A program designed to spark growth in Northern Kentucky's urban neighborhoods is one step closer to bringing the financial power of its corporate citizens to bear.
The Catalytic Development Funding Corporation, Vision 2015's leading program to stimulate private real estate development in the area's cities, announced on July 16 that it had received a $1 million funding commitment from Duke Energy. The pledge pushed the local business community's commitment to the Catalytic Fund to over $3 million, with more soon on the way. Corporex implemented the Vision 2015 plan by committing to the first million dollars plus providing start-up operating funds for the organization.
Set into motion in late 2008, the fund is a key component of Vision 2015's plan to improve the quality of life in Northern Kentucky, bring new business to the area and an influx of more than $150 million in new development.
"The intent of the fund is the stimulate investment and revitalize Northern Kentucky's urban areas," says Jeanne Schroer, the Catalytic Fund's executive director and a commercial real estate veteran of more than 25 years. "Our projects will have a strong housing focus, though we will consider office and neighborhood retail projects as well. We want to bring new residents into those corp urban areas and improve the quality of life of residents who already live there."
The ultimate goal, she adds, is to serve an economic boom in Northern Kentucky.
After studying urban renaissance success stories from around the country, Vision 2015's Urban Renaissance Action Team noticed a common thread throughout them all -- each had efforts similar to the Catalytic Fund, sponsored by local business, to focus on urban revitalization. Vision 2015 set up Catalytic to tackle that role, studying others' best practices to go about breathing new life into downtown neighborhoods.
"In the end, our goal is to be a catalyst for economic growth," Schroer says. "Cities that have a healthy urban core are cities that companies and 'new technology' workers tend to seek when they think about relocating. We want to make Northern Kentucky as attractive as possible to them."
For now, the Catalytic Fund's largest role is as a fund-raiser. Duke's commitment follows on the heels of $1 million pledges from both the Bank of Kentucky and Corporex. Schroer, a former Corporex executive, is in the process of lining up other corporate donors.
When the fund reaches the $10 million mark, local residents can expect to start seeing its impact, she says.
With an initial focus on the riverfront cities of Ludlow, Covington, Newport, Bellevue and Dayton, the Catalytic fund will have an active role in recruiting developers, helping secure sites for development projects, facilitating relationships with traditional lenders and, most importantly according to Schroer, providing "patient capital" for the developments.
"The typical urban project is hard to put together for a number of reasons," she says. "They're usually small, but extremely complex."
Navigating local zoning ordinances, along with city laws and neighborhood logistics like parking and access requirements can tie projects up in a web of details. And, because most urban revitalization projects break ground in more than one respect, lenders aren't usually eager to sign off on loans, says Schroer.
"Traditional lenders consider them 'pioneering' projects because there typically isn't something similar next door that you can point to as a reason to expect success," she explains. "There's no model for success, usually. Because of that, there's usually a gap between what traditional lenders will cover and what the project will actually cost. It's our role to help fill that gap."
The Catalytic fund is already talking to city leaders to pool its capital along with funding already available to the cities to make an even larger impact than if either acts alone. In the end, the Catalytic Fund will also invest its money in the projects, typically with longer termed loans than traditional lenders are willing to provide.
"We'll be there to give an initial financial boost to make sure the planned developments get off the ground, and we'll give developers a little breathing room -- more time to get the projects off the ground," Schroer says. "That's where the patience comes in. In some cases, we could be the first capital invested in a project and the last to be repaid once it is a success."
Along with continued influx of corporate investment, that money will then be funneled into even more projects, becoming an "engine driving the local economy," says Schroer.
Source: Jeanne Schroer, executive director, the Catalytic Development Funding Corporation.