Third Federal Savings and Loan Association of Cleveland, which has been financing new homes for 60 years, is now developing them - to help revitalize its rundown neighborhood.
Three single-family homes are under construction, and ground will be broken for another in a few days. Plans for a half-dozen townhouses are also in the works, and additional houses will be built as property becomes available, said Marc A. Stefanski, chairman and chief executive officer of the $6.2 billion-asset thrift.
All the development will be in the working-class Broadway-Slavic Village neighborhood, which has seen little development since its heyday in the 1920s.
The Broadway Development Initiative, on which the thrift plans to spend $40 million, "started with the idea of building a building" - the new headquarters Third Federal completed two years ago - "and has grown into a five-to-seven-year plan," Mr. Stefanski said.
Since building the headquarters, the thrift has been trying to improve the neighborhood through various programs.
In a partnership with Cleveland and Bishop Anthony Pilla's Church in the City program it works with community groups to restore churches, buy up drug houses, and improve roads, as well as provide residents with low-interest credit.
The initiative also spawned a program that provides a credit management course in the high school and tutoring for elementary students.
Third Federal decided that its next move would be to provide housing. Being the developer seemed like the quickest way, Mr. Stefanski said.
"We just decided that we had enough people internally to start the process."
Third Federal acquires and prepares the land and subcontracts the construction and other services to local companies. It is offering homebuyers reduced closing costs, mortgage rates up to 1.25 percentage points below market rates, and tax abatements from the city.
Though the city and the church program are partners in the housing venture, the thrift hopes to make money on it. But profit is secondary to its desire to help the community, Mr. Stefanski said.
"It's a for-profit thing, but we are actually doing it because of our strong commitment to the city of Cleveland," he said.
Robert P. Schmermund, director of communications for America's Community Bankers, said that though other thrift companies have ventured into the world of developing, few have gotten as involved in the their communities as Third Federal.
"They have become so involved, and the unique quality really is the community-based community development lending," Mr. Schmermund said. "They really put their heart and soul into projects."