"Everyone deserves a fair shot"

Jack: Welcome back everyone to the OZExpo Podcast. My name is Jack Heald. I am your host for the show, and I am joined today by Dan Topple, who's a Senior Vice President at Customers Bank. Dan, welcome to the OZExpo Podcast.

Dan: Glad to be here. Jack. Thank you for having me.

Jack: You're a senior VP. Are you a senior VP of something in particular? I know at banks that tends to be a thing.

Dan: Right, right. I'm actually part of the leadership team group that focuses specifically on what we refer to as specialty deposit. And what I mean by that is institutional banking 1031, EB5 and obviously more specifically Opportunity Zones.

Jack: OK. So, this kind of thing is what you do all day long?

Dan: It is, yes.

Jack: Alright. Very good. Now in my research, I got a little bit of a flavor for your career. Tell us about it, give us a quick 30,000-foot, 500 mile an hour fly by. Who is Dan? How'd you get to where you are?

Dan: Alright. Well I'm a native New Yorker. I'm a graduate of Hofstra University and I've been in the banking world nearly 20 years now. My career started with Fleet Bank of America when I was in Boston. I got involved with their private bank and ultimately ended up focusing primarily on the nonprofit world. Nonprofit oddly enough, led me into an interest in the EB5 space, which ultimately led me to an interest in an Opportunity Zone.

Jack: Yeah, I'm trying to make that connection in my mind.

Dan: The EB5 space, what the media doesn't really discuss are the positives associated with EB5 and the true positive behind it is the job creation teams. So, having a nonprofit background looking to revitalize communities are looking at workforce development, the job creation piece of EB5 is what was very appealing to me. So, working in the EB5 space now, going on about five years. I and my colleague have been focused primarily on acting as an escrow agent to the EB5 community, but EB5 is ultimately what led me to Opportunity Zone.

Jack: Yeah. Okay. That makes sense. What did you study at Hofstra?

Dan: Nothing related to banking. So, I was actually…

Jack: That's why I asked. That's why I asked. If you just said “finance,” I'd be bored.

Dan: And I think that's true in general. Most people don't end up in a career for which they studied. I was a dual major in both marketing and English, which clearly is why I'm in the banking.

Jack: Oh yeah. It's quite obvious. Well, my major was music composition, so it's obvious I'm a podcaster.

OK. Let's go a little deeper now. As I was doing my research for this show, it struck me that I don't think I've actually interviewed an actual banker. I have talked to tax attorneys, I've talked to tax accountants, I've talked to fund managers and private office managers and of course developers and some entrepreneurs and a workforce development people, but I don't think I've actually talked to a banker, And I think there's a reason for that. I don't think about the banks being particularly important to this Opportunity Zone program. Why does the bank matter?

Dan: Well, and to take a step back, we're generally boring people, so I could understand why you've never wanted to interview a banker.

Jack: Oh, I've talked to tax accountants, so…

Dan: Oh, OK. You've got a point. So, the bank itself, at the end of the day, it really doesn't matter. A bank is a bank and as those that are participating in the Opportunity Zone space have the ability to have a banking partner that they're comfortable with, that's really what matters. But there, there are a small number of banks that are active in the Opportunity Zone space. Obviously, Customers Bank included. Where we're doing more than acting as just the banking partner, we're acting as a resource as well.

So, when you're talking about Opportunity Zones, you're talking about a lot of people who hear the term and want to get involved in the space but don't even know where to begin. So what I've been doing is helping to kind of piece the puzzle together, if you will, for our clients. So, we might have a developer looking to purchase a property that happens to be in an Opportunity Zone and they don't even know where to start. So we have this network of CPAs, of attorneys, of fund managers that have fund administrators that we're glad to make introductions and really help and hold hands along the way to ensure that what our client is looking to do is done to the best of everyone's ability involved.

Jack: You could almost be a central resource; a clearing house of information and I guess networks as well. Is that right?

Dan: We could, because what's interesting is that our client base not only consists of those who are looking to create projects, but those who might be interested in investing in projects. Yeah. We are not a broker-dealer. We're not a wealth management provider. Customers Bank is really focused on just traditional deposits and lending. But if we come across a client that happens to be coming into a gain and looking for guidance, we're glad to make whatever introductions make sense.

Jack: I noticed that you came to Customers Bank, at least the press release seemed indicate you came to the bank in April last year. Did the Opportunity Zone program play a role in that move?

Dan: Well when we came to Customers Bank, we were focused. My team and I were focused entirely on EB5. But it was EB5 that led us to Opportunity Zone, so I'll give you a brief history of how we got into this space. There was somebody in Baltimore who's doing a large project that we're meeting with and we were speaking with them about potentially getting EB5 into their capital stack.

They still had some pieces that needed to be filled. And in the conversation it didn't really seem that EB5 made sense for a number of reasons. But they introduced us to the Opportunity Zone program. This is probably either May or June of last year. So, we were very intrigued by this.

Turns out that a couple of people that were on their board were affiliated with AIG who are really I guess the architects of the whole program, if you will. And through introduction, we really went full steam ahead with a program. We start to meet some of the players in the Opportunity Zone space who then introduced us to funds who were looking for banking partners. Really Baltimore is what set this off for us. So, we're still focused on EB5 and other lines of business, but Opportunity Zones being what it is and what it could really do for communities around the country. That's really what we're focusing a majority of our time.

Jack: Now I'm going to ask you a question about EB5 that really has nothing to do with Opportunity Zones, but I'm asking the question because I'm curious. An EB5 investment, does that have to be an equity investment?

Dan: Well it's actually the opposite. So EB5 is primarily, it doesn't have to be  but it's primarily used as debt. The EB5 investor invests in the project, that money ultimately through multiple steps along the way, becomes a loan to the project, whereas Opportunity Zone is equity. So almost the opposite.

Jack: Okay. Very good. Now your bank is based in New York, I guess New York City, correct?

Dan: Well, so Customers Bank - we're actually based just outside of Philadelphia, so I'm actually here in our private banking office in New York and we have number of private banking offices between DC and Boston. And we have one in Chicago as well. But the bank itself is based just outside of the Philadelphia area.

Jack: Does that mean that you are geographically limited in your work or not?

Dan: We're only geographically limited when we're looking at new projects. So if there's somebody we've never worked with before and they're looking some for some type of credit facility for development, that's you know, ground up construction, let's say. It would really have to be within our footprint. However, if there's a client that we've worked with in the past and they're doing some type of ground up construction, years of development or need some type of financing for something, let's say in Los Angeles for example, as long as we have an existing relationship with them, we're fine continuing that relationship.

Jack: Let's assume that we've got people listening to this podcast who don't already have a relationship with Customers Bank. What is that footprint? Where is it that you, that you will look at? add new projects?

Dan: So primarily I'd say just north of Boston to just south of DC. So really that 95 corridor here in the northeast.

Jack: Alright, that's good to know. All right, let's talk a little bit more about some of – this is where I want to be careful – but have you run into any interesting, exciting projects that you can talk about in general enough terms that you don't give away?

Dan: I can. we ran into a number of them. I guess it just has to do with my passion about the Opportunity Zone space. The fact that there is now a program that incentivizes investors to invest in distressed communities across the country I think is amazing. And I think that goes back to my nonprofit background because this truly in my mind is it is a win for everybody in all of it. You have the investors who are looking at the tax advantages of it. You have the communities who don't have to rely on government incentive or bank financing, the private money coming to them. And for the most part, what I've seen are the fund managers, these developers really trying to do right for the communities. What's really attractive to me about this is that banks have a tough time lending in these areas. Yes, we have CRA requirements, which is Community Reinvestment Act. But we're not always comfortable with it.

Jack: Sure.

Dan: And this is just a fantastic avenue for these communities to find a path to, I guess, improvement, if you will. What I have been very impressed with recently is that the program itself was really meant for businesses. Obviously real estate is going to play a role in this. And real estate was really the first one to the party, if you will. But there's a lot of talk around businesses either relocating businesses to the zones or building businesses that are already existing in the zones. And I love that, that that goes back to the job creation piece.

I was at an event a couple of weeks ago in DC and Senator Tim Scott from South Carolina closed out the event and he said something which I thought was both scary and very impressive at the same time. He said that if the Opportunity Zone program isn't used for what it was intended to be used for, then he's basically going to put the Kibosh on it.

He wants to see it shut down. And that is scary to a lot of people in the room because a lot of the people are other funds that are focused on real estate development or just real estate developers themselves. But he has a very valid point. This was not meant as just a real estate avenue, as another way to fill out the capital stack. This is really meant to take a look at the communities around the country that need revitalization and to invest in them the right way.

Jack: You know, if it had been a random politician, I would've thought, eh, he's just mouthing off. But because I know Tim Scott was, I think he was one of the sponsors of the act initially. Wasn't he?

Dan: He was. It was him and Senator Booker.

Jack: Yeah. So, that really resonated with me that the heart of that message, let's actually make this investing true impact investing. Right. Great.

Dan: And that's been those who are leading the opportunities and initiatives. That's really been what they've been saying since day one. Steve Glickman for example. Steve has really been preaching that this is community revitalization. This is not solely to be another piece of your capital stack. This is, let's look at these communities. Let's find a way to get this done. Let's find a way to help them. And what I like now is that there's discussions about possible mandatory reporting in regard to the impact your investment is having as an investor, as a developer, as a business owner.

Jack: Mmm Hmm.

Dan: …and that to me will only increase the appetite to truly invest in these distressed communities.

Jack: OK.

Dan: I recently participated in a family office event here in New York and what struck me as very odd was that I was sitting in a table for lunch where there are maybe three or four representatives from family offices, and they were actually at the event to learn about Opportunity Zones. They had never heard of the program, but they never really did their research and understood it because they thought it was just a real estate initiative. They didn't realize that this is it. We have families that are in investing private capital into businesses for years, if not generations. This is an opportunity for them to do the same thing, but to get the tax advantages as well. And it was very surprising to me that in May of this year, nearly a year-and-a-half after this program was introduced in the Tax Cuts and Jobs Act that these family office representatives didn't really understand the full scope and the full impact of this program could have.

Jack: It does kind of boggle the mind. Of any group of people that you would think would be wired in and know about that, it would be the family offices that would be the folks I would think would be at the front of the line.

I want to ask you two related questions about reporting on actual community impact. First of all, have you got connections in your network that you recommend people to? That'll be the second question. The first question is are you aware of any organizations, companies, individuals that are gathering the information so that if reporting becomes mandatory, they've already got it?

Dan: I know a handful of foundations that are doing this and what they're doing is they're actually having fellows look into this and find the right way to get this done. For example, I've spoken pretty extensively with the Rockefeller Foundation and they're really trying to lead this initiative the right way. Really trying to say, here's what we need to do to show the impact, Okay? And they're working directly with the mayors of cities around the country.

To say, you have these opportunities to bring money into your city. You have opportunities to do with the right way. Let's figure out a way to promote your cities to entice investors into your city and we're going to help you really get this out there, right? Well, we're going to help you with proving the impact and investing in your city is going to have.

I've seen a number of organizations that are looking to do this. I'm still primarily on the nonprofit side. I haven't seen I guess for-profit, if you will, companies doing this so much. There are organizations such as Invest Real for example, where Stefan and his team are showing, you'll put in certain parameters as far as what you're looking to do from an impact perspective, and they'll show you projects within which you could invest. But I haven't seen much as far as that next step actually helping you with here's where you have to do to put together the report in requirements. Here's how we're going to help you with that. I haven't really seen that so much.

Jack: Okay. Well my next question was going to be, and do you have contacts in business that are providing that kind of service? Stefan Schimenes was one of my guests on the show a couple of months ago. I love what he's doing. There is an organization out of Silicon Valley called, I want to say NES, that appears to be working in that direction. And I'm embarrassed now that I can't remember who it was I talked to over there.

I think Kyle Walker is doing something similar as well. All of all of whom have been guests on the show. I'm 100% convinced that that is a massive need in this space. Or there are going to be political leaders like Tim Scott who are going to make a mess, in the best way. Like this such an opportunity to really make a difference in the communities that need it the most. And the last thing you need is a few bad apples, taking advantage of and making a mess of it for everybody.

Dan: I agree 100 percent You know, there's this program if you have a distressed area and your building you know, luxury hotel and super expensive housing, all you're doing is displacing the folks that are living there that need the help. And that's not the purpose of this program. The purpose of this program is to help those in need, help the communities. You need to create jobs, develop businesses. Low income housing, workforce housing, help revitalize the community. Don't just push the problem off to something else.

Jack: I have talked to a number of folks who really get it and are doing genuinely extraordinary work in these distressed communities and creating exactly that kind of situation: jobs, workforce housing, supporting, and amplifying the very best things about the community while remedying some of those systemic issues.

God knows, it's hard work. I mean, it's brutally difficult work. If it was easy, it would've been done already. But these folks really do it.

Tell me a little bit about Dan Topple the man. What's your background, that this kind of an impact investment and helping distress communities. Why does that resonate so with you?

Dan: I honestly have no idea. I really don't. My background, I'm just a Long Islander who left. I'm now on the other side of the river. I'm on the Jersey side. I'm married, two children, dog typical suburban life. I really don't know. I just think that everyone deserves a fair shot, but not everyone has the opportunity for that fair shot. And I think that's what got me into the nonprofit space in the first place where working with nonprofit clients and helping them from a banking perspective in any way that I can just, I guess for lack of a better term, it felt good. You know? It feels good to know that there's an organization out there that has a certain goal in mind to help the community in a certain way and I could somehow help to make that happen.

And I know from a banking perspective it's kind of like, well, how am I helping, right? I'm just their banker. Right? If I could help to find a way to get them to avoid fees or to kind of build up their account a little bit better or two from a banking perspective, provide them with a grant or some type of sponsorship that helps them. That's what I enjoy doing, I like seeing these organizations reach or achieve their mission and I really don't know where that comes from. I guess that's just, I guess it's in my blood and my DNA, if you will.

Jack: Well, there's a ring of authenticity to that answer. There really is. I don't know that you'd need a better answer than that. “It makes me feel good.” That's actually a really, really profoundly human, and profoundly powerful response, so I appreciate that.

Well, Dan, this has been a really good conversation for me. Before we wind it up, any last words for our listeners?

Dan: I'm a true believer in this program. Again, I'll just reiterate that if it's done right, this can be a fantastic success story for generations to come. I don't think we should necessarily look at the project itself as being the right type of project. And what I mean by that is, yes, the luxury hotels and that type of thing may not be the best thing for the communities as it could force displacement. But conversely, if you look at things like sports infrastructure for example, that might be something I looked at as something that's not really benefiting community.

How are you helping your community by building a new stadium? Some people might say, and I completely disagree with that, because these stadiums are going to employ thousands of people. The ancillary development around the stadium will employ dozens of people. It'll bring income into the community by those were attending whatever event it might be, sporting or otherwise. So I think we really need to do a deep dive into the program itself and to the communities and see what will revitalize this community. What's the right way to do it? How can I attract investors? And once these questions are answered and if it's on the right way, I truly believe this could be a transformative program for the country.

Jack: 100 percent agree. Well, Dan, for the folks live inside your footprint or want to work inside the footprint of the bank, what's the best way for them to get ahold of you?

Dan: Sure. And, full disclosure: we could work outside of the footprint as well. So I do partner with a number of funds that are based out on the west coast as well. When it comes to the actual construction financing, we do have to keep it local. But the best way would probably be by emails as my first and last name. dantopple@CBPCB.com. So that actually stands for the Customers Bank Private Commercial Bank.

Jack: That's helpful. All right, very good. And for our listeners, I'll remind you that this contact information will also be printed on the podcast website. If you didn't get it the first time you can go there and grab it for yourself.

Well, on behalf of Dan Topple of Customers Bank of New York, I am Jack Heald for the OZExpo podcast. Thanks for listening. Please be sure to subscribe to the podcast so you're always updated when new episodes are released. That happens multiple times a week. We will talk to you next time.

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