UMEZThe Upper Manhattan Empowerment Zone Annual Report 2005

290 Lenox Avenue, New York, NY 10027 212 410 0030 www.umez.org

UMEZ & NYEZ Boards of Directors

Upper Manhattan eMpowerMent Zone DevelopMent Corporation

Mr. Mario L. Baeza (Cha i rman)

The Rev. Henry A. Bel in, I I I

Dr. Hector Cordero-Guzman

The Rev. Dr. Charles A. Curtis

Dr. Walter I . Delph

Mr. Wil l ie E . Dennis ( Secre tar y )

Mr. Francisco Diaz, Jr.

The Hon. David N. Dinkins

Mr. Luis A. Facundo

Mr. Al len Gomez

Mr. James F. Haddon

Ms. Patric ia A. Jones

Mr. Anthony S . Kendal l

Mr. Luis A. Miranda, Jr. (Treasurer )

Ms. Pamela Palanque North

Mr. Zead R amadan

Mr. Johnny C . Rivera

Ms. Janet D. Rodriguez

Mr. Robert J . Rodriguez

Ms. Linda E. Scott

Ms. Mikki Shepard

Ms. Beverly J . Smith

Mr. Tracey R. Thomas

Mr. Sergio E. Sotolongo (V i ce Cha i r )

Mr. Wil l ie E . Woods

new York eMpowerMent Zone Corporationn

Hon. Charles B . R angel U.S . Representa t i ve , 15 th D i s t r i c t , New York

Hon. Jose E. Serrano U.S . Representa t i ve , 16 th D i s t r i c t , New York

Hon. Charles A. Gargano Cha i rman , Emp i re S t a te Deve lopment Corpora t ion Cha i rman , New York Empowerment Zone Corpora t ion

Hon. Daniel L . Doctorof f Deputy Mayor for Economic Deve lopment and Rebu i l d ing , C i t y o f New YorkV ice Cha i rman , New York Empowerment Zone Corpora t ion

Kenneth J . Knuckles Pres ident and Ch ie f Execut i ve Of f i cer, Upper Manha t t an Empowerment Zone Deve lopment Corpora t ion

R afael Salaberrios Pres ident , Bronx Overa l l Economic Deve lopment Corpora t ion

33

�

Our mission is to sustain the economic

revitalization of all communities in Upper

Mission

Our mission is to sustain the economic revitalization of

all communities in Upper Manhattan through job creation,

corporate alliances, strategic investments and small business assistance.

� �

Table of Contents

Message from the Chairman and President & CEO . . . . . . . . . . . . . . . �

Upper Manhattan at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Business Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

• Case S tudy : Nub i an Her i t age D i rec t . . . . . . . . . . . . . . . . . . . . . . . . . . � �

• Case S tudy : Ear l Monroe ’s Res tauran t . . . . . . . . . . . . . . . . . . . . . . . . . � �

• Case S tudy : Urb i vore Wor ldw ide , LLC . . . . . . . . . . . . . . . . . . . . . . . . � 5

Map with UMEZ’s 2005 Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 6

Cultural Industry Investment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . � 8

• Case S tudy : La Casa de l a Herenc i a Cu l tura l Puer torr iqueña . . . . . . . . . � �

• Case S tudy : B i l l T. Jones /Arn ie Zane Dance Company . . . . . . . . . . . . . . � �

• Cu l tura l I ndus t r y I nves tment Fund Techn i ca l Ass i s t ance Awards . . . . . . . � 5

Investment Guidel ines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 6

Investment and Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . � 8

UMEZ F inanc i a l Pos i t ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 8

Net Cumu la t i ve Vo lume o f NYEZ Approva l s . . . . . . . . . . . . . . . . . . . . . . � 9

UMEZ Inves tments Approva l M ix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 0

Bus iness I nves tments Approva l M ix . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 0

Nonpro f i t I nves tments Approva l M ix . . . . . . . . . . . . . . . . . . . . . . . . . . . � �

Executive Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � �

UMEZ & NYEZ Boards of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . � �

Message from the Chairman and President & CEO

Leading with Vision

Fiscal year 2005 raised the benchmark for leadership and investment activity by the Upper Manhattan

Empowerment Zone. This year we began actively engaging the developers of East River Plaza, a 480,000 square

foot retail center with a 624,000 square foot parking garage that is planned for East Harlem. When constructed,

this anchor investment is expected to create up to 1,200 full-time jobs for the local community and would

represent the largest investment to date for our organization. The employment impact of the East River Plaza

project is expected to be significantly greater than that of Harlem USA, and we expect the project to have a

similar positive effect on retail commercial development in East Harlem.

Another area of leadership is our role in re-envisioning the 125th Street corridor as a center for tourism,

entertainment and media for New York City. To assist us in this role, we retained the Initiative for a Competitive

Inner City (ICIC), a national nonprofit founded in 1994 by Harvard Business School professor Michael E. Porter,

an international authority on strategy and competitiveness. ICIC will assist us in evaluating ways to strengthen

the competitiveness of our cultural businesses, create linkages with the regional and national economy, implement

a shared strategy among diverse community leaders and increase national attention to Upper Manhattan as a

premier location and source for cultural products and experiences.

Speaking from the President and CEO’s perspective, I believe that the crowning achievement of our leadership

successes in fiscal year 2005 was the election of Mario L. Baeza as our new Board Chairman, replacing the late

Johnnie L. Cochran, Jr., who passed away in March 2005. Mario brings a breadth of investment experience with

which to guide our organization to new heights under his watchful and visionary direction. He is the Chairman and

CEO of The Baeza Group, LLC, a Hispanic-owned alternative investment company focused on the management

of private equity funds and real estate projects that target the emerging Hispanic market in the United States. He

is also Chairman of TCW/Latin America Partners, LLC, a company formed in 1996 out of a partnership between

Trust Company of the West, an asset manager with approximately $90 billion in assets under management, and

Baeza & Co., which Mario founded in 1995 as the first U.S. Hispanic-owned merchant banking firm focused on the

Pan-Hispanic region. TCW/Latin America Partners was one of the pioneering private equity funds specializing in

the acquisition of controlling stakes in important Latin American companies.

Mario L. BaezaChairman

Kenneth J. KnucklesPresident & CEO

� 5

a ProductiVe Year

From an activity perspective, we invested in a number of projects on both the nonprofit and business fronts.

Beginning with nonprofits, our Cultural Industry Investment Fund had one of its most active years with

almost $1 million invested in five organizations, including Harlem Textile Works, La Casa de la Herencia

Cultural Puertorriqueña and the Bill T. Jones/Arnie Zane Dance Company, among others. The most prominent

indicator of the Fund’s heightened pace of activity was the Technical Assistance Program, which allows UMEZ

to issue small grants to nonprofit organizations with a faster turnaround than would normally be allowed. This

year, the Fund awarded $575,000 to twelve organizations. A partial list of recipients included El Museo del

Barrio and Taller Boricua in East Harlem, and the Malcolm X and Dr. Betty Shabazz Memorial and Education

Center in Washington Heights.

On the business side, we continued the transformation of Upper Manhattan through the opening of over

31,000 square feet of new commercial space at Strivers Gardens, a mixed-use condominium on Frederick

Douglass Boulevard, which currently includes a Chase retail branch and a Duane Reade store as new

commercial tenants. In addition, we have invested in two innovative start-up restaurants. The first, Ginger

Restaurant, is the community’s first modern Asian restaurant located on the corner of East 116th Street and

5th Avenue within the new “green” residential condominium building developed by Full Spectrum of New

York. The second, Earl Monroe’s Restaurant in Riverbank State Park, is named after Earl “The Pearl” Monroe,

the legendary guard for the champion 1973 New York Knicks. Earl Monroe’s Restaurant is one of the first

white tablecloth restaurants in West Harlem.

We also revived our small business lending initiative through the Business Resource and Investment Service

Center, Inc. (BRISC), which reopened for business in January 2005. BRISC offers loans between $50,000 and

$250,000 to local entrepreneurs, and we approved three loans during fiscal year 2005. The loans included start-

up capital for a Harlem-based organic grocer, expansion capital for a low-income housing service provider and

financing for the construction of studio spaces for local artists. Our BRISC lending program has been essential

in enabling these small businesses to start up or to expand their growth.

Looking ahead

As we look ahead to fiscal year 2006, we are excited about the upcoming opportunities to influence the

cultural and economic vitality of Upper Manhattan. First, we will continue our development leadership by

focusing on large anchor investments that can provide unique mixed-use commercial developments in Upper

Manhattan. Second, we will continue to invest in arts and cultural institutions in order to strengthen these

strategic community assets, and to explore the many ways in which they can work synergistically to revitalize

the 125th Street corridor. Finally, the capstone to this development pyramid is our ongoing support for the

creation and growth of small local businesses, which will logically benefit from the dynamic developments,

national attention and increased visibility created through our anchor and cultural investments.

Our vision for the future is not merely an extension of the existing growth, but an unprecedented

transformation and elevation of the economic and cultural production of Upper Manhattan. Together with our

funding partners and numerous local community leaders, we believe that the vision, leadership and experience

are in place to accomplish this lofty objective.

we will continue our development leadership by continuing to focus on large anchor investments across the

3. Leading income densitY (in miLLions)*...

Upper Manhattan

$��5

$677

$�8�

$��0

$�05

Chicago Philadelphia Los Angeles Atlanta

*Household Income/sq mile

...with Fast-growing demograPhic

n Upper Manhattan is 52% Hispanic, 33% African-American, 11% White and 4% Other

n Above average buying power growth expected through 2009:

• 8% annually for Hispanics • 6% annually for African-Americans

4. LargeLY underserVed market More Underserved Households in Upper Manhattan

Households/Restaurant Households/Retailer

5�

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80

��8

Upper Manhattan Rest of Manhattan

5. exceLLent transPortation inFrastructure

n Quick access to Triborough and George Washington Bridges

n Minutes from LaGuardia Airportn MTA Metro North link to Westchester and Connecticutn Cross-town corridors for large truck usagen 10 local and express subway lines linking Uptown and the

rest of New York City (A, B, C, D, 1, 2, 3, 4, 5, and 6 trains)

76

Upper Manhattan at a Glance

Upper Manhattan is an area of approximately 7.3 square miles with a population of approximately 545,000.

The community has benefited from a dramatic growth in population and income, which has induced more

banks and national retailers to invest and expand into the community. From 1990 to 2000, Upper Manhattan

experienced a number of positive growth trends that will continue to attract new businesses and additional

investment, including those illustrated in the tables below.

1. growth in new housing units... 5 Times More Growth in Upper Manhattan

Upper Manhattan Rest of Manhattan

�%

5%

...creating Fast PoPuLation growth 3 Times More Growth in Upper Manhattan

Upper Manhattan Rest of Manhattan

�%

6%

2. Fast growing median househoLd income...

Upper Manhattan Rest of Manhattan

��%

�7%

...PrimariLY From $50,000 + househoLds

$60K

�7%

77%

-9% -�9%

$35-50K $20-50K < $20K

8 9

The last transaction, a loan through the BRISC initiative to Urbivore Worldwide, LLC (Urbivore) for the

renovation of an art gallery and art studio space in Central Harlem, reaffirms the Empowerment Zone’s goal

of positioning Upper Manhattan as one of New York City’s primary arts and cultural districts. The gallery

and studios will be operated by an artist who has achieved international acclaim as a recipient of the 2005

MacArthur Foundation Fellowship. This loan represents an innovative and creative approach to helping

Harlem’s small business community through access to affordable BRISC capital.

PLanning ahead

As we look back on this year’s harvest of closed transactions, we are mindful of the long lead time required

to close a transaction. As a result, we began two initiatives that, we believe, will increase the number of closed

transactions in fiscal year 2006. First, we have worked with our state and city funding partners to reduce the

overall approval cycle time and are restructuring other procedures to further improve the efficiency of our

underwriting process.

Second, we are implementing a more aggressive marketing effort throughout New York City. The objective of

this strategy is to expand our marketing presence by educating a broad range of potential borrowers about

the services we offer and our many success stories. This outreach will include direct mailings, print advertising,

speaking engagements and special events hosted for targeted audiences, such as Upper Manhattan bankers. In

fact, we’ve already started to see the benefits of our banker outreach through our loan to Urbivore, which

was referred to BRISC by a traditional lending institution. By building awareness of our services, we hope to

increase both the quality and quantity of transactions closed in Upper Manhattan.

Since restarting our BRISC lending mid-way through fiscal �005, we approved � loans totaling $6�0,000 before year-end.

Business Investments

a harVest Year

Fiscal year 2005 produced the first fruits of a two-year effort to increase both the quality and quantity of

closed transactions. The Business Investments division closed $14.1 million in loan and grant investments, and

will maintain this momentum in fiscal year 2006. The dollar volume figure represents eleven transactions—a

280% increase over the prior two fiscal years combined and a testament to our increased productivity.

Since restarting our BRISC lending program mid-way through fiscal year 2005, we approved three loans

totaling $630,000. These loan commitments went to support small, but growing, local businesses—including

an organic grocer, a low-income housing developer and an artists’ gallery and studio space.

This year’s selected case studies feature three transactions: two from the Business Investments portfolio

and one from the BRISC portfolio. The first, Earl Monroe’s restaurant, demonstrates our commitment to

continue providing unique and needed services for Upper Manhattan residents while striving to meet our

more rigorous underwriting criteria. As one of the few restaurants in a park setting with an unencumbered

view of the Hudson River and George Washington Bridge, Earl Monroe’s, we believe, represents a new gem

in the crown of the unique dining and entertainment venues offered by Upper Manhattan.

The second transaction is our loan to Nubian Heritage Direct, an online retailer of African-themed products.

This case study illustrates our commitment to providing expansion capital for growing businesses. Nubian

Heritage Direct is the online extension of the existing Nubian Heritage retail franchise—which, as a direct

result of an Empowerment Zone loan in fiscal year 2003, is now headquartered in Harlem. This is a true

Horatio Alger story of a local street vendor who began with a simple but revolutionary concept—providing

lifestyle products that cater to the entire Pan-African market. With financing from the Empowerment Zone,

Nubian Heritage has built a major retail presence not only in the local New York City market, but also in

cyberspace, with our most recent loan for the on-line store.

��

Our second loan is helping Nubian take its product line beyond New York City’s case studY: nubian heritage direct

The Empowerment Zone awarded Harlem-based Nubian Heritage Direct a $1 million loan to help expand

its operating capacity from a local retailer to a national Internet, phone, and catalog based direct retailer

offering the full range of Nubian Heritage products. Nubian Heritage Direct is the direct sales channel

of the Nubian Heritage family of companies, which together manufacture, market and retail African-themed

health, beauty and lifestyle products such as shea butter soaps, lotions, literature, music, apparel, artwork

and jewelry.

The proceeds of our loan helped Nubian Heritage establish a website (www.nubianheritage.com) and a

warehouse facility, which will allow the company to sell its products to a national and international market.

Additionally, our support allowed Nubian Heritage to purchase a supply of inventory to be sold over the

Internet and stored in a renovated shipping and receiving facility in the basement of Nubian Heritage’s Harlem

store, located on Fifth Avenue between 125th and 126th Streets. Nubian Heritage’s expansion will create 30

new jobs in Harlem.

Mr. Richelieu Dennis, co-owner of the Nubian Heritage franchise, originally approached the Empowerment

Zone for assistance in developing his Harlem store because, as he states, “Traditional lenders did not understand

the cultural relevance of our products and did not see the market potential of our customer base.” In fiscal

year 2003, the Empowerment Zone provided a $387,500 loan to finance the construction of the company’s

flagship Harlem store, which has since expanded to include a day spa, a café, and a number of adjacent stores

that complement Nubian Heritage’s product line.

Our second loan is helping Nubian Heritage take its product line beyond New York City’s borders; the sales of

which will draw national capital into Upper Manhattan’s economy. This loan is a quintessential investment for

the Empowerment Zone and for Upper Manhattan for a number of reasons. First, Nubian Heritage is a small

business in a growth mode that is capitalizing on Harlem’s world-famous image as the center of America’s

Pan-African culture, and helping to reinforce this unique image with its product line. Second, Mr. Dennis is

a community-minded entrepreneur who co-owns the building that houses the National Black Theater, one

of Upper Manhattan’s primary cultural institutions. Third, Mr. Dennis has deep roots in the local community,

having begun his career as a street vendor of soaps and incense on 125th Street.

Founded in 1992, Nubian Heritage is a lifestyle emporium that currently operates five retail locations in

Harlem, Brooklyn, and Queens, and manufactures and distributes its own brand of bath, body and skin care

products. As a full service cultural and lifestyle brand, Nubian Heritage celebrates the spirit of Africa through

health and wellness, literature, music, art and community development.

�0

Top image: Nubian Heritage, 2033 Fifth Avenue and 126th Street. Bottom left: From left to right: Kenneth J. Knuckles, President & CEO of the Empowerment Zone; Nyema Tubman, CFO of Nubian Heritage; Congressman Charles B. Rangel; Richelieu Dennis, CEO of Nubian Heritage; Earl Bernard, COO of Nubian Heritage; Paul Quintero, Senior Vice President for Business Investments at the Empowerment Zone; Neel Gandhi, Investment Officer at the Empowerment Zone. Bottom right: Spacious interior of Nubian Heritage’s Harlem retail store.

�� ��

case studY: earL monroe’s restaurant

The Empowerment Zone awarded Earl Monroe’s Restaurant & Club a $380,000 loan to help finance

construction and other start-up costs. The investment marked the twenty-third restaurant venture funded

by the Empowerment Zone since its inception in 1995. The 150-seat restaurant serves innovative Southern

cuisine, featuring cornmeal-crusted striped bass with okra, Caesar salad with avocado and fried shrimp, crab

chowder, and chicken with sweet potato gravy.

Most notably, Earl Monroe’s has a spectacular setting high atop the Hudson River in Riverbank State Park

(which runs along the Hudson River from 135th Street to 145th Street). The venue’s breathtaking view of the

George Washington Bridge, Hudson River and the New Jersey Palisades, places Earl Monroe’s among an “all-

star” cast of distinguished restaurants in New York City. The restaurant has been embraced by local residents

and, we believe, will be a lasting fixture in the Harlem community.

Our funding was instrumental in helping to establish Earl Monroe’s and reinforces our commitment to

providing unique and needed services in Upper Manhattan. Co-owner John Lowy, founder of The New York

Restaurant School and former owner of Mickey Mantle’s Restaurant, said, “In spite of all the positive changes

taking place in Harlem, it is still difficult to raise capital for riskier ventures like restaurants. Without the

assistance of the Upper Manhattan Empowerment Zone, Earl Monroe’s Restaurant would have remained just

a dream.”

Our funding was instrumental in helping to establish Earl Monroe’s and reinforces our commitment

Earl Monroe’s Restaurant, Riverbank State Park and 145th Street

�� �5

case studY: urbiVore worLdwide, LLc

The Empowerment Zone awarded a $250,000 BRISC loan to Urbivore. The project is a start-up art venture

that was formed in November 2004 by two highly acclaimed artists, Ms. Julie Mehretu and Ms. Jessica Rankin.

The name Urbivore is a combination of the words “urban” and “carnivore,” signifying one who consumes the

urban environment or lifestyle.

The artists’ vision in forming the company was to renovate their vacant property, located at 312 West 118th

Street between 8th Avenue and Manhattan Avenue, into a studio and gallery space for local artists. Urbivore

expects to rent six to eight studios to artists who need work space to create their art.

Julie Mehretu was born in Addis Ababa, Ethiopia and was named Newsweek’s next artist to watch for 2005; she

is the first African-American female artist to receive such a distinction. Her work is displayed at prestigious

venues across the country, including the permanent collection of the newly renovated Museum of Modern

Art. On September 20, 2005, Ms. Mehretu was also selected to receive a 2005 MacArthur Fellowship, often

referred to as the “genius grant.” Her work focuses mainly on acrylics on canvas.

Jessica Rankin was born in Australia and focuses on a variety of unique works of needlepoint. Her work is

displayed and sold in venues throughout New York City and Germany.

Urbivore is a creative new business venture addressing a need created by the growing arts and culture

industry in Upper Manhattan. After being turned down by traditional lenders for this project, the artists used

our start-up BRISC loan to transform their picturesque dream into reality.

Urbivore is a creative new business venture that is addressing a need created by the growing arts and

From left to right: Ellingston Clark, Senior Lending Officer with BRISC, and Hope Knight, COO of the Empowerment Zone, present a check to Julie Mehretu and Jessica Rankin, inside their newly built art gallery on West 118th Street. Behind the group is Passage, 2004, by David Rankin, Acrylic on Cotton Duck, 63 1/2” x 191”.

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il l� . 106th Street Design Study –

“A Cultural Corridor” East 106th Street from Fi f th Avenue to the Har lem River

� . Art Gallery and Studios Operated by Julie Mehretu and Jessica Rankin 312 West 118th Street

� . Audubon Partnership for Economic Development 513 West 207th Street

� . Boys Choir of Harlem 2005 Madison Avenue

5 . Earl Monroe’s Restaurant & the Pearl Club Riverbank State Park and 145th Street

6 . East Harlem Business Capital Corporation 2261 F irst Avenue

7 . El Museo Del Barrio 1230 F i f th Avenue

8 . Firelight Media 324 Convent Avenue

9 . Ginger Restaurant 1400 F i f th Avenue

�0 . Harlem Business Al l iance 275 Lenox Avenue

�� . Harlem School of the Arts 645 St . Nicholas Avenue

�� . Harlem Textile Works 1671 Amsterdam Avenue

�� . Housing to Enhance Communities Real Estate 2471 Freder ick Douglass Boulevard

�� . Jazzmobile 154 West 127th Street

�5 . Karrot 304 West 117th Street

�6 Katrina Parris Flowers 1844 Adam Clayton Powel l J r. Boulevard

�7 . La Casa de la Herencia Cultural Puertorriqueña 1 East 104th Street

�8 . La Marqueta Center is land a long Park Avenue f rom 111th to 119th Streets

�9 . Malcolm X and Dr. Betty Shabazz Memorial and Educational Center 3940 Broadway

�0 . Mama Foundation for the Arts 149 West 126th Street

�� . Manna House Workshops 338 East 106th Street

�� . National Black Theater 2031 F i f th Avenue

�� . National Jazz Museum in Harlem 104 East 126th Street

�� . Nubian Heritage Direct 2033 F i f th Avenue

�5 . NYC & Co. Visitors’ Kiosk Plaza in front of 163 West 125th Street

�6 . Opus 118 103 East 125th Street

�7 Renaissance Ballroom 2341 Adam Clayton Powel l J r. Boulevard

�8 . Taller Boricua 1680 Lexington Avenue

�9 . Touro College 230 West 125th Street

�0 . Umanoff & Parsons Park Avenue between 121st and 122nd Streets

�� . West Harlem Waterfront Redevelopment Hudson River at West 125th Street

�005 Projects of Upper Manhattan Empowerment Zone

�6Upper Manhattan Empowerment Zone

9 7

16 6

19 26

�8 �9

The Fund provides support to cultural organizations that use the arts as a tool for economic development, job

creation and growth of cultural tourism within the five communities of Upper Manhattan.

The Fund focuses on four primary areas of investment to strengthen the cultural assets of Upper Manhattan.

� . Reinventing/re-envisioning cultural historic sites

� . Strengthening and advancing primary institutions

� . Developing and building the next generation of mid-size organizations

� . Nurturing and growing cultural resources through service organizations

As a whole, the division proactively focused its time towards better serving the nonprofit arts and cultural

organizations in Upper Manhattan through greater responsiveness and flexibility. Looking forward, the division

will continue to: bring the Fund’s guidelines and strategies into greater alignment with the needs of organizations

in its catchment area, assist with the establishment of service organizations across the communities served by

the Empowerment Zone, activate the Cultural Opportunities Fund to complement existing initiatives, invest

in key cultural historic sites and provide substantial technical assistance.

This incisive approach will yield tangible results for our neighbors in the communities of Upper Manhattan.

Five years from now, we expect the Empowerment Zone’s investments in Upper Manhattan’s cultural industry

to have nurtured, developed, and realized signature projects that: add value to the landscape, strengthen small

and emerging organizations, extend financial and technical support to the many individual artists who make

Upper Manhattan their home, and help to secure the futures of the myriad middle-tier cultural institutions.

Ultimately, we expect the Empowerment Zone’s support to measurably improve Upper Manhattan’s cultural

ecology by enhancing the lives of those who live here and those who visit.

Cultural Industry Investment Fund

a Year oF imPLementation

Fiscal year 2005 ushered in a reinvigorated Program and Nonprofit Investments division. The leadership

transition in the previous fiscal year resulted in the articulation of a new vision and a refined strategy for

achieving the Empowerment Zone’s goals. In order to bring these goals to fruition, we installed new staff to

lead the Programs and Nonprofit Investments division. This team contributed renewed energy, creating an

ethos of transformation and progress.

A comprehensive examination of our goals and objectives conducted in fiscal year 2004 gave rise to a

significant restructuring of investment strategies. For the Program and Nonprofit Investment division, a key

change was to shift investment emphasis to a primary focus on the arts and cultural sector. This transition

was fully realized in fiscal year 2005. Another key modification was a board mandate introducing technical

assistance as an important preliminary step in assisting organizations. In most instances, provision of technical

assistance must occur prior to consideration by UMEZ of potential future investments in the organization.

During fiscal year 2005, twelve technical assistance awards were made, totaling more than $575,000. Finally,

$980,000 was invested in five additional organizations in the form of grants.

Together, these changes have stimulated the division and helped to reignite its core program, the Cultural

Industry Investment Fund.

The Fund celebrates Upper Manhattan’s rich past while creating new legacies. The work of the Fund is two-

fold: community building through a cultural and economic lens; and, a marketing of place that repositions

Upper Manhattan as one of New York City’s primary cultural districts. The goals of the Fund are:

• Sustaining the local economy by promoting development, revitalization and tourism

• Making strategic cultural investments

• Strengthening the cultural ecosystem

Looking forward, the division will continue to bring the Fund’s guidelines and strategies into greater alignment with the needs

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case studY: La casa de La herencia cuLturaL Puertorriqueña

The Empowerment Zone awarded a two-year grant of $225,000 to La Casa de la Herencia Cultural Puertorriqueña

to support capacity-building, program development, and preservation and cataloguing of its archive.

Founded by the late New York State Assemblyman Luis Nine in 1981, La Casa is an East Harlem based

community cultural organization whose objective is to promote the development of the Puerto Rican culture

and to preserve, enrich and disseminate the cultural and literary heritage to the Puerto Rican community and

others. This is achieved through cultural programs and activities, including performances, workshops, annual

events and community services. La Casa houses a library and a prestigious research center with an 11,000-

item, Puerto Rican heritage archive that is used by educational leaders from across the nation, Puerto Rico

and Spain.

As a historically volunteer-run organization, La Casa’s success is a tribute to the dedication of its volunteers

and the loyalty of its membership and audience. It has relied upon a membership drive and small fund-raising

events for the majority of its operating income in order to survive the loss of government funding.

La Casa recognizes the importance of infrastructure enhancements to strengthen its capacity and to ensure

a continued presence. Among its priorities are workforce stabilization and expansion. In response, the

Empowerment Zone’s investment financed the conversion of the executive director’s position from volunteer

to salaried in order to allow full-time commitment to the organization. Also, a part-time administrative assistant

was hired to support the executive director with the daily operations of the organization and to assume some

archival preservation responsibilities to secure and chronicle the cultural history.

The hire of these initial staff members will bolster the organization as it undergoes a strategic planning

process to chart its course over the next three to five years. The planning process will include an analysis of

La Casa’s programs, its management and financial systems, and a market analysis. The plan will help to inform

La Casa about future staffing structures and fund-raising strategies needed in order to support its current and

potential programs and services.

In addition to supporting the staff hires and the strategic planning process, the Empowerment Zone grant

also helped La Casa attain greater capacity and efficiency. The organization purchased office equipment,

including computers, software and scanners. All these efforts help to position La Casa to preserve the

richness of the past, while also preparing for the evolving needs of future generations as they learn about

Puerto Rican heritage.

La Casa houses a library and a prestigious research

Left image: From left: Maurine Knighton, Senior Vice President for Program and Nonprofit Investments at the Empowerment Zone ; Otilio Diaz, President of La Casa; Anita Velez-Mitchell, Board Member of La Casa; Kenneth J. Knuckles, President & CEO of the Empowerment Zone; Johnny C. Rivera, an Empowerment Zone Board Member.Right image: One of several works of art at La Casa

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case studY: biLL t. Jones/arnie Zane dance comPanY

The Empowerment Zone awarded the Bill T. Jones/Arnie Zane Dance Company a $210,000 grant to support

capacity building, workforce expansion and the development of a strategic fund-raising plan. This grant

coincides with the culmination of the company’s five-year strategic plan, which set forth dual goals of capacity

building and the establishment of a permanent residence in Harlem through its “Harlem-Home” initiative.

Founded in 1982, the Bill T. Jones/Arnie Zane Dance Company is a product of an eleven-year collaboration

between Bill T. Jones and the late Arnie Zane. The company is acclaimed by the international dance community

as one of the most innovative and powerful forces in modern dance. Widely recognized for its artistic

significance and accomplishments, the company seeks to build its organizational capacity in order to sustain

its artistic course. At the same time, it aims to capitalize upon its longstanding collaborations with Upper

Manhattan-based organizations.

The primary focus of the company is to support Bill T. Jones’ effort to create and perform new work and

explore ideas, but more importantly, to teach others the company’s unique dance style, language and vocabulary.

This ensures that the work will remain vibrant and alive, not an ossified museum artifact, thereby allowing it

to be passed down through successive generations of dancers. The creation of new work is a primary driving

force of the company. During the last two decades, more than 75 works ranging from brief solos to evening-

length, full company works have been presented.

The company seeks to transform itself from a founder-led organization into an institution. To do so, it needs to

build its organizational capacity. The Empowerment Zone’s investment is a first step in fulfilling these aims by

helping to create a fund-raising department whose staff will focus primarily on resource development. These

new staff members include a director of development, development associate and development consultant.

This team of professionals, working in concert with the executive director, will be responsible for maximizing

fund-raising efforts not only to support ongoing institutional needs, but also to launch and implement a capital

campaign in pursuit of the company’s “Harlem-Home” initiative.

A permanent home for the company will provide an enduring presence and stability that will function as a

command center for all its current and future initiatives. This leads to a stronger foundation for nurturing

creativity and supporting the creation of new work. It also provides a medium for fostering young professional

dancers and developing new educational and public programs. The space will complement the company’s

current vision of integrating itself into the Upper Manhattan community and evolving more fully as an

institution.

The company seeks to transform itself from a

From left to right: Aminah Yoba, Program Assistant at the Empowerment Zone; Dona Lee Kelly, Development Director for Bill T. Jones/Arnie Zane Dance Company; Jean Davidson, Executive Director for Bill T. Jones/Arnie Zane Dance Company; Julia Lu, Senior Program Officer at the Empowerment Zone.

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ciiF technicaL assistance awards

During fiscal year 2005, Empowerment Zone staff began issuing technical assistance grants at a robust pace.

Twelve grants were issued in fiscal year 2005 totaling $575,000. Here is a sampling of the grants made in fiscal

year 2005 through the Technical Assistance Program:

• The East Harlem Business Capital Corporation developed a tenant leasing plan and a detailed operating budget for La Marqueta, which is expected to be enlarged and restored to its former role as a thriving retail marketplace

• El Museo del Barrio conducted a strategic plan to shape its programs and operations in light of capital improvements and changing demographics

• FirelightMedia,aHarlem-baseddocumentaryfilmproductioncompany,created a business plan that will enable it to develop and distribute content that promotes socially conscious messages, particularly for communities of color

• The Harlem Strategic Cultural Collaborative, a membership organization of Harlem cultural organizations, hired a project manager to oversee organizational development activities

• Jazzmobile formulated a business plan to guide its continued development and its expansion into a permanent space

• The Malcolm X and Dr. Betty Shabazz Memorial and Educational Center hired a project manager to coordinate the Center’s development

• The National Black Theatre conducted an organizational assessment

• Taller Boricua conducted an organizational assessment

Twelve grants were issued in fiscal year �005 totaling $575,000,

Top left: Firelight Media. Top right: Malcom X and Dr. Betty Shabazz Memorial and Educational Center. Bottom left: National Black Theatre. Bottom right: El Museo del Barrio

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cuLturaL industrY inVestment FundApplicant: 501(c) (3) incorporated in New York

Mission: Arts and culture

Geography: Located within Upper Manhattan

Grant size: Variable

Grant term: Typically one to three years

Uses:• Redevelopment of cultural historic sites

• Strengthening and advancing institutions

• Capacity-building

• Sustainability

• Service organizations that support emerging arts groups

Key requirements:• Strategic fit with the Empowerment Zone mission and funding guidelines

• Sustainability

• Experienced management team

• Business plan, strategic plan, and/or fundraising plan that reflects understanding

of sector and project costs

To learn more about the Empowerment Zone, call (212) 410-0030 or visit our website at www.umez.org.

Additionally, for our free report on “How to Make Money Uptown,” please email us at fortune@umez.org or call our free pre-recorded message at (212) 410-9622.

Assistance is provided through start-up or expansion loans for

Investment Guidelines

The Empowerment Zone offers financial assistance through three programs: (i) The Business Resource

and Investment Service Center, (ii) The Business Investments program, and (iii) the Cultural Industry

Investment Fund. Assistance is provided through start-up or expansion loans for businesses as well as grants

for qualified nonprofit organizations. In addition, businesses located in the Empowerment Zone are eligible for

certain federal, state and city tax benefits. The guidelines for financing under these three programs are

summarized below.

briscLoan size: $50,000 to $250,000

Pricing: Fixed rate and competitive with market rates

Loan term: Typically five to seven years

Uses: Start-up financing, business expansion, machinery and equipment, leasehold improvements, refinancing,

acquisitions and working capital

Key requirements:

• Sustainable cash flows

• Experienced management team

• Business plan that reflects understanding of sector and project

• Meaningful equity contribution

• Personal guaranty and other collateral

emPowerment Zone business inVestmentsLoan size: $250,000 and above

Pricing: Fixed rate and competitive with market rates

Loan term: Typically five to seven years (commercial); up to ten years (real estate)

Uses: Start up financing, business expansion, machinery and equipment, leasehold improvements, commercial

real estate and working capital

Key requirements:• Sustainable cash flows

• Experienced management team

• Business plan that reflects understanding of sector and project

• Meaningful equity contribution

• Personal guaranty and other collateral

• Minimum creation of five full-time equivalent jobs

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Investment and Financial Summary

N E T C U M U L AT I v E v O L U M E O F N Y E Z A P P R O vA L S(In Millions of Dollars)

Fiscal Year

120

100

80

60

40

20

01996 1997 1998 1999 2000 2001 2002 2003 2004 2005

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$96$�0� $�05

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U M E Z F I N A N C I A L P O S I T I O N

FINANCIAL POSITION 2005 2004 2003

Cash and Investments $21,589,283 $19,303,859 $12,502,800

Loans to Businesses and Affiliates 16,292,197 19,902,489 23,832,530

Grants Receivable and Other Assets 1,883,652 1,280,999 1,494,106

Net Fixed Assets 24,914 40,676 77,386

TOTAL ASSETS $39,790,046 $40,528,023 $37,906,822

Current Liabilities $344,515 $260,197 $170,822

Net Assets 39,445,531 40,267,826 37,736,000

TOTAL LIABILITIES AND NET ASSETS $39,790,046 $40,528,023 $37,906,822

ACTIVITIESInterest and Other Revenue $1,694,041 $943,856 $1,708,765

Government Grant Support for Lending Activity 8,416,292 11,613,667 11,081,688

TOTAL REVENUE AND SUPPORT $10,110,333 $12,557,523 $12,790,453

Grant Program Expenditures $4,760,388 $5,304,983 $5,676,164

Program Service Expenditures 4,859,779 3,317,139 3,036,27

Management and General Expenditures 1,312,461 1,403,575 1,651,848

TOTAL EXPENDITURES $10,932,628 $10,025,697 $10,364,283

CHANGE IN NET ASSETS ($822,295) $2,531,826 $2,426,170

CASH FLOW Change in Net Assets ($822,295) $2,531,826 $2,426,170

Depreciation and Amortization 18,825 44,902 96,056

Net Loan Repayment/(Disbursement) 3,610,292 3,930,041 4,360,079

Net Decrease/(Increase) in Grant Receivables (271,110) 226,147 (1,166,374)

Net Decrease/(Increase) in Other Assets (270,784) 78,781 (212,515)

Net Decrease/(Increase) in Liabilities 23,559 27,555 (98,372)

Fixed Asset Sales/(Purchases) (3,063) (8,193) (13,242)

NET INCREASE/(DECREASE) IN CASH $2,285,424 $6,831,059 $5,391,802

BEGINNING CASH $19,303,859 $12,472,800 $7,110,998

ENDING CASH $21,589,283 $19,303,859 $12,502,800

The summary financial information was derived from the audited financial statements prepared by Watson Rice, LLP.

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umeZ inVestments aPProVaL mix

57%Business

Investments

��%Nonprofit

Investments

5�%Real Estate

Development

8%Retail Services

8%Restaurants

��%Small Business

Assistance

�8%BRISC

business inVestments aPProVaL mix

�9%Arts and Culture

�6%Tourism

��%Business and Technical

Assistance

��%Human Capital

nonProFit inVestments aPProVaL mix

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Executive Management

Kenneth J. KnucklesPresident & CEO

Hope KnightChief Operating Officer

Paul QuinteroSenior Vice President for Business Investments

Maurine KnightonSenior Vice President for Program and Nonprofit Investments

Blair M. DuncanGeneral Counsel

Kelvin CruceySenior Vice President for Finance and Administration