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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.


Clearinghouse 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.

In 2012, 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.

 

 
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