Yvette Ittu is the president of Cleveland Development Advisors, a nonprofit real estate lender that marries private money and tax credits to spur investment in the city.
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View full sizeYvette Ittu, the president of Cleveland Development Advisors, stands in the middle of East Fourth Street -- one of the nonprofit real estate lender's success stories. Since 1989, CDA has put nearly $181.9 million into more than 100 projects, most of them in Cleveland. The nonprofit relies on private investors and uses New Markets Tax Credits to attract additional money to challenging projects in urban neighborhoods.CLEVELAND, Ohio -- Since 1989, Cleveland Development Advisors has channeled nearly $181.9 million into urban real estate projects, from grocery stores in struggling neighborhoods to huge developments like downtown's Gateway arenas and the Flats East Bank.
Odds are good that you've never heard of CDA.
But you've seen the nonprofit's group hand at work, at Cleveland Browns Stadium, in apartment and condominium conversions of huge Warehouse District buildings and in the transformation of East Fourth Street into a residential, restaurant and entertainment district.
An arm of the Greater Cleveland Partnership, the region's chamber of commerce, CDA provides real estate loans at reduced costs for borrowers, helping developers stretch their dollars more. Much of the cash comes from several dozen local companies, banks and foundations.
But CDA also aggressively pursues New Markets Tax Credits, federal and state tax credits designed to spur investment in low-income areas. Using those credits, CDA can attract a broader range of investors to Cleveland projects that otherwise would struggle to find financing.
The nonprofit has played a financing role in more than 100 projects -- developments that represent a cumulative investment approaching $2.2 billion.
For Yvette Ittu, this is a dream job. The 48-year-old Cleveland native grew up in the city's West Park neighborhood and now lives in Rocky River. She wears two hats, as president of CDA and executive vice president of finance and operations for the Greater Cleveland Partnership, and oversees a small staff shared by the two organizations.
After a recession-imposed fundraising break, CDA is preparing to approach private investors again. And the nonprofit is wrapping up an unusual deal to take a stake in the Cleveland International Fund, a local company that pairs wealthy foreign investors with Cuyahoga County real estate projects.
How was Cleveland Development Advisors started?
The original funds were capitalized about 20 years ago. The Cleveland Tomorrow organization (now the Greater Cleveland Partnership) had the idea - 'Let's put our money where our mouth is, in terms of getting some of these catalytic projects done.' One of the first projects was Gateway, where the funds were used for site acquisition. Those funds were used again for things like the Rock and Roll Hall of Fame.
How would you describe your role in projects?
Our investments range from $200,000 to our largest, Gateway, at $28 million. We're the gap financing to help get a project moving. Generally our investments are in the $1 to $2 million range. Over the last five years, that has been able to grow to about $5 million, on average, per investment because of additional dollars we're putting in from our funds and the New Markets Tax Credits that we're able to bring to the table.
Do all your funds return money to investors?
A lot of the discussion that we have is around balancing mission and margin. These are private-sector funds, but they're meant to be invested in catalytic economic-development projects that will move the economy forward and create jobs and vitality in neighborhoods. Some of the funds are revolving, so if these projects are successful, those dollars get reinvested. There are others that go into a project, come back and are returned to investors.
How did you land in this job?
I have a finance and legal background and was approached by the staff at Cleveland Tomorrow about helping to manage the real estate funds. I couldn't think of anything more exciting. I've always been interested in development. Being able to see some of the projects go from walking through a vacant building and saying what are the possibilities for this, and helping to figure out how to structure financing to take the project from being a vacant building to new housing, was something that was incredibly enticing for me. This is really, to me, one of the coolest jobs you can have.
How do you measure a project's impact?
That's hard to describe, but you kind of know it when you see it. If you're looking at the Central neighborhood, which has been in desperate need of a grocery store for a decade, and you can help move that type of project forward, is that going to have an impact on that community? Absolutely.
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View full sizeIn this photo from November 2004, shoppers brave rain and crowds during the grand opening of Arbor Park Place in Cleveland's Central neighborhood. The project, anchored by a Dave's Supermarket, was the first large-scale retail development in the neighborhood in 40 years. Cleveland Development Advisors played a financing role in the project.We're taking measured, calculated risks. We're saying we believe in an idea that a developer has. We were one of the first investors in those projects that created what is now Fourth Street, and we've made several investments in that street.
The 800 Superior development, with AmTrust Financial coming in is yet another example. (The New York-based insurer could bring 1,000 jobs to the building, at East Ninth Street and Superior Avenue.) That's going to make a huge impact to the NineTwelve District, which we know will have significant vacancies over the next couple of years.
We need to try to reuse those buildings, to encourage companies to come to town or have some adaptive reuse, like what might be happening with the East Ohio Building, in terms of converting it to housing.
How did the financial crash and recession impact you?
We had to do what a lot of the financial industry had to do. We had to take a step back and look at the market. But it was a time in which the capital we provide was very much needed to move projects forward.
We continued to make investments, in projects like the Tudor Arms (now a DoubleTree hotel), Uptown (an apartment and retail project in University Circle) and Flats East Bank. They were at times when, if CDA capital was not available, these projects might not have gotten done.
We can't do anything alone. We are just one piece of the capital that it takes to get these projects done. In the capital stack, we may see that we are one of two investors. Or we may be one of five or, in the case of the Flats, 37 different sources of financing it took to get that project done.
It was not the time for us to go out and raise capital, for sure. During that time, we focused on using the resources that we had to get projects done. Now that the market has recovered a bit, we feel that it is time for us to go back out and seek recapitalization of some of the funds that we are preparing to close out.
What are your priorities now?
We're at a time where we have a lot of momentum in the community, with a number of big projects. But there's still a lot of opportunity for additional investment.
We have the NineTwelve District that we need to focus on. We have some opportunities along the lakefront that could be tremendous. We are seeing more opportunities in downtown housing. We have two projects that we're working heavily on right now. The Hanna Annex project (in PlayhouseSquare), that will convert the building into housing, and 800 Superior.
Projects like the Avenue District condominiums, a downtown building recently sold and converted into apartments, haven't panned out as you hoped. How do you handle setbacks?
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View full sizeThe uppermost steel beam, signed by public officials, developers and project tenants, was hoisted into place during a topping-out ceremony at the Flats East Bank project in June. The fir tree placed on the beam comes from folklore, and construction workers believe it symbolizes bringing new life to a building.That is where we've seen the most projects that we've had to restructure or work out, in for-sale housing. We're trying to reposition them to still be vital projects, for example, by converting them into rental projects.
Walker & Weeks (near Cleveland State University) is another project that at one time was talked about as being for-sale and now is converted into rental.
We are very proactive with borrowers and owners of our projects that have fallen on hard times. We are working with them to restructure some of these loans until they get back up on their feet and are able to repay.
How did you get the New Markets? Do you expect Congress to renew the program, which was created in 2000 and expired last year?
We applied in the first round and received an allocation. The policy behind New Markets was to provide a tool that would infuse private capital into low-income communities. And that is, in fact, what CDA was already doing. We didn't call it a low-income community, but we were investing capital in Cleveland to make things happen. New Markets became another vehicle to do even more of what we were doing.
We've doubled the amount of investment that we've made in the community since the time that New Markets came into play.
Most of the industry is out of allocation, so if Congress reauthorizes the program, there could be some new influx of New Markets Tax Credits, probably as early as the spring of 2013. All indications are that it is moving in the direction to be reauthorized.
It's extremely important, because a lot of the projects that we're looking at need the type of equity that that tax credit creates.
Do you have a favorite project?
I'm not going to pick one of my children over another. What is exciting is listening to someone with an idea for a development project and working with them and people around the community to help move a project forward.
Not that I'm picking favorites, but the Flats might be an example of that. It took years to pull that together, and working with a number of organizations and individuals. That's a perfect example of how this community came together to help move a significant development project forward.
There. You made me pick a favorite.
On Twitter: @mjarboe