August 25, 2014
California CDFI First Recipient of Guaranteed Treasury Bond
by Robert Kropp
Clearinghouse Community Development Financial Institution will use the $100 million bond to finance
community development projects in California and Nevada.
Community Development Financial Institution (Clearinghouse CDFI) and Opportunity Finance Network (OFN) announced last week
that Clearinghouse CDFI has been awarded the first $100 million CDFI Bond Guarantee
Program by the US Treasury Department.
Established through the Small Business
Jobs Act of 2010, the CDFI Bond Guarantee Program is designed to support economic development
opportunities in low-income and underserved communities. The Treasury Department announced a total
of $325 million in bond guarantees through the CDFI Bond Guarantee Program last week. Under
Secretary Mary Miller said of community financial development institutions at the announcement,
“These borrowers have a national footprint in community development financing and a solid history
of delivering innovative financial products that spur job growth, provide small business loans, and
finance quality affordable housing, and community facilities. This new tool –the first of its kind
by the CDFI Fund –will help these organizations make even more critical investments in communities
across the country.”
Clearinghouse CDFI plans to use the bond proceeds to finance
community development projects in California and Nevada. Specifically, the for-profit firm will
finance 96 units of affordable housing, an early childhood education center, and a community-based
nonprofit agency serving 3,000 families annually.
“Access to long-term, fixed-rate capital
is a game changer for Clearinghouse CDFI and potentially the CDFI industry as a whole,” stated
Clearinghouse CDFI President and CEO Douglas Bystry. “Not only do our borrowers benefit from longer
term loans; fixed-rate capital will have a profound impact over the long-term in low-income and
distressed communities where it’s needed most.”
To date, Clearinghouse CDFI has funded a
total of $1.1 billion in loans for 1,540 projects in distressed communities, benefiting over
813,000 individuals. Clearinghouse CDFI loans have created or retained over 10,800 jobs and
developed or rehabilitated 9.2 million square feet.
The bond for Clearinghouse CDFI was
issued by OFN, a national network of CDFIs. “OFN looks forward to seeing the impact this financing
will have in disadvantaged communities in California an Nevada, as well as to facilitate access to
the BGP on behalf of more qualified CDFIs in the future, as demand-and need-for this long-term,
affordable financing grows,” said Cathy Dolan, OFN Chief Operating Officer.
Clearinghouse CDFI received a $2 million award from the Wells Fargo NEXT Awards for Opportunity Finance, which annually
provide $8.25 million to up to four CDFIs that have distinguished themselves by their efforts to
provide financial services in underserved communities. Clearinghouse CDFI received the award for
its plan to expand into Nevada, where unemployment and single-family foreclosure rates are among
the highest in the US.
In addition to the bond issued by OFN to Clearinghouse CDFI,
Community Development Trust (CDT) will receive a bond for $125 million. The New York-based real
estate investment trust (REIT) owns more than 5,200 units of affordable housing and also has
mortgages on nearly 17,500 units of multifamily rental housing.
Also, Local Initiatives
Support Corporation and Enterprise Community Loan Fund received bonds of $50 million each.
Treasury will announce additional borrowers in coming weeks; however, the CDFI Bond Guarantee
Program will sunset September 30, 2014, unless it is reauthorized by Congress. President Obama's
Fiscal Year 2015 budget proposes to extend the program.