When I was elected to the Senate in 2010, I brought to Washington ten years of experience in county government—and a clear perspective on the impact of federal programs on local development. That perspective has guided my priorities in Washington and helped me understand that community development financial institutions, or CDFIs, are a perfect example of effective local and national institutions empowered by smart federal policy.
CDFIs are financial institutions that are dedicated to lending to underserved communities and financing projects that stimulate economic development in the areas that need it most. CDFIs’ community development mission drives them to invest in areas that traditional banks will often not touch, while still maintaining an over 30-year track record of stability and profitability. At the same time, through the innovative New Markets Tax Credit (NMTC) program, CDFIs attract investment in low-income communities from other private actors like banks and corporations.
CDFIs include a variety of structures and business models, including community banks, credit unions, loan funds, and community venture capital funds. These types of institutions have always been important to local development in their own right, but their status as Treasury-certified CDFIs drives them to sharpen their focus on their communities and helps them access federal resources to increase their capacity. For example, Delaware’s two newest CDFIs, Sussex County Federal Credit Union and Eagle One Federal Credit Union, have always been focused on serving their local constituencies. But since acquiring CDFI status, they have had access to tools that will help them improve their communities even more.
I’ve seen firsthand how Delaware’s CDFIs benefit their communities. As New Castle County Executive, I helped plan aspects of the future development of the historic Flats neighborhood on the west side of Wilmington. Since joining the Senate, I have been proud to see that project flourish. This community of over 450 residential units will be redeveloped in seven phases over the course of a decade. Cinnaire, another Delaware-based CDFI, has provided $2 million in debt and $18 million in equity investments to help make this idea a reality.
I continue to come across examples of the good work CDFIs are doing across my state. Last year, I had the privilege of hosting the Administrator of the U.S. Small Business Administration (SBA), Maria Contreras-Sweet, in Wilmington for a tour of local small businesses. We began her visit with Van Hampton, head of First State Community Loan Fund, a CDFI based in Wilmington that focuses on small business lending. During the tour we visited La Fia, a restaurant in downtown Wilmington founded with help from a loan from the First State Community Loan Fund. First State partners with the SBA through the Community Advantage program, a smart initiative designed to help CDFIs offer SBA loan products.
A few years ago, I was pleased to find that the First State Montessori Academy, a Wilmington-based charter school, was purchased and renovated with help from a $3 million loan on short notice from NCALL Research Inc., a CDFI based in Dover. Although NCALL focuses on lending to struggling rural communities in Kent and Sussex County, its loan fund provides financing statewide for critical development projects.
In the Senate, I’ve tried to emphasize to my colleagues that they might know about major development projects across their states—but have no idea that they only occurred with help from CDFIs. I was proud when the First State Military Academy opened in Clayton. Only later did I find that NCALL and Cinnaire partnered to help provide the low cost financing to reclaim the dilapidated school site and transform it into the top rate school it is today. Now this tuition-free charter school has the capacity to provide Junior Reserve Officer’s Training and technical education to more than 500 students.
With these examples in mind, I’ve sought to help CDFIs in Delaware and around the country. As the Ranking Member on the Senate Appropriations Subcommittee on Financial Services and General Government, I am the senior Democrat overseeing spending for the Treasury Department, including the CDFI Fund. Fortunately, CDFIs enjoy bipartisan support, and the Chairman of the Subcommittee, Republican Senator John Boozman of Arkansas, is a key ally.
Last year, Senator Boozman and I helped increase funding for the CDFI Fund to $233.5 million, the highest level in the history of the program. We also helped defend funding for CDFI programs like the Bank Enterprise Award program and the Bond Guarantee Program. I look forward to working with the Chairman to ensure these initiatives receive the support they need in 2017 and beyond. I also want to find legislative ways to improve these programs, and I welcome feedback from the CDFI advocates who know best.
Since its inception, the CDFI Fund has awarded more than $2 billion to CDFIs and allocated $43.5 billion in New Markets Tax Credits. In Delaware alone, our five Treasury-certified CDFIs have issued more than $202 million in loans and facilitated more than $104 million in NMTC. For decades, CDFIs have leveraged this federal funding with capital from private sources. By some estimates, every $1 in awards results in over $12 in lending activity – and all of this financing goes to potential homeowners, small businesses, and local real estate development in underserved communities.
The CDFI model works and has had real impacts on local communities. I’m honored to have the opportunity to fight for federal programs that support CDFIs in Delaware and across America.