The 2013 Interagency Minority Depository Institution and CDFI Bank Conference
Roundtables
Collaboration with the CDFI Fund
| Panel Moderator | |
| Brian E. Argrett | President & CEO, City First Bank, Washington, DC |
| Panelists | |
| Scott Berman | Manager, Legislative and External Affairs, CDFI Fund |
| Greg Bischak | Manager, Financial Strategies & Research, CDFI Fund |
| Robert Ibanez | Program Manager, New Markets Tax Credit Program, CDFI Fund |
| Ruth Jaure | Manager, CDFI & NACA Program, CDFI Fund |
| Lisa Jones | Manager, CDFI Bond Guarantee Program, CDFI Fund |
| Robert Mulderig | Manager, Certification & Compliance, CDFI Fund |
| Mia Sowell | Senior Policy & Program Officer, Bank Enterprise Award Program, CDFI Fund |
Overview
Senior CDFI Fund Officials discussed current program, policy and research plans affecting CDFI Banks, answered questions, and solicited comment on New Markets Tax Credits, Bank Enterprise Awards, and other CDFI programs. Among other updates, the CDFI Fund outlined their Capacity Building Initiative to provide training and technical assistance on a variety of topics, and Community Development Bond Guarantee Program interim rules designed to include financing small businesses, senior facilities, daycare centers and multi-housing developments.
General Discussion
The New Markets Tax Credit (NMTC) program allows Community Development Entities to raise capital through the sale of tax credits. The funds can be used flexibly for a variety of projects, including manufacturing, charter schools, community facilities, and neighborhood retail. To date, $36.5 billion in NMTC authority has been issued through ten rounds of funding. In its most recent round, the CDFI Fund allocated $3.5 billion in NMTC authority to 85 applicants. Of these, ten were first time awardees. There is vigorous competition for awards. The application for FY2013 NMTC awards opens in late July, with proposals due in September. Currently, the program is authorized through FY2013. The President proposed in his FY2014 budget that the program be made permanent.
The CDFI Bond Guarantee Program offers long-term capital to CDFIs at low cost. In FY2013, $500 million in bond authority is available, through $100 million tranches. CDFIs can participate in a variety of ways – as issuers, as eligible CDFIs with bond loans from the issuer, or as secondary borrowers. CDFI-to-CDFI lending provides an opportunity for smaller CDFIs to participate in the program. On June 11, the CDFI Fund announced the application for potential bond issuers with materials available on the CDFI Fund website (www.cdfifund.gov); the applications are due in mid-July. The program is complicated. The CDFI Fund is offering several workshops and a webcast for potential applicants.
The CDFI Fund and Native American Communities Assistance Programs provide financial and technical assistance awards to certified CDFIs. Financial awards may be used for financing capital, loan loss reserves, capital reserves, or development services. The awards, made in the form of equity investment, loans, grants, or deposits, must be matched by non-federal sources on a dollar-per-dollar basis. The program is very competitive, with requests typically 3-times the amount of funds available.
The awards for the FY2013 funding round will be announced in September, with $150 million to be disbursed. The application for FY2014 will be released in the fall 2013. The CDFI Fund announced a capacity building program, to provide training and technical assistance for CDFIs who are also MDIs, to address the unique challenges they face. The Preserving and Expanding CDFI Minority Depository Institutions Series is expected to roll out in late 2013 or early 2013, and will address a variety of topics, including building leadership capacity, expanding capitalization, managing organizational transformation, enhancing operational performance, and navigating compliance and regulations.
The Bank Enterprise Award program provides financial incentives to FDIC-insured institutions to invest in CDFIs and increase lending and investments in distressed communities. It is the only CDFI Fund program exclusively for bank applicants, and it looks retroactively at bank performance. The program is highly competitive. In FY2013, $17 million in awards are available with applications due July 12th.
The CDFI Fund provided an update on the recertification process which is underway, and on a variety of research studies to evaluate the impact of CDFI programs. Some of the upcoming research studies include:
- An evaluation of the NMTC Program by the Urban Institute
- An evaluation of the impact of CDFI Fund investments in CDFIs by the Carsey Institute
- An evaluation of the Bank Enterprise Awards program
- Work with the Federal Reserve on identifying gaps in the market by mainstream financial institutions, and the role CDFIs play in filling those gaps
- A study that looks at how community development projects define, estimate and account for job creation.
Conclusion
The CDFI Fund offers a variety of programs to assist MDIs and CDFIs in raising and leveraging capital to better serve their low- and moderate-income (LMI) communities. Many of the programs are highly competitive, and the award criteria consider the economic impact of these banks in their communities. While most CDFIs focus on a specific LMI geographical area, it is possible to scale social impact across the country by defining the target market not in terms of geography, but in terms of a targeted population such as low-income targeted populations. Each CDFI Fund program has a help desk for specific questions. Information on the help desks is available on the CDFI Fund’s website at www.cdfifund.gov.