COMMUNITY development is easy to talk about, but often very hard to accomplish. Consider the remarkable transformation of a block of apartments in this small city of 8,240 inhabitants. The clapboard structures, built in the 1870s and '80s, had degenerated into a ramshackle tenement clinging to the banks of the Winooski River - a scene more reminiscent of poor sections of late 19th-century Manhattan than the capital of the Green Mountain State.
Now the same 23-unit row of apartments, known as the Barrett Block, is a source of pride to many Montpelier residents and to the investors and organizations that helped bring the renovation about. The paint, hues of off-white and lilac, is crisp. The hanging back porches no longer look as though they are about to fall into the river. Inside, plumbing and wiring and heating have been modernized.
It's like night and day, according to Ken Flood, a tenant who was involved in pushing the project forward. He recalls paying $255 a month for heat before the renovation, but "it didn't matter how much the heat cost, it still didn't keep you warm." Last winter - a severe one in Vermont - was the first in memory that Mr. Flood and other tenants could feel comfortable in their apartments. They now pay $5 a month less rent than before, with heat and hot water included.
This kind of project is what Clinton administration officials had in mind when they drew up the president's community development banking plan, introduced in Congress last month. The plan would distribute $382 million over four years through lending institutions that serve low-income urban and rural areas.
South-Central Los Angeles is most often talked about as a typical target area for the Clinton plan, but the process undertaken here in semi-rural Montpelier says a lot about what it takes for community-development projects to succeed anywhere. The impetus has to come from within the community itself, and the partners - ranging from lenders to investors to tenants - have to be willing to endure a lengthy and sometimes frustrating process.
The initiative to rebuild the 120-year-old row of structures in Montpelier came from a coalition of local churches that decided it was time to do something about this specimen of urban blight just a couple of blocks from the golden dome of the capitol.
The churches were joined by the Central Vermont Community Land Trust, which became the lead local agency. The Vermont Community Development Loan Fund, which invests money donated by private individuals, companies, and religious groups, eventually got involved in the financing. And Housing Vermont, a nonprofit company, used the federal low-income housing tax credit to form a limited partnership of investors. Wide variety of funding
That partnership included Northfield Savings, a local bank; National Life of Vermont, an insurance company; and Ben and Jerry's, the Vermont-based ice-cream maker. These corporate investors traded a quantity of cash for "a stream of tax benefits," explains Michael Richardson, director of Housing Vermont. They become "limited" owners of the property - not liable in the event of a fire or other mishap and with no say in managing the project. The value of the federal income-tax credits, however, plus the "p assive losses" they can write off, gives them a 12 percent return on their investment.
Some state money was also available through the Vermont Housing and Conservation Board, and grants from the federal Department of Housing and Urban Development. It didn't hurt that Sen. Patrick Leahy (D) of Vermont had delivered newspapers along that block as a boy and took a direct interest in the rehabilitation of the buildings.
Between the initial organizing efforts and completion of the refurbished apartments, nearly four years elapsed. Nancy Wasserman, head of the community development loan fund, says the undertaking often seemed "like a jigsaw puzzle with no edges and all the pieces look the same." There were always new agencies to deal with and new forms to fill out. Understanding the process would require "a special degree in housing development," jokes Ms. Wasserman.
That's a "degree" few conventional bankers hold. The "huge complexity" of a project like the Barrett Block helps explain why smaller-scale lending institutions that specialize in putting these deals together usually take the lead in such efforts, says Wasserman.
The loan fund, which contributed about $750,000 toward the $3 million project, also keeps a much closer eye on its clients than a conventional bank might. If payments are even a day or two late, Wasserman says, she's on the phone to make sure problems don't become disasters. "We know how our folks are doing."
Then there's the nature of the payoff. Regular banks are likely to see only the risks, not the benefits. That is because they have only one bottom line, a financial one, Wasserman says. Her organization and others involved in the project have that bottom line plus a second one related to the value of a project to the community - its social good.
The social payoff also works for many of the investors brought aboard by the tax credit. "One thing we've proven in Vermont," says Mr. Richardson, "is that you can get corporations to invest at least in part because of idealistic reasons, not just straight return." National Life of Vermont, for example, is headquartered in Montpelier and could clearly see the community benefits. Tenant initiative key
The willingness of the tenants to form an association and start looking out for their own interests was another key to success, says Wasserman. The loan fund took a direct hand in helping them organize and recognize their "right to decent housing."
And the project isn't over yet. A couple of run-down concrete tenements adjoining the rehabbed clapboard buildings have to be cleared away to make room for a brand-new apartment building and a small park area. That's Phase 2, and it is temporarily being held up by a legal challenge over parking spaces available to businesses in the neighborhood. But that's a relatively small hurdle compared to some already cleared.