Introduction
Thank you for that warm introduction. It's a pleasure to be here today. During the almost two years I have served as Director of the CDFI Fund, I have had the opportunity to meet with Native leaders and visit Native communities across the country. These meetings and visits have allowed me to see your many accomplishments and they have also shown me that there are several challenges that your communities face. Today, I'd like to share with you some of the ways in which the CDFI Fund is working with you in order to overcome those challenges, through our award programs and our training initiatives.
As Director, one of my more rewarding responsibilities is to announce the recipients of our various award programs. Last month, I visited the Oglala Sioux Nation in Pine Ridge, South Dakota, to announce over $11.3 million through the Native American CDFI Assistance (NACA) Program, the largest award amount in the history of the program. Of the total amount, $8 million in financial assistance awards were made possible through the American Recovery and Reinvestment Act of 2009 (Recovery Act) and will spur new economic growth within Native communities. Nearly 80 percent of these financial assistance and technical assistance awards have already been disbursed, enabling Native CDFIs to immediately increase their lending activity.
At the award announcement, I had the opportunity to meet with the Lakota Fund, one of the recipients of the Recovery Act awards. The financial support the Lakota Fund received enabled them to expand lending for emerging small businesses and entrepreneurs on the Pine Ridge Reservation. The cooperation that exists between Native CDFIs , Native communities and the CDFI Fund is resulting in great success stories. The Lakota Fund made investments in Native American Natural Foods, a provider of foods sustainably grown within the community. They have seen success with the release of one product in particular, the Tanka Bar, an energy bar that is available at 2,000 retail locations.
The CDFI Fund's various programs, collectively known as our Native Initiatives, work to increase access to credit, capital, and financial services by creating and expanding CDFIs whose primary mission is to serve Native communities. One way we achieve this is by providing direct funding - financial assistance and technical assistance awards - through the NACA Program. Since the NACA Program was created in 2002, we have awarded Native CDFIs with 175 grants totaling $31 million. As an indicator of the program's success, there has been a significant increase in the number of certified Native CDFIs. In 2001, there were only 14 Native CDFIs. Eight years later in 2009, that number has climbed to 50, - a 350 percent increase - and there are 60 additional Native organizations classified as emerging CDFIs.
The 2010 round of the NACA Program is already underway. The Notice of Funding Availability will be published in the Federal Register later this week, officially opening this year's round of competition through which we will make approximately $12 million more in awards available. Native CDFIs have until October 7th to submit their applications, so I encourage everyone here to visit the CDFI Fund's web site for further information. The award announcements will be made next March.
Our Native Initiatives also consist of the Expanding Native Opportunities (ENO) initiative. The CDFI Fund also offers a series of training programs - collectively known as our Expanding Native Opportunities initiative - to organizations working in Native communities.
These consist of:
- the Native Communities Financing Initiative (NCFI), which is an intensive series of workshops and follow-up technical assistance conducted over a 12-month period to help Native Communities develop and expand Native CDFIs;
- the Native Enterprise and Entrepreneurship Development (NEED) Initiative, which focuses on entrepreneurship development systems, curricula integration and program development at the local level;
- the Native Financial Skills Initiative (NFSI), which is a training of the trainers in the Building Native Communities financial education curriculum and integrated asset building programs; and
- the Native Individual Development Account Initiative (NIDA), which provides a three-day training session designed to help communities start, implement, and sustain Individual Development Account - or IDA programs.
New rounds of these highly regarded and in-demand training programs were announced last week and additional details can be found on the CDFI Fund's website.
New Native Initiatives Strategic Plan
In 2001, the CDFI Fund released the Native American Lending Study. Its goal was to examine access to capital and financial services within Native communities by identifying the barriers to access, and providing options to address these barriers. The study identified 17 major barriers that are faced by Native Americans in this area. These barriers include infrastructure, government operations, economic, financial and physical infrastructure, education and cultural issues.
The Native American Lending Study proposed a number of options to address those barriers. The proposed options included increasing the number of financial institutions within Native American communities, developing non-traditional capital delivery systems to expand financial literacy educational opportunities, to create more entrepreneurial activities, and to increase technical assistance and training for business owners.
The need for such a study had been evident since the CDFI Fund's creation in 1994. Congress noted that many Native communities, in both urban and rural areas, endured a series of problems, both social and economic, as a direct result of their lack of genuine economic opportunities.
The CDFI Fund has made great progress in supporting Native communities to overcome the challenges identified in the Native American Lending Study. As a new commitment to that support, the CDFI Fund recently published a new five-year Native Initiatives Strategic Plan, entitled Financing Native Leaders for Tomorrow. A very significant undertaking, the plan identifies clear objectives that the CDFI Fund is committed to take that will address the economic challenges faced by the 2.7 million Native American, Alaska Native, and Native Hawaiian people living in the United States.
In compiling the strategic plan, we outlined five key strategic objectives and it is our goal to see that each of them is met. Specifically, the CDFI Fund will sustain and advance established Native CDFIs, increase opportunities for them to access available capital, enhance financial skills and opportunities within their communities, increase the level of interagency coordination of Federal funding for Native CDFIs, and update the Native American Lending Study of 2001.
Impact in Native Communities
I'd like to now spend the remainder of my remarks on the CDFI Fund's New Markets Tax Credit (NMTC) Program which is another valuable "tool" to bring needed capital and credit into economically distressed communities, including Native communities.
The NMTC Program allows taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs), which, in turn, use this capital to make investments in economically distressed communities Since the program began in 2002, the CDFI Fund has made 396 awards totaling $21 billion in allocation authority, some of which has benefitted Native American communities.
The program also benefitted from The American Recovery and Reinvestment Act of 2009 (Recovery Act), through which an additional $3 billion of New Markets Tax Credit allocation authority was provided to the CDFI Fund.
Even in the midst of an economic recession, the program has continued to spur investments in underserved communities. Our hosts today at Travois have committed themselves to redevelopment efforts within Native American communities, and have seen firsthand the benefits that the NMTC Program can bring. In 2007, Travois New Markets LLC was awarded a $30 million allocation. The award has focused on businesses that export goods and services outside Native communities.
One of the projects that will benefit from this award is the Navajo Tribal Utility Authority, who will construct two electrical substations that will bring power to more than 400 families in the towns of Shiprock and Cudeii, New Mexico. The Navajo Nation has a population of approximately 175,000 people, and of those, nearly 70,000 lack running water, electricity, or natural gas. Therefore it is easy to understand why this development project is so desperately needed. The project will allow the Navajo Nation to double their electrical capacity to support further economic development efforts. Project costs came in at $6.4 million, the total sum of which was made possible by the New Markets Tax Credit Program.
The shortage of electricity has hindered the creation of new and sustainable businesses within the community. Multiple projects have been unable to move forward. So while the substation development project will create approximately 90 construction positions, it will also allow other businesses to open within the Navajo Nation. Among these is a school that will employ 50 people, a Navajo health administration building that will have 60 positions and a home for women and children that will employ 16 individuals. The additional electrical capacity will also generate approximately $41 million in economic development for the Navajo Nation, creating additional jobs and building the community. This investment is a remarkable example of the NMTC Program at work in just one Native community.
Travois is also providing New Markets Tax Credit allocations to the Coastal Villages Region Fund (CVRF) Project, a fishing cooperative spread across 12 towns In Alaska. CVRF works to provide long-lasting opportunities for the Alaskan Native population within the commercial fishing industry.
Catching fish is one thing, but processing them is another. Unfortunately, the small number of commercial processing plants has stymied the fishing industry's ability to generate income, as smaller boats are often unable to travel to those plants in other cities. To counter this, CVRF finalized the construction of a salmon processing plant in Platinum, Alaska. In this remote area, with a poverty rate of 25 percent, and with a median family income of 53 percent of the statewide median, employment options were significantly limited. This project has been responsible for creating 669 critically needed permanent jobs, and an additional 210 construction jobs. It now supports a network of almost 600 fishermen. Additionally, CVRF has the ability to distribute 600 commercial fishing permits, but due to the bottleneck created by the shortage of plants, only 200 are issued at any given time. The plant in Platinum will allow for maximum distribution. Project costs totaled $41.2 million, $17.3 million of which was made possible through the New Markets Tax Credit Program.
While the creation of a fish processing plant is an important first step, CVRF has seen the need to create new industries within the fishing community as well. They are also funding programs to teach fishermen new skills, such as engine repair and general boat maintenance.
Additionally, the local airport in Good News Bay is unable to handle larger planes, such as those capable of supporting a thriving commercial fishing industry. CVRF has undertaken a project to expand the airport's runway, allowing access for larger commercial aircraft.
The NMTC Program has also played a key part in the success of The Opportunity Fund, a CDFI located in San Jose, California, which has benefitted the local Native population. The Opportunity Fund's mission is to assist working families achieve their dreams of homeownership and financial independence. They do this through the use of financial education courses, microfinance loans, matched savings accounts, and affordable home financing. Of those served, more than 70 percent are women, and 45 percent are recent immigrants.
In October, we will announce the entities selected to receive $5 billion in New Markets Tax Credits under the fiscal year 2009 round of this program - of which $1.5 was made possible through the Recovery Act.
We anticipate opening the fiscal year 2010 round of the New Markets program next February. I encourage each of you to familiarize yourself with this great program and consider applying. As always, please visit our website for more details.
In addition to the NMTC Program, Native CDFIs are successfully utilizing the CDFI Program and NACA Program to provide needed and lasting impact in their communities.
For example, another organization effecting positive change within Native American communities is the Citizen Potawatomi Community Development Corporation (CPCDC) in Shawnee, Oklahoma. Founded in 2003, Citizen Potawatomi's mission is to provide loans and other opportunities for community redevelopment within the Citizen Potawatomi Nation and other Native American communities.
While relatively young, Citizen Potawatomi has already made some lasting impacts on the communities it serves, a result of the services that they provide. Chief among these are their commercial loan program, business development services, and financial education and credit counseling.
The CDFI Fund has been proud to work with Citizen Potawatomi, first through its NACA Program, and then later through it's CDFI Program. In fact, Citizen Potawatomi is the first and only certified Native CDFI to make the transition from the NACA Program to the CDFI Program, our original and main funding program. This is a fact Citizen Potawatomi is rightfully very proud of. To date, they have received more than $5 million in CDFI Fund and Recovery Act awards.
As with other CDFIs, they have put this funding to good use. Citizen Potawatomi boasts many success stories, including Shawnee Cleaners, a dry cleaning and laundry service located in Shawnee, Oklahoma.
When Dwight and Darcee Yancey bought the business in 1998, they didn't know anything about the dry cleaning industry. What they did know about was hard work and determination, factors Citizen Potawotomi is always willing to endorse. So when the Yanceys were looking to modernize their equipment and their infrastructure, it didn't take long for Citizen Potawatomi to see the merits of the request, something that had been ignored by more mainstream financial lending institutions. Today, Shawnee Cleaners is a huge success, able to hold its own against larger, corporate dry cleaning service providers.
Conclusion
In conclusion, the CDFI Fund remains committed to ensuring that Native American, Alaskan Native and Native Hawaiian communities have the same access to capital, credit and business opportunities as are found within other areas of the United States. Our awards and training programs will always be available for those purposes, and we encourage CDFI certification, so that you may take advantage of all that we have to offer. We never tire of hearing your success stories, as your success is our success.
I am happy to see that Native communities flourishing, especially during the current economy. The CDFI Fund is experiencing growth of its own, as the new administration has more than doubled our budget. That, in addition to the passage of the Recovery Act, has put us in a much better position to assist you.
Thank you.