In September of 2000, Fleet Bank began notifying non-profit, community-based organizations in Brooklyn that it was accepting applications for a $750,000 grant to be administered as part of the Community Renaissance Initiative. The program is intended to stimulate business growth in area on the East Coast where urban renewal is occurring. In Brooklyn, a scramble ensued, with different groups allying themselves in order to put together convincing proposals. The criteria were rather broad: the non-profits had to demonstrate that they could successfully parlay the funding into strengthening the vitality of Brooklyn’s small-business economy.

One coalition that formed to write a proposal was led by the Brooklyn Chamber of Commerce, which teamed up with the Bogolan Merchants Association, the Central Brooklyn Partnership, and the Business Outreach Center. In an attempt to gauge the most immediate needs of the business community they serve, representatives from each group met with local merchants and residents. The message was clear: socio-economic change in Fort Greene, Clinton Hill, and Bedford-Stuyvesant is wreaking havoc on the commercial real-estate market.

“With the influx of people and money into the area, merchants have found their rents jumping up 25, 50, 100 percent,” says Errol T. Louis, Executive Director of the Bogolan Merchants Association. “Since there is no commercial rent control, landlords can actually just triple the rent when the lease is up.” This is one troublesome aspect of the 1990s economic boom that transformed the area. Suddenly, many of the small, family-owned businesses that helped define these neighborhoods are being forced out by escalating rent in much the same way as some lower-income residents have been effectively “priced out” as residential rents and prices rise.

As Geri Jasper, CFO of the Business Outreach Center, puts it, the group felt the most effective way to promote small business economic vitality would be to “help existing businesses, when possible, to gain control of their properties and give them a more permanent stake in the community.” To do so, the group proposed to help local merchants navigate the changing real-estate conditions and market forces through the services and expertise of their consultants. Fleet was convinced. In November, the bank announced that the group led by the Chamber of Commerce had been granted $750,000 to carry out Fulton FIRST (Fleet Initiative for Retail Services and Trade). With the help of Congressman Ed Towns, the group went on to secure another $3 million in financing from Mayor Giuliani in January. This generous additional funding is designed to extend the Fulton FIRST program to help serve the business community in Bed-Stuy through real-estate assistance, “streetscape improvements,” and marketing and planning studies.

It’s easy to see that the combined grants will go a long way in securing a more stable real-estate environment for local businesses. Less obvious are Fleet’s interests and motives in making this kind of grant. After all, it’s not a loan, so there is certainly no guarantee that this investment in Fulton Street will achieve any tangible returns for the bank. Furthermore, since Fleet currently has no branches in the area, it’s difficult to argue that this grant will help them increase their customer base.

In order to understand why Fleet made this grant, it’s vital to know about the Community Reinvestment Act, or CRA, a federal law that was passed in 1977 and has since been an ideological battleground. The law requires banks to lend and invest in under-served, low-income, and minority communities. This prohibits the practice known as “redlining,” in which banks and other financial institutions actively choose not to invest in certain areas based on their ethnic makeup or income-level characteristics. Banks are given a “CRA rating” by the government. This rating measures the extent to which a bank has fulfilled its CRA obligations. If a bank has a low CRA rating, the government can delay the bank’s planned mergers, openings of new branches, and expansion into interstate banking.

Historically, Democrats and liberals have been the CRA’s strongest supporters. Although some Republicans and conservatives have supported the bill, most have staunchly opposed it. President Bush the Elder was one of the law’s most dedicated enemies. In 1991, the Bush Administration’s attempt to overhaul the entire banking system included a significant weakening of the CRA’s impact on mergers. Then, in 1992, Bush proposed legislation that would have gutted the law by exempting many banks from CRA ratings altogether. Both attempts failed, mostly because pro-CRA Democrats controlled Congress at that time. Since then, the CRA’s main opponent has been Senator Phil Gramm, a Republican from Texas who serves as Chairman of the Senate Banking Committee. Gramm claims that the CRA allows communities to “extort” money from banks by filing complaints with the government.

Yet according to two studies of the law’s impact conducted last year by the Treasury Department and the Federal Reserve, the law has succeeded in increasing the availability of financial products to low and moderate income citizens. The Federal Reserve’s study further found that loans and investments required by the CRA are just as profitable as loans and investments in banks’ overall lending portfolios. That is, banks have generally been able to profit just as much from CRA loans as from loans to more “mainstream” clients. Nonetheless, most Republicans, and even some Democrats, are still intent on dismantling the CRA. Many believe this opposition stems from the heavy influence the banking industry exerts on politicians and political parties in the form of campaign contributions and intensive lobbying.

Federal fiscal policy often seems to follow an elliptical path on its way to affecting communities. Many times, these changes first affect financial markets here and abroad, then large-scale corporations and industries, then state-level budgeting, and on and on until, eventually, the aftershocks are felt by small merchants and private citizens. What’s fascinating about the struggle over the CRA at the federal level is that its results are quite immediately palpable in the daily livelihood of small communities. As one person involved in the Fulton FIRST proposal put it, “Anytime you see a bank making grants like this one, three letters describe the reason behind it: CRA.” Without the pressure of CRA ratings, Fleet would probably not have a Community Renaissance Initiative, and thus the Fulton FIRST grant would never have come into being.

Yet the CRA-inspired grant from Fleet is not a panacea for all the problems that are emerging as Fort Greene, Clinton Hill, and Bed-Stuy’s commercial districts develop. Each neighborhood is currently facing, to varying degrees, wide-spread gentrification. That rather nebulous term is sometimes carelessly used to describe what is in fact a complicated set of interactions between socio-economic, cultural, and racial shifts. Clearly, not even the best-funded of community-based groups can do much more than attempt to guide their clients through one or two particular aspects of these shifts. That’s why the non-profit groups that are receiving funding through the Fulton FIRST program all share a primary focus on real estate issues. Yet each has a different approach and a different set of priorities.

Bogalan’s Errol Louis says the grant will provide a badly needed support system of consultants for those already doing business in the area, and also represent a way to attract desirable new businesses in the area. According to Louis, leaving development up to market forces is how an area gets “one more bodega, one more liquor store, one more check cashing store.” With the Fulton FIRST funding, Louis adds, “we can talk with people from different locations in the area, or recruit someone from outside and tell them, ‘You’re going to have friends.’ You can almost quantify what that’s worth to somebody, compared to flying blind and trying to figure out a neighborhood on your own.”

Mark Griffith, of the Central Brooklyn Partnership, casts the issue differently. “We see this as an anti-gentrification effort,” he says. For Griffith, the changing dynamics of Fort Greene, Clinton Hill, and Bed-Stuy represent great opportunities. Yet, without help, older and more traditional local businesses could be shut out. “Fulton Street is very much owned by outside interests…which are controlling the area,” he notes. “Of course, this cuts across racial lines. What we’re trying to do is give people who run businesses a fighting chance to own property.” The Business Outreach Center’s Geri Jasper also has concerns about the possible risks of rapid change. However, in her opinion, the Fleet Bank grant “will not promote gentrification.” Rather, she believes it will encourage capital to re-circulate within the community in a way that will benefit residents and local merchants.

There are subtle but important differences between these three outlooks. All three groups hope their work will help merchants make decisions about real estate and sales that will positively affect neighborhoods. Yet while the CBP and the BOC are primarily concerned with the ability of already-existing business to exercise some control over the changes that are taking place, the BMA is more eager to open the area up to more newcomers who will undoubtedly quicken the pace of those changes.

All of this is essentially predicated on the difficult task of defining what is an “outside” interest and what is a “local” one. As the neighborhood and the local economy continue to evolve, this distinction may become more and more difficult to make. What’s crucial to see is that, although this kind of development would be impossible without the CRA, it’s ultimately up to the newly-funded community organizations to steer the local economy in whichever way they feel is most positive.

Perhaps the most important players on this stage are in fact the local merchants themselves. After all, they perceive how the local business environment is changing at the most basic level, and the Fulton FIRST projects is ostensibly set up to best suit their individual needs.

For Selma Jackson, owner of the 4W Circle of Art and Enterprise on Fulton Street, the grant represents a way to ensure the community maintains its unique character as an important hub for the creative arts in Brooklyn. For the past 10 years, 4W Circle has served as a “retail incubator” that helps local artists and craftspeople enter the retail market by showcasing their works. “When we first got here,” Jackson recalls, “it was a very uncertain situation. There were empty storefronts everywhere.” Back then, Fort Greene was a much different business environment, and real-estate prices were nowhere near their current level. It was therefore easier, in some ways, for local merchants and artists to establish themselves, albeit in a rather limited market. “This has always been an artist’s community, but now it’s changing again,” Jackson notes. “Will it still have the same artistic feel to it?”

Last April, Laura Goodwin opened up The Training Academy, a gym on Waverly Avenue off Fulton Street. Goodwin came to the area from Park Slope, which she left partly to escape that area’s business homogeneity. She sees the community focus of the Fulton FIRST grant as a way to encourage a “grassroots business attitude,” one that fosters the recycling of local money. After all, she laughs, “I don’t go to Kinko’s. I go to O.B.E., the local copy shop.”

While not a matter of doctrine or principle, such a decision does reflect a kind of political choice, or a values-based choice. Laura remembers: “When I first started, this business was just a dream. That’s the way I saw it. It wasn’t until later that I started to think, ‘What are the political ramifications of this? What are the social ramifications?’”

Hopefully, the Fulton FIRST program will also encourage more people to ask themselves those very same questions. Doing so may further enable people to see how their neighborhoods and their businesses are connected not only to specific, national political issues like the Community Reinvestment Act, but to the politics of everyday life, as well.