If all goes as planned, the D.C. City Council next week will agree to trigger the spending of $4 million of city funds to help finance a quasi-public corporation aimed at stimulating economic development in District neighborhoods.
The city's fiscal 1986 budget earmarked the money for the Economic Development Finance Corporation, created by council legislation in 1984. The money could not be used until private businesses had contributed a portion of the funds necessary for the corporation to carry out its work.
City law requires the finance corporation to implement development projects and provide financial and technical assistance to small and minority-owned businesses. The corporation is also expected to produce highly visible results through activities that "strengthen and stabilize businesses . . . stimulate economic, industrial, commercial, employment and manpower development and encourage neighborhood improvement and stabilization."
In short, the basic idea behind the corporation's formation is to get private companies and government officials to work together for the expansion and retention of businesses. The idea is not unique. There are about 50 development corporations nationwide. The District's corporation is patterned after the Philadelphia Industrial Development Corporation, one of the oldest of its kind in the country.
But the level of cooperation sought by the District will break new ground here, according to City Council member Charlene Drew Jarvis (D-Ward 4), chairman of the council's Committee on Housing and Economic Development and the chief sponsor of the law that created the District's corporation. When government and private funds are combined, Jarvis said, she expects the finance corporation to begin operation with about $15 million.
"For a long period of time there was not a willingness on the part of business to support or work with government," said Jarvis. "We're seeing a revolution in terms of private sector thinking."
While the City Council demonstrated its desire for business commitments to the city in recently adopted interstate banking legislation -- which requires banks seeking to acquire District banks to make substantial loans to economic development projects in distressed areas -- the success of the finance corporation hinges on voluntary action from the business community.
On Tuesday, the City Council will determine whether the private business community's puchase of $1,025,000 worth of shares in the Neighborhood Economic Development Corporation, the private, for-profit subsidiary of EDFC, is sufficient to warrant the release of the District government funds.
Thus far, all of the private sector money committed to the finance corporation has come from the banking community, which has also pledged to work with a group of leading business people to raise enough money to make the private sector's initial investment a total of $5 million. The banking community initially made its pledge during the City Council debate over interstate banking.
The group of board of directors includes Daniel J. Callahan III, chairman of the American Security Bank; James Nelson, president of the National Bank of Washington; Robert Pincus, president of D.C. National Bank; Belle V. Gentry, president of the D.C. Chamber of Commerce; Delano Lewis, a vice president of Chesapeake & Potomac Telephone Co., and Louis Simpson, the senior vice president of Government Employees Insurance Co.
The type of projects to receive assistance or financing will be determined by a nine-member finance corporation board of directors.
Next week, the council will vote on the mayor's recommendations for five of the board positions. The nominees are: Greater Washington Board of Trade nominee Barbara David Blum; D.C. Bankers Association nominee C. Jackson Ritchie; D.C. Chamber of Commerce nominee K. Lewis Dunlap; James G. Banks, a counsultant for the D.C. Association of Realtors; and Alexis M. Herman, president of Herman and Associates, a small business corporation.
The law requires that the other four board members be government officials -- the mayor, the deputy mayor for economic development, the City Council chairman and the chairperson of the council's housing and economic development committee.