WORTHINGTON - Members of the FDIC, Federal Reserve and Office of the Comptroller of the Currency hosted a “Banker’s Lunch and Learn” on Wednesday, an event meant to build connections between local lenders and various agencies and nonprofits to spur economic development and create new opportunities in the region.
Community banks are important for any local project because they provide the loan that gets it started. Of course, banks won’t provide loans for any project. Some startups carry more risk than others, and not every bank has the knowledge or expertise to fund unfamiliar projects.
A major theme of the event was urging bankers to find partnerships to make such projects a reality.
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Scott Marquardt, vice president of the Southwest Initiative Foundation (SWIF), and Greg Raymo, president and CEO of First State Bank Southwest, spoke about how the two have worked together to get local projects done. With a combination of funds from SWIF’s business loan program, as well as financial support from First State Bank Southwest, the two have worked to finance small business startups in Worthington, such as the Avalon School of Cosmetology, established in 2007.
Rick Goodemann, Southwest Minnesota Housing Partnership (SWMHP) CEO and Dale Roemmich, First Farmers & Merchants National Bank CEO, hosted a panel on affordable housing. The two have worked together on projects for more than 10 years. Partnerships between SWMHP and community banks have brought many apartment complexes to Worthington, including Nobles Square Apartments, Rising Sun Estates and the upcoming Grand Terrace Apartments.
Roemmich admitted he never thought he would be providing loans for affordable housing. He said most community banks don't want to fund affordable housing projects because they don’t know enough about them. That expertise can be found by reaching out to experts in the field.
“Without the strong lending community, we couldn’t do what we do,” Goodemann said. “Having someone like Dale, he’s been extremely flexible, and his helping to problem-solve has been immensely valuable.”
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Goodemann also went into the issue of affordable housing, something he said wasn’t specific to Worthington, but to most growing cities, where incomes of potential renters are not rising enough to meet rents that are inflated by factors such as rising construction costs.
“Even if you look at Mankato, they have the same problem,” Goodemann said. “They’re creating a whole bunch of market development starting at $1,400 rent, but most of the jobs being created are at a level that can’t afford that at all.”
The lack of profitability for the free market often means local participation - such as financial support from the city or other sources - is required for market rate housing to be developed, Goodemann said.
