The recently passed Fiscal Year 2018 spending bill increased funding for most federally funded programs, including programs critical to the CDFI community. While the increase in funding is welcome news, potential changes at the Department of Housing and Urban Development (HUD) are cause for concern within the community development sector. Under Secretary Carson’s leadership, HUD is considering striking anti-discrimination language from the department’s overall mission statement. The statement will no longer include “inclusive” communities “free from discrimination.” While this language is not final, it is troubling.
Protecting inclusive communities is a pillar of the CDFI industry, and the recently passed spending bill shows that our work has bipartisan support. The $1.3 trillion spending package delivers the largest funding boost to federal agencies in years. While we are optimistic at the historic levels of funding for CDFI programs, we recognize that we must continue to work with Congress to preserve and protect inclusive communities.
The CDFI Fund, which provides critical funding for LIIF and our partner Community Development Financial Institutions (CDFIs), received the highest level of funding in its history. Congressional leaders ignored the President’s FY 2018 and 2019 budget proposals, which called for the elimination of CDFI Fund programs, and allocated $250 million for the CDFI Fund, $2 million above last year’s record $248 million funding level. Within this amount, the bill provides $160 million for financial awards and technical assistance, including preservation of the Healthy Food Financing Initiative, with a set aside of $22 million.
The CDFI Fund was created as a bipartisan initiative in 1994 with the mission of investing in CDFIs to promote economic revitalization and community development. Through its CDFI Program, the Fund invests directly in CDFIs, providing both financial and technical assistance to CDFI awardees. The CDFI Fund also administers both the New Markets Tax Credit (NMTC) and Capital Magnet Fund programs. Since its inception, the CDFI Fund has awarded over $2 billion to community development organizations and financial institutions, and has awarded NMTC allocations totaling $50.5 billion, including $518 million to LIIF, which we have deployed in the funding of grocery stores, health clinics, and affordable, transit-oriented housing.
Increases in Affordable Housing and Charter School Funding
In another major win for both the community development and affordable housing industries, HUD received an increase in funding of $3.9 billion, or 10% over FY 2017 levels. This is $11 billion more than what the President sought in net discretionary funding for FY 2018.
In addition, the bill provides a 12.5% increase to Low Income Housing Tax Credit (LIHTC) allocations, starting this year and lasting until 2021. This is the first time Congress has raised the nationwide allocation allotment since a temporary increase during the Great Recession. This provision could potentially increase production by approximately 28,400 affordable rental homes over 10 years compared to current law.
Federal funding for charter schools also saw a boost in funding. For FY 2018, the Charter Schools Program received $400 million, an increase of $58 million, with $47.5 million going to the expansion of charter schools in rural areas.
Of the total funding, the Credit Enhancement (CE) program received no less than $40 million. This allocation is only $6 million less than the Department of Education allotted for the CE program last year, putting the program in a good position for the most recent funding round announced this month. Much like last year, the Department of Education will most likely have discretion to increase the funding beyond $40 million for the CE program.
The CDFI Fund’s support enables us and more than 1,000 other CDFIs nationwide to provide patient, innovative capital solutions to help small businesses, expand educational opportunities, and build affordable homes. While this appropriations bill holds good news for the CDFI industry, our advocacy efforts to protect the CDFI Fund and related community development programs continues.