A MESSAGE TO CALIFORNIA LEGISLATORS ABOUT . . . THE NEW MARKET TAX CREDITS PROGRAM
Towards Resident Ownership of Neighborhood Change
How a small family foundation is having a profound impact on community development An abandoned factory becomes a thriving commercial and cultural center In 1997, a connected network of 10 southeastern San Diego communities suﬀering from disinvestment became the focus and home of the work of the Jacobs Family Foundation (JFF) and the Jacobs Center for Neighborhood Innovation (JCNI). A 20-acre lot in the heart of these communities housed a long abandoned aerospace factory. Bordered by barbed wire fencing and tainted by the chemicals of a manufacturing plant, the site had become a brown ﬁeld and a testament to the former prosperity and promise that had long since left this community. The Jacobs Family Foundation purchased the lot that year, and began to engage community residents and businesses in ﬁnding out what the community needed. More than 800 surveys with individuals and businesses pointed to the need for a major grocery store, restaurants, a bank, a coﬀee shop, entertainment venues, and living wage jobs. The residents who shared their opinions were asked to stay at the table as members of working teams that would lay the plans and see through the processes of turning their hopes and dreams into reality. Between 1997 and 2005, more than 3,000 people participated in the planning, design, ﬁnancing, building, leasing, and operation of what is now known as Market Creek Plaza, a vibrant multicultural commercial venue in southeastern San Diego.
Today, the community’s vision for change can be seen in every aspect of Market Creek Plaza. The 10-acre, $23.5-million Plaza is home to the businesses community members requested in their surveys, many owned and/or run by local residents. The Food 4 Less grocery store, the After ﬁrst major chain store in this community in 30 years, is one of the best performing stores in the region. It and the other 10 businesses, owned by local entrepreneurs and national tenants, employ 170 people, half of whom live in the community. The 500-seat outdoor amphitheater, combined with a series of public multicultural art projects valued at $1.2 million, has made Market Creek Plaza a hub of cultural expression and learning through art, dance, music, performances, and other celebrations. In 2005, the Plaza recaptured $24.4 million of $60 million in annual economic leakage from this community. A key federal program shares in the success of Market Creek Plaza. Funding for this innovative project was challenging, especially in light of the economic disparity of the community when the work began. The New Markets Tax Credits (NMTC) program was a tremendous asset in making resident ownership of change possible. Market Creek Plaza has been called the “quintessential example” of what this program was meant to do — attract private sector capital investment into the nation’s urban and rural low-income areas to help ﬁnance community development projects, stimulate economic growth, and create jobs.
In 2004, Market Creek Plaza received a $15-million NMTC loan funded by Wells Fargo through Clearinghouse CDFI. At that time, it was the largest such loan on a commercial development project in Southern California and the ﬁrst made on a project developed hand-in-hand with the residents of the community it serves. The below-market interest rate of this loan kept the cost of money low, making it possible to fund twice as much community development work and keep more money in the community. More importantly, it made possible the next step in resident ownership: ownership of the asset itself. In 2006, 416 community investors purchased ownership units in Market Creek Plaza through a ﬁrst-of-its-kind Community-Development Initial Public Oﬀering (CD-IPO). Those same community stakeholders that created the vision for change can now beneﬁt from it personally as they’ve become members of a preferred class of investors who own a 20 percent stake in the project and are ﬁrst in line to receive up to a 10 percent return on their investment when proﬁts are available. This summer, the ﬁrst payout to these investors is expected. A second $15-million NMTC investment from U.S. Bank through Clearinghouse CDFI is funding construction of a new $23-million, 75,000-square-foot community center located on the other half of the original 20-acre site. The Joe & Vi Jacobs Community Center will house a cultural training kitchen, a state-of-the-art meeting and conference center, accessible community and oﬃce space, a showplace for public art, a neighborhood gathering place, and the new headquarters for JCNI. The resident-led work that began with Market Creek Plaza and the Joe & Vi Jacobs Community Center continues in The Village at Market Creek, a mixed-use, transit-oriented development. The residentplanned village will transform 45 blighted or under-utilized acres into a thriving area with 800 new homes, 350,000 square feet of commercial and industrial development with 800 new jobs, all complemented by an integrated set of community resources. Housing for The Village, currently being designed by a 25-member team, is in critical need of low-cost funding. The NMTC program can make this type of funding possible. In an eﬀort to connect aﬀordability and ownership in a costly San Diego housing market, NMTC funding and a combination of other ﬁnancing tools can close the cost gap and create a bridge to homeownership for local residents. Approval for a one-year extension of this critical program to support inner-city community development is welcome news, and we strongly support eﬀorts to extend the program further into the future as our work in this community continues. We appreciate the support of our State and Federal legislators in making the NMTC available, and look forward to sharing updates with you regarding our work in southeastern San Diego.
About the Jacobs Family Foundation and the Jacobs Center for Neighborhood Innovation The Jacobs Family Foundation and its sister organization, the Jacobs Center for Neighborhood Innovation, operate on the premise that residents must own and drive the change that takes place in their community for it to be meaningful and long-lasting. Founded by entrepreneur and philanthropist Joseph J. Jacobs Jr. (1916-2004) and his family, the Jacobs foundations are forging new pathways for community change. Working in partnership with residents of a formerly underinvested community and bringing together the best practices of philanthropy, entrepreneurism, community building, and governmental support, the Diamond Neighborhoods of southeastern San Diego are experiencing the transformation of blight into economic viability, unity from diversity, and the building of capacity of individuals who own the plans, processes, and assets of community change. If you have questions regarding our projects, please contact Ms. Jennifer Vanica, President and CEO of the Jacobs Center for Neighborhood Innovation or Ms. Shirley Adams, Director of Community Resources and Partnerships at (619) 527-6161, or email Shirley at firstname.lastname@example.org.