Development Fund Wounded, But Surviving

Congress to quash future funding completely, the Community Development Financial Institutions Fund is up and running. The fledgling agency, created as a result of last year's community development banking bill, is now funding community development projects. Lawmakers voted in August to pare funding to $50 million from the $125 million appropriated last year. But the agency is still ready to provide seed money to financial institutions for low-income projects. "While we would have loved to have had the $125 million, we can still fund a wide variety of projects with the current appropriation," said Kirsten S. Moy, director of the fund. However, a measure covering next year's budget would ax the agency's funding. Senate and House conferees are expected to hammer out their differences on the bill this week. Of the $50 million the agency now has, $30 million is available for banks, thrifts, credit unions, and venture funds. The money will be awarded to institutions that submit five-year plans outlining how they'll make the funds available for low-income projects. Financial institutions may receive up to $2 million each. However, because of the limited funds, Ms. Moy said she expects the awards to be substantially less. The first funds are expected to be awarded by spring. Another chunk of the appropriation - $15.5 million - will fund implementation of the Bank Enterprise Act. That law doles out money only to banks and thrifts that are increasing their lending in low-income areas. The more money an institution commits to a low-income project, the more funding the agency will match under the Bank Enterprise Act. To determine how much money institutions will get, the agency will weigh the risk and cost of each proposal. The remaining $4.5 million of the agency's $50 million appropriation covers administrative and start-up costs. The fund is hosting two workshops next week to explain how to apply for funding - in Arlington, Va., Nov. 13, and in Los Angeles Nov. 17. The word is already getting out, Ms. Moy said. The agency has mailed over 600 applications to interested institutions. "This federal program is going to be a big boost for us," said Mark Pinsky, executive director of the National Association of Community Development Loan Funds. "This money is going to help out institutions that are permanently committed to rebuilding communities through leveraging money." Although Congress is planning to wipe out her agency, Ms. Moy, a former portfolio manager for Equitable Real Estate in New York, said that she holds out hope. "It's never over until it's over," Ms. Moy said. "This program continues to be a presidential priority, and many people predict a veto on the bill. "If I weren't optimistic about this, I wouldn't have left my old job."