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Native CDFI Taps New Financing Source

A Native community development financial institution has tapped the bond market becoming the first Native CDFI to take part in the program.
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A Native community development financial institution has tapped the bond market for $16 million, becoming the first Native CDFI to take part in a bond guarantee program run by the federal CDFI Fund.

The Citizens Potawatomi Community Development Corp., based in Shawnee, Oklahoma, will use the bond proceeds for large-scale commercial real estate projects in its service area.

The financing was part of an Opportunity Finance Network-issued $127 million bond on behalf of seven eligible CDFIs serving urban, rural, and Native American communities, one of which was Citizens Potawatomi CDC. The CDFI Fund, a unit of the U.S. Treasury, called this issue “the most diverse application approved thus far in the CDFI Bond Guarantee Program.”

In all, $324 million in bonds was guaranteed by the CDFI Fund in this round. In total there were nine bond loans guaranteed this fiscal year, bringing the total guaranteed to date to $852 million. All of the bond proceeds are designed to “provide long-term, fixed-rate capital for projects in low-income and underserved communities.” The ultimate source of the funds is the Federal Financing Bank.

To give an idea of the scope of this allocation, the CDFI Fund has disbursed $20 million to 43 Native community development financial institutions in its latest round of NACA (Native American CDFI Assistance) funding, well less than $1 million apiece (but up from $12.2 million in fiscal 2014. Since program inception, the CDFI Fund has allocated more than $100 million to Native CDFIs.

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In all, the CDFI Fund awarded more than $200 million in the latest round of funding.

Citizens Potawatomi CDC also received the largest NACA allocation, at $3.75 million, giving it a total of $19.75 million. Four other Native CDFIs received $1 million or more, including Alaska Growth BIDCO, Anchorage, Alaska; Four Bands Community Fund, Eagle Butte, South Dakota; Hawaii First FCU, Kamuela, Hawaii; and Salt River Financial Services Institution, Scottsdale, Arizona.

The biggest Native allocates offer a variety of financial products. Hawaii First FCU provides consumer loans and housing loans to its low-income and other Native Hawaiians of Hawaii County, located on the Island of Hawaii. Hawaii First FCU will use its FY 2015 NACA Financial Assistance award for loan loss reserves and capital reserves. Salt River is an affordable housing mortgage and home improvement lender. Alaska Growth BIDCO provides small business loans and small business counseling to low-income communities throughout Alaska.

There are now more than 70 Native CDFIs certified by the CDFI Fund, with many more seeking certification.

The Fund says its allocations “serve a wide range of Native American, Alaska Native, and Native Hawaiian communities, and reflect a diversity of institutions in various stages of development – from organizations in the early planning stages of creating a CDFI, to tribal entities working to certify an existing lending program, to established CDFIs in need of further capacity building assistance. A total of 60 applications were received requesting more than $37.5 million for the FY 2015 round, which was the CDFI Fund’s 14th round of funding with awards specifically for Native communities.”