North Carolina National Bank, the largest bank in the Southeast, is going into-the inner-city redevelopment business withe a new subsidiary federal banking officials say is the first of its kind.
The move comes as banks throughout the United States are coming under pressure through the recently enacted Community Reinvestment Act to make sure credit is extended to all sectors of their communities.
It also reflects a national strategy for reversing urban decay, adopted by the Carter administration, that increasingly stresses a partnership between governmental and private efforts.
Officials in the office of the Comptroller of the Currency, which approved plans for the subsidiary, hope other national banks will follow NCNB's example. Their approval was required because banking regulations strictly limit banks' dealings in real estate.
The subsidiary, named the NCNB Community Development Corp., is initially intended to help redevelopment in Charlotte's Fourth Ward, the 78-acre northeast quadrant of downtown that has been the focus of recent city and private efforts to inverse urban decay.
But NCNB President Hugh L. McColl Jr. says the pace of Fourth Ward development has been too slow, with major developers hloding back for fear it would take too longer for middle-income, wholefamily projects or commercial ventures to make) money. (NCNB, through its sister company NONB Mortgage Co, is already involved in low-income housing.)
"What seemed to be missing downtown, if I may say to, is muscle, courage. What developer is going to put money in the ground and hope it will make money?" he said.
"If a developer a does a joint project with NCNB Community Development Corp. and it's a success, you'll see a flock (of others)."
Fourth Ward, a posh residential district around the turn of the century, is now mostly rundown structures and vacant lots, interspersed with recently renovated houses.
It contrasts starkly with the $60-million glass and steel complex on Independence Square, the heart of downtown, which contains the NCNB tower and adjacent Radisson Plaza hotel.
Sidewalks on Independence Square after 9 p.m. are lined almost exclusively with working-class black people waiting for buses, while inside the Radisson, apredominantly white and affluent clientele relax amid the comfortable surroundings of what many consider the city's finest hotel.
It is a desire to change the sharp division on the nighttime square that lies at the heart of NCNB's new venture, McColl says.
Charlotte, a commercial center of 30,000 for the Carolina's Piedmont area has long been known as having a lack-luster night life.
"Our way of life would be enhanced if we could make it a residential as well as a business area," McColl said. "I don't want a city that's just business. It's more fun with people."
In 10 or 15 years, he hopes, the night-time square will look different. "The black people waiting for buses will still be there, but you'll also see a couple strolling down the street, maybe a man in a tuxedo with a lady in the long dress on their way to a fine nightclub. You "See CHARLOTTE, E12> might see young people with a guitar soaking up the atmosphere.
"If you've been to San Francisco, down around the Cannery or Ghirzdelli Square, you'd know that I mean - people going to where things are happening."
The bank is not unaware the new venture will aid its image as community leaders and groups look to NCNB for leadership in community involvement, McColl says. And he acknowledges that a revitalized Fourth Ward will be good business for NCNB.
"You're sitting in a complex that's worth $60 million," he said in an interview from his 23rd floor office in the NCNB Tower.
"You could argue it would protect that investment to create a healthy environment around it. Our trust department holds a great deal of property in this town. Yes, we have a very real interest."
But NCNB won't be able to make a direct profit from the operation of the subsidiary under the limitations imposed by the Comptroller, he said. Those limitations require profits to be kept within the subsidiary or, if the subsidiary is dissolved, given to charity.
The limitations also require a majority of the subsidiary board by non NCNB people one-third must be associated with the Fourth Ward. The reason for all the strings is because federal laws severely limit the conditions under which a national bank can hold real estate. NCNB is being permitted to create the subsidiary under an interpretive ruling by the Comptroller of the Currency which allows projects that are predominantly civic and not entrepreneurial.
Banks across the United States are now under increasing pressure to take civic and community interests into account, partly as a result of the antired-lining Community Reinvestment Act, which was passed in late 1977. Redlining is a controversial mortgage banking practice of refusing to make loans in certain neighborhoods.
The Comptroller's office is now in the process of drawing up regulations for the new law, which requires banks to consider all sectors of the community in all allocating credit.
"NCNB's involvement (with plans for their subsidiary) pre-dates enactment of the Community Reinvestment Act," said Cantwell F. Muckenfuss Ill, deputy Comptroller for policy planning. "But there's no question that other banks may to demonstrate their involvement with local community development."
The subsidiary will begin operations with $250,000 from NCNB and will have available up to $4 million per project through low-interest or interest-free loans from NCNB, McColl said. The maximum total permitted in loans from NCNB is approximately $10 million.
The subsidiary's new president is Dennis Rash, a Fourth Ward resident active in revitalization efforts there.