Foundations examine smart growth finance

A group of foundations focusing on smart growth is undertaking a study of real estate finance cosponsored by the Congress for the New Urbanism (CNU). The Funders Network for Smart Growth and Livable Communities, based in Miami, was founded in 1999 with three members. The nonprofit now has 55 members, including some of the nation’s largest charitable organizations — e.g. the Ford, MacArthur, Hewlett, and Packard foundations. While consisting mostly of foundations, the Funders Network also includes a major lending institution, Bank of America, and a local development authority, the Casino Redevelopment Reinvestment Authority (CRRA). Some members, such as the MacArthur, Hewlett, and Surdna foundations, have funded CNU over the years. Most of the members are grants providers and are not heavily involved in real estate finance, according to executive director Ben Starrett. However, a few members are directly involved in financing new urbanist projects. These include the McCune Charitable Foundation (revitalization of Albuquerque, New Mexico), Bank of America (major project in downtown Charlotte, North Carolina), CRRA (several infill projects in Atlantic City, New Jersey), and MacArthur Foundation (Abacoa development project in Jupiter, Florida). Some Funders Network members also fund conventional real estate, notably Bank of America. The Real Estate Finance and Smart Growth Project will focus on identifying barriers to financing smart growth, and how these barriers can be overcome. The project will also look at how the members can be more actively involved in directly financing smart growth. “One potential source ... is investment managers of philanthropic foundations,” according to a description of the project. “The power of the investment side of private foundations rarely works complementary to the goals and values of their program side. Recognizing that this situation has evolved for valid reasons, there nevertheless may be opportunities for private foundation investment officers to meet their fiduciary responsibilities appropriately while at the same time doing more good for inner city and downtown revitalization efforts.” The project will result in educational materials, and — time and resources permitting — a review of actual investments in smart growth projects that banks, foundations, investment firms, insurance companies, and others have made to illustrate historical activities and returns, if available. Starrett, who previously served as the chief of agency planning for the Florida Department of Community Affairs under the late Gov. Lawton Chiles, notes the negative impact of sprawl on quality of life and the environment. The smart growth movement focuses on fighting sprawl, but also “recognizes that good development in the right place is part of the solution,” he says. Good development can be defined as mixed-use, mixed- income, walkable neighborhood developments located in urban core areas served by transit, he says. As many have noted, financing for smart growth is often scarce, he says. “Despite the strong and growing consumer demand for walkable neighborhood development projects, few financial institutions and investment groups are lending to or investing in projects that use these innovative strategies.” The growth in the Funders Network “is an indication of a real interest in funding smart growth, and the recognition of the limited success that previous efforts — many of which have focused on single issues — have had on transforming communities,” Starrett adds. The Funders Network held its second annual meeting in Oakland, California, in late February, 2001.