Build Something Beautiful Newsletter
Q4 | 2015
Beneficial State Bank & Housing Action Commitment - By Kat Taylor
At Beneficial State Bank, we believe that safe, clean, comfortable, and convenient housing, a sustainable commute from jobs, is a human right. There is a growing affordable housing crisis in each of the regions in which we live and work, and as a bank, we have the ability and responsibility to help find and fund solutions for housing affordability and preserve this right for everyone.
An Historical Commitment
From its beginnings, Beneficial State has been committed to housing equity. While the collapse of the housing market in 2008 (one year after our founding) precluded us from building and scaling mortgage lending, we were deeply engaged in developing creative strategies that helped to prevent foreclosures nationwide. The bank also lent to investors to renovate blighted homes and put them back in the market, effectively stopping plummeting housing values that were destabilizing entire neighborhoods. Many of the houses in these neighborhoods were then rented to families who had lost their homes, helping to preserve affordable housing options throughout the crisis and recovery until banks started lending again.
More recently, Beneficial State has employed three strategies to support housing: 1) partnering with affordable housing developers and other financial institutions to provide loans that help to build and retain affordable housing; 2) launching and growing a multi-family lending division to support affordable rental units throughout our markets; and 3) helping tenants avoid eviction by supporting non-profit housing organizations in our communities.
From 2012 through 2014, in partnership with housing developers, property owners, and other financial partners, Beneficial State’s lending has helped to support
• 752 units of dedicated affordable housing units*
• 558 of non-dedicated affordable and workforce-affordable housing units through efforts including our multi-family division*.
To put these results in context, this year San Francisco Mayor Ed Lee set a goal to build and rehabilitate 10,000 homes that are permanently affordable to low and moderate income families by 2020; that’s an average of 2,000 per year. In Oakland, a national survey revealed on December 9th that Oakland is the city with the largest rent increase in the country. Mayor Libby Schaaf formed a cabinet to address the housing affordability crisis in the city, and to develop the Housing Equity Roadmap. The road map adopted by the city sets a goal of 6,000 new affordable units over the next 7 years, an average of about 850 units per year. The plan also has the goal of preserving 43,000 units and improving 5,000 others over that same period (together an average of about 6,800 units per year).
In the Pacific Northwest, where there is currently a shortage of 40,000 affordable rental options, the Portland City Council officially declared a housing emergency in October 2015, and is working with Mayor Charlie Hales to develop a series of plans to support housing affordability and reduce homelessness. Similarly, Seattle Mayor Ed Murray declared the “worst housing affordability crisis in decades,” setting a goal to develop 20,000 affordable units over the next decade in order to meet the expected need. Like San Francisco, Seattle will need to build an average of 2,000 per year to keep up with demand.
New Ideas in Development
Beneficial State Bank recognizes that preservation of currently affordable units is a key to maintaining vibrant inclusive communities and keeping families in their homes. As such, we will augment our efforts with new actions that help both to build and to preserve permanent affordability and ownership opportunities for people of all income levels in all of our markets. Specifically, three programs will be piloted, tracked, and – if successful – promulgated through business school case studies and social media. We are exploring the following with our expert housing advisers:
• Rebating some interest cost for owners committing to not raise rents for the life of the loan,
• Using low-cost debt to incentivize developers of new housing to keep 5 - 10% of their units affordable, in cities where this isn’t already mandated by law,
• Lending to a portfolio of affordable housing developments through a special affordable-housing-focused Real Estate Investment Trust (REIT).
More to come on these pilots when we have good cases to publish!
Finally, Beneficial State Bancorp, an affiliate company of Beneficial State Bank, has also provided site control for a pioneering effort in Portland to develop what may be the first tall wood building in the U.S. Tall wood buildings, permitted so far in Australia, Canada and Europe, eliminate steel and concrete from construction (except in the foundation) and therefore have a much lower greenhouse gas footprint. On the site of Albina Community Bank's Pearl neighborhood branch, this new building would include five floors of workforce affordable housing along with aligned office space, the Albina branch and Beneficial State Bank offices. Tall wood buildings also promise to reactivate rural economies with a sustainable timber product and re-connect the urban/rural divide to restore broader prosperity.
Together, We Can Do This
Beneficial State Bank believes, as a recent SPUR Report asserts, that access to housing is critical to achieving social and economic equity. New York Times columnist and Nobel Laureate Paul Krugman noted that "[t]he good news is that this is an issue over which local governments have a lot of influence. New York City can’t do much if anything about soaring inequality of incomes, but it could do a lot to increase the supply of housing, and thereby ensure that the inward migration of the elite doesn’t drive out everyone else. And its current mayor understands that." Our mayors do too.
So while the task of providing equitable affordable housing is daunting, it is essential. Our communities have demonstrated the political will and we at Beneficial State are doing our part with our powerful tool of mission-aligned finance to get it done. We are grateful to have YOU – our crowdfunders, our passionate, mission-driven depositors – who help provide us the deposit capital critical to that mission.
Beneficial State Bank Client, Options Recovery Services
*Affordable units are calculated according to the Federal Housing Finance Agency definitions in each of our markets ranging from affordable at 30-60% AMI in typical markets up to 100% AMI in Very High Cost markets.
Dedicated units include deed-restricted units, Section 8 units, and other units developed and managed by non-profit affordable housing organizations. Non-dedicated units are affordable at the time of loan; they are generally apartments in multi-family apartment buildings, and are subject to market forces, local rent policies, and property owner activities.
Beneficial State welcomes two new affinity card partners.
We are pleased to introduce the newest partner organizations to the Beneficial State Bank family of affinity cards. Clean Water Action and B Corporation have come on board to offer credit card alternatives for environmentally conscious citizens and folks looking to use business as a force for good™.
The Clean Water Action VISA® Platinum Affinity credit card is designed from the bottom up to help finance affordable housing, renewable energy projects, and local and sustainable farming that feeds hungry people and keeps our water clean. B Corporation’s VISA® Platinum Affinity credit card works to move from a marketplace of businesses to a movement of businesses doing well while they do good.
Both of these VISA® Platinum Affinity credit cards offer competitive rates, rewards, and benefits without supporting environmentally destructive industries or projects. Switch and feel great knowing that every time you use your card, a percentage of your purchase supports critical environmental and community projects!
Sacramento is now a Limited Service Branch!
With our friends new and old, Beneficial State announced the opening of our limited service branch (LSB) in Sacramento at a celebration last month at Hot Italian restaurant. As an LSB, we offer a range of options to meet more of your banking needs.
Stop by for a visit or contact the Sacramento team for more info!
Beneficial State Bank:
980 9th Street, Suite 2260
Sacramento, CA 95814
What's new in 2016? Beneficial State Bank Impact!
Banks should nourish our communities, not extract from them. At Beneficial State Bank, we measure our impact to provide transparency to our stakeholders and to maximize our success in achieving the triple bottom line. Beneficial State Bank's soon-to-be-launched impact website will share our beliefs and approaches to making measurable positive impact, key metrics on our progress to date, the context within which we work, and a few stories along the way. Stay tuned for our new impact website coming January 2016!
Money On A Mission: Recap
On October 7, Portland’s new Evergreen Ballroom was humming with great conversation among over 250 small business owners, social entrepreneurs, local capital providers and business assistance organizations. Beneficial State partnered for the second year in a row with Albina Community Bank, Community Sourced Capital, Craft 3 and several other lenders and agencies to connect small business owners with resources.
We were thrilled that Governor Kate Brown announced a new loan program for small businesses seeking access to capital. The Governor pointed out how critical it is for the State to support thriving small businesses in Oregon. “By connecting small companies with the resources they need to thrive, Oregon is seeding job growth while supporting businesses that might otherwise not have access to these kinds of tools."
We were also joined by Mayor Charlie Hales who has prioritized programs to support workers and business owners in historically underrepresented populations. We are appreciative of his ongoing collaboration with Portland's growing B Corp community.
Beneficial State Bank In The News
Beneficial State Bank Awards
Beneficial State Bank and Albina Community Bank Receive CDFI Fund Awards For Investment in Low-Income Communities - Beneficial State Bank (CORE - $2M, BEA - $265,496) and Albina Community Bank (BEA - $239,117)
Beneficial State Bank Pledges