"After a quarter century of opening up the Lexington market to entrepreneurs and potential homebuyers, the Community Ventures Corporation (CVC) is looking to open a market to Lexington.
The CVC, which grants and helps secure loans ranging from a few thousand dollars to a $7.5 million new market tax credit for an expansion of the Galt House, is ringing in its 25th anniversary with plans to more than double its current number of offices and open a year-round public market behind its small business incubator at the intersection of Third and Midland, according to CVC President and CEO Kevin R. Smith.
"We've got a lot of entrepreneurs in this community that don't need a store front; a booth-type location probably would be best for them. It is a place that you can go see great diversity and be able to find things that you can't find. We've got a great farmers market here, but where do you go in the winter? If you had an indoor space, then those farmers that can produce in the winter could have a place to sell," Smith said.
"Right now (entrepreneurs) are limited to when we have fairs, the Roots and Heritage Festival or something like that, or going out of town and selling, so I think this would create a pretty good market for a lot of people. And it would be a great attraction for those who live here in the community as well," he added.
This is the latest step in the history of CVC, which started out "to create jobs that low-income people could get that would offer higher pay, and we did that by investing in companies that would create those jobs," Smith said. But it has evolved into establishing wealth within a community by helping people become homeowners who may not otherwise be able to buy a house, and by helping established companies grow.
"To be able to meet their needs, we had to go out and find new products for (the companies we helped establish), and that is sort of how our growth happened," said Smith, who has been with CVC since 1993.
When Smith came aboard 15 years ago, CVC had only employed one person at a time. Now the company has 30 workers and a $2 million annual operating budget. Smith attributes CVC's continued existence to the free temporary office space the company was given in the National City Building shortly after he took the helm.
The ability to spend money on operations and not capital expenses is now a central focus of CVC as they house 17 businesses in their North Broadway headquarters and six in the small business incubator.
"It keeps them from having to dig those big holes; they don't need to borrow anything to get into good space. Our real goal here is how can you get started without borrowing, because why dig a hole if you don't need it?" Smith said.
The startup small businesses gain access to the buildings' meeting rooms, and the main receptionist answers their phones using the company's name. Leases start at $375 a month.
Companies with their own storefronts that CVC helped establish and expand include Louisville's Consumers Choice Coffee and Jay's Cafeteria and Catering, Lexington's Natasha's on Main and Esplanade and Spalding's Bakery, where people line up out the door each morning for their doughnuts.
CVC currently has offices in Lexington, Louisville, Campbellsville and Henderson with plans to open five more locations over the next four years. Smith said he didn't want to discuss what cities CVC would be locating in other than Frankfort, where they plan to open an office in early 2008.
In order to open the new offices, Smith says they will need $64 million available. CVC is expecting to hit the $40 million mark in mid-October and hopes to secure all the funding by the middle of next year. Funding for CVC comes from LFUCG, the Kentucky Housing Corporation, HUD, the Small Business Administration, and the Cabinet for Economic Development, among others. In addition, the organization collects roughly $300,000 to $600,000 annually in private donations.
One of CVC's goals, Smith said, was to allow businesses to be established outside of Kentucky's Golden Triangle and help people to establish wealth in these areas as well.
One of the largest hardships he anticipates running into in the near future is the loss of savings and equity on the part of families because of unscrupulous lenders, misleading subprime mortgages and the resulting rash of foreclosures state and nationwide.
Smith fears the glut of foreclosures will lead to a run on rental housing, and in areas of Kentucky where rental property is already at a premium, people won't be able to afford what few places there are. Alternatively, he expects some will end up paying too much for a place that doesn't meet their needs.
"What's going on right now is trying to find these families before they go into foreclosure," he said. "We are basically shut out of this process; we can't get the lenders to tell us who these families are, so we have to wait for them to be foreclosed on before we can help. At that point, they've lost their home, and we've got to start all over with the client."
Even after a house has been foreclosed, the person or family that lost their home can still be eligible for a number of programs to reestablish their credit and get them back into a homeownership. On the flip side, Smith said, there are people who think they earn too much to qualify, but both ends of the spectrum can have the CVC give them a low-interest loan or offer their assistance in securing one from a bank.