2021 HomeBase Annual Bus Tour
Q&A with The Catalytic Fund and The Center for Great Neighborhoods
Answered by Jill Morenz, Director of Community Initiatives and Communication at the Catalytic Fund and Sarah Allan, Project Manager for Economic Development at The Center for Great Neighborhoods.
What are the next big things for Covington in the next five years?
Jill: The biggest opportunity is the former IRS site. It’s 23 acres about a block away from the river. Now that the IRS has moved out, Covington will regain control of the land. There are plans to restore the street grid and build a variety of housing options, mixed-use, restaurants and retail.
Sarah: At the request of residents, The Center for Great Neighborhoods is pivoting its development focus to Covington’s Eastern Neighborhoods which currently has the City’s highest rates of poverty; our staff is working closely with residents to create a Quality of Life Plan to be implemented over the next five years, and which will likely include affordable housing development (of which there is a critical need as Covington is slated to lose 300 units of public housing over the next year), business development, greenspace and recreation opps, and arts-related opportunities.
What do you all look for in potential projects?
Jill: We select projects that will have a catalytic impact on the surrounding neighborhood, encouraging further development. Our projects must be high quality and meet our strict underwriting requirements. We can take on more risk than traditional banks, so we are often a critical financing piece that enables the project to be done.
Sarah: Most projects we take on are assessed through a systemic equity lens, meaning The Center intentionally focuses most of our development efforts on those projects that will raise the equity of residents who are typically not served by large development because of systemic issues, i.e., race, income, language barriers, etc. We approach projects with an eye towards the double bottom line of both people and profit. When a critical project has a gap between development costs and what we will ultimately make as a return, we work to raise the dollars needed to fund that gap through either grants, patient capital, etc. We also place an emphasis on tackling those projects that take into account the community’s desires and requests (which are typically documented in a neighborhood Quality of Life Plan).
What type of partnerships does your organizations seek out?
Jill: The Catalytic Fund works with developers who have a larger vision for their projects and are known for high quality work.
Sarah: The Center’s work is long term (we’ve been around over 40 years), allowing us to build deep relationships with varied community members across multiple disciplines and putting us in a unique position to respond to various opportunities and challenges through cross-sector partnerships with i.e., the health care sector, City and County Government, local entrepreneurs, etc. We believe one of our most important roles is getting the right people at the table who represent these various sectors because experience has demonstrated how critical this is to creating sustainable, community-driven solutions.
Share obstacles on a development project and how you dealt with the obstacles.
Jill: Most of the issues with our projects are a result of construction delays. We are able to work with the borrowers to extend the timelines of their loans with us.
Sarah: No development project ever goes as planned but our staff is creative and usually can find good solutions to the majority of obstacles. Most recently, we completed our first restaurant project which took 12 months longer due to COVID, supply chain issues, higher material costs, and lack of reliable subcontractors. Because we knew this project was catalytic to our community, we worked hard to make it happen, i.e., rebidding trades to get numbers down as well as working with the restaurant owner to create an outdoor seating area that would accommodate more patrons due to COVID. The project is now complete and one of our most successful to date with the owner doubling his projected sales in just the first two months!
How do you keep a well-balanced portfolio of diverse projects?
Jill: We are fortunate to have excellent working relationships with the cities we serve and they often bring us projects or sites they would like to have developed or redeveloped. We have a reputation for bringing challenging projects to fruition, so developers seek us out. Since our primary criteria for a project relates to the effect we believe it will have on the surrounding neighborhood, we let that drive our project selection.
Sarah: As our portfolio of real estate holdings continues to grow, we are putting in place structures that help us look at the totality of projects and how each project’s bottom line affects our ability to do other projects moving forward. We believe a mix of housing price points is both healthy for a community and also healthy for our bottom line in that we can use profits made from a market sale to help fund gaps in other projects that are important for us to do because they are catalytic to the neighborhood.
What drives your organization to do real estate development?
Jill: Northern Kentucky’s urban river cities have incredible building stock. We believe that utilizing these assets is a direct way to impact their neighborhoods, the city and the region, by bringing people to live, work, shop or play here.
Sarah: Most urban communities have buildings that need a lot of TLC and Covington is no exception. Fortunately for us, Covington has more beautiful historic buildings than you can count (there are 17 historic districts).While many of these structures are being lovingly restored by committed homeowners and business owners, some are in such bad condition that no one wants to touch them….except us. Through our vast historic rehab experience (55 buildings and counting), we’ve witnessed the transformational impact that revitalizing the worst buildings can have on communities so we work with residents on ways to address these properties in their communities.
While we’ve historically sold our rehabs to homebuyers, the need for quality affordable rental housing in the City has become so critical that we’ve started to pivot some of our real estate development to rehabbing, renting, and managing these types of units. This new line of business is affording us more opportunities to address systemic equity issues but is also creating growing pains as we begin to operationalize systems for property management.
What current projects are you excited about?
Jill: We are very excited about a multi-house development that is coming in Newport. It will transform an entire block.
Sarah: As we pivot our work to the Eastern side of Covington, it’s clear that the linchpin to successful economic development iis revitalizing the former St Elizabeth’s Hospital site, of which approximately only 50,000 square feet of the 350,000 square foot complex is currently occupied. The building is owned by someone who operates a nursing home and rents out small sections of the building to other entities, including a church and a hair salon. Currently, the building feels vacant which is proving to be a roadblock to other development in the community since this is the largest property in the immediate area.
The City recently approached us about our willingness to work with them and manage subleasing a portion of the old St. E’s for additional artist studio space. Because of our experience owning and managing the Hellmann Creative Center, we know there’s demand for additional artist and creative studios since there are no other studios available currently in the City. After touring the building, we believe that one section has great potential for this idea and are moving forward with pre-development in the hopes of developing approximately 9,000 square feet of the building into 13 artist studios.
How does your organization view Community development?
Jill: For us, real estate investment and real estate development services form two of our three pillars. The third is what we call Community Vibrancy Initiatives. As part of my job, I create or help promote fun activities in the river cities that showcase everything happening here (cuisine, breweries and distilleries, public art, arts-related events, family activities, outdoor pastimes) to current residents and visitors.
Sarah: The Center is a comprehensive community development corporation which includes fostering community leadership, economic development, financial education, and the redevelopment of vacant and blighted structures while also acting as a catalyst for equitable growth in Covington. We spark this momentum by bringing people together, encouraging them to work with each other, and supporting their efforts to shape the future of their community. We are committed to helping people discover and develop their skills, find and use the resources they need, and connect with partners who share their concern for the well-being of Covington.
