the 1970s and 1980s some of this activist nature

dissipated (Newman, 2006). Many CDCs first tried economic development initiatives through

supporting small businesses in blighted areas (e.g. replacing a community grocery store that

had gone out of business) (Fed. Reserve Bank of SF, 2012). However, often these businesses

ended up bankrupt and sometimes brought the CDC down with them. Through this

experimentation with social investment, “CDCs learned that housing, for which there was both


subsidies and demand, provided a viable business model (Fed. Reserve Bank of SF, 2012, p.

35).”

The 1990s were a time of great growth in the community development industry

(Walker, 2002; Walsh & Zdenek, 2007). Two important changes partially responsible for the

growth were: local governments boosted their funding for housing production systems, and

intermediaries increased their role in helping CDCs successfully produce affordable housing

(Walker, 2002). Intermediary organizations were first established in the 1980s to support

community development work through loans, guarantees and grants. The two primary national

intermediaries are Local Initiatives Support Corporation (LISC) and Enterprise Community

Partners (LISC, 2013). Since 1980 those two organizations have invested over $25 billion in

CDCs and their housing projects, producing and rehabilitating roughly 603,500 units of

affordable housing in the United States (LISC, 2013 & Enterprise Community Partners, 2013).

NeighborWorks America is another intermediary whose primary role has been to

provide professional training to CDC staff around the country through three annual conferences

where individuals can work toward certifications in a variety of areas. Additionally,

NeighborWorks has a certification process for CDCs that can become official NeighborWorks

organizations or become a part of the more exclusive Network of Excellence (NeighborWorks

America, 2013). These groups of organizations, “collectively leverage expertise and effective

business models,” from across the country and are in strong position to advocate for policy

change that affects community development at the federal level (NeighborWorks America,

2013). All three intermediary groups have begun to work with CDCs over the past couple years

to define the term, “sustainable community,” and to describe how CDCs interact with other


sectors to create sustainable communities throughout the country (Enterprise Community

Partners, 2013; LISC, 2013; NeighborWorks America, 2013).

The financial crisis of 2008 caused what some interviewed for the study referred to as,

“the flight to excellence.” Some organizations that had been operating on thin margins went

out of the business, leaving affordable housing properties that often had been neglected and

were in need of significant physical improvements. Funders and investors of these projects

then changed the way they financed future projects requiring CDCs sponsoring housing projects

to have larger cash reserves, increased insurance, and more fully engaged boards of directors.

Housing projects were selected for funding based on the strength of the organization applying

for funding rather than just the potential of the project itself.

Those CDCs that have weathered the storm of the financial crisis of 2008 have become

stronger and have proved that they can be resilient in the face of challenge. However, many

CDCs had to liquefy assets they had, and many received stimulus funds from the government

that kept them afloat (Fed. Reserve Bank of SF, 2012). It is important that there is a clear path

forward where CDCs can remain resilient during challenging times. This study looks particularly

at the Portland Metro Area but the issue of resiliency and sustainability of CDCs is a national

one.

History of Community Development in Portland Metropolitan Area

Looking specifically at the CDC industry in the Portland area, the first CDCs began their

work in the 1980s, when the City of Portland began redeveloping vacant and abandoned

property by transferring the properties to CDCs (Provo, 2009). The unique land use planning


Organizational NameNumber of Staff

Number of Units

People Housed

Annual Operating Budget

Year Incorporated

Units Under Development

Service Area

Bienestar 6 463 1622 700,000$ 1981 46 NW OregonCommunity Partners for Affordable Housing

7 325 650 534,000$ 1993 96SE Wash Co and SW Portland

Central City Concern 650 1597 1750 40,000,000$ 1979 0 Portland Hacienda CDC 28 381 1488 2,500,000$ 1992 0 Multnomah, Clackamas and Clark Cos.Human Solutions 80 608 2168 8,068,984$ 1988 67 East Portland, East Mult Co.Innovative Housing, Inc. 8 937 2030 720,000$ 1984 138 Greater Portland AreaNorthwest Housing Alternatives

29 1876 2500 3,718,000$ 1982 190Oregon

Portland Community Reinvestment, Inc.

31 700 2100 5,300,000$ 1992 12N/NE Portland

REACH CDC 94 1426 1750 10,000,000$ 1982 447 Portland Metro AreaRevitalizing Outer South East (ROSE) CDC

11 406 1,000 1,600,000$ 1991 19Outer SE Portland

and zoning established targets for affordable housing that have been adopted by the regional

government, Metro, also has had a positive impact on CDCs’ ability to develop affordable

housing and has created a model other cities have tried to emulate (Provo, 2009).

In the 1990s, Portland’s CDC industry was considered to be of a “low‐medium” size

compared to that of other U.S. cities. Cities with community development industries of similar

sizes at that time included: Baltimore, Dallas, Oakland, St. Paul, and Indianapolis (Walker, 2002).

By the end of the 1990s Portland’s CDC industry ranked highest in quality among 22 other

major cities (Walker, 2002). The CDC industry in the Portland area has demonstrated that

smaller organizations can work effectively to produce safe healthy housing that is affordable to

those struggling to make ends meet.

Currently there are ten CDCs in the Portland area with a combined housing portfolio of

8719 units (Oregon Opportunity Network, 2012). The chart provides basic comparative

statistics on Portland area CDCs.

Table 1: Comparative Statistics of Portland Area CDCs


(Oregon Opportunity Network, 2012).

From table 1, it is clear that there are three CDCs that stand out with regard to the size

of their affordable housing portfolio – Central City Concern, Northwest Housing Alternatives,

and REACH CDC. These three organizations provide over half of the affordable housing

operated by CDCs in the area. Large variations in the number of staff at organizations primarily

has to do with whether a CDC contracts for property management services at its housing sites,

or directly hires property managers and maintenance staff keeping that function in‐house. For

example, Community Partners for Affordable Housing has seven staff, but contracts with

Income Property Management for site managers at its seven properties, maintenance staff,

supervisory and compliance staff. If those contracted staff were in‐house at Community

Partners, it is likely the staff size would double. In contrast, Portland Community Reinvestment

Initiatives, Inc. has its property management and maintenance staff in‐house. A similar

situation causes wide variation in size of annual operating budget. Some organizations carry

their affordable housing projects on the same financial records as their organizational

operations; other organizations have an organizational budget and then distinct budgets for

each housing project.

The Portland Metro Area is currently one of the tightest rental markets in the country

(Manning, 2013). What that means for low‐income households is that it is even harder to find

housing. Properties owned by CDCs have waitlists and are competitive to get into. Individuals

with assistance such as a Section 8 Voucher have fewer options because landlords can be more

exclusive and not work with programs like Section 8 because there is so much demand for their

units (Manning, 2013).


In addition, Urban Renewal Areas that were established in Portland a decade ago with

the advantage of Tax Increment Financing (TIF), which funded numerous housing projects with

set‐asides for affordable housing in those Urban Renewal Areas are declining as a revenue and

land source as those areas are fully ‘renewed’. Federal funds supporting affordable housing

development and CDCs generally have also decreased 20 percent in the last five years,

significantly increasing competition for resources. Meanwhile, at the state level, Oregon’s

Department of Housing and Community Services is currently being dismantled and reconfigured

to fall under the Department of Health and Human Services (Oregon Opportunity Network,

2013). While it is unclear whether this change will further decrease funding available for

affordable housing development, it has created a feeling of uncertainty and chaos for many

organizations that rely on funding from the State for their organizational survival.

Most Portland area CDCs depend on a diverse base of funding – government sources,

development fees from housing projects, revenue from housing projects, private foundation

grants, individual and business contributions, and fundraising events. However, development

fees from housing projects are the largest ‘chunk’ of funding a CDC typically receives from one

source. When a CDC completes an affordable housing project, they receive $100,000‐300,000

as a developer fee to offset the costs of predevelopment and development that the

organization has accrued during the development process. This is particularly critical to smaller

CDCs who may complete a housing project every two or three years; they need that infusion of

unrestricted funds for the organization to survive over time. Therefore, CDCs need to keep

developing affordable housing or they will go out of business. This issue is particularly acute in

the Portland area due to the number of CDCs in the region and the number of those


organizations that are truly small, grassroots organizations. As funding grows scarcer, the

outlook for those organizations and the low‐income households they serve becomes more

desperate.

An added dimension of this challenge that is particular to the Portland area and possibly

other more environmentally conscious areas of the United States, is that to be competitive in

funding cycles affordable housing projects must employ green, sustainable building practices.

This has a great added benefit to the community and often to the residents of the housing that

is built who have reduced energy expenses as a result of the building features. However,

sustainable building practices have an increased upfront development cost, even if those costs

might be recouped in future years of project operations. A higher project cost means each

organization needs a greater funding award to make their project ‘pencil.’ Sustainable building

practices fit into an overall framework of environment, economy, and equity (the “3 Es”) that

“must interact in any model of regionalism or sustainable development (Ozawa, 2004, p. 20).”

Definition of Affordable Housing

The general definition of affordable housing is that a household pays no more than 30

percent of its annual income on housing (U.S. Dept. of Housing and Urban Development, 2013).

According to the U.S. Department of Housing and Urban Development, “An estimated 12

million renter and homeowner households now pay more than 50 percent of their annual

incomes for housing, and a family with one full‐time worker earning the minimum wage cannot

afford the local fair‐market rent for a two‐bedroom apartment anywhere in the United States

(2013). In Oregon, the housing wage is $15.52 per hour (National Low Income Housing


Coalition). This is the rate a household must earn in Oregon to afford a two‐bedroom

apartment at fair market rent. Clearly, at nearly double the state’s minimum wage, Oregon’s

housing wage is difficult for low‐skill households with one wage earner to attain. The housing

wage also increases depending on the number of individuals in the household, and increases

when looking at just the Portland Metropolitan Area to $17.13 per hour (National Low Income

Housing Coalition).

The affordable housing CDCs acquire, build and operate is targeted to low‐income

households, as defined by the Area Median Income (AMI). Households earning less than 60

percent of the AMI are considered low‐income; households earning less than 30 percent of the

AMI are considered very low‐income. The AMI varies by household size as illustrated in the

chart below:

Table 2: Area Median Income (Annual) for Portland Metro Area by Household Size

(Portland Housing Bureau, 2013)

In addition to CDCs, there are a variety of other ways affordable housing is developed or

provided for low‐income households. Federal programs administered by the U.S. Department

of Housing and Urban Development such as Section 8 currently serve 1.2 million low income

households each year (Center on Budget and Policy Priorities, 2013). In the Portland area,


12,500 households in Multnomah, Clackamas and Washington County receive Section 8

vouchers, with an additional 8,600 households on waiting lists (Schmidt, 2012).

There are also a few for‐profit developers that build affordable housing as part of their

portfolio. These housing properties serve the same populations as CDCs do since for‐profit

developers are able to access the same major funding sources for development as nonprofit

developers (Steffey, 2013). However, many of these for‐profit developers do not provide the

other benefits to the local community that CDCs do. There has been an ongoing debate in the

Portland area surrounding this issue of whether the efficiency of for‐profit developers has the

same effectiveness as the community‐integrated approach of CDCs as was evidenced in many

of the interviews I conducted. However, in the end, each of these methods for meeting the

need for affordable housing is not enough. The need for affordable housing remains in spite of

all the housing programs and projects.

Throughout the literature I reviewed for this portion of the study I kept reading about

frustration with the challenges of meeting the need for affordable housing with regard to

funding, policy and leadership. However, coupled with that malaise was pride in how much the

community development industry has accomplished and passion to find a pathway to keep

moving forward. When considering the benefit of community development work and the need

for CDCs to remain resilient it is helpful to understand the impact of a CDCs work directly from

someone benefiting from it.

After a history of drug abuse that began when she was 13, this single mother found the

path to sobriety and sustainability through living at a local CDC property and participating in


onsite resident services. Her children participated in after school and summer youth programs

held onsite, and she participated in recovery and parenting groups. Sharing her experience at a

fundraising event for a local CDC she concluded her comments with this statement:

Through so much and so many, I have become the person, parent, mother, friend, sister, co‐worker and peer in which I have always wanted to be yet never believed I could. Thank you to all who believed in me way before I was able to believe in myself. This affordable housing and programs help—they change lives and save lives. Although the statistics will show that not everyone makes it, some relapse, some are evicted and move on. But for those who do come through, like me, the rewards are priceless ‐ for myself, my family, and for the community.

It is this impact both on individual households as well as the larger community that

demonstrates the need for CDCs to remain resilient throughout the United States, and

particularly in the Portland area where there are increased challenges for the

community development industry to move forward.


STUDY METHODOLOGY

The ten leaders in the Portland area community development industry were chosen to

be interviewed for this study based on length of tenure in their position, vantage point of the

industry from their position, and to provide a variety of perspectives on the issue of increasing

the resiliency of Portland area CDCs. Those interviewed included:

‐ Directors and senior staff from state and local funding agencies.

‐ Executive Directors of the two largest and two of the smallest CDCs in the Portland

area.

‐ Directors of state trade association and policy advocacy groups

‐ Senior staff and a consultant for private funding sources (an intermediary

organization and private foundation).

Based on the size of the community development industry, interviewing ten leaders provided a

comprehensive view of the situation. Further description of those interviewed is included as

Appendix B.

After taking written notes during the interviews, the notes were grouped first into the

four categories of a SWOT analysis (strengths, weaknesses, opportunities, and threats).

Following that, the comments were grouped into the three challenge areas previously

identified through the literature review – funding, policy, and leadership. This provided a

holistic picture of the current state of community development industry in the Portland area,

and also captured the detailed level of the data garnered through the interviews that pertained

to the specific challenge areas.


STUDY ANALYSIS

The results from the ten interviews I conducted were combined with a large amount of

recent literature and presentations on the topic of increasing the resiliency of CDCs in the

Portland area. This issue is a timely one currently being worked on by community development

leaders. In thinking about how to aggregate the data I have assembled, there are not clear

themes that seem to emerge. Because this is an issue many are currently considering it feels as

though it is in the brainstorming stage. Ideas about the future of CDCs expressed by study

interviewees and literature run the gamut from merging into regional, multi‐state developers of

affordable housing, to engaging in economic development and microenterprise, to going to

housing development that is less expensive, to focusing only on preservation of existing housing

(Federal Reserve Bank of San Francisco, 2012). However, I realized in this process is that I had

too quickly limited the scope of work of CDCs with my research question. Initially, I set out to

address resiliency of CDCs specific to the work of affordable housing development. During the

interview process I came to understand the distinction between meeting the need for

affordable housing and community development.

One of the individuals I interviewed is the Executive Director of a local organization who

spends much of her time advocating at the state and federal level for policy change that will

increase the number of affordable housing units and access to those units. During our

interview when I asked for her thoughts on potential ways CDCs could meet the need for

affordable housing in Portland she said, “CDCs are never going to produce enough units to

meet the need for affordable housing.” Later that day during my interview with a local


consultant currently working with a private foundation to evaluate the impact of their recent

affordable housing funding initiative, echoed the other interviewee’s comment, “The

community development industry can’t possibly solve the problem [of affordable housing]; they

need to recognize they are one piece of the puzzle.” While CDCs often primarily focus on

affordable housing development, there are potential opportunities to engage in other activities

that also stabilize and improve local communities.

To explore the challenge of resiliency among Portland CDCs at a more holistic level I

used two methods of analysis: conducting a SWOT (Strengths, Weaknesses, Opportunities, and

Threats) Analysis of the issue and considering the Portland CDC industry in terms of different

organizational lenses to illustrate the problem from different perspectives. The challenge

framework of funding, policy, and leadership resonated with most interviewees, and was

reflected in the recent literature. A more detailed analysis of each of the three areas follows

this initial analysis.

Table 3: SWOT Analysis (based on interview responses)

STRENGTHS

‐ CDCs in Portland who have remained solvent through 2008 financial crisis are the strongest and have learned from that challenge (2 interviewees)

‐ Good base of junior leaders ready to come into executive positions (3 interviewees)

‐ Leadership training program for emerging community development leaders in Portland (4 interviewees)

‐ The number of CDCs in Portland provides housing and services to the full spectrum

WEAKNESSES

‐ Very reliant on government funding (7 interviewees)

‐ Many smaller CDCs do not have the working capital to move forward on a housing project in a timely manner (3 interviewees)

‐ Cost per unit for construction of affordable housing is too high (3 interviewees)

‐ Community Development Industry cannot meet the need for affordable housing (5 interviewees)


of the population that cannot be served by one good organization (4 interviewees)

‐ Too many CDCs competing for scarce resources (4 interviewees)

OPPORTUNTIES

‐ Potential to diversify – develop housing projects other than new construction, built with LIHTCs (3 interviewees)

‐ CDCs are well‐positioned to increase partnerships with education and healthcare systems (5 interviewees)

‐ Housing is a key social determinant of health (5 interviewees)

‐ A lot of run‐down properties that may be good matches for preservation, which is greener and cheaper than new construction (4 interviewees)

THREATS

‐ Significant reductions in government funding (9 interviewees)

‐ Large, multi‐state affordable housing developer has come into Portland (2 interviewees)

‐ Housing is not a priority in Oregon Governor Kitzhaber’s 10 Year Plan (3 interviewees)

‐ CDCs need to decide whether they are community development organizations or affordable housing organizations (2 interviewees)

This SWOT analysis provides a starting point for thinking about the different factors

involved in this broad issue of resiliency of Portland area CDCs.

In Gareth Morgan’s book, Images of Organizations, he presents several images as

analytical frameworks that can be employed to view a challenge facing an organization from

multiple angles (2006). The images or lenses he defines are: machines, organisms, cultures,

political systems, brains, flux/transformation, psychic prisons, and instruments of domination

(Morgan, 2006). While these lenses are intended to be used for looking at a single

organization, I found them to be useful in thinking about the Portland area CDC industry as a

whole. For the analysis of this project I found the cultures, organisms and political systems

lenses to be most beneficial.


Morgan’s culture framework is focused on the ideological foundation and values of the

organization or industry and emphasizes a system of shared meaning. It “rests in a bed of

accepted capacities and incapacities (PA 540 Class Lecture, 3/2012).” The culture framework

also draws attention to organizational logos and other symbols and can be best observed by

participating in the routine activities of the industry as an outsider (Morgan, 2006). While

organizational culture or ‘corporate culture’ may give the impression there is one proscribed

culture within an organization or industry, Morgan asserts, “In any organization there may be

different and competing value systems that create a mosaic of organizational realities rather

than a uniform corporate culture (Morgan, 2006).”

This “mosaic of realities” is what I experienced in the interviews I conducted. There

have been many discussion and articles over the past decade regarding the need for CDCs to

get “to scale” – an ideal organizational size where their staffing level is at its peak efficiency

based on the number of units in an organizations housing portfolio (Walsh & Zdenek, 2007). In

considering the resiliency of CDCs I asked each interviewee whether they thought there is an

ideal size for a CDC in Portland and if so, what that size is. The responses varied. Some

suggested that it was a challenge to get to scale with fewer than 1,000 housing units. Others

argued that getting to scale with over 1,000 units generally results in expansion of an

organization’s service area and decrease in connections with each community the organization

works in; there are staff restraints in being able to be active in each neighborhood group or

Chamber of Commerce, for example. Getting to scale also requires increasingly professional

staff and board, which can potentially distance the organization from the local community

members, especially those low‐income individuals CDCs are working to serve. There is balance


to be maintained between organizational sustainability and responding to the community was

another theme that emerged in the interviews.

However, most everyone responded with a variation of what a long‐time Executive

Director of a large CDC, shared with me, “Different types of organizations are best‐suited to

different functions. Smaller organizations have more connection to communities; larger

regional groups to more to address the issue [of affordable housing].” Another interviewee

who is a funder at the county government level suggested that the size of an organization

should vary depending on its service area and the need in that area. While there was diversity

among the responses, everyone agreed that there was a need both for small CDCs that connect

more readily and more directly with local communities or specific target populations that may

not otherwise be served by a larger organization, and that there was also a need for larger

organizations that are able to produce new units of affordable housing each year. Diversity and

mutual respect between organizations are clear values of the culture of the CDC industry in the

Portland area.

Another helpful lens for looking at the issue of resiliency of Portland CDCs is the

organism lens, which focuses on understanding the organization/industry within its

environment (Morgan, 2006). It is related to the contingency theory of organizations that

asserts there are varying structural designs that can be utilized based on a given situation to

move the organization (Morgan, 2006). Since its inception the community development

industry has changed and adapted to its environment.

As a whole, interviewees felt that the Portland community development industry has

continually adapted its structure, primarily based in changes in priorities established by core


funders of CDCs and their projects. An example one of the interviewees provided was of

Hacienda CDC, an organization that has shifted from focusing on housing development to more

of a joint focus with economic development, and previously began offering foreclosure

assistance during housing crisis (Hacienda CDC, 2013). Some may suggest that Hacienda has

adapted too much and has experienced ‘mission creep,’ moving too far from their original

organizational mission. Yet, most CDCs’ mission statements are broad enough to accommodate

a variety of activities that improve the community; it is the interpretation of the mission

statement by the board and staff that may be limiting the scope of what the organization can

do to meet the needs of the community it serves. The chart below provides the mission

statements for each of the CDCs in the Portland area.

Organization Mission Statement

Bienestar We believe in the resilience and capacity of all

human beings to help, change, adapt and lead

in their own lives, their families,

neighborhoods and communities.

Community Partners for Affordable Housing To promote a health community through the

development of permanent affordable

housing, sustainable economic growth and

community‐based partnerships.

Central City Concern To provide pathways to self‐sufficiency

through active intervention in poverty and

homelessness.

Hacienda CDC A Latino CDC that strengthens families by

providing affordable housing, homeownership

support, economic advancement and

educational opportunities.

Human Solutions To help low‐income and homeless families and

individuals gain self‐sufficiency by providing


affordable housing, family support services,

job readiness training, and economic

development opportunities.

Innovative Housing, Inc. To efficiently and economically develop,

preserve, and operate high quality, affordable

housing for low‐ and moderate‐income

households and to help our residents maintain

their housing stability, improve their quality of

life, and access opportunities to break the

cycle of poverty.

Northwest Housing Alternatives Northwest Housing Alternatives (NHA) creates

opportunity through housing. NHA builds and

preserves affordable housing for people

earning low –incomes including families,

seniors and people with special needs.

Homeless Intervention Services are provided

to families, couples, singles and seniors in

Clackamas County through the Annie Ross

House and its sister program, HomeBase.

NHA’s properties in the Portland Metro area

are enriched with Resident Services to provide

our residents with opportunities to live

healthy and fulfilling lives.

Portland Community Reinvestment Initiatives,

Inc.

Preserve, expand and manage affordable

housing in the City of Portland and provide

access to, and advocacy for, services for our

residents.

REACH CDC To provide quality, affordable housing for

individuals, families and communities to

thrive.

Revitalizing Outer South East (ROSE) CDC Dedicated to serving the needs of outer

Southeast Portland communities by

developing affordable housing and helping to

create educational and economic

opportunities.


While some of these mission statements are more constrictive to the development of

affordable housing solely, most CDCs have a mission statement that allows for some adaptation

to the environment and suggest that organizations can continue to meet their missions of

improving the communities they serve through economic development, social services that

alleviate poverty, and advocacy, in addition to affordable housing development.

A third image for exploring the issue of resiliency of Portland CDCs is the political lens.

This lens focuses on power and control, and who in the organization or industry has it (Morgan,

2006). It sees the organization as a system of governance and interest‐based, ruled by

autocracy, bureaucracy, technocracy and co‐determination (PA 540 Class Lecture, 3/2012). This

frame furthers the complexity in considering decision‐making within an organization or

industry.

It is clear from my interviews that although there is value of the diversity and a respect

for CDCs of difference sizes, those CDCs with the largest housing portfolios – Central City

Concern, REACH CDC and Northwest Housing Alternatives – have the most power. This has

become especially clear during what one interviewee described as the “flight to excellence”

beginning in 2008. Funders and investors shifted to focus their investments not just on good

housing projects, but on good organizations with strong financial reserves; this often meant

more investment in larger organizations.

Sheila Greenlaw‐Fink, Executive Director of Community Partners for Affordable Housing

since 1995 noted in the interview that, as a small organization, the last housing project they

built was by far the most challenging to finance (Personal Communication, 4/2013). The group


was subjected to very detailed financial and insurance review by the lender and investor in the

project, and ultimately had to get a guarantee loan from another larger CDC in Portland

because Fink’s organization did not have enough capital in reserves to make the lender and

investor comfortable with the housing project, despite the organization’s exemplary track

record (Personal Communication, 4/2013). Additionally, when Meyer Memorial Trust began its

Affordable Housing Initiative in 2009, it hand‐picked the largest CDCs in the Portland are to

receive grants for the initiative rather than have an open competitive application process

(Meyer Memorial Trust, 2013). Clearly, there are political as well as financial advantages to

being one of the larger CDCs in the area.

This broad analysis of the issue of increasing the resiliency of Portland CDC brings

forward some of the implications in the three main areas of challenge – funding, policy, and

leadership. The next part of this analysis will address each of these areas separately.

Analyzing the Challenge of Funding

The lack of funding from federal and state government was the overwhelming first

response of interviewees when I asked interviewees what were the biggest challenges currently

facing CDCs. Most saw the reason for the lack of funding is that it had reduced in recent years

for a variety of reasons:

o Focus on debt reduction at the federal level (1 interviewee).

o An overall pattern of disinvestment in CDCs (3 interviewees).

o Uncertainty at the federal and state level (4 interviewees).


o Disinvestment in the Department of Housing and Urban Development through the

federal budget process (2 interviewees).

Another theme of the interviews within the challenge of funding for CDCs was that the

current nature of CDC funding involves a heavy reliance on development fees received from

projects. A long‐time Executive Director interviewed asserted that most CDCs in Portland could

not stay in business for more than two years without another development fee. CDCs receive

development fees with each housing project they complete. Development fees are intended to

reimburse the CDCs for some of the expenses they incurred during the predevelopment and

development phases of the project. Development fees are typically large for an organization

($100,000‐$300,000) and are unrestricted funds, meaning that they can be used for any costs of

the organization. Often other sources of funding, especially grants, can only be used for certain

expenses previously identified before the project began. It can be challenging for a CDC to find

funding sources that will cover expenses related to administration and fundraising for the

organization.

This reliance on development fees means a reliance on continuing to produce affordable

housing units for a CDC to remain solvent. Dependence on continued development of

affordable housing projects translates into a reliance on the main program that makes projects

possible, the Low Income Housing Tax Credit (LIHTC) Program. The LIHTC Program is a federal

program that is administered at the state level. Many interviewees noted that as the funding

for the program has decreased competition for funding awards has increased significantly.

CDCs from around the state compete each year for limited funding; in 2012, 32 organizations

applied for funding from the LIHTC program and 11 received funding (Oregon Housing and


Community Services, 2013). With an application that is often in excess of 200 pages including a

market study conducted by an outside vendor, architectural drawings and construction

specifications provided by vendors, it is very expensive for an organization to even compete for

LIHTC funding.

As funding has gotten more restrictive, CDCs have had to apply for LIHTCs two or even

three times before receiving an award of funding. There is a sense among the CDC Executive

Directors I interviewed that there is a queue that has developed in the program. If there are

several projects that did not get funded in the previous round and apply again the following

year, it is likely that those projects will receive funding ahead of new projects that are

competing for the first time. This adds cost to the overall development process and limits CDCs

ability to partner with local jurisdictions and for‐profit developers that want to complete a

project on a shorter timeline than is currently possible with the LIHTC Program.

An added dimension that has resulted from the increased competition for funding is

that housing projects have added features to the developments to make them stand out from

others. These features add value for the organization and the residents of the housing, but that

also add cost. One recent example of this is a project under development by REACH CDC where

they are building a 57 unit project to passive house standards (Fehrenbacher, 2012). Passive

house is a cutting edge design that, “uses superior insulation and air ventilation systems to

dramatically reduce energy consumption (Fehrenbacher, 2012).” If the project is completed, it

will be one of the first multifamily projects built in the nation with passive house standards.

While this can bring increased visibility to REACH CDC, using passive house design standards


adds roughly 10 percent to the cost of project (Fehrenbacher, 2012). More expensive projects

mean more community support and larger requests for the already diminishing LIHTC funding.

With the current challenges in budgeting at the federal and state level legislators have

been taking a hard look at the LIHTC Program. Particularly in the Oregon legislature, many have

question the cost of development per unit for affordable housing. With the added costs of an

elongated process for receiving funding through the LIHTC Program and special project feature

to increase competiveness, affordable housing development can cost over $200,000 per unit

(Oregon Opportunity Network, 2013).

This issue is divisive in the Portland area CDC industry, which was clear as I conducted

the interviews for this study. It raises the question of quality versus quantity of affordable

housing. Through the LIHTC Program housing projects are intended to remain affordable for a

period of 60 years (Oregon Housing and Community Services, 2013). To keep costs low over

time it is important that affordable housing projects are built to last with durable products, but

many see a need to balance green building techniques such as rainwater harvesting or living

walls with building as many units of housing as possible. Nick Sauvie, Executive Director of

ROSE CDC since 1992 was the most outspoken on this topic during my interviews stating, “the

system is set up to build very expensive housing for poor people (Personal Communication,

2013).” He advocates for more preservation of existing properties that are currently owned by

private landlords and in substandard condition, suggesting that “rehab is greener than any new

construction,” and more cost effective (Sauvie, N., Personal Communication, 2013).


Some CDCs have been able to develop affordable housing projects without support from

the LIHTC program, particularly in the case of preservation or rehab projects where the

organization can receive funding and financing from other government sources. Other

Executive Directors interviewed have been able to build housing in urban renewal areas using

Tax Increment Financing. However, those interviewees also stressed that preservation projects

can present additional obstacles because the full scope of work needed to rehab a project

cannot be known fully until work is underway, and most urban renewal areas in Portland are

reaching the end of their funding period and do not have many more resources via Tax

Increment Financing.

The larger impact of these funding challenges and the ‘produce or perish’ cycle for

Portland area CDCs means that organizations have less flexibility to be responsive to the

communities they serve. This is especially true for smaller organizations that often have scant

operating reserves. Many of those I interviewed suggested the need for mergers among CDCs.

When I asked the question of whether the Portland area has too many CDCs, most all the

interviewees stated that it could be beneficial for a couple of mergers to take place. While

mergers may address the funding challenge, they can distance an organization from the

community they are serving.

Analyzing the Challenge of Policy

As the primary funding mechanism for the development of affordable housing The Low

Income Housing Tax Credit (LIHTC) Program, which was created by the Tax Reform Act of 1986,

is also a component of the challenge of policy facing Portland area CDCs (U.S. Dept. HUD, 2013).


Many interviewees commented on a fragility of the LIHTC Program at the state level with the

recent concern expressed by legislators regarding the cost per unit for development of

affordable housing. Two of the interviewees shared an even more dismal outlook that the

LIHTC program is vulnerable both from cuts at the state level and elimination at the federal

level. One of the local funders interviewed was concerned that CDCs can be so focused on the

local level that they do not see potential changes on the horizon at the federal level that can

significantly impact their work.

As a piece of policy, “the housing credit [LIHTC] program’s structure as part of the tax

code – and not part of the domestic discretionary budget – is a critical element that has made it

one of the most successful programs of all time. As part of the tax code, private investors – not

taxpayers – pay the penalty for the small number of properties that do not succeed through

having to forfeit the tax credits incentives (Affordable Rental Housing ACTION, 2013).” In

Oregon, 34,374 units of affordable housing have been constructed or preserved with support

from the LIHTC program (Affordable Rental Housing ACTION, 2013).

Another issue related to policy that all the interviewees identified was the current state

of Oregon’s Department of Housing and Community Services. As part of Oregon Governor John

Kitzhaber’s Ten Year Plan, the agency is being dismantled and reorganized as a part of another

state agency (Van Vliet, 2013). The goal of this reorganization and the Ten Year Plan overall, is

to increase collaboration that can create a healthy future for Oregon in priority areas:

Education, Jobs and Innovation, Healthy People, Safety, and Healthy Environment (State of

Oregon, 2013). The reorganization process for Oregon Housing and Community Services has

just begun will take about three years and involve an outside assessment of the agency’s


programs and services (Van Vliet, 2013). This has created a permeating sense of uncertainty

among leadership at Portland area CDCs.

An additional layer of uncertainty expressed by interviewees comes from the position of

housing issues within the Governor’s Ten Year Plan. Housing is not explicitly included as an

important goal in the Ten Year Plan; it is only included as it relates to health care and education

(State of Oregon, 2013). For several years has been clear that housing is an important social

determinant of health, however now CDCs are being encouraged to directly partner with and

support the health care and education systems. Many feel CDCs are already well‐positioned to

do this work after fifty years of working collaborative in communities around the county – “As

we develop an integrated vision of what works, and hold that ideal accountable to data and

measurement, community development should become the “go to” partner for improving the

life chances of individuals and fostering healthier communities (Federal Reserve Bank of San

Francisco, 2012, p. 418).”

In addressing these policy changes, Janet Byrd, Executive Director of Neighborhood

Partnerships and Oregon’s Housing Alliance, stresses the importance of using non‐polarizing

messages to advocate for housing policies and resources. In her work with legislators, Byrd has

found, “messaging is one of the most important things we do (Personal Communication,

4/2013).” I have had the opportunity to see the relevance of this first‐hand both in Washington

DC during our EMPA National Policy Experience Course and through my own participation in

advocacy efforts at the Oregon State Capitol.


Engaged in the day‐to‐day work of community development, it can be challenging to

step back and also participate in the wider issues that influence the daily work. Ronald Heifetz

and Marty Linsky, in their book, Leadership on the Line, provide the metaphor of a dance floor

to help leaders remember the importance of this dual focus (2002). When we are out on the

floor engaged in the ‘dance’ of the work we are not able to see or reflect on what is happening

on the rest of floor. By leaving the floor and going up to a balcony overlooking the dance it is

possible to see what work needs to occur at that higher level to improve the work of everyone

on the dance floor (Heifetz & Linsky, 2002). Through working at the balcony level on policy

issues, as well as continuing the dance, leaders can address the challenges facing community

development in the Portland area.

Analyzing the Challenge of Leadership

The majority of those I interviewed felt that there is a good group of emerging leaders in

the Portland area that will be able to assume leadership positions at CDCs as founding and long‐

time Executive Directors begin to reach retirement age or pursue encore careers. An outlier to

this consensus argued that most CDCs lack a succession plan that dictates how a leadership

transition, either emergency or planned, would occur. Another outlier used the example of a

recent Executive Director transition at REACH CDC, suggesting that there were few local

applicants for the position and that emerging leaders in the Portland area might not be ready to

assume the stress and responsibility of an executive leadership position.

Interviewees identified three major sources of training that have been helpful in

preparing future leaders. The first is the peer‐learning that occurs through Oregon Opportunity


Network’s Industry Support Groups. These groups organize CDC staff members by their job

function – asset and property management, housing development, fiscal management, resident

services, and executive directors – and provide opportunities for learning and relationship

building between organizations (Oregon Opportunity Network, 2013). Leadership of these

groups often rotate between members, providing opportunities for leadership. Twice a year

Oregon Opportunity Network brings all the Industry Support Groups together for a full‐day

conference to further the skills, knowledge, and relationships gained through the peer‐to‐peer

exchange (Oregon Opportunity Network, 2013).

The state association of CDCs, Oregon Opportunity Network, coordinates the second

source of training for future leaders. Called, LEAD (Leadership, Excellence, Achievement and

Development) ON, this is a nine‐month program, “designed to take on some of the toughest

challenges facing the housing industry and provide participants with tools to put to immediate

use to take them on and achieve results (Oregon Opportunity Network, 2013).” Several

Executive Directors I interviewed noted the value of this program and the benefits they had

seen at their organizations from having staff complete the program.

The third training source interviewees included as important to developing future

leaders in the community development industry is a program with a similar focus to LEAD ON,

but conducted at a national level through a community development intermediary

organization, NeighborWorks America. Conducted through a number of multi‐day seminars

held at Harvard University, the “Achieving Excellence” program uses a challenge‐based,

performance driven design (Oregon Opportunity Network, 2013). The majority of current

Executive Directors of Portland area CDCs have participated in this elite program; every


Executive Director I interviewed noted the benefits they gained from their experience in

Achieving Excellence and had encouraged emerging leaders in their organizations to apply for

the program. LEAD ON is based on the Achieving Excellence program model as a way to

provide a similar leadership training program at the local level (Oregon Opportunity Network,

2013).

When I asked interviewees what leadership strategies they had personally found most

effective in leading a CDC in Portland or what they had observed as being most critical. The

strategies that surfaced included:

o Keep projects “on time and on budget.”

o Be innovative and visionary – “pushing the envelope.”

o Maintain long‐range financial projections with the best case, worst case, and an

average of the two.

o Groom staff to take on leadership responsibilities; share leadership.

o Developing a strong board of directors and foster a good relationship between

the board and the Executive Director.

o Being able to achieve and demonstrate measurable outcomes.

o Working with the board of directors and community stakeholders to create a

strategic plan for the organization and then sticking with it.

o Being able to “manage the ambiguity of all the issues” currently facing the

community development industry.


While a need for succession planning did seem to be evident at several CDCs, there

were also examples of how that issue was addressed in regular operations of organizations.

One Executive Director shared how they encouraged their staff to cross‐train and learn about

aspects of other staff members’ work. They had found this to be a strategy for succession

planning and also a way to encourage collaboration and a sense of teamwork among her staff.

Another Executive Director noted that while their organization is in the process of

developing a formal succession plan, they have sought to build relationships with partners and

community stakeholders that extend to the whole organization and are not solely with a single

staff person. This helps ensure that in a staff transition the organization remains stable

because the partnerships that help it operate remain intact. Strategies like these further the

resiliency and future of the community development industry in the Portland area.


RECOMMENDATIONS

“Resilient communities require more than decent housing, important as that is; they require an

array of amenities that support the social fabric of the community and build the capabilities of

community residents (Bernanke, 2013).”

The Federal Reserve Bank of San Francisco, together with the Low Income Investment

Fund recently assembled a collection of essays from funders, practitioners, academics, and

policy advocates that work in the community development industry (2012). The essays reflect

on the rich history of the field, provide examples of what has been most successful, and begin

to chart a path forward for CDCs throughout the United States. Near the end of the book they

distill the learnings from all the essays and diverse perspectives represented and provide three

core competencies of an approach to community development work that will cause it to be

successful in the future:

1. “entrepreneurial in nature and fundamentally cross‐sectoral, engaging more

partners than are currently involved in community development;

2. Data‐driven and capable of sense‐and‐respond adjustments; and

3. Composed of both people‐ and place‐based interventions (Fed. Reserve Bank of SF,

2012, p. 378.”

These core competencies provide a solid framework for thinking about what will work

specifically for CDCs in the Portland Metro Area to remain resilient.

Addressing the Challenge of Funding


Three main recommendations emerged in this challenging arena of funding for CDCs

and their affordable housing projects. The first is that the three largest CDCs in the Portland

area – Central City Concern, Northwest Housing Alternatives, and REACH CDC come together to

form the Quarterback of Community Development in Portland. The idea for a quarterback

comes from recommendations for the community development industry at the national level

(Fed. Reserve Bank of SF, 2012). The quarterback is a metaphor for an entity that serves “in a

coordinating role, managing a diverse coalition of players in order to achieve community

betterment (Fed. Reserve Bank of SF, 2012, p. 383).”

From the interviews I conducted it was clear that these three organizations stand out in

the Portland area, and the state at large, as the leaders of community development. Their

Executive Directors are well‐known for their commitment and innovation. By forging together

as the Quarterback of Community Development in Portland this group can establish and pilot

partnerships with other sectors that can be used as a model for other CDCs in the region.

Ideally, they can also provide some technical assistance to other CDCs that may be struggling in

a particular area of fundraising, governance, leadership or staff development. Together, they

could potentially pool some operating reserves to leverage investment by funders in housing

projects sponsored by smaller CDCs. An example of how this has already worked successfully is

a recent partnership between a large Portland CDC and a small one.

The small CDC needed an additional $1 million in reserves as a loan guarantee fund for

its last affordable housing development, but did not have access to those funds. They

partnered with a large CDC who did have those funds. The result was a win‐win for both

agencies – the project moved forward and the small CDC received a development fee to


support its operations when the project completed and the large CDC received a portion of the

development fee for allowing the use of its funds as a loan guarantee fund.

Using its depth of expertise, capital and relationships, the Quarterback of Community

Development in Portland can be instrumental in increasing the capacity and impact of CDCs,

and in so doing, can increase the range of target populations served by the industry. This group

can also potentially attract new funding to the Portland region. Many in the interviews

identified Portland as ‘resource‐poor.’ Through increased coordination and community impact,

the Quarterback group can bring in new funding from national sources – private and/or public –

that will benefit the community development industry in the area.

The second recommendation in this area is for CDCs to collaborate on specific housing

projects. As noted earlier, competition for the Low Income Housing Tax Credits (LIHTCs) that

are crucial in the development of affordable housing means that CDCs often have to apply two

or more times to receive funding. This increases the length of time between projects being

developed at an organization as well as the period a CDC has to survive between development

fees that come from completing affordable housing projects. Through collaborating on housing

projects themselves, CDCs can split the developer fees from each project. This has many

potential advantages:

o Fewer projects in each LIHTC funding cycle; less competition and decreased need

for CDCs to add expensive (although often innovative) features to their projects.


o CDC staff can learn directly from each other through experiencing together the

phases of development (site control, pre‐development, assembling the

development team, applying for funding, construction, lease‐up and operations).

o From a lender and funder perspective, this coproduction model could involve much

less risk because it would take both organizations going out of business for the

project to fail.

o CDCs can have a more steady source of revenue from shared developer fees from

projects each year rather than having to wait two to three years to receive a full

developer fee. This provides better cash flow and allows organizations to be more

selective about housing projects because they are not as desperate to produce

projects.

Finally, the third recommendation in this area does not require as much explanation;

CDCs should continue and enhance their focus on preservation of existing housing stock. Many

interviewees noted the importance for more preservation projects, their typically reduced cost

compared with new construction, and the abundance of substandard housing in our region

currently operated by private landlords. This can be instrumental in increasing the livability of

our region for low‐income individuals, families, and older adults.

Addressing the Challenge of Policy

In the way that the Portland area’s largest CDCs have potential to remedy of the

challenge of funding in increasing the resiliency of CDCs, the smaller CDCs have the potential

remedy the challenge of policy. When our EMPA cohort traveled to Washington, DC, we heard


directly from U.S. Representative, Kurt Schrader and U.S. Senator, Jeff Merkley the importance

of personal contact and stories from constituents in the legislators’ process of coming to

decision about how to vote on a particular issue or in determining their own policy agendas

(Schrader, K. & Merkley, J., Personal Communication, 1/2012). The Portland area’s smaller

CDCs are the most grassroots based and geographically focused; they have deeper connections

with many of the individuals they are serving and the community groups that are affected by

their work.

As affordable housing has become, “a platform for delivering other social services and

promoting community in ways that go far beyond simply providing a roof over one’s head,”

those small CDCs that are often so closely connected with the community can more easily

organize ‘organic’ stakeholders – real citizens who can advocate on behalf of themselves and

their community (Fed. Reserve Bank of SF, 2012, p. 379). For this to be successful some citizens

may need some training on topics of messaging and the policy development process.

Addressing the Challenge of Leadership

Based on the interviews I conducted as part of this project, the future of CDCs in the

Portland area is in good hands. Many noted the high caliber and number of emerging leaders in

Portland’s community development industry. The one recommendation in this area is for CDCs

to develop and formalize succession plans for their organizations, both in the case of an

emergency transition and a planned one. This will formalize the consensus that there is current

staff capacity within CDCs to weather transitions at the executive level.


I have worked at a small CDC for nearly 12 years in a variety of capacities. We always

talk about the need for affordable housing; state the staggering statistics of rent burdened low‐

income households in our area in grant applications. I had always thought the idea that my

organization, along with the several others, was going to somehow exponentially increase our

production of affordable housing units to meet the need was farfetched. Working at a

nonprofit, however, one is supposed to be relentlessly idealistic, at least in the stereotypical

sense. I had stopped questioning the feasibility of our mission and had just kept working. By

conducting the interviews for this study I have come to understand the work of CDCs and their

impact on communities more broadly.

The one commonality throughout all the interviews was the concept that there is

strength in diversity. The need for affordable housing is not going to be met by one

organization or one industry, it will be met by collaboration and partnership between nonprofit,

for‐profit and government entities and programs. This need of collaboration is not new to

community development; in fact it has been foundational to the development of the

community development industry. What is needed now for CDCs in the Portland area to

remain resilient is for the organizations to be more collaborative with each other to leverage

the strengths of the different sizes and target populations of the current CDCs, and for

organizations to develop plans addressing the inevitable transitions of the great leaders that

have brought the industry to its current position.


REFLECTIONS ON PERSONAL IMPLICATIONS OF STUDY FOR PROFESSIONAL PRACTICE

In considering the implication of this research on my own professional development,

Randy Stoeker (2005), author of Research Methods for Community Change chides, “Remember,

the action is the important part, and you are doing the research only to support the action (p.

140).” I pursued this research project, and the whole MPA degree, to further my understanding

of how to be an efficient, effective, and ethical leader. Based on my work in the EMPA program

the core leadership competencies that have emerged for me are:

‐ An understanding of history, both of the community and organization I am serving.

‐ The ability to communicate values and vision, and persuade others to assume those

values and vision.

‐ The ability to form collaborations and manage/maintain strong relationships with

partners.

‐ An understanding of authority and discretion; the ability to share power.

‐ The ability to manage risk and seize opportunities.

I have begun developing and using these competencies in my current work and look forward to

ongoing opportunities to improve and expand these as I move forward in my career of public

service.

I used the interviews for this project as an opportunity to build relationships with

current key leaders in the community development industry in Portland and to continue to

position myself as an emerging leader in the industry. Frankly, I was surprised how quickly each

of the individuals I sought to interview responded and how positive and helpful they were. It


brought into focus for me the idea that while I will always be continually learning and growing

in my leadership capacity, I am already have enough tools, knowledge, and emotional

intelligence to be a leader. I am a leader. Through focusing the capstone project on providing

recommendations for strategic directions for CDCs like the one I currently work for, I have a

better understanding of what direction to take an organization when I have the opportunity to

lead one.

An important piece that stood out from this project for me is that for CDCs in Portland

to increase their resiliency they do not need to become hyper‐developers of affordable

housing; they do not have to fully meet the need for every low‐income household in the region

to have affordable housing. Rather the resiliency will come from engaging in a diversity of

activities in partnership with a variety of community groups and members. This idea has

personal significance for me because I am often focused on the efficiency side of the equation;

wanting to achieve something ‘productive’ all the time. Yet, I can only maintain this stopgap

focus on being productive for a certain period of time before I become overspent, exhausted,

self‐righteous, and still short of my goal because too often I do not engage others in helping

me. I usually go through a period of apathy and doubt about my career path, followed by a

return to an exaggerated focus on producing. This limits my personal resiliency as a leader.

Martin Benjamin, in his book, Splitting the Difference, provides an interesting definition

and discussion of the idea of compromise (1990). According to Benjamin, compromise is an

outcome and process that is impacted by the need to retain cooperative relationships with

others, the scarcity of resources, and factual uncertainty (Benjamin, 1990). Compromise can


occur both interpersonally and intra‐personally as many of us hold a complexity of values that

can come into conflict with each other (Benjamin, 1990).

I want to think about this more simply and just always easily choose the right, best thing

to do; that a clear right or wrong determination can be made after enough critical thinking and

adherence to personal values. While Benjamin does stress the role of critical thinking in making

compromises that do not negatively impact one’s integrity, he suggests that there is a danger in

always prioritizing moral values and principles ‐ “the claims for morality, if omnipresent,

unremitting, and overriding, may force us to relinquish commitments to develop certain

morally unobjectionable undertakings and, in some instances, our reason for living (Benjamin,

1990, p. 58).”

A cliché synthesis of this argument could perhaps be, “All work and no play make Jack

(or Jill) a dull boy (or girl).” As I continue on my journey of leadership and public service I have

gained an awareness of the intrapersonal compromises I have made and continue to make. I

have also learned that to be a resilient leader not only includes an understanding of the ways

my values balance and conflict with each other, but also the need to temper work in areas that

address moral values with work in areas that maintain a high quality of life for myself and the

community I serve. Resiliency of a community or an industry begins at the personal level of

those engaged in its work.


SOURCES

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www.enterprisecommunity.com. Federal Reserve Bank of San Francisco & Low Income Investment Fund (2012). Investing in

what works for America’s communities. San Francisco, CA. Fehrenbacher, L. (2012). REACH eyes passive house design for multifamily project. Daily

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corporations’ capacity. Journal of Planning Education and Research. 22: 240‐256.

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the Portland Market, Portland, OR.


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National Low Income Housing Coalition (2012). Out of reach. Washington, DC. NeighborWorks America. Retrieved on May 17, 2013 from www.nw.org. Newman, K. & Lake, R. (2006). Democracy, bureaucracy and difference in U.S. community

development politics since 1968. Progress in Human Geography. 30(1): 44‐61. Oregon Housing Alliance. Retrieved May 29, 2013 from www.oregonhousingalliance.org Oregon Housing and Community Services. Retrieved May 18, 2013 from

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www.oregonon.org. Oregon Opportunity Network (2012, February). Member directory and annual report. Portland,

OR. Ozawa, C. ed. (2004). The Portland edge: challenges and successes in growing communities.

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Administration. 23(9): 1679‐1709. Schmidy, B. (2012). Portland’s Section 8 clients are shifted east of 82nd avenue. The Oregonian. State of Oregon. Retrieved May 19, 2013 from www.oregon.gov. Steffey, D. (2013, March). Speech presented at The Future of Affordable Rental Housing in the

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17, 2013. http://www.shelterforce.org/article/1851/coming_together/P0/


APPENDIX A: INTERVIEW QUESTIONS

Interviewee: Date:

‐ What would you describe as the biggest challenges currently facing CDCs in Portland? ‐ Through my research so far it seems like the challenges are grouped into three areas:

funding, policy, and leadership. Do those seem like the right categories to group challenges facing CDCs into?

‐ In what ways has your organization grown in the past ten years? ‐ Do you feel your organization will be able to grow at the same rate in the next ten

years? Please describe the strategic plan your organization is currently pursuing. ‐ How do those challenges facing CDCs in Portland impact your organization’s ability to

achieve the milestones laid out in your strategic plan? ‐ What solutions would you suggest for improving the situation for CDCs in Portland? ‐ Are there particular solutions that are specific to the Portland area or do you see them

being applicable in other regions? ‐ What do you think is the ideal size for a CDC in Portland? ‐ What are some advantages of having multiple local CDCs serving areas of the Portland

region? ‐ What are some disadvantages of that? ‐ What have you found to be the most important leadership strategies?


APPENDIX B: AFFILIATIONS OF INTERVIEWEES

Janet Byrd, Executive Director of Neighborhood Partnerships and Housing Alliance (2005‐present) – very active in housing policy work in the Portland area and at the state level Sheila Greenlaw‐Fink, Executive Director, Community Partners for Affordable Housing (1995‐present) – small CDC focused on Washington County – suburban areas of the Portland Metro Area Martha McLennan, Executive Director of Northwest Housing Alternatives (2002‐present) – CDC with largest number of housing units in Oregon John Miller, Executive Director of Oregon Opportunity Network (2011‐present), previous ED of HOST CDC (a CDC focused on homeownership that went out of business) – trade association for CDCs in Oregon and particularly the Portland area; active in housing policy efforts Amanda Saul, Senior Program Manager, Enterprise Community Partners – intermediary that serves as investor in a variety of housing projects in Portland and nationally; also provides grants for specific organizational expenses Nick Sauvie, Executive Director of ROSE CDC (1992‐present) – smaller CDC with a very discreet community focus Kris Smock, Consultant working with Meyer Memorial Trust (largest private foundation in Oregon) on the second phase of an Affordable Housing Initiative to support CDCs Ben Sturtz, HOME Program Senior Manager at Washington County Office of Community Development (2005‐present) – staff contact for HOME and some CDBG projects Margaret Van Vliet, Director, Oregon Department of Housing and Community Services (2011‐present), previous ED of the Portland Housing Bureau – state agency that administers LIHTC program, currently being dismantled and its work incorporated into other state agencies Dee Walsh, previous long‐time Executive Director of REACH CDC (1990‐2012) – one of the original and most nationally recognized CDCs in Oregon


APPENDIX C: TOOLKIT FOR PRACTITIONERS: A PATH FORWARD

Increasing the Resiliency of Portland area

Community Development Corporations: A Path

Forward

By Shannon Wilson, MPA candidate, Portland State University & Director of

Operations, Community Partners for Affordable Housing, Inc. (CPAH)

The disinvestment in community development funding sources at the federal and state levels,

along with policy changes tightening regulations and priorities for organizations receiving

funding, and upcoming changes in leadership of CDCs threatens the future of community

development. This is especially true in Portland, an area that was already described as resource

poor before this current belt‐tightening.

Many around the country have begun to explore what is next for the CDC industry – how

organizations can be sustainable and move forward to serve more low‐income households.

Through a literature review and interviews with local industry leaders the following

recommendations emerged addressing each of the areas of challenge facing CDCs – funding,

policy, and leadership.

Addressing the Challenge of Funding

Establish the Quarterback of Community Development in Portland. Bring together the

three largest CDCs in the Portland Area (Central City Concern, Northwest Housing

Alternatives and REACH CDC) to establish and pilot new partnerships with other sectors,

particularly education and health care, that other local CDCs can replicate. By working

together, this Quarterback group is more likely to be able to attract funding from new

regional and national foundation sources.

CDCs Collaborate with Each Other on Individual Housing Projects. By working together

on individual projects, CDCs can decrease competition at the State for LIHTCs and create

a more steady flow of operational support from project development fees by splitting

fees on mutual projects, but completing more housing projects each year rather than

waiting as many as three years in between projects and associated developer fees.

Focus on Preservation of Existing Housing Stock. Some resources through Urban

Renewal Programs and Tax Increment Financing may be drying up, but there is still a lot

of older privately‐owned properties in need of some TLC. Often these preservation

projects can be done more quickly than new construction projects, provide a developer

fee to the CDC and increase long‐term affordability of rental housing in Portland.


Addressing the Challenge of Policy

Engage Small Grassroots CDCs in Advocacy. Often, smaller CDCs are more grassroots in

their approach to their work and have deeper or more relationships with the individuals

they serve with their housing. Through leveraging these connections, the Portland CDC

industry can have better access to a diverse pool of low‐income individuals, families,

and older adults who can speak first‐hand with legislators about the need for and

benefit of affordable housing and community development organizations. This will

require training of these residents, but could be a significant resource in affecting policy

change in a beneficial way for CDCs.

Addressing the Challenge of Leadership

Develop Emergency and General Succession Plans. Transitions of organizations’

Executive Directors can be a stressful and challenging time for staff and board members

of a CDC. Having strong succession plans in place better help the organization navigate

through this period of change and are more likely to successfully recruit a new Executive

Director who is a good fit for the organization and the community it serves.

“Decent, safe, and affordable

housing, and the stability it

offers, helps us to build better

lives and stronger communities

(Oregon Housing Alliance, 2013).”

The path forward is not an easy one, but CDCs do have the potential to remain

resilient despite challenges in the areas of funding, policy, and leadership. There is

strength in the diversity of CDCs serving the Portland area. By leveraging the

strengths of each CDC with regard to the size of the organization and target population through

collaboration, we can all move forward.

It is also important to recognize that the need for affordable housing is not going to be met by

one organization or one industry, it will be met by collaboration and partnership between and

among nonprofit, for‐profit and government entities and programs.

Documents

Increasing the Resiliency of Community Development ... Shannon...Increasing the Resiliency of Community Development Corporations in the ... Increasing the Resiliency of CDCs: ... Interview