Bernel Hall, president and CEO of New Jersey Community Capital, recently discussed the year that was, the year ahead, and the organization’s efforts to expand equity and opportunities for people of color. The 35-year-old NJCC is New Jersey’s largest community development financial institution, an organization that uses integrated financial products to bring capital to low- and middle-income communities that often struggle to gain access to capital for economic development.
The organization had a strong 2022 and is off to a robust start in 2023, according to Hall, who has spearheaded NJCC programs centered on diversity, equity and inclusion, including Community Asset Preservation Corp., the largest affordable housing development company in New Jersey with more than 600 units of housing and 500,000 square feet of commercial assets.
Despite the economic headwinds emerging from the pandemic, Hall said that NJCC’s lending to small businesses and real estate developers, especially minority-owned entities, has increased significantly.
“We actually had a historic year with $43 million in loans last year, which was the most in the history of the organization,” Hall told NJBIZ. “Our current portfolio is $123 million in both loans to small businesses and real estate. I’m happy to say that 55% of those loans are outstanding to minority- and women-owned companies.”
As the foreclosure and eviction moratoriums have lifted and landlords move to remove tenants who are behind on their mortgages and rents, Hall said NJCC has been active in purchasing non-performing loans. “We actually did a deal where we purchased non-performing loans in 37 states, 160-or-so non-performing loans,” Hall explained. “And what we’re really doing there is we’re working with homeowners, many of them people of color, to modify their mortgages for a time period to stabilize their asset base as well as their credit.”
In November, NJCC was awarded $40 million through the New Markets Tax Credit Program from the U.S. Department of Treasury’s CDFI Fund. Since the program’s inception, NJCC has received nearly $250 million in these funds, which have been allocated to projects across the Garden State.
Hall cited efforts such as the Brick Church Transit-Oriented Development in East Orange, which includes mixed-income and affordable housing in and around the train station with both retail and a grocery store, as well as work being done in Salem where NJCC is working to use NMTCs in a creative way to spur homeownership in a town where 61% of the residents are Black, but only 46% of homeowners are.
“So, we’ve been working with our lending group, which handles those tax credits, as well as our nonprofit real estate development group to build homes for the citizens of that town,” said Hall. “As well as provide down-payment assistance so that they will be more likely to move in those homes. So, we’re working in a variety of different ways.”
NJCC also received a $3 million tax credit to rebuild the East Trenton Library, which is in a historically Black neighborhood in Trenton and will be used for job readiness and workforce development, in addition to serving as a library for a community that needs it.
Collaboration and partnerships are at the core of NJCC’s efforts to help reach its goals. “Obviously, we have a finite amount of capital,” Hall said. “We really have to work with both main philanthropic partners as well as government partners to blend capital. Because, in some ways or another, you have to take more risk to spur economic development in communities where people have had a problem getting access to capital or have been a victim of economic racism, whether it be through faulty appraisals and/or credit rip-offs.”
Another example of such a partnership is the Equitable Small Business Initiative, working with the African American Chamber of Commerce of New Jersey and foundations across the state to put together a $5 million fund that focuses on bringing capital to Black- and women-owned small businesses.
“Oftentimes, people have trouble getting that first loan for working capital to move out of their day-to-day job, where there may not be career upside, into their first business,” said Hall. “So, we really wanted to use those funds for that purpose so that more people have the opportunity to build out a business.”
Hall pointed out that studies show that when people are given that first allotment of working capital and can scale their business locally, they do not need to be subsidized on property and sales taxes. “They build locally. They buy supplies locally. They hire locally,” Hall explained. “And when they grow, they remain local.”
Another focus for NJCC is making sure communities they work with are financially literate and professionally legitimate, with access to contracts and capital, which Hall stressed is the equation to help eradicate the racial wealth gap. “They’re licensed. They’re bonded. They’re insured,” said Hall. “B2B and government contracts tend to be the best at the beginning of the lifecycle of these businesses. And also, capital that is both patient and low-cost.”
New Jersey’s urban redevelopment market is on fire with a variety of high-profile projects taking shape in cities around the state. Hall said that he is in communication with developers and city leaders about how the entities and people NJCC works with can get involved in some of those types of projects, or subsequent redevelopment they spur. He pointed to his work as head of Invest Newark, the economic development corporation for the Brick City.
“We actually created programs specifically designed for local developers to work on,” said Hall. “We were able to position developers for projects to help them build a track record and help them build an asset base to do larger developments over time. And in doing that, we also really encouraged joint ventures among people that live in these communities, people of color, with nonprofits, women-led development companies. You can’t force people to work together, but we encourage people and work diligently with the cities to identify these folks, so they at least know each other. And when they hear about a project, they are able to exchange information and have a potential to work together.”
On accessible housing, NJCC’s real estate development company, Community Asset Preservation Corp., owns about 600 properties in New Jersey, New York and Florida, selling typically to low- and middle-income earners. “I’m proud to say that just in the first quarter this year, to date, 73% of the properties that we sold have been sold to BIPOC households, and 100% of our down payment assistance loans have gone to people of color,” said Hall. “As we really comprehensively look to create wealth in these communities in the way that traditionally has worked for everyone else.”
Those efforts to generate opportunities to build wealth and expand economic mobility also include flexible financing, which Hall describes as a huge part of the equation. He pointed out that many of the people NJCC works with do not have access to the funds required for big down payments, sometimes combined with student loan debt and limited liquid assets. And even with a good credit score, there are still many hurdles to receiving capital. So that is why flexible financing is critical to bridge the gap.
“If not us, who is going to be there to help them with those programs,” Hall asked.
As for the year ahead, Hall said his main focus is access to capital to be able to continue NJCC’s work but at a faster pace. “We did, as I said, just under $50 million in loans last year. We have already committed $27 million in loans to the communities that we are targeting. And it is not even March yet,” Hall explained. “So, we will surpass our total-year lending outlook by June.”
That means that NJCC is exploring different options and thinking outside the box to gain more funding for further projects and initiatives. “I’m really focused on expanding our footprint, our funder base, and the complexity in which we not only refresh our balance sheet. But honestly, I’m really focused on creating a community development investment bank to refresh our balance sheet and those of other CDFIs in a way that increases the velocity of money that gets to the communities that we’re targeting,” said Hall.
When asked what excites him the most about the potential projects and work on the horizon for NJCC, Hall said that people are more willing to talk about these issues specifically from a racial equity angle than they have been at any point in history. “These are not easy topics. They’re not easy problems,” said Hall. “Looking at this issue is just strengthening, from an economic standpoint, the weaker link in the chain that we’re all connected to. So, I’m very encouraged by that.”
When asked what keeps him up at night, Hall came back to funding and trying to find sources that are more realistic about the nature of patience and the nature of yields. “You have people saying they want to do it, but then when it’s time to talk about how long that loan will be outstanding, that investment will be outstanding, how much yield they expect in return for their investment,” Hall explained. “Then you see people revert back to that same traditional financial engineering mindset, which I do not think works for the problem at hand.”
Earlier this month, NJCC announced a widening of its footprint with its first financing deal toward affordable housing in Philadelphia, which Hall said marks the start of the organization’s national expansion plans.
“We are currently in our strategic planning stage. And we are planning to obviously continue to be based in New Jersey. So, I want to be very clear on that point. But we are going to expand nationally and do this work in communities across the country that have similar problems that we believe we can help with,” said Hall.c