Bank of America promotes smart growth

As the nation’s largest financier of commercial and residential real estate, Bank of America wields considerable influence in the market, and the bank now claims it wants to use that influence to make the market more attentive to environmental concerns and urban revitalization. At a time when the Congress for the New Urbanism is calling for more education of real estate lenders wary of mixed-use development, the bank’s smart growth rhetoric merits a closer look. Bank of America CEO Hugh McColl has repeatedly expressed an interest in changing conventional development patterns. Last year, he told an audience of shopping center developers about his “profound sadness in seeing clearly the unintended consequences” of “spontaneous, prolific, undirected development.” McColl’s cure for the ills of sprawl is smart growth, which he defines as favoring incentives over controls, as protecting the environment, and as including the widest possible range of stakeholders in discussions on regional growth. This does not mean that Bank of America is about to stop its substantial lending to conventional developments. “We have to be a profit making business and support all the credit-worthy things that happen within the market,” says Candace Skarlatos, a senior vice president of environmental initiatives. “But we need to change the market.” As part of this effort, the commercial real estate and community development banking divisions seek out mixed use and mixed income projects that will rejuvenate downtown areas and put development near lines of transportation, says Sarah Tucker, a vice president of corporate public relations. Doug Woodruff, a senior vice president of community development banking, notes that projects that marry multifamily housing with commercial building pose a high level of risk. “In some cases that risk is something commercial banks chose not to understand,” he says. Woodruff claims that Bank of America now pushes itself to accept these risks. “We believe that we have the ability to be a catalyst, to change people’s perception about these market opportunities. As a corporation with $600 billion in assets we can take on projects that others see as being outside their risk comfort zone.” Woodruff points to a redevelopment of St. Louis’ Washington Avenue warehouse district as an example of what Bank of America is trying to do. The first step has been to make an investment in 63 loft apartments dedicated to artists, and that will be followed by retail and restaurants on the first floors. Another St. Louis project focuses on mixed income housing. Four hundred units of public housing were replaced by 300 units of apartments and townhomes, some of which sold at market rate. “We thought the market rate units would be the last to go,” Woodruff says, “but they sold within three days.” Construction of many of the buildings that contain the bank’s own employees is also guided by smart growth principles, Tucker says. This is particularly evident in Charlotte, North Carolina, the home of McColl’s NationsBank, which merged with BankAmerica of San Francisco in 1998 to form Bank of America. According to Jim Palermo, a vice president of corporate real estate, the bank has converted several brownfield properties and empty parking lots in the downtown wards into a mix of office buildings, luxury housing, retail, restaurants, and green space. Bank of America has also developed a technology park in the so called Gateway Village on the depressed fringe of downtown Charlotte. The five-block project includes 900 square-foot loft condominiums that line the edge of a parking garage. “We’re using our growth to spur urban renewal – it’s better known as enlightened self-interest,” explains Palermo.