New Initiative - Access to Capital

Background

The goal of the CPP is to link businesses with CDCs resulting in investment in CDC areas. The CPP staff has been working hard to develop specific tools which will encourage businesses to make these investments. Particularly because of the negative image associated with emerging markets, it is often difficult for investors to raise capital. Accordingly, the CPP has launched several initiatives to provide improved access to capital for businesses which want to invest and operate in CDC areas.

Community Health Facilities Fund "CHFF"

"CHFF assists the non-profit behavioral care borrower in obtaining low-cost, fixed-rate loans. Borrowers can finance new construction, renovation, the acquisition of property and high cost debt. They can also finance equipment, as long as there is real estate to be financed also. Some working capital can be financed. 1 Loans financed by CHFF generally have a 25-year term. The interest rate is below the prime rate and is fixed for the term of the loan. CHFF lends up to 90% of the asset's appraised value."1 CHFF has set up a loan program that can finance borrowers one at a time and on their own schedule. So far, CHFF has provided 31 behavioral care organizations with a total of $80 million in loans.

The Community's Bank

The Community's Bank is the only independent, minority-owned bank in Connecticut. It was established by Peter Hurst to meet the banking needs of the previously underserved areas of Bridgeport, Hartford and Bloomfield, Connecticut, which are all ethnically, racially and economically diverse. Mr. Hurst's key observation was that this area's diversity represented potential profitability. This led him to establish banking locations in areas that other financial institutions refrained from entering, and serve markets whose banking needs had been left unmet.

Community Reinvestment Fund: Securitization of EDA Loans

Community Reinvestment Fund (CRF) is a nonprofit corporation that provides capital to community development lenders across the country. It works with all type of lenders, from single person nonprofit organizations to giant state agencies. CRF provides a "secondary market" for these community development loans by buying loans secured by assets - including business loans, commercial and residential real-estate loans, and community facility loans. By selling loans at the fair market value to CRF, the lenders receive funds immediately and with minimal restrictions. To date, community-development lenders in 22 states have received more than $200 million in cash from CRF. Most of the loans that are purchased by CRF are "warehoused" until a sufficient quantity is acquired to pool together for a secondary debt offering (called Community Reinvestment Revenue Notes) issued by CRF to institutional investors, such as banks, insurance companies and pension funds. Since its inception in 1989, CRF has made 13 such Community Reinvestment Notes offerings totaling over $54 million.

Greenpoint Manufacturing and Design Center, Brooklyn, New York

Like many social-economic development projects, the Greenpoint Manufacturing Design Center (GMDC), the only not for profit industrial developer in New York City, rose from the toil of a few opportunistic problem solvers. In this case David Sweeny set out to create and preserve quality blue-collar jobs for low income New Yorkers. While working at the North Brooklyn Community Development Corporation, before founding GMDC, David Sweeny studied ways to create jobs for skilled and semi-skilled tradesmen in low-income Brooklyn neighborhoods.

The Greyston Foundation: Financing a New Greyston Bakery

Over a three-year period that began in 1999, the Greyston Foundation was able to raise the funds necessary to build a $9 million, 23,000 square-foot baking facility in Yonkers, New York. The site is in a blighted section of town and about mid-way into the financing process the soil was determined to be a contaminated "brownfield." In spite of this and other setbacks, the Greyston Foundation was able to issue tax-free industrial development (IDA) bonds as the cornerstone financial piece. The bakery's financing also benefited from the Department of Housing and Urban Development's Enterprise Zone designation along with a similar designation from the State of New York.

Cooperative Financing for Manufactured Housing Parks New Hampshire Community Loan Fund

Created in 1985, the New Hampshire Community Loan Fund (NHCLF) is a non-profit lender that has assisted helped tenants of manufactured housing parks to form cooperatives by securing financing and providing technical for the length of the loan. There is a critical need for this sort of financing because 4% of New Hampshire's 1.2 million residents live in manufactured housing, which has become a viable form of affordable housing. Currently, 10% of New Hampshire's 460 manufactured housing parks are cooperatively owned.

SEA Corporation

The main goal of this project is to give community development organizations new ideas on how to raise capital. To that end, we will look at the Sustained Excellence Alliance Corporation and its Program-Related Investment (PRI) administered by Calvert Foundation.

The 10 community development corporations that make up SEA Corp needed flexible capital that could be drawn upon during initial phases of project planning, research, and development. To satisfy this need, SEA Corp teamed up with the Calvert Foundation to create a PRI to raise capital and create a fund for the member organizations to access predevelopment money. SEA Corp is expecting to raise a total of $5 million through the offering.

Wall Street Without Walls (WSWW)

This initiative is an outgrowth of an overarching program funded by several foundations designed to encourage venture capital to flow into poverty areas. The WSWW provides access to the pro bono services of over 100 Wall Street Professionals who are available to assess the potential for raising capital through the markets. NCCED invites CDCs which may have deals which would be appropriate are encouraged to explore this possibly.

NEOF

NCCED has created its own fund which can be accessed by business which await to invest in CDC areas.

FRANCHISE EQUITY FUND

Many franchisers provide technical assistance and favorable terms for minority owned franchisees. Nonetheless, there are always up front costs which must be met. Accordingly, NCCED, in partnership with the IFA and NCDB, has created a Franchise Equity Fund.