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By opening a branch in Roanoke's West End community, Freedom First Federal Credit Union hopes to contribute to the revitalization of a neighborhood in transition.
KYLE GREEN | The Roanoke Times
Dave Prosser, vice president of community development for Freedom First Federal Credit Union, stands at the future site of a Freedom First branch in the 1200 block of Patterson Avenue Southwest. Prosser has been called “the visionary” who first proposed that the credit union expand in the high-needs area.
KYLE GREEN | The Roanoke Times
Architectural plans illustrate the layout of the new credit union branch, which is scheduled to be complete in early 2014.
KYLE GREEN | The Roanoke Times
Freedom First’s Dave Prosser and Joy Parrish, director for West End Center for Youth, look over plans for the future site of the credit union branch. “I think what we’re seeing is a neighborhood in transition,” said Parrish.
KYLE GREEN | The Roanoke Times
The new Freedom First branch will be located in the 1200 block of Patterson Avenue in Roanoke.
Sunday, March 24, 2013
For blocks in any direction, you'll find some of the highest poverty rates in the city, above-average numbers of people without a vehicle and disproportionate joblessness.
Roanoke's west-of-downtown area, which is home to several thousand people and predominantly black, is defined by economic struggle.
There is at least one financial institution that believes too many residents lack even a bank or a credit union account or, if they have one, also go to nearby payday lenders, pawn shops and rent-to-own companies, or rely primarily on cash.
To try to expand the number of checking and savings accounts and traditional loans households use, Freedom First Federal Credit Union has decided to place a new branch in the West End community. On April 1, crews will begin constructing a one-story building for it in the 1200 block of Patterson Avenue Southwest.
The credit union, with significant financial backing from the federal government, plans to furnish account services, loans and education programs to the West End, Hurt Park and Mountain View neighborhoods and commuters to downtown Roanoke by early 2014.
The location for the project was strategic. The facility will be next door to West End Center for Youth, a hub of day and summer programs for teens and children that operates at a prominent intersection: 13th Street and Patterson Avenue. It is on the bus line and around the corner from a small retail and service business district.
City and neighborhood leaders predict that the new access to financial services will complement recent investments in housing in the area and create a climate for the creation and expansion of businesses.
Here, a $300 million financial institution is setting up shop in an area that "has become deteriorated and is dealing with years of disinvestment," according to the city's May 2012 Neighborhood Revitalization plan.
Just on Patterson Avenue, the community lost its grocery store, Sav-A-Lot, which closed a year ago and hasn't reopened. There is a newly boarded-up brick home across from West End Center.
The area looks far different from the busy retail corridors of the Roanoke Valley, such as Electric Road, that have garnered most of the region's new financial services branches.
"We observe criminal activity on a regular basis," said Joy Parrish, who has worked at West End Center for 19 years and has run it for three.
However, the crime issues are easing based, she believes, on the efforts of police, residents and programs by government and community service agencies.
"We believe it will continue to improve with these revitalization efforts," she said. "I think what we're seeing is a neighborhood in transition."
In Hurt Park, a neighborhood adjoining West End, the city and social services agencies arranged for the construction or substantial improvement of 22 homes, and lesser improvements to 61 homes, according to Keith Holland, HUD Community Resources program administrator for the city. A neighborhood watch was established, police bike patrols were added, and code enforcement sweeps were intensified.
This year, eight more houses are to be built, and more housing work is coming in 2014, he said.
To Freedom First, the deployment of company resources to a place like this is in keeping with its structure and mission.
Owned by its depositors and focused on their needs, Freedom First says it pursues a not-for-profit, social mission of community development and financial inclusion.
It holds the status of a federally recognized community development financial institution that is eligible for grants from the federal government to help economically distressed communities with credit, capital and financial services that residents of such communities may be unable to obtain from mainstream financial institutions. At least half of its members are low-income.
The West End branch project "makes perfectly good business sense to us," said Dave Prosser, vice president of community development.
According to Prosser, Freedom First already serves neighborhood residents through partnerships with community service agencies and through direct relationships with more than 100 residents who are members, even though no branch is present. The branch will multiply those connections.
Financing is in place. The federal government, which shares Freedom First's aims, has provided $850,000 to help get the branch open and lending. The city is giving West End Center Inc. a Community Development Block Grant for $343,176.
It will use those funds and financing to construct the building, the largest portion of which is to be leased to Freedom First for five years.
"We're making a commitment to be in that community for the next five years," Prosser said. "My ultimate goal is to bring that facility to fruition and then, once we can make it sustainable and show that it is standing on its own two feet, then we can build a free-standing facility somewhere close-by in that neighborhood that would be a branch with a drive-through."
No drive-through in the beginning? That's OK, say neighborhood residents who welcome the project.
"I think it's kind of great they're putting it in this neighborhood, and I hope it works," said Clarissa Hale, a Freedom First member who uses the Salem branch. She lives in the neighborhood and was picking up a child at West End Center on a recent afternoon.
Valeria Alphin, who lives in the neighborhood and leads the Mountain View Neighborhood Association, is enthusiastic about the project.
"It's an economic development opportunity," Alphin said. "It's going to hopefully be a seed for other development to come into the area."
The 13th Street retail corridor, with four convenience stores, a take-out restaurant, vehicle services and a church in a four-block area, could benefit from additional businesses, community leaders say.
Predictions for branch success abound.
"They will have a line," said the Rev. Albert Rawlins, who lives in Greater Raleigh Court but picks up a grandchild and great-grandchild at the center. "It can't come soon enough."
Dan Merenda directs the Council of Community Services and sits on the board at Freedom First. He refers to banks and credit unions as valuable "roots."
"Banks in general are roots in our communities. You don't often see one of those roots going into a low-income area," he said.
Freedom First expects its new branch will open more than 4,000 checking and savings accounts, according to its latest estimate. In addition, the credit union expects to lend $2.5 million to branch customers during each of the first three years, primarily for home loans, Prosser said. Its smallest loan is $250.
As the lead tenant, the credit union's six employees will occupy most of the 3,000-square-foot building. However, a portion is being reserved for a community room and possibly a kitchen. The side and rear exterior will feature a covered area for a series of farmers market tables.
In a future project phase, Freedom First and its partners have a vision to move the playground of West End Center away from Patterson and pave a driveway to make drop-off and pickup easier.
Prosser is quick to point out that for Freedom First to engage in such a project requires many partners, and that some of them are shareholder-owned banks. So even though the new branch won't bear a name such as StellarOne or Valley Bank, banks support the overall mission, Prosser said, some by investing funds in Freedom First.
Bruce Whitehurst, who directs the Virginia Bankers Association, said each bank is obligated by regulators to offer programs and services to low- to moderate-income people under the 1977 Community Reinvestment Act.
By and large, banks comply and, if a regulator wants to see more effort, a given bank will make that a priority, Whitehurst said.
Bob Fetzer, owner of Building Specialists, the Roanoke general contractor chosen to erect the structure, called Prosser "the visionary" who first proposed that the credit union expand in the high-needs area. Prosser said he probably first spent time in the neighborhood during a community service project at West End Center.
Since then, he has come to know its struggles and opportunities well.
"This is one of the heaviest crime locations in the city," Prosser said during a recent visit to the site.
"That's going to change," Parrish said.
Prosser agreed that's a possibility, noting that the new bank branch will have cameras outside.
In addition, he said, there are likely benefits to residents putting money in accounts rather than carrying cash.
The Roanoke Police Department has no data on whether communities with neighborhood banks have less crime that those without. However, "bringing a legitimate business into an area only helps to strengthen that community. A sense of community among citizens who are stakeholders also helps to reduce crime," police spokeswoman Aisha Johnson said by email.
Crime appears to be already trending downward, as the number of crime reports fell 66 percent so far this year compared with last year, according to Johnson, who confirmed the area had had a history of more crime than is typical for the city as whole.
Although the project initially was conceived as a micro-branch - a cubicle such as Freedom First operates at some large companies - the West End project was reconfigured to be a full-service branch by the time blueprints were drawn up at Interactive Design in Roanoke. That means the full menu of financial products and service that Freedom First offers will be available, including loans to people who struggle to qualify for traditional credit, Prosser said.
For example, Prosser said, consider the plight of a stay-at-home mom who suddenly must sell and repurchase the family home after a divorce to release her ex-husband from the mortgage. If she gets a job, she is a candidate for a loan from Freedom First despite lacking the two-year income history that traditional lenders require, Prosser said.
In general, Freedom First uses education and assistance to help people navigate obstacles so they can use mainstream financial services such as checking and savings accounts and loan programs and avoid "alternative" services such as payday lenders, vehicle title lenders, pawn shops and check-cashing companies that "may lack consumer protections and can be costly for those struggling to make ends meet," according to the September 2012 edition of the National Survey of Unbanked and Underbanked Households by the Federal Deposit Insurance Corp.
Reliance on alternative services is high, according to the study, which found "more than one in four households (28.3 percent) are either unbanked or underbanked, conducting some or all of their financial transactions outside of the mainstream banking system."
Households led by a member of a non-Asian minority group, a person with low income, an unemployed person or a young person report the highest rates of unbanked or underbanked, according to the FDIC, which stated its goal is that everyone can access "safe, secure, and affordable" banking and credit union services.
The main reason people go without bank and credit union accounts is they don't think they have enough money to have one, according to the FDIC. Identification, credit or banking history problems are other reasons.
Freedom First said in its application to the Department of Treasury for the $850,000 that alternative service providers in the area "often prey on this mostly impoverished, culturally diverse neighborhood with no other options for cash advances and asset development."
The application didn't name any of the providers, but LoanMax is a vehicle-title lending company with a branch about two and a half miles north of West End. A branch employee referred a reporter seeking information on products and services to a company representative in Georgia who did not respond to a request for an interview.
A one-year, $1,000 loan requires 12 monthly payments of $234, according to a sign on the interior wall. The cost of credit comes to about 180 percent per year, which is almost twice the amount of the loan itself.
Freedom First would lend $1,000 for 6 percent, making the payment about $88 monthly, Prosser said.
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