Leverage.

That's the key word for Denver's newest community development financial institution, formally announced last week. Seedco Financial Services, based in New York City, will manage Seedco Financial-Denver in partnership with the city, and with support from the Colorado Housing and Finance Authority.

The private nonprofit will focus on neighborhood commercial revitalization, affordable housing and small-business expansion, with special attention to distressed or underserved areas. Denver will put in $2.7 million in 2007, and up to $15 million over five years. The money comes from federal block grants, not from the city's general fund. Seedco will match the city's contribution, manage the city's allocation of federal tax credits intended to spur investment in low-income areas, lend from its own pool of funds under management, bring in other nonprofits and altogether have up to $17 million available to invest in 2007.

There are often deals "that don't quite pencil out," as Mayor John Hickenlooper put it, and so banks don't do them. He knows what he's talking about, too. When he started the Wynkoop Brewery in the late 1980s, a $125,000 loan from the city's revolving fund was a critical part of the financing because what is LoDo now was skid row then. Creating jobs was part of the deal, Hickenlooper recalled, and by the time the loan was due to be paid back, five years later, Wyn- koop had 130 employees. It was a risky venture that worked out well for Denver as well as for its future mayor.

That's the kind of risk Seedco Financial is willing to take, said its president, William Grinker. And with Seedco in the picture, banks are more willing to participate, for example in loans to small businesses that create jobs. Seedco's long experience - it was started in 1987 - in providing both financial and technical assistance to businesses and community groups improves their chances of success.

This project, which holds so much promise for Denver, has been in the works since 2005, when the city commissioned a study by ShoreBank Advisory Services of its community development infrastructure. ShoreBank - an offshoot of a similar though much larger community development institution that started in Chicago - found gaps that Seedco's mix of public, private and philanthropic investors can help fill.