The Van Wert County Foundation has about $100 million in assets and is celebrating its 100th anniversary this year. Like many community foundations, it traditionally invested its money on Wall Street and used the returns to make grants totaling $4 million to $5 million per year.
But the foundation and its CEO, Seth Baker, realized that they needed something to make the town more attractive to workers. Like many smaller Midwest communities, Van Wert was experiencing significant decay and business vacancy in its core.
So the foundation’s leaders decided to try to improve this by renovating a few aging buildings in the core, working with the local land bank. A mutual connection introduced them to Fort Wayne, Ind., businessman Eric Doden, president of Pago USA, a development firm that wanted to partner with small towns to revitalize historic town centers. Doden already knew Van Wert because, as he puts it, “My mother was born there and my grandparents are buried there.” He encouraged the community to think much bigger.
Baker and the foundation stepped up to the challenge. Instead of investing everything on Wall Street, they chose to take some of their assets and invest them into their own town’s Main Street with a program called Van Wert Forward. They devoted an initial $3.5 million to property acquisition, growing to $5 million over time. With that, they were able to purchase 63 buildings, about half of all the commercial and mixed-use property downtown.
Many of these buildings were in bad shape, some on the verge of collapse. In fact, shortly after the land bank acquired the 1905 Home Guards Temple building, downtown’s largest, it collapsed. Most of the buildings had unoccupied upper floors, and some had vacant storefront space as well. Some were occupied by businesses whose proprietors also owned the building, but without a succession plan in place for the owner’s coming retirement.
Baker and the foundation assembled a complex mix of capital that included federal and state historic tax credits, Ohio’s transformational mixed-use tax credit, and private donations. The community foundation put in some equity and there was also a large equity investment by Central Insurance, an insurance company that is a marquee local employer.
The first tranche of eleven parcels was a $26 million project that used this mix of funding sources — with no debt. The buildings were fully renovated, with 36 apartments on upper stories and commercial space on the ground level. The apartments were rapidly all leased. A number of ground floor spaces have been leased to businesses that include a bridal shop and an event venue. An Asian fusion sushi restaurant is slated to open this summer. But Baker acknowledges that commercial leasing has been slower than residential.
For the community foundation, the Van Wert Forward project is primarily about a desire “to create a well-resourced and thriving quality of life for our community.” But they do care about financial returns as well, because Van Wert Forward is an investment project. Baker says, “We are vision driven, so that’s No. 1. Are we driving a return on our vision? That's absolutely what we're doing. That's really the No. 1 return for us. No. 2 is we're a philanthropic organization. We do need a return on those assets, but we can be patient with that return. But we are very cognizant that if we take investment assets from a high returning investment and put it into here, there's an equilibrium that we've got to pay attention to.” He says the foundation keeps an “eagle eye” on that balance.
What Baker and the community foundation understood is that if something didn’t change, the town would stay on its trajectory of decline. Perhaps its greatest asset, its collection of historic downtown buildings that could never be recreated today, might be largely lost to decay the way the Home Guard Temple building had been.
In this environment, in a town that really needed investment, did it make sense to continue taking $100 million of the community’s money and investing it all on Wall Street? Van Wert clearly thought the answer to that was no, and the community decided to act. Baker says, “We were primed to own our destiny and to take a stand and say, ‘No one's waiting in the wings to save us. If we don't do this now, our community is not going to exist.’”
Many small towns face similar circumstances to Van Wert. And many of them have community foundations with more money than you might think. The Van Wert Forward model could thus be applicable to many more places than models such as reliance on a wealthy patron. As the collapse of the Home Guard Temple building shows, these communities are running out of time to save their precious patrimony.
Pago USA’s Eric Doden says, “Community leaders should be more afraid of allowing distress to accelerate than the failure of a bold plan to fix it. That tension creates the opportunity for growth.” And Baker hopes other towns follow Van Wert’s lead, saying, “I'd love to see more people do it and rebuild some of these towns — before it's too late.”
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
