VanCity Savings Credit Union knew exactly what it was getting into when it opened a facility in a tough part of town here. And it went ahead anyway.
"Pigeon Park is the poorest postal code in Canada, it is a community in crisis," said Sara Holland, spokeswoman for VCSCU. "It's an area of heavy drug use, prostitution and crime. There are many homeless, ill and emotionally troubled people living there. These people have little access to the mainstream financial community. They don't have bank accounts."
So it seemed like just the right place to open a credit union branch offering lifeline financial services, right?
"Yes," said Dave Mowatt, CEO of Van City, after being approached by Mark Townsend, an official with the local assistance group called the Portland Hotel and Community Services Society.
"I couldn't believe I actually got him on the phone," said Townsend. "I mean, we're a small non-profit and we call all kinds of organizations asking for help, and this guy is a chief executive officer. There should be some kind of award for guys like that."
The need for the people of Pigeon Park to have a place to cash their government assistance checks and pay utility and other bills had reached emergency status after a government-sponsored bank closed in late February 2004. The Four Corners Community Savings Bank hemorrhaged more than $6 million in losses since opening in 1995, and when the plug was pulled, poor people were again left with poor choices: payday lenders and pawn shops.
Four Corners would cash checks and had looser identification requirements than standard banks, and the fees were much less than the payday alternative of $20, said Holland (a $5 fee and a percentage of the total amount of the check). "That's outrageous, and in my opinion, it takes advantage of these people; people who cannot afford to pay such costs."
It was the circumstances of people so vulnerable and a situation so dire that put into motion a new plan to bring financial services to the market, using some of the painful but valuable lessons learned by Four Corners.
Meetings organized to either save the bank or develop another solution settled easily on one strategic flaw: the bank overreached. It tried to offer too many services, and had to charge fees to cover costs and maintain staff. And the bank staffers themselves were not trained to deal with the particular problems presented by the Pigeon Park community.
"That's our expertise," said PHS's Townsend. "We're on the ground there everyday. We understand these people; we know their needs and our staff is qualified to help them." According to Townsend, the Portland Hotel Society was founded by Liz Evans, a nurse who worked in a local hospital who came to recognize that patients who being discharged needed follow-up care and a safe place to live. She turned an old, run-down hotel into a community service center that provided medical, dental and other services and is PHS's executive director.
"We came up with a better model," said Holland. PHS has the street smarts; we know banking. We kept the services simple, offering check cashing, bill-paying savings and ATM access. We don't expect it to be profitable, but it will support itself as a pay as you go."
"As the bank was nearing shut-down, politicians wanted an alternative, so the different city and provincial bureaucracies tried hard to come up with a solution, but couldn't," Townsend said.
Getting a 60-day notice regarding the closing, the plan was accelerated by the only groups left standing: PHS and Van City, which formed a unique partnership. "We had to find a new location, which we did, and managed to push the permits through," said Townsend. The facility being used is a 5,000-square-foot former branch of the Bank of Nova Scotia that was at one time a pawnshop.
VanCity and PHS Community Services Society launched Pigeon Park Savings in a record 67 days. PHS employees, who have experience helping people with chronic substance abuse and other problems, are the faces that members see, while Van City does all back office operations.
"We opened on March 15," said Kirsten Stuerzbecher, manager of Pigeon Park Savings. "Van City trained PHS staffers as tellers while renovations were going on."
Stuerzbecher, who has worked with Townsend for a dozen years, was put in charge of the project and worked closely with Alexandra Paproski, Van City's corporate secretary. "Alex is Dave Mowatt's right hand, and she just about did miracles. They called Home Depot for supplies, they got painters, they got tilers, they got furniture. Honestly, we couldn't ask for a better or more generous partner," she said. "Ultimately, it was a project that was just put in people's laps-and these are people who already have jobs to do-people from various departments, from information technology facilities, etc. These peoples' help was instrumental, and Van City's history of involvement says it all, really."
"It is a first," allowed Holland. "I don't know of anything else like it. Corporate Vancouver went to town, cleaning, painting, organizing help: we got set up, got the building ready, got regulatory approval, did the training and were set to go. "
"We focused on what people need in order to be viable," said Stuerzbecher. "Having a bank account is very important. It's especially symbolic to these people who feel marginalized by society. They don't do well in ordinary banks because they feel they are being judged. It's a challenge.
"Van City made some changes to accommodate them, too, reducing the usual membership fee to $5 and waiving all service fees for the first month. Members get an ATM card when they join and can cash checks; pay bills and get money orders. Incoming wire transfers and direct deposit is also available, for people known as the 'working poor,'" she continued. "We also cash checks from other local non-profits that employ people and pay by check. Usually, there would be a hold on those, but we know those organizations, so we make that money available."
Members who join at the Pigeon Park branch are not "conditional" members, with all the rights and privileges, including voting rights. They can use their ATM card at any Van City ATM. Pigeon Park has already opened 860 memberships out of a goal of 3,000.
"They know Van City; they've all heard of it and feel good about being a part of it. They especially appreciate being treated with respect," said Stuerzbecher.
