New CDFI Fund program supports long-term community development financing
NEW YORK – August 20, 2014 – (RealEstateRama) — Local Initiatives Support Corporation (LISC) will invest $50 million in long-term loans to improve the quality of life in distressed neighborhoods through the first round of an innovative federal financing program.
It’s part of the Community Development Financial Institution (CDFI) Bond Guarantee Program, in which the U.S. Treasury Department recently guaranteed $325 million in bonds that will be directed to support community development projects across the country. The program is administered by the U.S. Department of Treasury’s CDFI Fund, and fills a significant market gap that has made it nearly impossible for projects to get loans with terms longer than 15 years. Lack of long-term financing has handicapped efforts to revitalize blighted areas.
LISC was approved for $50 million through the program and is using the proceeds to finance affordable housing as well as to support new health and education facilities in low-income communities. It’s an important addition to LISC’s line-up of lending and investment tools, which includes $14 billion in support for new housing, businesses, schools, health centers, parks, and jobs in some of the nation’s toughest neighborhoods.
“If you are wondering how important this is, consider the wide disparity between the number of families that need affordable rental housing and the available supply,” said Denise Scott, executive vice president with LISC. “There are millions of hard-working Americans who can’t find homes within their means. The CDFI Bond Guarantee Program is one way to get new housing off the ground, and it supports the kind of economic development that helps residents live well. This is about improving the long-term health of our neighborhoods.”
LISC’s $50 million participation in the program is part of a $100 million partnership with Bank of America and Enterprise Community Loan Fund. Last week, Bank of America issued $100 million in bonds that were purchased by Treasury’s Federal Financing Bank, with proceeds split between LISC and Enterprise.
“We know low-income communities can be good places to lend and invest—our track record over nearly 35 years proves that and so does the remarkable work of the CDFI Fund,” said Michael Rubinger, LISC president and CEO. “Our hope is to not only support important development efforts that revitalize neighborhoods, but to also demonstrate that long-term investments in these areas make financial sense. Risk can be managed effectively when you really understand how to work in these communities. And, we do.”
LISC combines corporate, government and philanthropic resources to help nonprofit community development corporations revitalize distressed neighborhoods. Since 1980, LISC has invested $13.8 billion to build or rehab 310,000 affordable homes and apartments and develop 51 million square feet of retail, community and educational space. For more, visit www.lisc.org.