Need to Know: Key Regulatory Developments
Here’s a small mercy as other programs decline: A conservatively estimated $26 million will be available in Community Development Financial Institutions (CDFI) program grants for fiscal 2008, and if early congressional actions are any indication, the grant amounts could come close to doubling.
The amount available for CDFI program grants is typically based on the budget for its parent entity, the CDFI Fund, which was $54.5 million in both fiscal 2006 and fiscal 2007. However, in fiscal 2008 the CDFI Fund’s total budget could return to higher Clinton-era levels, raising grants proportionally.
The CDFI Fund budget has only exceeded $80 million three times in its history. It ranged between $95 million and $118 million during fiscal years 1999 through 2001 but has declined since. Now this summer’s House-passed financial services appropriations bill calls for raising the fund’s budget to $100 million. The Senate Appropriations Committee reported a bill in July calling for $90 million, which was still awaiting the full Senate’s action at press time.
If the CDFI Fund budget comes in between those two figures, that could mean an increase to perhaps as much as $45 million or so in the amount available for CDFI program grants.
Such a budget increase is certainly possible, said Judy Kennedy, president and chief executive officer of the National Association of Affordable Housing Lenders, “but it’s too soon to tell.”
Still, she expressed optimism about the prospects for a boost in funding. “Absent some major hurricane and/or other emergency bill, something’s gotta give between the administration’s veto threats and the spending levels/tax cuts the Congress prefers,” said Kennedy. “Prospects improved over the recess, as the ‘subprime tsunami’ could justify any and all related items.”
CDFI program grants combine the former Financial Assistance and Technical Assistance awards, including some Financial Assistance money reserved for “small and/or emerging” grantees. They aren’t the largest pot of federal money, but they produce a handy multiplier effect, as do the other, smaller CDFI Fund grant opportunities, and the New Markets Tax Credit (NMTC), which the CDFI Fund also administers. This year’s House bill summary claims, “On average, each dollar invested in the CDFI Fund leverages an additional $27 in non-federal funds.”
CDFI program grants strengthen privately run CDFIs that finance projects serving economically distressed people or neighborhoods, including some affordable housing. The CDFI Fund makes additional grants to tribal CDFIs under its Native American Initiatives Program, which awarded an additional $3.6 million in July. The Bank Enterprise Awards (BEA) program announced last winter it would grant approximately $10 million to banks this summer for increasing business with CDFIs or with disadvantaged customers. BEA awards had not been announced as of Labor Day, but CDFI Fund spokesman Bill Luecht reported they would appear “before the close of the fiscal year (Sept. 30).”
Some past Bush administration budgets proposed the CDFI Fund should give up grantmaking and function only as manager of the NMTC. However, the White House fiscal 2008 budget request relented somewhat, seeking a little less than $28.6 million for the entire CDFI Fund, including $12.2 million in administrative expenses.
CDFI program applications are due Oct. 31. New applicants must seek certification by Oct. 17. Recently posted resources at www.cdfifund.gov include a spreadsheet listing NMTC projects through fiscal 2005 and an archived twohour webcast on the CDFI program application. The site is also inviting existing grantees to submit descriptions of exemplary projects using a recently posted “Project Profile Template.”