Greetings!
I'm pleased to update you about Contact Fund's current activity, provide a snapshot of new deals under consideration, and tell you more about another venture that I'm involved with, Alembic Development.
Clearly, these are challenging times for the many nonprofit organizations and social enterprises that are strained by the credit crunch and a concurrent decrease in charitable giving. At the same time, these organizations are experiencing a significant increase in demand for their services. If there was ever a need for community development investing and creative private capital, this is the time.
A story about Women's Housing and Economic Development Corporation (WHEDCO), a Contact Fund borrower and leading provider of low-income housing and support services, reminds us that community development is alive and well in the South Bronx. WHEDCO has just opened what it calls the largest low-income 'green' housing development in the country.
And in the spirit of moving forward, on March 15th, Contact Fund's 2008 Notes will mature and be replaced by new 2009 Notes. We are actively marketing to new investors and would love to provide you with the details of participating in this round of financing.
As always, we encourage feedback and/or inquiries by emailing us or via our website.
Sincerely, Mark Reed, Founder and Principal
Contact Fund LLC
|
|
Spotlight: WHEDCO |
|
 WHEDCO, a leading multi-service organization in the Bronx, celebrated completion of its newest housing development project, Intervale Green, built on an abandoned lot in the South Bronx. The largest affordable Energy-Star (an efficiency standard set by the US Environmental Protection Agency and US Department of Energy) certified building in the nation, Intervale Green is comprised of 128 units of affordable housing for low-income and formerly homeless families, with commercial storefronts along the first floor. Learn more by clicking here. Financing from Contact Fund provided a critical line of credit to cover expenses incurred from the time the project began until development fees were received, upon final completion of the project.
According to Tom Guiltinan, WHEDCO Chief Financial Officer, what makes Contact Fund financing so important is not just the flexibility that it provides the organization in meeting its obligations, but the personal commitment and spirit of partnership that is developed.
"Contact Fund understands the unique issues that community-based organizations such as WHEDCO face. They know why delays happen - they understand our funding constraints- and they are fully committed to our overall vision of addressing the multiple challenges required to help families live full, productive lives."
Pictured: Nancy Biberman, President of WHEDCO
and Mark Reed, Founder & Principal of Contact Fund, LLC |
|
Current Portfolio |
 Contact Fund concluded 2008 in good financial condition, and portfolio organizations are stable, though strained, as nonprofit organizations and social enterprises feel the credit crunch. According to a recent New York Times article which references new research by the School of Social Service Adminstration at the University of Chicago, almost three-quarters of nonprofits in the US receive some type of government financing, and about half of those count on that aid for at least half of their budgets. As a growing number of states delay payment, nonprofits must rely on lines of credit to help them get by. It's important to note that many of these organizations have not done anything differently than they were doing before the worsening economy and thus do not pose any greater risk. It's just that the conditions they are working in have changed.
WHEDCO as featured, began the lease-up phase at its new, 128-unit Intervale Green development for families making $25-50k per year. Projected to fully repay Contact Fund's loans by 12/31/09. Clickhere to learn more about WHEDCO. Project Enterprise is weathering the financial crisis' impact on its low-income micro borrowers. The organization will be honored on February 27th by NV (an urban business magazine), alongside Stephon Marbury and Vivica Fox. Click here to learn more. Asian Americans For Equality New homeowner loan program, principal repaid fully as of 12/31/08. A strong organization which may present new opportunities around foreclosure prevention and housing rehabilitation. Click here to learn more. Local Initiatives Support Corporation (LISC) Predevelopment Redeployed capital from five completed East New York duplexes to an apartment re-hab on W. 149th Street in Harlem, in partnership with Harlem Congregations for Community Improvement. All five duplexes were sold to middle-income New Yorkers using traditional mortgage financing. Click here to learn more. BTQ Financial Leveraged Contact Fund's loan to win an additional $1mm capital expansion loan from a large NYC foundation. Revenue growth continues as non-profit clients seek out cost-saving solutions. Click here to learn more.
  |
|
Pipeline of Potential Deals |
|
Community investment capital has not been so critical in a generation. Contact Fund has engaged a team of consultants from the Milano School at the New School in NYC to analyze areas of opportunity for high impact community development investing. Simultaneously, we're engaged in preliminary conversations with groups working to address the following issues:
Gap financing for distressed homeowners
FJC, the social investor involved with BTQ Financial, introduced Contact Fund to a homeowner loan program run by a Credit Union and a Neighborhood Economic Development organization. Contact Fund may be able to provide loan capital, through the credit union, to approved homeowners who are already in counseling. On a rigorous budget, the homeowner would use the gap loan to "buy down" existing, exploitative mortgages and remain in their homes with a new FHA mortgage. This is a cutting edge effort to break trail in the foreclosure crisis recovery.
Brooklyn pre-development
Through Alembic colleagues (see below), Contact Fund became aware of a Brooklyn non-profit with an ambitious plan to build low-income and middle-income housing, retail and program space. Like WHEDCO, this organization is a multi-service organization with a track record of innovation.
Solar retrofit for low-income housing
We are in preliminary discussions with several sources testing investment models to finance solar installation on existing nonprofit owned affordable housing.
Charter school finance
While charter facilities development often leverages large public pools of capital, growing the "business" of the school is more capital constrained. Contact Fund is researching financing opportunities with a variety of organizations.
|
| Deal Flow - About Alembic Development |
 Many of you know that in 2006 I made a personal investment in a start-up affordable housing partnership, Alembic Development (alembic: A device that purifies or alters by a process comparable to distillation). The two other partners, Benjamin Warnke and Sue Rheem, have extensive backgrounds in affordable housing development at other organizations.
Since 2006, Alembic has developed a 73-unit rental property on East Tremont in the Bronx for formerly homeless New Yorkers, and has completed 80% of construction on a similar property located on East 118th Street in East Harlem, where gentrification has been powerful. It is nearing closing on a breakthrough 93-unit development blending supportive housing and low-income housing for families.
Alembic is focused on housing development, in deals that typically range from $15mm to $100mm in size (including public financing). My involvement in Alembic continues to be an important source of deal-flow for Contact Fund, including the aformentioned opportunity with a Brooklyn nonprofit. As part of our overall commitment to community development investing, we look forward to continuing to share information and opportunities related to Alembic Development as well as Contact Fund.
| |
