Investments and support valued at $1.8 billion are coming to distressed neighborhoods in Kansas City and St. Louis after community groups leveraged an agreement with Enterprise Bank and Trust.
The Concerned Clergy Coalition of Kansas City helped forge the deal that was made as part of Enterprise’s gaining federal approval for its acquisition of Eagle Bank and Trust.
“We’re not looking for a handout,” said the Rev. Jefferson Edwards, the chair of the Concerned Clergy’s Economic Development and Banking Committee. “We’re just looking for access.”
The activist groups used the opportunity under the federal Community Reinvestment Act to make their claims for more equitable investment across lower-income neighborhoods when Enterprise moved to purchase Eagle last fall.
This negotiation was unique in that the bank came forward first, eager to make an agreement with the community groups, said Chaplain Will Jordan of the Metropolitan St. Louis Equal Housing and Opportunity Council which was a key negotiator in St. Louis.
“We’ve been doing this kind of work for seven years and this is the first time a bank entered into this voluntarily,” Jordan said. “Hopefully this signals to banks that it can be good business to seek out community groups in this way.”
Resolving community complaints helps banks win the approval from the federal regulators, and Edwards said the community groups had fruitful negotiations with Enterprise.
The $1.8 billion in prospective investments includes goals for $30 million in lending for mortgages in lower-income communities, $24 million for mortgages to minority borrowers and $180 million in small business loans.
The agreement secures that Enterprise would maintain 10 percent of the merged bank’s assets for use in community development lending.
The benefits would be divided across both St. Louis and Kansas City.
The collaboration between several community groups in both cities was encouraging, Edwards said.
“We’re always so competitive (between Kansas City and St. Louis),” he said, “but this has been a beautiful partnership. This has been a great coalition.”
In the targeted Kansas City area, Edwards said, there are some 29,000 homes east of Troost Avenue and between Independence Avenue and 85th Street, and as much as 70 percent of them are in need of repair.
“There is potential for customers for banks,” he said, “if we can get them out of the mindset against east of Troost.”
Kansas City’s finance and housing and neighborhoods departments are seeking leverage to encourage lending in economically stressed neighborhoods.
The city is developing a proposed ordinance or resolution to require any banks bidding for the city’s banking business to make commitments toward equitable lending across neighborhoods. It is also working on a shared-risk program where banks could create a pool of capitalization funds to help support lending without as much risk.