A couple of weeks ago I had the pleasure of travelling to New Orleans to join the Department of the Treasury's Deputy Secretary Neal Wolin, U.S. Senator Mary Landrieu, and U.S. Representative Cedric Richmond to announce the latest round of awards in the New Markets Tax Credit Program. I have been to New Orleans several times during the past few years, and it is always inspiring to see the work that CDFIs and Community Development Entities (CDEs) are doing to help rebuild the city since Hurricane Katrina and the BP oil spill.
Our first stop was at the New Orleans Healing Center, a new, 55,000-square foot facility that offers a market, a restaurant, and a variety of other services and programs to promote physical, emotional, environmental, and spiritual well-being. ASI Federal Credit Union, a certified CDFI, has used capital provided through the Healthy Food Financing Initiative to build a co-op grocery store inside the Healing Center. In addition, ASI has opened a micro-branch in the Center to provide micro-loans and other resources to help local entrepreneurs launch their businesses.
We also visited the Lower 9th Ward - the neighborhood that was hit hardest by Hurricane Katrina - and saw how CDFIs and New Markets Tax Credits are helping the Make it Right Foundation, which was founded in 2007 by Brad Pitt, build 150 affordable, energy-efficient, and flood resistant houses for families that lost their homes in the storm.
The New Markets Tax Credit awards ceremony itself was held at Federal City Town Center, a retail complex that is the heart of a 155-acre mixed-use redevelopment of a military base that closed last fall. It was a fabulous day, and I can say with confidence that, with the help of CDFIs and CDEs, good things are happening in New Orleans. But I was also aware that there is still so much more to be done in the city and in the region. Despite the real progress, real challenges remain.
And in that respect, I believe New Orleans resembles our nation as a whole. Although we are seeing clear signs that the recovery is accelerating - private employers are adding jobs, unemployment is falling, the economy is growing - we still have much to do, especially in low-income communities that were struggling long before the recession hit and are struggling now.
So it is critically important now - as it always is - that the CDFI Fund and the CDFI industry continue moving forward and expanding our work so we can do our part to ensure that the recovery reaches every corner of the United States.
CDFI Fund Update
In a few moments, several senior officials at the CDFI Fund will be speaking about how they are planning to move their programs forward in the next year. Before you hear from them, I would like to give you an update on some of the latest developments at the CDFI Fund.
First of all, I am very pleased to report that the CDFI industry is stronger than ever. The CDFI Fund has the most certified CDFIs in its history - 972 at the end of January. The demand for all of our programs remains very strong, and it is clear that those programs are having a tangible impact.
For example, CDFI Program awardees in 2010 provided more than 5,000 small business and microenterprise loans, created or maintained more than 25,000 full-time jobs, and used their grant funding to leverage $1.5 billion in private investment. They also financed almost 1,800 affordable housing units and 16,000 affordable rental units, and provided financial literacy and other training to more than 177,000 individuals in the communities they serve.
The awareness of the impact of CDFIs is also growing. The CDFI Fund has received strong appropriations from the Administration and Congress over the last several years.
Now, I know that many of you are wondering whether those strong appropriations will continue in FY 2013, and I'm afraid I can't give you a definitive answer. Last month President Obama released his proposed budget for FY 2013, which is just the first step in a negotiation process that we expect to be long and difficult, just as other recent federal budget negotiations have been long and difficult.
So at the CDFI Fund we feel it is very important to be realistic about what the future may bring. At the same time, we feel very hopeful and are doing everything we can to ensure that work of CDFIs is understood and appreciated on the Hill.
We also feel that there are many things about the President's budget proposal that are very promising. Indeed, the budget, to quote the document itself, "maintains robust funding for Community Development Financial Institutions." Specifically, it provides $221 million for the CDFI Fund, which matches our FY 2012 appropriation and, we believe, stands as another strong endorsement of the CDFI industry. At a time of difficult budget cuts that the Administration's proposed budget is a clear sign of support for the CDFI Fund and the CDFI industry.
The President's budget also proposes to reauthorize the New Markets Tax Credit Program in 2012 and 2013 - $5 billion in allocation authority for each year. In addition, it proposes a new allocated tax credit to support investments in communities that have suffered a major job loss event, especially communities where a military base or major manufacturer has closed or substantially reduced its workforce. This proposal would provide $2 billion in credits each year for three years beginning in 2012.
The FY 2013 budget request is certainly one of the bigger things the CDFI Fund has had on its plate recently, but it is hardly the only thing. So I want to speak about some of the other activities under way at the CDFI Fund.
On February 17, President Obama announced his intention to appoint two new members of the Community Development Advisory Board, which provides guidance to the CDFI Fund on its policies and activities. The new appointees are David C. Lizarraga, the President and CEO of the Los Angeles-based Community Development Corporation TELACU/Millenium, and Ron Phillips, President and CEO of Coastal Enterprises (CEI), the well-known CDFI located in Maine. I would like to congratulate David and Ron. I look forward to working with both of them and drawing upon their considerable knowledge and expertise.
Also, on February 21, I had the honor of participating in a roundtable discussion on microlending hosted by the White House Business Council and Representative Carolyn Maloney. In December, Representative Maloney introduced the Investing in Small Businesses Act, which would provide capital to CDFIs to create loan-loss reserves for small business lending.
The roundtable was held at Baruch College, in Manhattan, and provided a great opportunity to discuss federal efforts to advance microlending. Among the participants were Don Graves, Executive Director of the President's Council on Jobs and Competitivenes; New York State Senator Daniel Squadron; Stephen A. Vogel, CEO of Grameen America; Erica Dorn of ACCION USA, Nancy Ploeger of the Manhattan Chamber of Commerce; Dr. Edward Rogoff of the Field Center for Entrepreneurship at Baruch College. Also joining us was Cyrus Amir-Mokri, the Treasury Department's new Assistant Secretary for Financial Institutions. His presence was a clear sign that Treasury is aware of the importance of supporting small businesses.
I also want to mention our progress with our Capacity Building Initiative.
Last year, we presented the first training sessions under the Capacity Building Initiative. As you may know, the Initiative is designed to help certified and emerging CDFIs expand their ability to serve their communities. In addition to providing training sessions led by established community development firms, it offers participants technical assistance and access to a variety of valuable tools and resources.
The training we offered last year through the Initiative consisted of separate courses on five different topics: foreclosure solutions, portfolio management, CDFI capitalization, leadership development for established Native CDFIs, and healthy foods financing. Altogether 18 training sessions were held on these topics and 360 participants attended.
In addition, for those who were unable to attend the sessions in person, we presented 11 different webinars covering three of the topics. More than 600 people joined us for these online sessions.
The Financing Healthy Food Options courses have proven to be especially popular. The provider, Opportunity Finance Network, conducted five training sessions throughout the country on how to finance all types of healthy food projects, and will offer a sixth session later this month, in North Carolina. In addition, many CDFIs are now receiving customized technical assistance to build or expand their healthy food lending activities. OFN has also created original curriculum and training materials for the courses. As far as we know, this is the first time that training materials have been produced specifically for CDFIs engaged in healthy food financing.
The CDFI Fund has created a resource bank on our website that makes the materials used in the healthy food financing course available to the general public and members of the community development industry. It is the first resource bank the CDFI Fund has made available under the Capacity Building Initiative, and we plan to offer more in the near future.
In addition, the CDFI Fund just launched another new training series under the Capacity Building Initiative last month. The series is called The Leadership Journey: Native CDFI Growth and Excellence, and it provides training and technical support to help well established Native CDFIs take their organizations to the next level. The Leadership Journey will take place over two years and will provide participants access to training, individualized technical assistance, resource materials, peer mentoring, and executive coaching opportunities.
The Capacity Building Initiative really is a great way for you to develop your understanding of some of the key issues that are critical to your organization's success, so I want to encourage all of you to participate, either in person or through our webinars.
In 2012, we will be adding a new course to help microlenders build their capacity to meet the growing demand for small business loans, and another to support small and emerging CDFIs in rural and other high need areas. Please check our website for all details. We look forward to seeing you.
Finally, I would like to take a few moments to bring you up to date on the latest developments with the new CDFI Bond Guarantee Program.
In the past year, the CDFI Fund has been making significant progress towards launching the Bond Guarantee Program, which was created by the Small Business Jobs Act of 2010 and will offer CDFIs a new source of long-term, patient capital for loans and investments in low-income communities.
The CDFI Fund is the administrator for this program, and thus far we have hired two-full time staff to lead the program, facilitated an industry listening session, and engaged a consulting firm that helped us develop the financial model for subsidy rate calculations required for issuing guarantees under the program.
In addition, last July, we initiated a Request for Public Comments. Our BGP team reviewed and analyzed more than 60 comment letters from the public and the industry, and explored ways to incorporate or address them into the program's upcoming regulations. They are also incorporating "lessons learned" from other federal guarantee programs. By the way, all of the comment letters are available for viewing on our website.
Let me point out that, as a federal credit subsidy program, the CDFI Bond Guarantee Program must adhere to the Federal Credit Reform Act (known as FCRA), related regulations, and OMB circulars. In fact, any federal program that provides direct loans or loan guarantees is subject to FCRA. The requirements of FCRA are detailed in OMB Circular A-11, which requires that, for all credit subsidy programs, specific language be included in the relevant appropriations act.
While the Small Business Jobs Act authorized the creation of the Bond Guarantee Program, subsequent action through an appropriation bill to meet the FCRA requirements was not possible. At the points when the CDFI Fund's FY 2012 budget was submitted to and subsequently approved by Congress, the credit subsidy model required by FCRA had not yet been approved; thus, it was not possible to insert the required FCRA language in the CDFI Fund's FY 2012 appropriation. The CDFI Fund does not currently have any Congressional authority to provide guarantees of bonds issued by Qualified Issuers in FY 2012.
We are now working proactively to get the legislative authority to move the program forward. During the first annual budget cycle that the CDFI Fund had an opportunity to support the Bond Guarantee Program, we supported it. The President's FY 2013 Budget includes support to implement the program and the specific appropriations language mandated by FCRA.
Of special note, the President's Budget also showed that OMB has approved the CDFI Fund's zero credit subsidy model - a major victory for the implementation and future success of the program. Key next steps for FY 2012 include: publishing the program's regulations; releasing application materials for Qualified Issuers and eligible borrowers; hiring the Program Administrator; soliciting the Master Servicer; and, pending Congressional action, issuing the first bond guarantee in Fiscal Year 2013.
Telling Our Stories
As you can see, 2012 promises to be another important year for the CDFI Fund and the CDFI industry. We have made real progress, but real challenges remain.
So we must all be committed to moving forward and to working together.
And I believe we must all be committed to telling our stories.
One of the other sites we had a chance to visit on our trip to New Orleans last month was the Southeast Louisiana Fisheries Assistance Center, which was created by Seedco Financial in 2008. The Center has provided more than $6 million in loans to help hundreds of fishermen and fishing industry workers stay afloat in the wake of the hurricanes and the BP oil spill.
A fisherman we met at the Center told us his story. He said he had been close to going bankrupt and had been afraid he wouldn't be able to feed his family - but then something miraculous happened. I will never forget his words: "Seedco gave me a loan and saved my business."
I know all of you have stories like this one, stories about lives that your organizations have helped to transform. My hope is that you will tell those stories, because, in these difficult times, it is more important than ever for each of us to stand up and do our part to make sure that our work is understood and appreciated in our own communities and beyond.
Indeed, it is more important than ever for each of us to do our part to make sure we continue moving forward.
Thank you. I look forward to working with you in 2012.