WASHINGTON - With only about 20 percent of the money it has available this year to help qualify Native groups for federal grants even requested, and even less (about 5 percent) obligated, the CDFI Fund has hired a technical assistance provider and embarked on a three-year program to boost Native use of the program.
At issue here is a chance to qualify for millions of dollars in CDFI funding each year ($32 million this year) and an even bigger prize - the new, multi-billion dollar New Markets Tax Credit program the CDFI Fund is administering ($3.5 billion next year).
According to the fund, a unit of the Treasury Department, as of July 2, nearly $5 million was available in its Native American Technical Assistance (NATA) and Native American CDFI Development (NACD) programs. But only $1.1 million of that amount had been requested, and just $256,000 obligated. Notice of Funds Availability (NOFA) for the two was made on Feb. 3, 2003.
The Fund recently awarded a $1.5 million four-year contract to National Community Capital Association, which is partnering with First Nations Oweesta Corp. to offer training to develop more Native CDFIs. (CDFI stands for community development financial institutions, which make loans or invest in low income areas.)
The Fund also said it is implementing a three-year strategic plan to increase Native use of the CDFI program. Major foci include:
oIncreasing training opportunities for Native groups.
oFinancial assistance above what is currently being offered.
oEncouraging the development of demonstration programs.
oSupporting Native financial education through contracts with private organizations.
Deadline for applications for the NATA and NACD programs is through May 31, 2004. The maximum award is $100,000.
Well-known Native CDFIs include the non-profit Lakota Fund, Kyle, S.D., the Hopi Credit Association, Keems Canyon, Ariz., the for-profit Alaska Growth Capital BIDCO, Anchorage and Native American National Bank, Browning, Mont.
In a first round of funding last year, some 36 tribes and Native groups received about $2.5 million toward becoming CDFIs.
The CDFI Fund's NOAA (notice of allocation availability) for the second round of New Market Tax Credit allocations is expected to be published in the "Federal Register" shortly, and the $3.5 billion the Fund has to allocate for 2004 gives tribes and Native community development groups an even bigger incentive to qualify.
If they qualify, they could join 66 organizations (including an Alaska Native venture that received a $5 million tax credit) that averaged $38 million apiece in credits in the first round of NMTC funding in March.
Application deadline is this fall and CDFI has tentatively set credit allocations for the first quarter of 2004. Indian country is one of the areas specifically targeted for the NMTC, although no set-aside has been made.
Apparently only one Native firm, Alaska Growth Capital BIDCO, Inc., Anchorage, was an initial awardee in March, when $2.5 billion in credits were allocated.
AGC, a unit of Arctic Slope Regional Corp., is a loan fund that will use its $5 million in credits to support small business loans, mostly in rural Alaska. A for-profit, it targets Alaska Natives and other minorities for business loans.
The tax credits will be used to achieve outside equity or ownership investment in projects, which is something rare in Indian country to date. A company like Alaska Growth would sell the credits to an investor and the cash it receives would provide the equity that would help a project to go forward. The investor gets a tax credit of 39 percent of the cost of the investment, to be taken over seven years.
Most of the initial awardees are targeting low income business and real estate activities, said the CDFI Fund, although just 11 percent of the real estate is residential, with the balance being community-related and commercial real estate. Another federal effort, the Low Income Housing Tax Credit program, targets residential real estate.
Alaska Growth's for-profit status stood it in good stead for the first round of funding, since as a for-profit CDFI it automatically qualified for the "CDE" certification needed to qualify for the NMTC. Many community development groups in Indian country are non-profits, and thus have to qualify, or, if already a CDFI, re-qualify as a CDE (community development entity).
According to the CDFI Fund, there are currently 679 CDFIs around the country and 1,091 CDEs. Many groups have both designations, including Indian country CDFIs like the Lakota Fund, Native American National Bank, and Four Bands Community Fund, Eagle Butte, S.D.