
          Community Development Corporations
          By Lamm, CarolCarol Lamm
          Vol. 10, No. 2, 1988, pp. 19-20
          
          Over the years, MACED has worked at economic_development from many
angles. We began by providing technical assistance to worker
cooperatives and then went on to work with locally owned private
businesses. We did our first policy work in the late 1970s when we
convinced the state of Kentucky that there was more to economic
development than branch plant attraction. Back then we helped state
officials design a loan fund for small businesses. We have worked with
bankers to make mortgages more available to moderate income
families. We have a couple of for-profit subsidiaries now that invest
in businesses, mostly forest product industries, where we concentrate
our technical assistance.
          A couple of years ago, MACED decided that we could not continue to
put all our eggs in the diversification basket, that is, into looking
for ways to get around the coal industry. We began to do some research
and policy advocacy on ways to make the coal industry itself have a
more developmental impact on the region.
          Our most recent project involves grassroots education as we assist
an organization in Kentucky's fifth congressional district which has
the lowest percentage of high_school graduates among its adult
population of any congressional district in the country. Over the past
year we have started or worked with seventeen affiliates in the
district's twenty seven counties.
          When I step back from this recitation of activities and ask,
"What have we learned that I can share today?" I came up with
three major areas.
          First of all, we have learned that economic_development is more
than job creation. Ken Johnson spoke yesterday about the limits of
counting jobs as a measure of progress. He pointed out that the ways
wages are earned and the distribution of wages are other important
measures. Whenever a region's economy can serve moderate and low
income people better, that is economic_development. Sometimes economic
development can mean new and better jobs for people. But, economic
development can also mean better housing, schools, and medical
care. There are a number of ways to make the economy work better for
people besides job creation, critical though that is.
          A second lesson recognizes the importance of doing something, then
thinking about it, then doing the next project based on what you
figured out. This sounds so obvious, but I have seen community
organizations, to say nothing of state government agencies, that
skipped the thinking part, or constrained their evaluations in such
narrow ways that their question became, "Did we send out as many
brochures as we said we would?" One of the most satisfying aspects
and exciting things about working for MACED is the way that we
repeatedly step back and look at the results in the light of bigger
goals. We keep getting new insights into what might work.
          Let me tell you a little bit of how we looked at forest products
when we started out about twelve years ago.
          There are hundreds of small sawmills in eastern Kentucky. They are
very important in the economy for the low_income people who are
employed in them and in logging. So we began providing technical
assistance to existing sawmills. Then, we stepped back from that and
said, "Well this 

is not really having the effect that we would like
to have. It is not creating new activity. Let's start working with
sawmill startups." So we did that through financial and technical
assistance. Then we stepped back and said, "This is not getting us
to very many people. What can we do that will give us a lever on this
forest products industry and, actually make a significant
difference?"
          We saw that each of these little sawmills had marketing
problems. They were so small that they could not accumulate enough
lumber to sell in certain markets, even if they knew where they
were. They were selling high quality hardwoods to be made into pallets
because they could not get together enough of them to sell to a major
buyer. So we established a lumber yard and sawmill that was big enough
for the export market. This had an impact on many sawmills in the
area. They now had a steadier market than before.
          Our ability to act and reflect points to a special role that
Community Development Corporations can play in state policy-making,
too. Because we are small and energetic organizations, CDC's can try
out different approaches and get some feel for their relative success
while the state bureaucracy is still waking up to the thought that a
new direction is in order.
          Part of thinking involves choosing issues opportunistically,
strategically.
          We looked the housing situation over for several years, looking at
the reasons given for the dearth of housing starts and the prevalence
of sub-standard housing, even among middle-income families in the
mountains. We chose a housing issue upon which we could make a
difference. We concluded that one problem lay in the kind of mortgages
that were available. Banks were offering ten- to fifteen-year
variable-rate mortgages with from twenty-five to thirty-three percent
down payments, minimum. The thirty-year fixed-rate, five-percent down
mortgages that were widely available throughout the US, simply weren't
to be had in eastern Kentucky.
          In the rest of the country, banks had figured out ways to sell
their long term mortgages to buyers who wanted long term fixed rate
investments through secondary mortgage market mechanisms. In eastern
Kentucky, bankers weren't familiar with those mechanisms, and there
existed a handful of regulations that made secondary mortgage
marketing difficult in rural areas.
          MACED organized a consortium of ninety-four out of the 102 bankers
in eastern Kentucky. We negotiated the necessary changes with one of
the secondary mortgage market outfits that was receptive, and we
organized training sessions with the bankers. They then were able to
make loans that they could sell in the secondary mortgage market. We
also put together two bond issues that together raised $46 million for
low-interest rate mortgages and used some innovative financing that
made the mortgages available to considerably lower income families
than would have qualified otherwise.
          We chose that point of intervention very strategically to make a
difference.
          
            For the last nine years I have worked for MACED, the
Mountain Association for Community Economic Development. From an
office in Berea, Kentucky, MACED works in the central Appalachian
Mountains.
          
        
