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. I would like to call the subcommittee on housing, transportation and Community Development to order. I want to thank you as always, you and your staff are working with us on this hearing, which will focus on Community DevelopmentFinancial Institutions and how specifically cdf is can promote housing developer intent Economic Opportunity. I think that we all believe that everyone in this country should have the freedom and opportunity to build the lives that they want, that this is the American Dream, and an essential Building Block for fulfilling the streamers people have access to capital, lending, and resources so they can purchase a home or build a Small Business or get an education. We also know that not everyone has equal access to capital and Financial Services and this inequity drives big gaps in opportunity and wealth which is what we see in our country. Communities of color and Indigenous People in rural areas dont often have the same access to capital and that ends upholding everybody back. According to the Federal Reserve, a typical black familys network is only 15 of a typical white family and on average the net worth of a hispanic family is 19 of a white familys net worth. Theres less Data Available on the net worth of native families but a recent analysis by the minneapolis fed found that in one sample, median and data family had a net worth 32 times lower than that of a median white family, that analysis also found that homeequity is much smaller portion of the native familys wealth in part because of the difficulties native families face in getting mortgages. If you think of Rural Communities, the Pew Research Center data shows that Rural Counties are 50 more likely than urban counties to have high rates of concentrated poverty and twice the rate of concentrated poverty compared to suburban counties so its clear we have a lot of work to do to address these disparities, these challenges. So today, im very excited, we have the opportunity to hear how cdf is are a powerful tool to expand access to capital and Financial Services, to people in places that have been too often left out of opportunities. Cdf is work and have long had bipartisan support. When they fund the federal agencies overseas, cdfi programs established in 1994, there were 80 cdfis. Today there are a thousand supplying Innovative Strategies for getting capital and resources to underserved communities in all parts of the country. Ive seen the power of this work helping Small Businesses and building loans. We know that federal investment in cdfis yield a strong result because they Leverage Private capital. By one estimate, cdfis generate 10 of new investment on the private side for every one dollar in federal support. Today, we have an opportunity to hear about this work, what is working, what can be improved from three impressive cdfi leaders. Cdfis are bringing jobs and Economic Opportunity to communities, helping Small Businesses get started. Cdfis have adapted to meet the needs of different communities showing theres a lot of flex ability in this model and i and hearing a lot of feedback, i am interested in hearing feedback on the bipartisan bills that are out there to support cdfis my colleagues and i have been working on. Senator rounds and i have a plan to update the cdfi program so that it works better for smaller cdfis that are making a low interest launch from sources of capital available. Im also working with senator rounds and senator lummis on a bill to make permanent a Successful Pilot program that supports mortgage lending on Tribal Trust Lands. I would note senator warner and senator haggerty have a bill to support the 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 continuing our work to support cdfis and address historic inequities we see in our Economic System that i believe can be remedied by your work so thank you so much. Senator lummis, your recognized. Ive been looking forward to this hearing. Cdfis are an important part of addressing borrowers needs in this country and 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 who are not well served by traditional banking institutions. 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 stakeholders have raised concerns about the proposed application, and the delays and finalizing the application and the transparency of the process. We need robust standards to preserve and protect the cdfi designation. So i call on treasury amnesty 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 i would like to hear from the witnesses today, how we can best expand Public Private partnership that has fueled 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 few native cdfi members so i would like to see what we can do to support access to the system for native cdfis. The Federal Home Loan Bank system has really taken a look at the commissions efforts as they look at their 100th anniversary and i want to acknowledge as part of that initiative, hfa 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 feedback from the session and others. With that i want to thank our witnesses so much. I look forward to being here today, thank you, you have always been so gracious about including topics that are really valuable both to urban and Rural Communities and tribal communities. 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, we expect that you will have questions from other members of the committee and we are again very delighted that we are welcome and willing to come today and help us learn more about this topic so with of that, i yelled back, thank you. Thank you so much. And welcome again to our three witnesses who are with us today. I will introduce each of you and then we will start with julia nelmark, president and ceo of Midwest Community develop and corporation based in detroit lakes, minnesota, sort of northwest central part of the state, she has been in her role since 2018 and shes led the deployment of 544 million in new market tax credit financing. In addition to leading the mm cdc she also leads a native cdfi subsidiary, the white earth investment initiative. Yesterday usda announced they would be one of 8 native cdfis receiving funding through the native american a relenting Demonstration Program which i think we will hear more about today. Julia has a cpa certification, holds a masters in management from northwestern universitys school of business. Renay dossman is president and ceo of neighborhood develop an center in st. Paul, minnesota, which focuses on helping Small Businesses get off the ground in supporting their growth, it provides entrepreneurs a suite of Services Including lending and training, Real Estate Services and assistance with management, consulting, accounting, and marketing, who joined in 2,019 with 18 years of experience leading teams and merchandising product developed and designed for targets. Shes a member of the africanamerican alliance of cdfis ceos and has earned her bachelor of science degree in management and accounting, and chrystel cornelius is president and ceo of we Struck Corporation at National Native cdfi based in colorado. Miss cornelius has 22 years of experience in the economic develop and field, shes an enrolled member of the United Nation of wisconsin and member of the Turtle Mountain ban, we will begin with julia nelmark. Good afternoon. You each will have 5 and as for your Opening Statement, the clock in front of you to help you track of time and your written statement will be made a part of the record and pardon me for interrupting. Good afternoon, members of the committee. As stated, i am julia nelmark, president and ceo of the Community Development corporation. 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 in funds to make investments in loans totaling 14. 8 billion. In minnesota 31 cdfis served as 851 million of ppp loans for minnesota businesses and nonprofits. Preserving some 88,000 jobs. Investment in cdfis offer excellent return on taxpayer investments lose cdfis leverage federal dollars on average 10 to 1 to facilitate growth in businesses, jobs, communities and more. In fiscal year 22, cdfis awards made 1. 4 million loans totaling 53 billion, financed over 65,000 Affordable Housing units. As individuals become more selfsufficient, their reliance on social welfare programs decreases, these decrease costs in the long run. Cdfis our innovative and flexible. We have a long track record of layering. Funding sources, funding multiple ways to use new tools. As an industry we are collaborating in a few National Groups to access the Greenhouse Gas reduction fund. The proposed cdfi tax credit and lenders act are also promising options to add essential liquidity. A growing segment of the cdfi industry, our native cdfis serving largely rural reservations, villages and homelands. With many facing high rates of party, 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 covert impacts who took out several internet loans, then came to us asking for refinance but there loan docs required them to pay nearly all of the full service fee equating to nearly 50 interest. They did not understand what they signed and had 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 less then in an urban area. Put that property on trust plan and it drops another 20 to 25 . Tribal Business Finance before covid costs 12 million to build but appraised to 6. 5 million. A bank could not finance that fully and the tribe could not fill the entire gap. The project used additional land for collateral and they accessed tax credit, federal Loan Guarantee and special sources. It is now doing well but only because of those multiple layers of funding. Title issues and improvement mortgages for additional issues, not uncommon with native projects. Many banks do not understand and avoid the complex legal status of trust plans. A second challenge is census data. Large rural census tracts pay multiple towns or entire counties and average out mass pockets of poverty often making them ineligible for Funding Sources we use. Recent census changes for 2,020 further narrow Data Available in many tribal areas. Minor wording changes to allow for the use of census data at the counter black group level or allow the use of locally collected data sources would greatly improve access in those areas. A third challenge relates to low Income 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 cdf is and do market tax credit permanency with cigna sets of validation. The cdfi guarantee improvement act to make these less expensive and more accessible, and Housing Support through light tech improvements and continued support for neighbor works america. I greatly appreciate your longterm continuing support, our impact numbers show how helpful youve been. We were excited at the formation of the cdf i caucus and increased efforts to bring in this work. Thank you for the opportunity to discuss this with you today. Thank you very much. Thank you, i am the president and ceo of a Neighborhood Development center. And dc is an under printer focused cdf i based in st. Paul, minnesota. For over 30 years created a model of excellence for serving Small Businesses located in low income neighborhoods. Im a proud member of the alliance, a group of organizations from 50 communities replicating the model and a member of the africanamerican alliance of cdfi ceos, the minnesota cdfi coalition and opportunity finance network. Our model features four pillars of support to provide access to opportunity and financing to populations who are not banks, these pillars are training, Small Business financing through loans, Technical Assistance and real estate incubators. We will be building a new innovation incubator over time, second stage businesses in 2024. Thanks to senators smith and klobuchar for securing the funding of what was destroyed by the murder of george floyd. The trusted local intermediaries for federal and state funds, many were left behind in the ppp process, we were able to ensure 90 of our ppp loan amounts went to these businesses. Nbc delivered 20 million in emergency loans and grants, 7 times more than we did in a typical year. This is the power of cdfi. In the state of minnesota we were ground 0 to communities across the country responding to racial and economic injustice. According to the Federal Reserve the median household worth for white families is 211,000. In contrast latin x families, 18,000 and for black families 0. We can and must do better. This is why cdfis matter. Heres what 30 years have taught us and what we know, Small Businesses in lowincome communities require unique and innovative approaches to opportunity and in the last three years, nbc has created initiatives to address entrepreneurs mental wellness, double down on our support for black and latino women, launched credit builder loans and education and assistant entrepreneurs by their own commercial real estate as another pathway to wealth. We dont stop there. The state of minnesota has tagged nbc to deploy 79 million in Small Business grants. I want to thank senator smith and other senators who signed on to support an appropriation of 341 million to the cdf i fund in fiscal year 24. That appropriation funds the entire cdf i a program like the native initiative and new market tax credit. Not to forget that during the pandemic Rapid Response program and equitable recovery programs were a lifeline to organizations like nbc and those we serve. Some recommendations i have. The cdfi funded a competitive process. I would recommend based base funding for all cdfis and competitive gr