Introduction
$498 Million in Bond Funding for Low-Income Community Projects.
In a landmark move, the US Department of the Treasury announced the largest bond issuance in its Community Development Financial Institutions (CDFI) Bond Guarantee Program, worth a staggering $498 million. This significant allocation will provide critical funding for projects that aim to revitalize low-income urban, rural, and Native communities across the United States.
The CDFI Bond Guarantee Program for Community Projects: An Overview
Established under the Small Business Jobs Act of 2010, the CDFI Bond Guarantee Program was designed to address the need for long-term, low-cost capital to spur economic development and community revitalization in underdeveloped regions. The program allows qualified CDFIs or their designees to issue bonds that provide fixed-rate capital for projects in underserved areas. These projects often focus on sectors such as housing, small business development, commercial real estate, health care, and daycare facilities.
Since its inception, nearly $3 billion has been guaranteed through the program, with $1.7 billion disbursed across 32 states and the District of Columbia by mid-2024. The recent $498 million guarantee is the largest single issuance, further cementing the CDFI Bond Guarantee Program’s role in advancing economic growth in distressed communities.
How the $498 Million Will Be Used
This historic $498 million guarantee will be allocated across various community projects through 10 eligible CDFIs, each targeting multiple needs in low-income areas. The funding will support the development of rental and owner-occupied housing, commercial real estate, small businesses, nonprofit organizations, and healthcare facilities.
The following are highlights of how specific portions of the $498 million will be distributed:
Opportunity Finance Network – $173 Million
Opportunity Finance Network will receive $173 million, distributed among seven eligible CDFIs. The funds will support various initiatives, including rental housing, owner-occupied homes, daycare centres, and commercial real estate. The funding will also benefit small businesses and nonprofit organizations.
Renaissance Community Loan Fund – $20 Million
The Renaissance Community Loan Fund (RCLF), headquartered in Gulfport, Mississippi, will receive $20 million to fund owner-occupied homes in Mississippi and Alabama. This marks RCLF’s first time receiving a bond loan under the program, and the funds will contribute to the development of affordable housing in the region.
Greater Minnesota Housing Fund – $25 Million
The Greater Minnesota Housing Fund (GMHF), based in Saint Paul, Minnesota, will receive $25 million to fund rental housing projects throughout the state. GMHF has consistently participated in the bond program, receiving previous guarantees in 2017, 2019, and 2022.
Community Loan Fund of New Jersey – $33 Million
The Community Loan Fund of New Jersey (LFNJ) will use its $33 million bond loan for various projects, including rental housing, commercial real estate, small business development, daycare centres, and nonprofit organizations. This will be LFNJ’s third time participating in the bond program.
Florida Community Loan Fund – $30 Million
The Florida Community Loan Fund (FCLF) will receive $30 million to fund projects within the state, including rental housing, commercial real estate, and healthcare facilities. The bond will also support nonprofit organizations and other community-based projects in Florida.
Homewise – $15 Million
Homewise, based in Santa Fe, New Mexico, will receive $15 million to develop commercial real estate and owner-occupied homes, primarily in Santa Fe and Albuquerque. This marks Homewise’s second time receiving bond funding, having previously participated in 2017.
Community First Fund – $20 Million
Community First Fund (CFF), based in Lancaster, Pennsylvania, will use $20 million to build rental housing and commercial real estate and support small businesses, daycare centres, and nonprofit organizations.
Nonprofit Finance Fund – $30 Million
New York City’s Nonprofit Finance Fund (NFF) will receive $30 million to support a wide range of projects, including rental housing, commercial real estate, and support for small businesses and charter schools across several cities, including Philadelphia, Los Angeles, and Oakland. This is NFF’s first bond loan under the program.
Community Reinvestment Fund, USA – $150 Million
The Community Reinvestment Fund (CRF) will issue $150 million in bonds for the Community Development Trust (CDT). The funds will be used to develop rental housing and charter schools across the US, focusing on affordable housing solutions.
Additional Bonds Issued by CRF
CRF will also issue $175 million on behalf of two other CDFIs:
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The Reinvestment Fund (TRF) will receive $100 million for various projects, including rental housing, healthcare facilities, and small business support in Philadelphia, Atlanta, and Baltimore.
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IFF will receive $75 million to fund projects in Illinois, Indiana, Iowa, and other states across the Midwest, focusing on housing, commercial real estate, and nonprofit organizations.
A Significant Milestone in Community Development
US Secretary of the Treasury Janet L. Yellen highlighted the importance of this bond issuance in supporting economic growth and community development, stating, “Today’s historic announcement will increase access to capital for projects that expand housing supply, grow small businesses, and ensure access to health care and child care.” The Biden-Harris Administration has prioritized expanding access to capital in low-income communities, and this bond guarantee represents a crucial step in achieving that goal.
By providing long-term, fixed-rate capital, the CDFI Bond Guarantee Program enables CDFIs to tackle large-scale projects that would otherwise be difficult to finance. These projects provide much-needed services, housing, and infrastructure, create jobs, and stimulate economic growth in communities that need it most.
Looking Ahead
As the CDFI Bond Guarantee Program grows, the $498 million in bond funding announced in 2024 represents a significant milestone in the US government’s efforts to support low-income communities. This record-breaking issuance will empower CDFIs to take on transformative projects, ultimately improving the quality of life for individuals and families across the country.
With nearly $3 billion in guarantees issued since the program began, the CDFI Bond Guarantee Program will continue to be a vital tool for revitalizing distressed communities, fostering economic development, and building a more equitable future.
