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Coastal Enterprises, Inc.: A History and Profile

Formed in 1977, CEI has always taken a transformative approach to community development finance. The organization's first program targeted the development of the aquaculture sector in Maine, providing access to credit along with a range of technical assistance for aquaculture management (human capital). In 2008, CEI has 85 staff and $371 million of assets under management (ceimaine. org/content/section/3/40/). Funding is mostly from loan funds, federal and state grants and investments, individual investors, and earned revenue.

CEI's products include small business and microenterprise loans; small business venture capital investments; new-market tax credit financing;[1] affordable housing loans and development; workforce development linked with small business financial assistance; small business technical assistance in developing business plans; sector programs for fishermen, farmers, small lot foresters, childcare providers, and community facilities; IDAs; housing counseling and homeownership education; a lease-purchase program; and policy development related to organizational programs as well as structural issues affecting the organization's clients.

The next two sections explore two CEI projects, looking at the range of assets developed where credit was the starting point for, or a crucial piece in, the project.

Progressive Alliance for Careers and Training

Between 2002 and 2004, CEI, using Federal Department of Labor earmark funds, led a project, PACT, to form a collaborative partnership with economic development, workforce development, and educational and small business organizations to strategically develop assets for a failing rural area: Maine's Western Mountains. In a single county in this area, there were fifty major layoffs between 1995 and 1999 in response to relocations and closing of manufacturing businesses due to global competition (Dickstein and Thomas 2006). PACT goals were to increase human, social, and financial assets that the region could draw on by training the workforce, financing businesses, and providing assistance with business strategies, and developing new alliances and working relationships (see Figure 9.2).

PACT developed a collaborative board that included key economic and workforce development agency staff (such as career centers and workforce investment boards), educational organization staff (such as community colleges), and business leaders who would guide the project over a two-year period, deciding priority areas for investment and allocating funds to specific projects (see Figure 9.3). The board reviewed the region's potential growth areas and identified health care, wood-product manufacturing, and information technology as sectors that could be focal points for investment and growth and that would offer career ladders and employment opportunities. These three sectors were represented on the board and in subcommittees.

The project targeted human capital development of incumbent and dislocated

Figure 9.2 PACT Project Goals

PACT Project Goals

Figure 9.3 PACT Board Members

PACT Board Members

workers. Concurrently, businesses receiving incumbent worker training were provided with technical assistance to prepare for future credit investments. Although businesses applied for loans, only one company received financing. This company, a wood-product manufacturer, stayed in business long enough for an angel investor with expertise in financing and marketing to invest in it. Furthermore, one staff member left the company to start up a complementary manufacturing business.

While credit was available, CEI, board members, and loan staff felt most companies needed to build human capital assets, so they focused on firm-specific training. Staff and business owners benefited from training received. For workers, this translated into financial assets with 49 percent of incumbent workers receiving a wage increase and additional employees receiving improved benefits packages. Additionally, seventy-one new jobs were created in participating companies. Notably, business owners and staff indicated a more empowered and motivated staff body. Postproject interviews revealed these benefits spilled over into staff's personal lives. For example, one incumbent worker described increasing self-confidence, which led him to return to school after the training. In the case of the Maine General Rehabilitation and Nursing at Glenridge, a peer mentor system led to increased wages and developed employees' soft skills, which employees reported being transferable for their personal home lives (Dickstein and Thomas 2006) (see Figure 9.4).

At the community and regional levels, the PACT board established strong relationships, building social capital between critical organizations based in the potential

Figure 9.4 Building Human Capital in the Nursing Profession

Building Human Capital in the Nursing Profession

for financial assets – grants and loans awarded through the project. Companies involved in the trainings were often past recipients of CEI loans. While the board did not continue to meet after the end of the project, the local Workforce Investment Board pulled members of the PACT board into its committees and peripheral structure. In Somerset County, members of the PACT board developed a county- level taskforce to deal with economic and workforce development. In 2006, some members of the PACT board, working together in new regions of Maine, successfully secured a grant for the Maine Marine Trade Association, and a second PACT proposal is awaiting funding to build on work accomplished.

PACT developed capital or assets at different levels: human capital for individual employees of targeted industries as well as more broadly for institutions, especially businesses in the region. Social capital was developed among the organizations that worked collaboratively as well as between these organizations and the businesses and employees who they worked in ongoing partnerships. Groups drew on this social capital after the project's end to develop proposals for further funding, thus leveraging access to other social networks. It is unclear whether PACT businesses developed financial assets, but some businesses did survive longer than anticipated, suggesting at least maintenance of financial assets (Dickstein and Thomas 2004). Development of human and social capital or assets may be the precursor to the future development of financial assets. Financial assets prior to the grant period and the promise of grants and loans were important stimulators of both social and human capital development.

This example points to the role a CDFI can play in developing a combination of different assets. CEI's institutional capacity in developing human and social capital was important .

Working Waterfronts

CEI's fisheries program lends to fishermen. However, access to working waterfronts was becoming a problem. CEI contracted with the Maine State Planning Office to survey the state of working waterfronts. Only 25 miles of working waterfront remained as a result of the privatization of Maine's coast (CEI 2004). This set the stage for the development of CEI's loan fund targeted at preserving working waterfronts. The first project was in conjunction with the York Land Trust to preserve a working dock in York, a coastal community in Southern Maine.

Large prices associated with coastal property present a challenge in preserving working waterfronts. York was no exception. When the Sewall's Bridge Dock originally came on the market in 2002, the community was concerned it would become another condominium development, meaning loss of one of the last remaining access points to the York River for fishermen. Two lobstermen attempted to purchase the property with no success. However, when it came back on the market in 2003, they were determined to find a way to save the dock (Lyman 2007).

Together, CEI, the York Land Trust, and the two local fishermen devised a plan by which the development rights to the land and the actual land costs were bifurcated. CEI provided financing to the York Land Trust, combined with donations from community foundations for the purchase of development rights. The fishermen obtained financing from a local credit union to pay for the remaining portion of the land (Lyman 2007). This innovative financing allowed the preservation of the waterfront use.

Clearly, this deal developed the personal financial assets of the two fishermen involved. But there was a far larger asset created for the community. Fishermen now had permanent access to the York River. Access to the waterfront, crucial for fishermen's ability to work, is a community asset, where the community is defined as local fishermen. The York Land Trust also saw value for the broader community in ensuring there was ongoing access to the waterfront and support for Maine's fishing industry, considered vital to the state. Public access to the river has been maintained, providing another form of community asset, but with a larger community, namely the town of York. The asset building for both the fishermen and York are a form of common asset building (Paxton, White, and Maxwell 2006).

In addition, several other forms of assets were developed. Bridging social capital was created between York Land Trust, the fishermen, and CEI, three groups that had not worked in combination before. Human capital was developed in York Land Trust, CEI, and several community foundations as they learned a new method of financing innovative asset-preservation deals. Important institutional bonds were created. As a result of this innovation, the Working Waterfront Coalition requested money from the state legislature to fund a Working Waterfront Access Pilot Program. This loan fund, currently run by CEI, is in its initial stages, having made loans to eleven groups in the preservation of working waterfronts. Three of these have been cooperative models (Cowperthwaite 2007).

  • [1] New Markets Tax Credits are tax credits for investments in low-income qualifying census tracts. See
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