Congratulations to the 12 CDFI COALITION MEMBERS who won $41,650,000!
Post authored by Linda Davenport.
On September 21, The Community Development Financial Institutions (CDFI) Fund announced its award of $91.5 million in Capital Magnet Fund grants to 32 organizations for the development of affordable housing and other community service facilities. A total of 23 CDFIs and 9 nonprofit housing organizations were given awards. Of the 23 CDFI awardees, 12 are members of the CDFI Coalition.
CDFIS & NONPROFIT HOUSING APPLICANTS
This is the first round of the program that has been funded by profits from Fannie Mae and Freddie Mac as contemplated under the Housing and Economic Recovery Act of 2008. An initial round conducted in 2010 was funded with a one-time $80 million appropriation from Congress. That initial round drew over 300 applications and resulted in 23 awards to CDFIs and nonprofit housing groups.
This year, 125 applicants requested more than $609 million, including 65 CDFI applicants and 60 nonprofit housing organization applicants. The current pool of applicants was far fewer than in the past, or nearly a third of the 2010 applicants. There are several possible reasons for this, including timing, as the application was due at the same time as other popular CDFI Fund programs, or perhaps because of changes to the application. The latter reason was compounded by the fact that there were proposed regulation changes, which allowed applicants only 60 days to absorb the changes in order to prepare and submit an application.
USE OF AWARDS
Each awardee must use at least 70% of its CMF grant to finance affordable housing, and they may use up to 30% of the money to finance related economic development.
According to the CDFI Fund, awardees plan to develop 17,000 affordable housing units comprised of more than 15,000 rental units and nearly 2,000 homeownership units. The majority of housing units, 93%, will be developed for low-income households earning 80% or less of the area median income (AMI). Half of the rental units will be developed for very low-income and extremely low-income persons earning less than 50% of the AMI. The Fund does not separately break out the percentage commitment to households at 30% of AMI in the announcement, notwithstanding several questions in the Community Impact Section that elicit specific responses. The awardees will serve 37 states and the District of Columbia.
The CDFI Fund supplied a five-page debriefing letter to unsuccessful CMF awardees. The first part covers the same review criteria that is posted with the award documents, on the CDFI Fund’s website. The other three pages cover other important features elements including the score ranking:
General Characteristics of a Highly Ranked Application.
The Fund explicitly identifies the characteristics of a highly ranked application by each section: Business Strategy, Leveraging Strategy, Community Impact and Organizational Capacity. Those scoring elements are:
- Market gaps were clearly articulated and supported by quantitative and qualitative information.
- Proposed financing clearly addressed the identified market gaps and offered more favorable rates and terms than typically available.
- Applications effectively demonstrated that a CMF award was critical to finance the majority of the
Applicant’s pipeline projects (i.e. projects would not go forward without CMF funding).
- Applications demonstrated a strong track record in delivering similar types of financing and undertaking similar activities in the Service Area.
- Applicants in which private leverage represented a high percentage of the total leverage proposed. For example, among all awardees, 70% of all total leverage is expected to come from private sources.
- If proposing a pre-investment strategy, the Applicant demonstrated a strong track record of pre-investment leverage and a strong level of commitment from potential pre-investment sources.
- If proposing a re-investment strategy, the Applicant demonstrated a strong track record of a reinvestment leverage and a sound strategy with a reasonable re-investment schedule.
- If proposing project-level leverage, the Applicant demonstrated a strong track record of raising project-level funds with realistic project-level leverage goals.
- Applicants demonstrated that the proposed business strategy addresses the identified needs of the communities and persons it intends to serve.
- Applicants proposed to develop/finance at least 50% of the rental units across their portfolio for Very Low- and Extremely Low-Income persons – 50% of AMI or lower (based on the median percentage).
- Applicants that proposed to develop/finance homeownership housing, had a median of 83% of homeownership units dedicated to Low-Income persons – 80% of AMI or lower.
- Applicants demonstrated strong management capacity with qualified key personnel, governing board, appropriate staffing structure.
- Applicants demonstrated strong financial health and operational capacity.
Application’s Score Range by Section. The Fund very helpfully provides a breakout of the total possible points for each sections and the point range that particular applicant was awarded by the readers in a chart form:
|Figure 1: Application’ s Score Range by Section|
|Application Section||Total Possible Points (3 Reviewers)||Application’s Score Range in Points|
|Business Strategy||75 points||individual applicant’s point ranges|
|Leveraging Strategy||75 points||individual applicant’s point ranges|
|Community Impact||75 points||individual applicant’s point ranges|
|Organizational Capacity||75 points||individual applicant’s point ranges|
|Total||300 points||XXX of 300 points|
|Figure 2: Total Score Range Distribution|
|Total Score Range||Number of Applications in Score Range||Percentage of Applications in Score Range|
|150 points or less||13||10%|