Rural Gateway Case Studies

PathStone Corporation Rural Innovation Fund (RIF) Economic Development and Housing Services

Project Summary

  • FY 2011 Grant Award: $2,000,000
  • Grant Category: Comprehensive
  • Applicant Type: Nonprofit
  • Grant Activities:
    • Job training and education in agritourism
    • Business assistance and entrepreneurship
    • Economic development planning and GIS
    • Housing education
    • New housing construction
  • Projected Impact:
    • Job training participants: 75
    • Individuals receiving training who obtain a job: 45
    • Small business training participants: 20
    • Businesses Assisted: 90
    • Permanent jobs retained: 109
    • Households receiving homeownership counseling: 60
    • Individuals receiving home maintenance training: 325


CastaƱer Region, Ponce, Puerto Rico map

Castañer Region, Ponce, Puerto Rico

Key Outcomes

  • 85 new housing units built
  • 157 construction jobs created
  • 325 persons received homeownership counseling
  • 206 existing businesses assisted
  • 109 entrepreneurs received technical assistance
  • 73 permanent jobs created


Javier Zapata
PathStone Enterprise Center
(787) 829-6024

Community Description

The Castañer Region is a mountainous area in central western Puerto Rico with a population of approximately 44,207 people across eight barrios, including four municipios. 62 percent of the population lives below the poverty line, with an extremely low per capita income of $3,947 and an unemployment rate of 18.78 percent. 64 percent of the population under the age of 25 does not have a high school diploma or equivalent. The economy is primarily agricultural, including products such as bananas, coffee, oranges, and tomatoes. Tourism also plays an important role in the region. Though there are some indigenous populations in the area, it is predominated by descendants of the Basque, French, Italian, and Corsican peoples. There is an absence of any locally based financial institutions.

Castañer is not a separate taxing jurisdiction; it is solely dependent upon the state for tax revenue to pay for infrastructure or other public services limiting funding for basic community services, education, and job training. 11 percent of the occupied housing units lack complete plumbing and there is an inadequate number of family rental opportunities.

The Organization

The PathStone Corporation is a nonprofit organization focusing on community development and human service with locations in Indiana, New Jersey, New York, Ohio, Pennsylvania, Virginia, Vermont, and Puerto Rico. The organization was formed in 1969 and has several different arms, including the PathStone Development Corporation (PDC), PathStone’s real estate development arm. PDC’s work includes preservation, new construction, adaptive reuse/repurpose, and mixed-use construction. PDC works with community partners, nonprofits, service providers, private developers, and government officials to design and build housing that is affordable, accessible, and seamlessly integrated into local communities. Affordable and safe housing is offered to qualified individuals, families, farmworkers, seniors, and special needs populations.

Another affiliate corporation of PathStone is the PathStone Enterprise Center (PEC), which was established in 1997 and became a Community Development Financial Institution (CDFI) in 1998. PEC provides loans for small businesses that are unable to qualify for financing from conventional lenders, offers small business support and technical assistance, and is designated as a Community Development Entity (CDE) under the New Markets Tax Credit Program. PEC accompanies its loans with a strong program of pre- and post-loan technical assistance and training. PathStone has a local office in Ponce, Puerto Rico, that operated the RIF project with support from the headquarters in Rochester, New York.

Project Overview

PathStone developed a comprehensive RIF project to address the needs of the rural Castañer area, including Puerto Rico’s historic coffee growing region, referred to by the organization as the Ruta 123 Corridor. This project was composed of:

  • Training and employment services for residents to help place farmworkers in other local jobs through inter-sector collaboration. This expands employment opportunities within agriculture and the housing construction industry, particularly those focused on green building techniques.
  • Training and resources for rural growers (primarily coffee), including business planning training to improve production, marketing, and transportation and to expand their businesses beyond their existing market to that of organically grown produce, local artisans, guest houses, and other hospitality business opportunities.
  • Financial and technical assistance for local microenterprises through PathStone’s Enterprise Center CDFI. This is intended to deliver credit and capital to these small and micro businesses due to the lack of any financial institution in the region. PEC saw an opportunity for the larger organization to partner with other lenders to create lower priced loan products.
  • Economic development through agritourism in the region (primarily focused on coffee) through planned and mindful approaches to marketing and area branding of coffee and other key agricultural products and tourist interests. This included a partnership with the Catholic University Architectural School and the Center for New Economy to provide technical assistance and planning support to existing local agricultural businesses and entrepreneurs.
  • Creation of affordable housing, beginning with an assessment of housing needs and the development of an affordable housing plan, which included farm labor housing, Mutual Self-Help single family housing, single family for sale housing, and affordable multi-family housing. PathStone worked with partners and existing programs to create affordable housing in the region through sweat-equity programs and subsidized rental properties, such as San German, a 56-unit site. There were approximately 300 units in total created as a result of this project.

Additionally, this project is an excellent example of leveraging funds and programs from different organizations—municipal, state, federal, and other organizations—to create a comprehensive set of services for workers of all ages and businesses of all sizes. PathStone also used RIF funds to leverage additional monies for workforce training programs, developing training programs for youth and adults. The most innovative aspect of the PathStone project was the development of the Ruta 123 Corridor, a major planning and investment in local businesses meant to spur tourism as well as local economic development. Additionally, they developed a strong web of interlocking programs for their participants.

These photos showcase PathStone projects: an affordable housing complex, a self-help housing project under construction, and an outdoor play area.


These photos showcase PathStone-supported micro-businesses.

Project Resources

PathStone developed a broad, interconnected series of partners for different aspects of the RIF program, such as workforce training, development of the Ruta 123 tourism corridor, and the microenterprise program. The table below lists the key leveraging partners.

PathStone was able to secure and leverage all funds needed for its RIF activities primarily due to the expertise and credibility of the larger PathStone Corporation. The RIF program enabled PathStone to hire new staff with experience and demonstrated capacity to administer their housing programs locally. In turn, this enabled them to leverage even more resources based upon the successful operational reputation that they were able to establish.

Primary Project Resources

Source Amount Details
RIF Grant $2,000,000  
PathStone Enterprise Center (CDFI) $550,000 For housing pre-development costs and micro loans
Pontifical Catholic University Puerto Rico $617,650 Professional resources and in-kind contributions of community planning charettes, student intern assignments for research in the area of regional marketing and community organizing, creation of a geographic information system, investigation of economic growth potential
HOME Investment Partnerships Program Funds and Banco Popular $790,000 For the construction costs associated with 10 single family housing units (Vistas de Castañer) in the Castañer region
Enterprise Community Partners $50,000 To support a Rose Fellow placement with PathStone in Puerto Rico
Juan Calaf, an architect assigned as a Rose Fellow to work with PathStone on housing design, green building, and site development for multifamily and single-family housing
National Council of la Raza $10,000 Housing counseling services
Total Leverage $4,017,650  


Additional funding sources included:

  • Puerto Rico Housing Finance Authority: HOME Investment Partnerships and Tax Credits Programs
  • USDA Rural Services: Section 514, 516, 502 programs
  • Federal Home Loan Bank of NY: Affordable Housing Program
  • Housing and Human Development Trust Fund
  • NeighborWorks America
  • U.S. Department of the Treasury: Capital Magnet Fund
  • Housing Department of Puerto Rico: Corporación de Renovación Urbana y Vivienda Fund
  • Banco Popular de Puerto Rico: Private Construction Loans
  • U.S. Department of Housing and Urban Development: Section 202 program
  • Enterprise Community Foundation: Section 4 and Green Charrette Grants
  • U.S. Department of Labor: Farm Labor Housing Services Grant

Program Outcomes

One of the most important outcomes of the RIF project was that it enabled PathStone to hire additional skilled and expert staff and leverage additional funds: Puerto Rico has very little nonprofit infrastructure and PathStone is one of few housing/economic development nonprofits operating on the island. Any avenues that strengthen and expand PathStone’s programming is beneficial to the region and the island as a whole. RIF funding enabled PathStone to foster relationships with some key partners, such as the Commonwealth Planning Department and Catholic University of Ponce, and allowed them to begin serious discussions with the National Park Service regarding a heritage trail.

PathStone was in a unique position in Puerto Rico to bring together funding organizations with clients and businesses on the ground. The Ruta 123 project is one example of how PathStone provided the experience and background necessary to facilitate large-scale projects that affect both the community and the region.

The flexibility of the RIF funding was a key aspect of its ability to impact the Castañer region. PathStone was able to use it to “fill in the blanks” through the organizations to leverage other funding opportunities as well as fill in gap funding for the larger scale multi-functional housing and development activities. The RIF funding was critical in PathStone’s ability to create a comprehensive program rather than just a series of discrete, tightly focused programs funded by other federal resources. The RIF funding seemed to trigger renewed attention and interest in the region and an overall reinvestment.

PathStone also cited their ability to meet the area demand for soft skill training, such as interview skills, resume development, and overall worker career development as a significant benefit of the program.

PathStone supported coffee agri-business

Agri-Business Supported by PathStone

Lessons Learned

Community engagement and inclusion are primordial in any economic development project. The project’s success rests soundly on an approach which takes the communities’ input from the outset and then includes them in every step along the way.

Access to capital is one of the biggest challenges in rural areas, such as the Castañer Region. The absence of commercial banks and a limited number of credit unions is a major challenge and directly impacts the region’s capacity to have sustainable economic development. Good business ideas and people who wish to execute them are in place. However, capital is scarce to make these projects happen. Pathstone’s ability to provide substantial funds to the region’s projects was critical to its success.

Non-profit capacity building was key to the success of this project. Pathstone was able to hire highly qualified personnel to implement the project, and that has given the project the leverage to pursue other opportunities to assist the region (and PR). For example, thanks to the RIF, the economic development CDFI affiliate was able to establish operations in PR, and not only that, it was able to grow as a result of it. Initially, the PR revolving loan fund set up for lending to the region’s small businesses was $200,000, and Pathstone started with one employee locally. As of 2019, they have loaned out $2.7M, and have four employees (with an additional two open positions at the moment) all of this thanks to that initial RIF money that helped to set up the operation in PR.

The flexibility of the RIF program allowed Pathstone to be innovative and create activities best suited to achieve the desired goals for their program locally. The RIF was designed with innovation in mind, and that allowed Pathstone to test and try out different approaches to achieve economic development. Some were very successful, others were not as much, but to have the flexibility to test various approaches, programs and activities was an excellent way of doing community development.

PathStone supported coffee agri-business

Agri-Business Supported by PathStone