Charles K. Blandin Foundation &
Grand Rapids Economic Development Authority
When the City of Grand Rapids, Minnesota was founded in 1872, it marked the farthest point that steamboats could travel upstream on the Mississippi River. As a result, it became the center of the area’s logging industry. At the turn of the 20th century, in a stroke of economic development genius, the city built a dam over the original rapids in order to attract a new paper mill, which Charles K. Blandin purchased in 1916 and grew into a thriving company that still anchors the region today.
In 1941, Mr. Blandin established the Charles K. Blandin Foundation (Blandin Foundation) to reinvest his own wealth back into Grand Rapids and other rural Minnesota communities. Today, it is one of only a handful of foundations in the U.S. focused exclusively on rural communities, and the largest rural-based foundation in Minnesota. One of its priorities has fittingly been economic development. As is the case for many rural cities, today parts of downtown Grand Rapids are in need of renovation to stay vibrant. Yet redeveloping older properties often has hidden costs, which can deter investors. Additionally, many developers struggle to get commercial financing just to acquire a prospective property because most lenders want to see tax-increment financing secured and tenant leases signed before they get involved. But developers cannot move forward with those steps until they have actually purchased the property.
To address this development “Catch-22,” Blandin Foundation and the Grand Rapids Economic Development Authority (GREDA), a public entity, created the Downtown Property Acquisition Loan Program. This program enables GREDA to borrow up to $1 million in PRIs from Blandin Foundation, which GREDA can then relend to developers to buy blighted downtown properties. Once the project attracts commercial financing, the developer repays GREDA, which then repays Blandin Foundation.
The program’s first success came right after it was launched in 2007. Four buildings located on the same block in downtown Grand Rapids had long been in decline. Blandin Foundation made a PRI loan of $624,500 to GREDA, which GREDA lent to a developer to purchase the properties. After only eight months, the developer put all of the pieces in place to retain commercial financing and pay back the loan. Today that downtown block is home to a new credit union and offers some of the nicest office space in the city.
Overall, Blandin Foundation has come to view PRIs as a powerful tool in its toolkit, especially for economic development, because PRIs can do what market-rate capital would not normally do, and if successful, PRIs allow charitable dollars to be reused over and over again. Now that is an idea worth sharing downstream.