The Treasury Department has guaranteed $325 million in bonds to support community and economic development projects in low-income neighborhoods across the country.
Affordable housing deals are among the early projects being funded under the new Community Development Financial Institutions (CDFI) Bond Guarantee Program.
The program was enacted through the Small Business Jobs Act of 2010, with the legislation directing Treasury to guarantee bonds issued to support CDFIs that make investments for eligible community and economic development purposes, including financing small business, rural infrastructure, rental housing, health-care facilities, and charter schools.
The eligible CDFIs and qualified issuers in the inaugural round are:
- Clearinghouse CDFI will receive $100 million from a bond issued by Opportunity Finance Network (OFN);
- Community Development Trust will receive $125 million on account of a bond issued by the Community Reinvestment Fund; and
- Local Initiatives Support Corp. (LISC) and Enterprise Community Loan Fund will each receive $50 million through two bonds issued by Bank of America CDFI Funding Corp.
Treasury leaders expect to announce additional borrowers selected to participate in the program in coming weeks.
“Access to long-term, fixed-rate capital is a game-changer for Clearinghouse CDFI and potentially the CDFI industry as a whole,” says Clearinghouse CDFI President and CEO Douglas Bystry. “Not only do our borrowers benefit from longer term loans; fixed-rate capital will have a profound impact over the long term in low-income and distressed communities where it’s needed most.”
The organization provided a $2.8 million loan to the Northern Nevada Community Housing Resource Board for the construction of Aspen Village, a 44-unit affordable housing property, in Sparks, Nev. The development features nine units for special-needs residents. Clearinghouse CDFI also funded a $700,000 acquisition loan to San Francisco Community Land Trust for the stabilization of rent-controlled apartments for families earning less than 55 percent of the area median income.
Enterprise said it has committed more than $10.5 million of its bond proceeds to two projects. The first preserves the affordability of 252 homes in Hampton, Va. The Fox Hill Mutual Homes community was preserved through a resident-led effort to protect their homes so they can continue to live there affordably.
Enterprise will also provide funding to TEAM Academy Charter School to build a 960-student charter school in Newark, N.J.
LISC leaders said it will use its proceeds to finance affordable housing as well as support new health and education facilities in low-income communities.
“If you are wondering how important this is, consider the wide disparity between the number of families that need affordable rental housing and the available supply,” says Denise Scott, executive vice president with LISC. “There are millions of hard-working Americans who can’t find homes within their means. The CDFI Bond Guarantee Program is one way to get new housing off the ground, and it supports the kind of economic development that helps residents live well. This is about improving the long-term health of our neighborhoods.”
The CDFI Bond Guarantee Program will sunset Sept. 30 unless it is reauthorized by Congress. President Obama’s fiscal 2015 budget proposes to extend the program.