CDFI Solutions for Attainable Housing
01 01 What is a CDFI 02 CDFI Programs for Housing Contents 03 03 Other Funding Solutions for Housing 04 04 Catalyst Impact Capital
What is a CDFI? ➢ CDFI stands for Community Development Financial Institutions ➢ Program is administered by CDFI Fund, which was established by the Riegle Community Development and Regulatory Improvement Act of 1994 ➢ CDFI Fund’s primary purpose is to promote economic revitalization and community development in low -income communities through investment in and assistance to certified CDFIs ➢ The CDFI Fund achieves its purpose by promoting access to capital and local economic growth in the following ways: directly investing in, supporting and training CDFIs that provide loans, investments, financial services and o technical assistance to underserved populations and communities; New Markets Tax Credit Program by providing an allocation of tax credits to Community Development Entities o which enable them to attract investment from the private-sector and reinvest these amounts in low-income communities; CDFI Bond Guarantee Program by issuing bonds to support CDFIs that make investments for eligible community or o economic development purposes; Capital Magnet Fund, which offers competitively awarded grants to finance ce affordable housing solutions for low- o income people and low-income communities nationwide. ➢ CDFIs can be banks, credit unions, loan funds, microloan funds, or venture capital providers ➢ Catalyst Impact Capital is a certified CDFI
CDFI Programs for Housing Certified CDFIs have access to a number of financing programs offered through the CDFI Fund. For affordable and workforce housing, there are three primary programs that CDFIs can utilize to finance the development of housing: ➢ Capital Magnet Fu Fund: Offers competitively awarded grants to finance affordable housing solutions and community revitalization efforts that benefit low-income people and communities nationwide. ➢ CDFI Bond Guaranty Program: Through the CDFI Bond Guarantee Program, the Secretary of the Treasury makes debt available to CDFIs from the Federal Financing Bank. ➢ New ew Markets Tax Credits: The NMTC Program incentivizes community development and economic growth through the use of tax credits that attract private investment to distressed communities.
Capital Magnet Fund ➢ One of the most critical objectives of the Capital Magnet Fund (CMF) is to finance Affordable Housing ➢ CMF funding may be used to finance ce both re rental housing and Homeow eownership. ➢ Rental housing may be Multifamily (5+ units) or Single-Family Housing; scattered site development is permitted. ➢ Homeownership is usually Single-Family Housing (4 or less units). This may include single family detached, condominium, co-operative and manufactured housing. ➢ A priority of CMF is the development of housing that is affordable to families and individuals with Low-, Very Low- or Extremely Low-Income. Maximum income for r CMF-funded housing is s 120% 120% of AMI ➢ Each rental Multi-family housing Project financed with CMF Award must have at least 20% of the units occupied by Low-Income Families (80% 80% of AMI or r below). ➢ 100% of the total Eligible Project Costs must be attributable to units that serve families at incomes of 120% AMI or below. Greater than 50% of the EPCs must be attributable to units that serve Families at Low-, Very Low- and Extremely Low- Incomes (80% of AMI or below).
Cdfi bond guaranty program ➢ The program was enacted through the Small Business Jobs Act of 2010 ➢ Unlike other CDFI Fund programs, the CDFI Bond Guarantee Program does not offer grants, but is instead a federal credit subsidy program, designed to function at no cost to taxpayers. ➢ Incentivizes and empowers CDFIs to execute large-scale projects, including the development of commercial real estate, housing units, charter schools, daycare or healthcare centers, and municipal infrastructure. In addition to these projects, eligible CDFIs may use the capital to extend credit to other community development borrowers ➢ Through fiscal year 2017, $1.1 billion had been guaranteed in bonds through the CDFI Bond Guarantee Program. ➢ Long-term fixed rate financing allows CDFI to provide attractive terms to borrowers, including developers of affordable and attainable housing
New Markets tax credits ➢ Helps economically distressed communities attract private capital by providing investors with a Federal tax credit ➢ The NMTC Program has supported a wide range of businesses including manufacturing, food, retail, housing, health, technology, energy, education, and childcare ➢ Cannot be used for projects that are solely residential; must have commercial component. No more than 80% of project revenue can come from residential use ➢ The credit totals 39 percent of the original investment amount and is claimed over a period of seven years. ➢ Tax credit equity can help bridge the funding gap for affordable and workforce housing projects
Other funding options ➢ PACE Financing: Finances up to 100% of the energy efficiency, renewable energy, water conservation, resiliency improvements and the related costs, covering retrofits to ground up construction. Can be used to bridge the funding gap for affordable and workforce housing ➢ 501 501 (c)( c)(3) Bonds: Nonprofits can issue private equity bonds on a tax-exempt basis to finance the funding shortfall common in affordable and workforce housing ➢ So Solar Credits: Utilize solar to generate power for projects and monetize tax credits and depreciation to bridge the funding gap. ➢ Credit En Enhance cements: Nonprofits/CDFIs can provide credit enhancements, such as loan guarantees and rate buy-downs, that will allow affordable housing developers to obtain higher funding advance rates (LTC) and lower rates.
Catalyst impact capital About Us Catalyst Impact Capital is a mission-driven organization, certified as a Community Development Financial Institution (CDFI), focused on creating economic opportunities and revitalizing communities. We provide innovative capital solutions to small business owners and developers of affordable and workforce housing, charter schools, healthcare facilities and other community redevelopment projects in low-income and underserved communities. Our Mission Our mission is to provide flexible and innovative capital solutions and services in order to create economic opportunities, produce safe and affordable housing, and ensure that high quality health care and education is made available to underserved people and communities.
Catalyst Impact Capital, Inc. 936 South Howard Ave., Suite 202 Tampa, FL 33606 (813) 670-3223 www.catalystimpact.org
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