Also in this issue:
> Looking forward:  New tools, new partnerships required to fund jobs, rebuild communities
> Charter school redefines opportunity for low-income students
> Green loan program kicks off with Minnesota pilot
> News Briefs

Editor’s note:  We’ve revamped the CRF newsletter to better engage those who matter most— supporters like you. Tell us what you think of our new features and the type of stories you’d like to see in future issues! Email us at crfusa@crfusa.com, post your comment on our Facebook page, or Tweet us @crf_usa.

Corner Office Update

Looking forward:  New tools, new partnerships required to fund jobs, rebuild communities

OUR VISION FOR THE COMMUNITY DEVELOPMENT INDUSTRY

Frank Altman, President & CEO
Community Reinvestment Fund, USA

What’s the right size for government?  

The federal budget battle has Americans discussing that question from Pennsylvania Avenue to Main Street. For the community development finance industry, a sector long reliant on tax credits, financial assistance grants, and guaranteed lending programs, the current debate is a wake-up call for how we do business.

The need for living wage jobs, affordable housing, and strong communities remains as urgent as ever.

Yet can our traditional financing vehicles, and even our traditional industry model, still answer this demand?

Traditional vehicles in jeopardy

Continued availability of New Markets Tax Credits (NMTC) allocations, CDFI Fund awards, and free-flowing capital markets remains uncertain in these anemic economic times. Even products with government guarantees, such as SBA 7A or SBA 504 loans, sit well out of reach for many lenders, due to strict requirements for balance sheet equity. Other options, like the new CDFI bond program, add liquidity to the market, but ignore smaller lenders unable to borrow in $100 million increments.

These are the critical tools that enable community lenders to support the small businesses that create jobs, and the projects that revitalize our low-income neighborhoods. But a “status quo” approach won’t be enough to get the job done.

We as an industry need to expand our financing options to deliver capital quickly and efficiently. We need to strengthen our relationships and develop a new, more collaborative network.

Defining a new, collaborative approach

More than 20 years ago, CRF pioneered a new method of accessing the capital markets to benefit small business owners and underserved neighborhoods. Today, our vision for community development finance means continued innovation—this time, to enable sustainable solutions and new partnerships that facilitate job creation and support disadvantaged communities.

These solutions include:

• A renewed commitment to collaboration. Tough credit markets require new partnerships among CDFIs, CDCs, community banks, and market-rate investors. National networks like CRF can play a matchmaking role to facilitate a value chain where all parties work together to maximize funding options. We must create relationships that empower multiple entities to work together quickly and seamlessly—as primary and secondary lien holders, poolers, packagers, project sources, and other roles.
• Options for smaller community development groups. Financing tools must remain accessible to organizations at all levels—not just those CDFIs who can afford multi-million dollar balance sheets. Preserving the local market knowledge of these groups is critical to identifying deserving projects, and providing business owners with technical assistance and hands-on support through all stages of their business.  
• Pursuit of policies that support jobs and low-income communities. We applaud new alternatives such as the CDFI bond program, and actively advocate for proven channels like New Market Tax Credits. As an industry, we must continue to come together and tirelessly articulate the need for accessible, affordable small business financing options.

We’re excited about these opportunities and relationships. Watch for more details in the coming months.

Share your views on this critical issue. Comment on our blog or Facebook page, or send us a message at crfusa@crfusa.com.

CRF in Action

Seventeen years ago, two teachers with a mission to redefine what is possible in public education launched a fifth grade school program in inner-city Houston, Texas. Today, the efforts of Mike Feinberg and Dave Levin have grown from serving 48 students in one location to helping more than 27,000 students in twenty states and the District of Columbia, through their national Knowledge is Power Program (KIPP).

CRF and our lending partners are proud to provide New Markets Tax Credit financing for KIPP’s latest endeavor: a permanent home for the KIPP New York City College Prep High School in the South Bronx, New York.

This charter school will house more than 1,000 students in grades 9-12—an enrollment where more than 80% of students come from low-income families.

Graduation rates at double the national average

The new high school allows KIPP to continue its nationally recognized focus on both academic excellence and positive citizenship. KIPP students achieve graduation rates that top 80%—more than twice the national average for low-income students. A philosophy of “Work hard. Be nice.” guides efforts at all grade levels.

The new high school will be a 120,000 square foot facility that includes 29 classrooms, three science labs, a library, gymnasium, cafeteria and auditorium. Work is expected to create or retain more than 345 jobs and attract additional opportunities to the surrounding community.

“Access to education can truly transform lives and communities for years to come,” adds Frank Altman, president and CEO of CRF. “We are pleased to collaborate with so many committed funding partners to support KIPP and the students of New York City.”

Project details:

• Financing: $35 million
• Vehicle: New Markets Tax Credits loan
• Purpose: Construction of a 120,000-square-foot building to provide a permanent home for the KIPP New York City College Prep High School
• Location: South Bronx neighborhood, New York City
• Job creation: 100 full-time positions and 245 construction jobs
• Student impact:  Serving 1,000 high school students annually, with 80% from low-income homes

Program partners:  Robin Hood Foundation; JP Morgan Chase Bank, N.A.; Consortium America, LLC; and National Community Fund, LLC.

Paying less for energy can give business owners a distinct competitive advantage. But with tough credit standards, falling property values, and few traditional financing choices, small business owners often find themselves left out in the cold when it comes to funding energy improvements.

The new CRF Green Loan for Businesses program provides a much-needed financing option specifically tailored to small businesses and entrepreneurs in Minnesota, with loans ranging from $50,000-$300,000 for energy-efficient equipment or building improvements.

The initiative pairs expert guidance and best practices in energy conservation—including a comprehensive energy audit—with capital availability at more favorable terms than traditional channels.

Making a measurable difference

This holistic approach sets the CRF program apart, according to Frank Altman, president and CEO of CRF.

“Unlike other financing options that focus on a single piece of equipment or building retrofit, the CRF Green Loan for Businesses evaluates the total energy use of a small business,” Altman explains. “This top-down view leads to greater savings in overall energy consumption—savings that small business owners can use to improve cash flow and increase their property value.”

The CRF Green Loan for Businesses pairs each borrower with a local energy resource who helps identify potential opportunities and shows in detail where the greatest energy savings will be.

Eligible projects include:

• Building shell improvements, such as weather stripping, new windows, and new roofing.
• New heating and cooling equipment.
• Energy efficient equipment.
• Efficient lighting.
• Alternative energy sources such as solar panels.

“We are proud to work with CRF to help provide funding for energy financing,” said Mike Rothman, commissioner of the Minnesota Department of Commerce. “It’s ‘green-dollar’ jobs like these that strengthen Minnesota’s small businesses and give them the resources to operate in an eco-friendly manner.”

Interested in learning more? Contact Kevin Riba at 612-305-2059 or kevin@crfusa.com.

Program support: The project was made possible through grant from the U.S. Department of Energy and the Minnesota Department of Commerce through the American Recovery and Reinvestment Act of 2009 (ARRA).

CRF partners:  City of Minneapolis Department of Community Planning and Economic Development; St. Paul Port Authority; Minnesota Community Capital Fund; and Center for Energy and Environment.