Transcripts For CSPAN2 Housing 20240702

On Economic Opportunity. They discuss needed investment in underserved low income communities and bridging the gap between rental markets and homeownership. This runs an hour and 20 minutes. Good afternoon. Id like to call the subcommittee on housing transportation and Community Development committee to order. I want to thank you as always, senator, to you and your staff for working with us on this hearing, which will focus on Community Development Financial Institutions or cdfis and how specifically cdfis can promote Housing Development and Economic Opportunity. I think that both the senator and i believe that everyone in this country should have the freedom and the opportunity to build the lives that they want, that this is the american dream. An essential Building Block for fulfilling this dream is that people have access to capital and lending and resources so that they can buy a home or build a Small Business or get an education. And we also know that not everyone has equal access to capital and Financial Services, and that this inequity drives big gaps or disparities in opportunity and wealth, which is what we see in our country. Communities of color and Indigenous People and rural areas often dont have the same access to capital, and that ends upholding everybody back. According to the federal reserve, a typical black familys net worth is only 15 percent of a typical white family. And on average, the net worth of a hispanic family is about 19 percent of a white familys net worth. And theres less Data Available on the net worth of native families, but a recent analysis by the minneapolis fed found that in one sample, a median native family had a net worth 32 times lower than that of a median white family. That analysis also found that home equity is a much smaller portion of a native familys wealth in part because of the difficulties that native families face in getting mortgages. If you think of Rural Communities, the Pew Research Center data shows that Rural Counties are about 50 percent more likely than urban counties to have high rates of concentrated poverty and twice the rate of concentrated poverty compared to suburban counties, so it is clear we have a lot of work to do to address these disparities, these challenges. Today im very excited. We have the opportunity to hear how cdfis are a powerful tool to expand access to capital and Financial Services to people and places that have been too often left out of opportunities. Cd fshgis work cdfis work, and they have long had bipartisan support. When the cdfi from the federal agency that oversees cdfi programs was established in 1994, there were about 80 cdfis. Today more than a thousand, deploying Innovative Strategies for getting capital and resources to underserved communities in all parts of the country. Ive seen the power of this work in my Community Helping Small Businesses and building wealth. And we know that federal investments in cdfis yield strong results because they Leverage Private capital. By one estimate cdfis generate 10 in new investment on the private side for every 1 in federal support. So today, we have an opportunity to hear about this work, whats working, what can be improved, from three impressive cdfi leaders. Cdfis are bringing and your organizations are bringing jobs and Economic Opportunity to communities and helping Small Businesses get started. Cdfis have adapted to meet the needs of very different communities, showing that theres a lot of flexibility in this model. And im also hearing a lot of feedback on im also interested in hearing feedback on the bipartisan bills that are out there to support cdfis and my colleagues and i have been working on. Two senators and i have a bill to update the cdfi Bond Guarantee Program so it works better for smaller cdfis that are making low interest longterm sources of capital available. Im also working with two senators on a bill to make permanent a Successful Pilot program that supports mortgage lending on Tribal Trust Lands. And i would note that senator warner and senator haggerty have a bill to support a secondary market for cdfi loans and several colleagues have bipartisan bills that fall within the finance committees jurisdiction to support cdfis. Im quite sure this will be an interesting and productive hearing. I look forward to hearing from all of you and then continuing our work to support cdfis and address the historic inequities that we see in our economic systems that i believe can be remedied in part by your work. Thank you very much. Senator, youre recognized. Thank you. Ive been looking forward to this hearing. Cdfis are such an important part of addressing the borrowers needs in this country. Im delighted to have some experts here today. Since i dont have much of a voice today, im going to submit my Opening Statement for the record, but i am going to just highlight a couple paragraphs that i had hoped to bring to peoples attention. Of course cdfis were set up to meet the needs of borrowers that are not well served by traditional banking institutions. And in exchange for doing this essential work, cdfis are given access to subsidized funds and grant money supplemented with private funds. So im a little disheartened that the Treasury Department in managing the cdfi fund has not given cdfis the certainty and flexibility they need to do their work, as treasury revises the certification process, many stake holders have raised concerns about the proposed application and the delays in finalizing the application and the transparency of the process. We need robust standards to preserve and protect the cdfi designation. I call on treasury and the cdfi fund to run a transparent process and truly take into account the feedback you have received through the Public Comment process. I also want to comment about cdfis needing access to funding ideally stable longterm funding. I know this is challenging, so id like to hear from the Witnesses Today how we can best expand the Public Private partnership that has fuelled cdfi lending and increased access to capital. One source has been advances from the Federal Home Loan Banks for those cdfis that are members of the system. However, the system has very very few native cdfi members, so id like to see what we can do to support access to the system for native cdfis. Theres a Federal Home Loan Bank system as really taking a look at its mission and its efforts as they look at their 100th anniversary, and i want to acknowledge that as part of that initiative, fhfa held a roundtable to gather feedback specific to the tribes needs, and i want to thank the native leaders that participated. I hope the report includes careful consideration of the feedback from this session and others. With that, i want to thank our witnesses so much, and i look forward to being here today, and thank you madame chair, you have always been so gracious about including topics that are really valuable, both to urban and Rural Communities and tribal communities, and weve had a lot of interest expressed by our colleagues on this committee. Theres a vote thats currently open which is why some of them have not arrived yet, but we expect that you will have questions from other members of the committee, and were again very delighted that you were welcome and willing to come today and help us learn more about this topic. So with that, madame chairman, i yield back, thank you. Thank you so much, senator. Welcome again to our three witnesses who are with us today. I will introduce each of you, and then well start and go down the line. President and ceo of midwest minnesota Community Development corporation based in detroit lakes, minnesota, which is sort of up in the sort of northwest central part of the state. She has been in her role since 2018, and she has led the deployment of 544 Million Dollars in new markets tax credit financing. In addition to leading the mmcbc also leads a native cdfi subsidiary the white earth investment initiative. Yesterday usda announced they would be one of eight native cdfis receiving funding through the native american relending demonstration program, a program which i think we will hear more about today. Julia has a cpa certification and holds a masters in management from northwestern universitys Kellogg School of business. Renee is president and ceo of neighborhood Development Corporation or center in st. Paul minnesota. Ndc focuses on helping Small Businesses get off the ground and supporting their growth. It provides entrepreneurs a whole suite of Services Including lending and training, real estate services, and assistance with Management Consulting and accounting and marketing. She joined ndc in 2019 with over 18 years of experience leading teams in merchandising, product development, and design for target. Shes a member of the African American alliance, cdfi ceos, a lot of alphabet there, and has earned her bachelor of science degree in management and accounting from the college of saint scholastica. And crystal cornelius with us today. Shes president and ceo of a corporation, a National Native cdfi based in longmont, colorado. She has 23 years of experience working in the native Economic Development field. She is an enrolled member of the United Nation of wisconsin and a member of the Turtle Mountain band of chippewa indians in north dakota. We will begin now. Thank you very much. I think you know this, but i will reinforce that you will each have five minutes for your Opening Statements. Theres a clock in front of you to help you keep track of time. Your full written statement will be part of the record. Pardon me for interrupting. Thank you. Good afternoon, madame chairwoman, Ranking Member, and members of the committee. As stated, im president and ceo of midwest minnesota, Community Development corporation, a cdfi and neighbor works america member, in rural minnesota, and ceo of our native cdfi subsidiary the white earth investment initiative. Cdfi Fund Programs help us promote community revitalization, Business Development, Affordable Housing, and job creation in economically distressed communities. During the pandemic, cdfis utilized 1. 25 billion dollars in rrp funds to make investments in loans totalling 14. 8 billion dollars. In minnesota, 31 cdfis serviced 851 Million Dollars of sba ppp loans for minnesota businesses and nonprofits, preserving some 88,000 jobs. Investments in cdfis offer an excellent return on our taxpayer investment. Cdfis leverage federal dollars on average 10 to 1 to facilitate growth in businesses, jobs, Community Tax base and more. In fy 22, cdfi awardees made over 1. 4 million loans totalling more than 53 billion dollars and financed over 65,000 Affordable Housing units. As individuals become more selfsufficient, their reliance on social welfare programs decreases, so these decreased costs in the long run. Cdfis are innovative and flexible. We have a long track record of layering varied Funding Sources, finding multiple ways to use new tools. As an industry, we are collaborating in a few National Groups to access epas Green House Gas reduction fund. The proposed cdfi tax credit and Scaling Community lenders act are also promising options to add essential liquidity. A growing segment of the cdfi industry are native cdfis serving largely rural reservations villages and homelands. With many facing high rates of poverty, access to capital and other Financial Resources is especially difficult, giving rise to predatory lending, now more accessible on the internet. In addressing this, we try to prevent issues like this Small Business customer, struggling with cash flow due to covid impacts, took out several internet loans then capable to us asking for refinance, but their loan docs required them to pay nearly all of the service fee, equating to nearly 50 percent interest. They did not understand what they signed and have very little recourse to change it. A few key issues lead to unique challenges facing rural cdfis in their communities. One is collateral valuation. A Rural Property is worth perhaps 20 percent less than in an urban area. Put that property on trust land, and it drops another 20 to 25 percent. A tribal business we helped finance before covid cost roughly 12 Million Dollars to build, but appraised new at about 6. 5 Million Dollars. A bank could not finance that fully, and the [inaudible] could not fill the entire gap. The project used additional land for collateral and via three cdfis accessed tax credits, a federal Loan Guarantee and special purpose sources. Its now doing well, but only because of those multiple layers of funding. Title issues and lease hold improvement mortgages were additional issues, not uncommon with native projects. Many banks do not understand and avoid the complex legal status of trust land. A second challenge in rural work is census data. Large rural census tracks spend multiple towns or entire counties and average out or mask pockets of poverty often making them ineligible for Funding Sources we use. Recent census changes for 2020 further narrowed Data Available in many tribal areas. Minor wording changes to allow for the use of census data at the count or block group level or to allow the use of locally collected data sources would greatly improve access in those areas. A third challenge relates to lowincome housing tax credits, our number one tool for development of affordable rental housing nationwide. The bipartisan Affordable Housing credit improvement act would increase the total available, strengthen the program, and help address challenges in rural and tribal areas. I could list a number of improvements we would strongly support to facilitate greater success in our work, but i will focus on just a few. Increased annual appropriations for cdfis and new market tax credit permanency with specific rural and native allocations. The cdfi guarantee improvement act to make these less expensive and more accessible. And Housing Support through both [inaudible] improvements and continued support for neighbor works america. I greatly appreciate your longterm continuing support for cdfis. Our impact numbers show how helpful you have been. We were excited at the formation of the cdfi caucus and the increased efforts you are bringing to this work. Thank you for the opportunity to discuss cdfis with you today. Thank you very much. We will go to you now. Thank you, chair smith and Ranking Member. Im the president and ceo of the Neighborhood Development center, in d. C. It is an entrepreneurial focused cdfi based in st. Paul minnesota. For over 30 years ndc has created a model of excellence for serving bipoc Small Businesses located in low income neighborhoods. Im a proud member of the build from within alliance, a group of organizations from 50 communities replicating the ndc model. Also a member of the African American alliance of cdfis ceos, the minnesota cdfi coalition, and the opportunity finance network. Our ndc model features four pillars of wrap around support to provide access to opportunity and financing to populations who are unbanked. These pillars are training, Small Business financing through loans, Technical Assistance, and real estate incubators. Ndc will be building a new innovation incubator focused on second stage businesses in 2024. Thanks to senator smith and klobuchar for their help securing a 1 Million Dollars grant for this project in chicago which was destroyed during the murder of george floyd. During the pandemic, cdfis like ndc were trusted local intermediaries for federal and state funds. While many were left behind in the ppp process, we were able to ensure 90 percent of our ppp loan amounts went to bipoc businesses. We did seven times more than we did in a typical year. This is the power of cdfis. In the state of minnesota we were ground zero to communities across the country responding to racial and economic injustices. According to the federal reserve, the median Household Wealth for white families is 211,000. In contrast, latin x families is 18,000. And for black families, 0. We can and must do better. This is why cdfis matter. Heres what 30 years of ndc has taught us a enwhat we know in our and what we know in our bones. Bipoc Small Businesses in low income communities require unique and innovative approaches to opportunity. In the last three years, ndc has created initiatives to address entrepreneurs mental wellness, double down on our support for black and latino women, launch credit builder loans and education, and are assisting entrepreneurs to buy their own commercial real estate as another pathway to wealth. We dont stop there. The state of minnesota has tagged ndc to deploy 79 Million Dollars in Small Business grants. I want to thank senator smith and other senators who signed on to support an appropriation of 341 Million Dollars to the cdfi fund in fiscal year 24. That appropriation funds entire cdfi programs like the native initiative, new market tax credit, not to forget that during the pandemic, Rapid Response program and Equitable Recovery Program were a lifeline to organizations like ndc and those we serve. Some recommendations i have, the cdfi fund is a competitive process. I would recommend base funding for all cdfis and competitive grants for additional performance impacts and or new innovative models. Accountability is important. But so is funding the full cdfi ecosystem. I also want to recommend the changes proposed by the senators for the cdfi Bond Guarantee Program improvement act, by reducing the minimum cdfi bond size from 100 million to 25 million, this bill will allow more cdfis especially smaller cdfis to access the fixed rate, longterm financing the Program Provides. Cdfi bond financing could be used to finance additional commercial space and or business incubators for local entrepreneurs. Lastly, i would like to share the story of one of our entrepreneurs. Marla smith opened consciously beautiful in 2018 in one of our Small Business incubators. She was a graduate of our training program, a recipient of Technical Assistance, and a loan client. Business was good. Then 2020 hit. Salons were closed, and civil unrest happened in our neighborhood, and then life dealt marla another blow. Her son lost his leg in a boating accident. This isnt a story of tragedy, but one of her rising like a phoenix. Marla did not quit. While staying with her son in the hospital, she shifted her business model, designing a curriculum and working with the Minnesota Department of cosmetology to require anyone licensed to do hair to be trained in all hair type. Marla is the first in the nation to create this type of curriculum and do policy work alongside it. Today marla and her son are thriving. Shes paid off her loan and recently graduated from ndcs black and latino women programming. Not only is marla a mom and Business Owner, shes a leader in our community. Thank you so much for allowing me this opportunity to testify. It is with deep gratitude to you all that i share my organizations work and i welcome any questions. Thanks. Thank you very much. Ms. Cornelius . Good afternoon, madame chairwoman, Ranking Member and members of the committee. Im crystal cornelius, president and ceo of a corporation and the neighbor works america affiliate in colorado. I thank you for the opportunity to appear before you to discuss how cdfis promote housing and Economic Opportunity. And a formal greeting hello and it is a great honor to meet with two very important and important is more so a measure of gratitude and strength within women today, so really appreciate this opportunity. The corporation is the longest standing native cdfi intermediary that works holistically with tribes and native nonprofits and their communities over the last 24 years. Its longstanding mission has directly affected thousands of tribal members from our inception. It is typically the first and many times the only investor supporting native cdfis and their local target market demand. A pretty me. The situation is more serious when it comes to managing Financial Institutions. According to the landing study conducted in 2115 of communities are more than 100 miles from the nearest atm or bank and 86 a single Financial Institution within their borders. This report explicitly identifies native communities in need of strict Financial Resources for the last Financial Institutions composed a fundamental problem in accessing financial the initial services. Perhaps more seriously makes homeownership business financing personal Consumer Lending products almost impossible to achieve. Analysis by the native american lending study of investments in native american and native hawaiian economies surveilled 44 billiondollar gap of those in United States economy. To address this need for strong and stable Financial Institutions the goal is to help native communities create, capitalize them aid and growth and sustainability of native cfis these organizations are communitybased financing entities governed by representatives and boards that meet the needs for accessible, affordable loans and other Financial Products that are often tied to intensive training and Technical Assistance and additional to capital resources. These institutions form the foundation to develop homeownership and privatesector opportunities for their respective communities and the emergence of a bustling homeownership and privatesector economy for members across the United States. The success of this approach and the number of cdfis we work with within our services is paramount. In 1999 today we have over 66 and emerging that are effective for tribal communities. Women look specifically into the landscape landscape of trouble committees and i think this is relayed by her Committee Members especially in remote communities tribal communities are tracking major cetaceans offering their products and Services Within our respective communities and we typically tend to be permeated by perfect lender so when we look at the imperative nature of what they have done over the past 25 years our institutions are the financial pillars of our economies of our tribal communities and a light and beacon of hope in what makes our organization so different as it provides a muchneeded Development Services that are relevant and tied with a capital thats needed not only for Consumer Lending products, building businesses but also seeing a huge insurgents but i find so exciting and homeownership. More and more tribal members have up to 20 years of our organizations operating in these measures are ready. They are homebuyer ready and they dont want to have delete their home to lead their communities to find a better pretend they were to create assets. Homeownership is one of the Building Blocks to creating access to generational wealth. We begin in 2002 with an exceptional record. Today direct financing is made an incredible impact within our communities and lending to her native cdfis created 16,652 jobs, 3885 Small Businesses and built 217 Affordable Housing units. When we look at the availability of capitol this year we have 40 to native cdfis in her portfolio. We have employed 579 million thats leveraging individuals and people that can leverage money as well. Three. 49 million in landing a 109 million housing many and 79 million 45 million agricultural lending. I thank you so much for taking the time listening and really supporting how important native cdfis are cross the country and only look at what the dream is supposed to encompass in communities that have been on the poor are left behind it not have the opportunity to answer the financial mainstream, 1100 cdfis are changing the lives of people every day creating tax base is creating stability within families. They are creating longterm generational wealth and more so specifically with the native communities we are creating community wealth. When we see the dollars reverberate within our communities and the strength of that builds thats what true change looks like. Thats what true equality looks like and thats what your equity looks like. When we look at our industries and what cdfis specifically do they are intrinsically culturally tied to the communities we will live work and breathe in our communities. Its breeding success. When we see one business start within a community and another individual says i can do the same thing. If they did it, why cant i and we are seeing that as we see we have created over 16,000 jobs. Thats just up to 42 cdfi zoner percolated we have 66 and 30 more emerging so looking at what we are excited about we need your continued support, your continued championship of the cdfis and specifically the native for appropriations. We have seen them pretty much at the same level at 21 million that was perfect when we had five, 10 of 15 cdfis now when we are getting a juncture of 60 or over the competitive nature of this program in and of itself which we are finding smaller cdfis are not getting funded because the more successful and impactful if we are all impactful but we need to make avenues and measures which we can increase the economic fatality of all committees and obviously in speaking on behalf of native communities and each and every one of our communities deserve this and you are a champion. Thank you very much. Thank you all for your testimony. We will get a chance to hear from all of you during her questions which will now begin and our first one line of questioning will will come from senator tester who is joining us remotely. Senator tester you have five minutes. Thank you chair smith and Ranking Member lummis and thank you for allowing me to go ahead. Thank you to the folks who have testified. Im going to ask ms. Nelmark a question. Ms. Nelmark have ever heard of boozman, montana . The answer is yes. Thats good. I just visited with a number of businesses there and housing is one of the highest growth in the country and housing there reflects that. Housing prices are through the roof rental prices are through the roof and its created a Homeless Population and its also created an affordable affordability issue for people and properties nobody wants to give up their and i dont blame them. My question for you is in the high growth area can be boozman or someone else but could cdfis play a role in housing whether its rental housing or ownership housing and what is that role . C thank you for that question. So they can play a number of roles. Reworking Housing Developments of multifamily and singlefamily Property Management for rental housing and financing for all types of housing including manufactured housing singlefamily housing etc. Keep going, sorry keep going. Specifically i think the issues we have been dealing with are the large gaps between rental housing and getting into for sale housing and homeownership and we are looking for options such as manufactured housing to be able to bridge that gap to be a steppingstone for people to start off and work their way up towards what they would like to end up in as their home. Okay, so a couple of questions that revolve around that. Allow that these folks didnt have the largest huge solutions or Game Changers because quite honestly supply is a problem and cost is a problem. How does the Community Get involved . To behalf to have a cdfi in that community or work with businesses are banks or how do you do it so i could tell those businesses that i talked to look heres how you need to get ahold of them and heres how you work on supply from this angle. We recently released research indicating adding housing nearly anywhere along the spectrum will fill the gap because people who move into that housing would be housing somewhere else along the chain and free up houses for others to move into. And so that can be failed by cdfis at the Affordable Housing level and also through Market Rate Developers at other levels. Okay. From the standpoint of the policymakers that senators that are in the room today, is there more that congress can do or the administrator in can do to break down the barriers to allow cdfis to do their work even better . Yes, yes. Specifically for housing to provide more base funding as ms. Dossman suggest it would be extremely helpful in planning and knowing where they could go to. Loans are housing tax credits as one of the best tools we have two provide for affordable rental housing and that is very difficult to get to access and rural areas particular. The tend to go to the urban areas more than anywhere else so those would be a couple of them. And in the last question because i only have 19 seconds left, 3,941,000,000 was appropriated with cdfis. How much is that once leveraged in other words whats the real value is roughly 10 times that on average. Okay, thank you very much. Thank you senator tester and i will now turn to senator lummis. Thanks madam chairman. Ms. Britt first evolved thanks for your enthusiasm on cdfis. Do you have any feedback on the cdfi proposal to revise the certifications of the locations yes and forgive me that i went over. Thats okay. There are specific very critical changes to the certification process that could possibly be detrimental to sub it cdfis and how we operate in our community specifically. Prior prohibiting interest on Mortgage Loans and loan payments and Mortgage Loans with the return of 30 years. Under proposed cdfi changes cdfis will have the right mortgages that include no negative amortization or bowling payments. When we look at the majority of the mortgages that are held within portfolio as of native cdfis the majority of those or bowling payments so if we look at how number one able to access conventional means outside of section 184 or usda by the two programs the mortgages that work for our communities for implementing change. We are going to see a huge increase decrease and homeownership in native communities and also the predominance of the finance restricting cdfi dedicated to Developmental Services. As individuals working within the cdfi industry in and of itself part of the cdfi certification is the marriage of Development Services in conjunction with financing. Some communities more need more Developmental Services than others. So these cdfi of the cdfi is not allowing Development Services to be imperative to create a stronger borrower and we are also going to see minimized individuals coming through. Development services are imperative whether you are native or broome to build the capacity of the availability. My next question id love to hear from any of you. What can we do to ensure cdfis have better access to stable forms of capitol and im particularly interested in what you had to say about federal homeownership. Federal Home Loan Bank membership hasnt been accessible for all cdfi for reasoned that those who do access it are able to get to that financing with pledging of Home Mortgage assets to those who dont do mortgage lending dont have the assets to pledge. Even more so cdfis make a lot of nonconforming Mortgage Loans which are not eligible to banks. Collateral Mortgage Loans with a higher loantovalue than prescribed. Those comes in certain areas that have value gaps in construction. Thank you. Thats very helpful. Thank you senator lummis. I think this cdfi von guarantee we talked about the fact that it could go from 100 million which we have never looked at that and we wouldnt have been able to use it. To go to 25 million is 25 million right . 25 million works and we can collaborate and Work Together but its more attainable than mark sussel at that level. I think it gives us longer terms because thats what we need. With these entrepreneurs that we support that want to do this commercial development if we think about our developing program that we are creating a gap in financing is whats tripping everybody up so to be able to provide longterm financing to them, patient capitol is what we call it as the key so grateful for that. Do you agree that 25 million is the sweet spot you it would be very helpful for some and yes to be able to collaborate we could use that a lot more. I would also say that the cost which leads to the higher Interest Rates makes it not as useful for certain types of loans or many types of loans and if there were some funding with a bill proposing 10 million in funding to provide for the reserve that would reduce the Interest Rate cost they would have to access the cdfi bond fund and it would make it more affordable loans to our customers. Thank you and ill have more questions in a minute. Thank you. Thank you so much senator lummis. Senator menendez. Thank you madam chair. The houses the last few months debating draconian cuts to domestic programs that harb including this cdfi fund. In july the House Appropriations committee passed a bill to cut funding for cdfis by 45 million in near 15 cut from fiscal year 2022. Can each of you briefly describe how these large cuts to the cdfi fund would impact the word the work that you and others do in this Disadvantaged Community . Thank you senator. To set a high level to cut 45 million was cut half a billion dollars of Community Lending and investment. And specifically to each of us it would cut out a lot of their activity that we are able to do within our community and that can be devastating for some of those areas that they serve in some of the people. I completely agree. If you think about what we are able to do as a result of covid that we were able to receive the additional funding and Rapid Response as well as taxable recovery programs the additional funding that we received during that time made it easier for us to serve that those that we need to serve and like you said not having to face. All cdfis are not created equal for not having apace especially for smaller cdfis makes it hard pressed to get into the communities that we need to get into to provide the training and low interest loans that we provide. Anything during these times especially now with Interest Rates and Everything Else more funding would be needed. I would echo those comments. And how it can affect generally is the ability to leverage funding and when we look at what are able to do with cdfi funds and leverage those with other longterm patient capitol you are looking at huge decrease in the amount of activity in loan volume which we be able to provide to our clients. Cdfis are proven effective time and time again which is by earlier this year 46 of senators joined requesting robust funding for this cdfi fund and hope to continue that bipartisan support. This cdfi Bond Guarantee Program which i helped create in the 2005 crisis allowed longterm lowcost capitol to jumpstart Economic Growth and Community Development all at no cost to the taxpayer. The program is supported over 1. 3 billion in financing for communities facilities nonprofits commercial real estate and other development projects. Ms. Nelmark can explain in greater detail how the cdfi Bond Guarantee Program helps these projects the cdfi bond Program Provides longterm lowcost capitol. To access your money we cannot get that in a regular Banking System. The cost of those funds to us is rather high to be useful other than longterm investment such as housing rental housing and property for example. We would greatly appreciate the Bond Guarantee Program improvement act to decrease the cost even a 10 milliondollar investment can make that much more accessible to many more uses in Community Development. Which is why im proud to cosponsor of the chairladys cdfi bond. He can only be more powerful. Ms. Nelmark can you talk about how cdfis can help alleviate the lack of Affordable Housing supply cdfis works on many avenues to increase housing and looking at pretty much any option we can come up with. Manufactured housing, rebuild housing, renovating existing homes providing for unique types of construction for finance developers such as the prefab walls. We are working with others to help them help our communities. Thank you. Thank you senator menendez. Senator fetterman. Hi. Thank you everyone but i just wanted to ask a question do you believe that there is a homeless issue and Rural Counties across america . Yes, its hidden though in areas very much so. They are a lot of people that dont appear to be homeless because they have a place to live for the night. Its very precarious and they could be out on the streets any day. Does anyone else agree i would agree with that. Cordial mores for lack of a better word we can have 16 individuals in a twobedroom house because theres not enough housing and individuals could be homeless and that doesnt constitute and how we care for our community. A supermajority of counties in my state of pennsylvanias rural and i have heard again and again theres a real housing crisis here and rural pennsylvania and i have thought about the problem. And what are the different options right now too. I wanted to bring to you this idea manufactured Housing Units i. E. Mobile homes. I think that would be a very affordable kind of option but is it fair to say that theres a stigma attached to it to where its kind of like trailers or worse things that im not going to say out loud. But i think thats a shame because its strange to meet. There has been a time where tiny houses were all the rage in urbanists and others think thats amazing so why not trailers to and if we have the kind of crisis of housing and Rural Counties i mean do you support that expanding Financing Options for people that just want manufactured housing as well or that never really has a path to pursue because of the stigma or that kind of the thing. People dont generally look for manufactured housing and we have been working on educating people, even our staff to understand the difference between mobile homes and post 76 in post post 94 had complaints manufactured homes that are much more energyefficient and wellbuilt and to think of them as a stepping stone to affordability. They can also be improved with carports, porches and things like that to look very attractive and not look like a mobile home. I dont know, i know millions of americans lived in manufactured housing and theres nothing wrong with that. I think its a very affordable kind of option for people and provides a roof over their head. Obviously its not as easily put into an urban area but i think its a shame. Is it safe to say it is that stigma that people are like i dont want to live in a trailer or anything like that. Ive seen, ive seen a lot of mobile homes that are lovely and they are beautiful and id have no problem living there. Putting them in a Community Model uses that stigma come increases the Community Spirit and a desire to be a part of it when they have ownership in the land on which their houses are located and it helps them all become much more of a neighborhood rather than just living in something next to each other. Is it a fair statement that people would rather have fewer people addressed with their housing are having more traditional homes built as will two . It seems like its kind of the tradeoff on it as well. Ive heard for years and years and seen that there is housing problems in rural pennsylvania. Thank you. Our Committee Land trust in pennsylvania are doing amazing work to create longterm Affordable Housing options. Community land trusts struggle to find funding the moves quickly enough so they lose out to private equity and market rate buyers. Have you seen these issues . Yes. Not just with land trust that with all cdfis and nonprofits who would be buying those homes to rent affordably and more so to maintain them to keep the homestead is safe and desirable and quality status so the kids growing up they dont have the worry about a hole in their ceiling and things like that. Yes to have that liquidity available to be able to jump on those right away, that something we have been in discussions with. North Country Foundation for example in minnesota to look to buy full mobile home parks all in one fell swoop to turn it into a community. It in right on time. Thank you very much senator fetterman. First i just want to say thank you so much and im not going to go back to the cdfi Bond Guarantee Program and the provisions in the reforms that senator rounds and senator lummis and i have proposed is a think we have talked about that. As we move that legislation forwarded love to be able to continue to speak with all of you about that and make sure we have set up in the right way. Let me ask a question specifically about the native cdfi Pilot Program. This is the department of agricultures Pilot Program to make mortgages on Tribal Trust Land and we have had a chance to hear about how challenging that is. An institution that doesnt have experience and making mortgages on Tribal Trust Land could be very difficult and difficult to resolve. Im wondering maybe ms. Cornelius and ms. Nelmark if you could share your views on this program and what are some of the unique issues unmaking homeownership on tribal lands and then ill have a followup. So ms. Cornelius and get ready because i have a question for you next ms. Dossman. The tribal lands in being able to mortgage or have mortgages within the lands has been, created very many barriers for tribal committees and generations upon generations so i think with the Lending Program number one is very innovative and its working to address an issue to create homeownership within our communities and a measure that understands the trust land and allows for future mortgages so all in all i would say its a wonderful program. Im also very excited to see as well theres a cool ask about would say government interest for example fannie mae and freddie mac to put their heritage loan product out and mortgages within tribal communities. It seems as if the pilot has been quite successful and thats way i hope we can expand it. Ms. Nelmark would you like to add to that . Yes, its very helpful when we are able to use those are some of the tribes dont have the codes and their regulation that allow for federal guarantees and federal direct loans to be use their so if some leeway in terms of the flexibility with those regulations that are required to be able to use those on the reservation that could be very helpful and i think there is already examples out there to use to consider. But its their option to implement those rules. Thank you. Ms. Dossman i want to dive in on some of the work that youve been doing at Neighborhood Development center around black entrepreneurship and issue no one very familiar with your work and a long time friend and ally of mine. Sometimes its difficult for people to understand what are these barriers and how specifically does an organization like Neighborhood Developments break down those barriers . Your wanting to start a Small Business for example. Explained what the barriers are and how you break them down. In the places that you were involved in. Thank you senator smith. We actually looked at our data and we noticed specifically for black and latino women we noticed that they were they started their Training Programs and they might not finish and they might not get Technical Assistance and would get alone so we got curious about what was happening. We did research and we talk to them and we found out it was a lack of support. It was a of them being able to build the communities themselves and them being able to get more support. We started program which is black latina opportunity and we started it and we didnt have funding at first and then we had people come along with us. We are now into her second cohort and we get focused dedicated training and resources. If we think about it, its not, if you think about marla shes a graduate of bakken is not that these entrepreneurs dont want to wear that they dont care or any of that. Its just giving them access to the opportunity. Up when you talk about Development Services thats what youre getting at . And again. An example of giving them what i call Technical Assistance. For the entrepreneur they have a culture in the above Business Development culture and they can work with each other. Chilling portrait of them to be able to work with the community. So thats what we have found and they are completing their business. They have supported and they are completing their Business Plans in Going Forward with their loans to access the capitol yeah. And then it just works and now they are together in this. We have seen great Great Success for the first round and now we have started with a second. I had a chance to be on a panel to discuss the opportunities the Building Block wealth and there were two incredible entrepreneurs from the twin cities there. The Woman Entrepreneur talked about specifically the challenges of trying to get access to capitol going to a bank in the bank looks at a record and says he no know what was the term he used not noncompliant. Nontraditional. Once you break that down she now owns several buildings. She has a successful business. She is able to build wealth for her family and its a great example of what you are talking about. I agree and if that access. To access and ability to obtain the capitol and thats why cdfis are so important. The work that we do is not about your credit score its not about how coli wrote you have on the table. Your commitment to the community and thats what makes the difference. We believe in these entrepreneurs and we believe in their spirit and their drive it just to know that someone is there walking along beside you and can give you what you need to do what you need to do. You are not waiting for them to fail. All the way. Senator sobel and thank you. Thank you chairman smith and thank you for your line of questioning for this present ceo of the bank of alabama is one of the areas we work so diligently unto thank you for answering it so directly. August the access to capitol making sure they are a success for people who want to be entrepreneurs. I commend you for your continued work on that. I continue to be a strong advocate for our countrys Banking System which gives so many hardworking families access to the american dream. From the largest inca regional down to the smallest local Community Banks and Credit Unions. Financial institutions of all sizes provide services to their individual customers, their members and communities. Cdfis certainly play an important and Critical Role in the banking ecosystem. Thanks to the strength and effort of our Banking Industry in alabama the number of unbanked and underbanked individuals in the state have decreased over the years but that being said in my state 55 under 67 of our counties are considered rural many al bamyans still access to typical Financial Services. Cdfis provide a host of services and product lines that not only help reach the underserved individuals to reinvest back into our local communities, expanding Economic Opportunities are all alabamians. Current Economic Conditions as we have seen over the last two years have hindered Small Businesses ability to access credit. Cdfis certified Community Banks and Credit Unions have continued to do their part and offering affordable products that promote Financial Inclusion and asset building and expand access to our great capital markets. Thats why congress has funded Grant Programs and enacted tax credits specifically for cdfis. Presents the united bank in alabama recently received a new market tax credit allocation award from the cdfi fun. They will use these investments to continue to bring new jobs to alabama improve access and promote more Affordable Housing. In addition to federal investments we need to ensure we are promoting policies that also allow these institutions to continue to attract private capitol as well. My question is can you just tell us some of the important things we need to take into consideration to ensure that cdfis content to have access to private capitol and i will start with you ms. Cornelius and work our way down. I think one of the things that im most excited about for our native communities are proposed changes so when we look historically investment within native cdfis or around so we are looking at what that can mean to have equity in partnership from Bank Specific than what we are founding finding part of the Foundation Footprint outside a the larger banking institution. With that access thats a whole new stream of capitol thats really exciting and i also think as we start working we have been incredibly successful with social capitol and we bring in Corporate Partnerships which will be intrinsic in how we gather our prospective programs to the best of our ability and leverage our opportunities and leverage or programs. Absolutely. I think it would be helpful if we could have cdfis. All cdfis or not created equal so the ability to know that you were going about doing your Strategic Planning and your budget that you have this money and you dont have too do the long lengthy applications of things that you do go through within your base it would make it a lot easier for us to do the work that we need to do unencumbered. Okay. Thank you. Similar to comments in terms of getting too predictable funding from the cdfi fund in addition to an on ramp of perhaps three to five years for new and emerging or smaller cdfis to Access Funding before joining the broader pool would be very helpful. The competitiveness has created a barrier to entry for those organizations who havent already been in it. Even in a new Market Tax Credit Program the successful applicant or within four or five points of the maximum so if someone answers as certain bonus questions no one loses those five points they are out of the running automatically. So if you different ways to make it more predictable funding would be the most helpful. Madam chairman can i ask one more question . You have the last two. Go ahead. In your experience which federal program has been the most successful in providing to cdfis so they can reinvest in our communities and on that same note if you dont think of that right off the bat is there an existing gap or shortfall that we need to take a look at and address . And its for everybody if she will let me. Thank you senator britt could one of the gaps that i keep seeing is when we think about the wealth gap in the wealth inequities and one of the pathways for that is for entrepreneurs to own their own commercial real estate. There is still such a gap for entrepreneurs to get their financing that they need to do that. We have programs in minnesota that we are trying but that gap, that 5 or 10 that we support entrepreneurs to come up with is really difficult for them to achieve. Id also say the ability to get market tax credits. Im really grateful for julie and her team because they have provided our cdfi with funding for us to be a will to do real estate. We didnt have the amount that we needed so how do we get more capitol and more of the cdfis that are doing the work so we can get further and deeper involved thank you. I would like to echo new market tax credits are incredibly important to the development of native communities and unfortunately this cdfi fund has really looked at the onramp thing for native cdfis so thats incredibly important and i believe our partnerships when youre talking about federal programs that are beneficial we work handinhand with usda and a lot of these that they have complement a lot of our services and or lending initiatives which help repel our development in this area. Thank you so much. I would add in addition to get theirs again that predictable capitol is most important and Neighborworks America for those who are fortunate enough to be members of it, provides Grant Funding every year to members and its spread across capitol and operating. It is some of the most flexible and useful capitol weve been able to access and restate years. Things along those lines, supporting Neighborworks America and increasing their appropriations would be helpful as well as similar funding to that. Is so important that you were all here and adam Ranking Member thank you for your indulgence. Thank you. Im going to the chairman has gone to vote as i understand it. There are no new democrat attendees. I believe we are about to conclude as well. I have a couple more questions and then im going to ask each of you to conclude by responding to this question. Is there anything you wish you would have been asked and werent and how would you respond . But before you respond to that question i have a couple extra questions. Ms. Nelmark your testimony talked about the gap between the finance we need for the project at its appraised value. Its a problem that plagues a lot of Affordable Housing projects. Can you talk about the need to think creatively about financing the types of projects you work on it how cdfis bring expertise . Thats a great question and thank you senator. And building singlefamily homes and minnesota we have seen value gaps with new construction to replace value of 50 to 80,000 per home and we have been fortunate enough to access at the state level and that gets us funding for two homes at a time for per committee so it doesnt give us the volume that is needed to really address the issue on a broad basis. We bought worked on additional sources to try to find that. New market tax credits is being used by a handful of organizations to finance the developers of these homes and a new market equity is used to reduce the costs by 20 or so on those homes with the affordable home developers. Thank you. And ms. Dossman in what ways to Small Businesses benefit from cdfis . Thank you senator lummis. Its fast. They receive training. You might be a great, you may know how to do hair beautiful ear starter will restaurant that you dont have a Business Plan or know how to run a business so we provide you with a Business Plan so you get training and want to start a business thats great but as you go along you might need Additional Support preview might need help with accounting and thats the biggest thing for our entrepreneurs as their financial activities. Unite need help with marketing and obviously as we have talked about here today the ability to access capitol for a person like me is difficult at best. Then you need space to put your business. Now you have this great business in this great idea. I think cdfis, we believe in the power and ingenuity of entrepreneurs and we dont stop at any point. Its a complete wrap around service and we are with those entrepreneurs every step of the way. As a Business Owner myself with at a restaurant other businesses and still have businesses and to have someone to walk along beside you and know for they will not give up on you no matter what is a beautiful thing. Cdfis are unique and thats why im so pleased that so many of you have brought such positive remarks about them. Okay so now we are down to the last question and we will start with ms. Cornelius. What do you wish you would have been asked and what do you want to leave this hearing knowing that we have heard . In looking at what could be asked and obviously i represent native communities throughout the United States alaska and hawaii, what can we do more to support specifically those marginalized Community Programs that we can enhance availability and partnerships . Working in such rural areas and having the opportunity to engage in larger programs would be imperative and when we look at the cultural hawaii is different than alaska and encompassing 574 federal recognized tribes or unrecognized tribes we are doing such great work. They are so much more to do. Thank you. My daughter and my husband were both part of the forprofit subsidiary of this cdfis on a reservation in wyoming called the painted pony. It took oral histories and converted them into storybooks, beautiful illustrated and every 4thgrader in wyoming received a copy of these books. Im very familiar with what native cdfis are capable of and its impressive so thank you for your work. Ms. Dossman. I want to and senator lummis for gratitude for the ability to be here with you today to think about the 1500 cdfis that i feel sitting around this table with the i want to express that the bill from within the Alliance Organization of 16 organizations across the country from anchorage to texas. We are in this together and it has been really heartwarming for me to understand and to get to know you better get to know that we are fighting this fight alone and that we have a vehicle where we have concerns that we can have a conversation about and come together for they wanted want you to know that im grateful to that. I also think its important to understand when people found out i was testifying only received. Get it, this is great. Tell them our story. Its a collaborative effort and we are all in this together. I am eternally grateful for this opportunity. Thank you. Thank you so much for your testimony today. We are delighted to have you with and we love this dialogue so be sure when you look at the legislation that you fed it and make suggestions to make the language clear and helpful. Ms. Nelmark thank you senator and i too appreciate the opportunity to share with you and the committee. We have been quite flexible, rural cdfis in particular working in so many different spaces. We havent talked a great deal today about Development Services such as homebuyer education financial counseling and free income tax preparation. Those services are some of the support of Building Blocks that help people get into their own homes. Actually to prepare them financially for all kinds of life work, work and home. That plan brings us into how to help them get into Affordable Housing. They talked about if you different solutions. Ive referenced lowincome housing tax credit and to have that more extensible throughout all areas of the state especially rural areas would be extremely helpful and i will mention the few statistics. According to a recent report by the Harvard Joint Center for housing study 41 rural renters or cost burden meaning they pay more than 30 of their income for housing costs in nearly half of rural households pay more than 50 of their income for housing. With those kinds of costs and a lot of homelessness as i mentioned earlier we really need to figure out ways and we are working on many ways but to have some of the tools that are are ready they are to strengthen and increase it would be extremely helpful for us. I want to thank our witnesses and madam chairwoman welcome back. I believe we are at a oppressions of the floor is yours. I dont know if senator lummis explained that we have boats going on so we go back and forth. Id like to close by thanking all three of you for your excellent testimony. I see and what you have raised painting a very good story about the important gaps that sub eight particular amber and tribal communities and underserved duties committees so for Small Businesses as well as people looking to build a Stable Family by owning their own home. We have gotten good ideas for week we can do in a bipartisan way to make sure the federal government is setting up certification processes and other rules that work to make it easier for you to do your work rather than harder for you to do your work. We know the importance of accountability this process so thank you to all of you for being here today and for your testimony. For the senators who wish to submit questions for the record those questions are due one week from today which will be tuesday october 24. For our witnesses you will have 45 days to respond to any questions for the record. Thank you again and with this, this hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]