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. Id like to call the subcommittee on housing transportation and Community Development committee to order. I want to thank you as always, senator, to you and your staff for working with us on this hearing, which will focus on Community DevelopmentFinancial Institutions or cdfis and how specifically cdfis can promote Housing Development and Economic Opportunity. I think that both the senator and i believe that everyone in this country should have the freedom and the opportunity to build the lives that they want, that this is the american dream. An essential Building Block for fulfilling this dream is that people have access to capital and lending and resources so that they can buy a home or build a Small Business or get an education. And we also know that not everyone has equal access to capital and Financial Services, and that this inequity drives big gaps or disparities in opportunity and wealth, which is what we see in our country. Communities of color and Indigenous People and rural areas often dont have the same access to capital, and that ends upholding everybody back. According to the federal reserve, a typical black familys net worth is only 15 percent of a typical white family. And on average, the net worth of a hispanic family is about 19 percent of a white familys net worth. And theres less Data Available on the net worth of native families, but a recent analysis by the minneapolis fed found that in one sample, a median native family had a net worth 32 times lower than that of a median white family. That analysis also found that home equity is a much smaller portion of a native familys wealth in part because of the difficulties that native families face in getting mortgages. If you think of Rural Communities, the Pew Research Center data shows that Rural Counties are about 50 percent more likely than urban counties to have high rates of concentrated poverty and twice the rate of concentrated poverty compared to suburban counties, so it is clear we have a lot of work to do to address these disparities, these challenges. Today im very excited. We have the opportunity to hear how cdfis are a powerful tool to expand access to capital and Financial Services to people and places that have been too often left out of opportunities. Cd fshgis work cdfis work, and they have long had bipartisan support. When the cdfi from the federal agency that oversees cdfi programs was established in 1994, there were about 80 cdfis. Today more than a thousand, deploying Innovative Strategies for getting capital and resources to underserved communities in all parts of the country. Ive seen the power of this work in my Community HelpingSmall Businesses and building wealth. And we know that federal investments in cdfis yield strong results because they Leverage Private capital. By one estimate cdfis generate 10 in new investment on the private side for every 1 in federal support. So today, we have an opportunity to hear about this work, whats working, what can be improved, from three impressive cdfi leaders. Cdfis are bringing and your organizations are bringing jobs and Economic Opportunity to communities and helping Small Businesses get started. Cdfis have adapted to meet the needs of very different communities, showing that theres a lot of flexibility in this model. And im also hearing a lot of feedback on im also interested in hearing feedback on the bipartisan bills that are out there to support cdfis and my colleagues and i have been working on. Two senators and i have a bill to update the cdfi Bond Guarantee Program so it works better for smaller cdfis that are making low interest longterm sources of capital available. Im also working with two senators on a bill to make permanent a Successful Pilot program that supports mortgage lending on Tribal Trust Lands. And i would note that senator warner and senator haggerty have a bill to support a 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 then continuing our work to support cdfis and address the historic inequities that we see in our economic systems that i believe can be remedied in part by your work. Thank you very much. Senator, youre recognized. Thank you. Ive been looking forward to this hearing. Cdfis are such an important part of addressing the borrowers needs in this country. 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 that are not well served by traditional banking institutions. And 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 stake holders have raised concerns about the proposed application and the delays in finalizing the application and the transparency of the process. We need robust standards to preserve and protect the cdfi designation. I call on treasury and the 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 id like to hear from the Witnesses Today how we can best expand the Public Private partnership that has fuelled cdfi lending and 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 very few native cdfi members, so id like to see what we can do to support access to the system for native cdfis. Theres a Federal Home Loan Bank system as really taking a look at its mission and its efforts as they look at their 100th anniversary, and i want to acknowledge that as part of that initiative, fhfa 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 the feedback from this session and others. With that, i want to thank our witnesses so much, and i look forward to being here today, and thank you madame chair, you have always been so gracious about including topics that are really valuable, both to urban and Rural Communities and tribal communities, and 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, but we expect that you will have questions from other members of the committee, and were again very delighted that you were welcome and willing to come today and help us learn more about this topic. So with that, madame chairman, i yield back, thank you. Thank you so much, senator. Welcome again to our three witnesses who are with us today. I will introduce each of you, and then well start and go down the line. President and ceo of midwest minnesota Community Development corporation based in detroit lakes, minnesota, which is sort of up in the sort of northwest central part of the state. She has been in her role since 2018, and she has led the deployment of 544 Million Dollars in new markets tax credit financing. In addition to leading the mmcbc also leads a native cdfi subsidiary the white earth investment initiative. Yesterday usda announced they would be one of eight native cdfis receiving funding through the native american relending demonstration program, a program which i think we will hear more about today. Julia has a cpa certification and holds a masters in management from northwestern universitys Kellogg School of business. Renee is president and ceo of neighborhood Development Corporation or center in st. Paul minnesota. Ndc focuses on helping Small Businesses get off the ground and supporting their growth. It provides entrepreneurs a whole suite of Services Including lending and training, real estate services, and assistance with Management Consulting and accounting and marketing. She joined ndc in 2019 with over 18 years of experience leading teams in merchandising, product development, and design for target. Shes a member of the African American alliance, cdfi ceos, a lot of alphabet there, and has earned her bachelor of science degree in management and accounting from the college of saint scholastica. And crystal cornelius with us today. Shes president and ceo of a corporation, a National Native cdfi based in longmont, colorado. She has 23 years of experience working in the native Economic Development field. She is an enrolled member of the United Nation of wisconsin and a member of the Turtle Mountain band of chippewa indians in north dakota. We will begin now. Thank you very much. I think you know this, but i will reinforce that you will each have five minutes for your Opening Statements. Theres a clock in front of you to help you keep track of time. Your full written statement will be part of the record. Pardon me for interrupting. Thank you. Good afternoon, madame chairwoman, Ranking Member, and members of the committee. As stated, im president and ceo of midwest minnesota, Community Development corporation, a cdfi and neighbor works america member, 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 dollars in rrp funds to make investments in loans totalling 14. 8 billion dollars. In minnesota, 31 cdfis serviced 851 Million Dollars of sba ppp loans for minnesota businesses and nonprofits, preserving some 88,000 jobs. Investments in cdfis offer an excellent return on our taxpayer investment. Cdfis leverage federal dollars on average 10 to 1 to facilitate growth in businesses, jobs, Community Tax base and more. In fy 22, cdfi awardees made over 1. 4 million loans totalling more than 53 billion dollars and financed over 65,000 Affordable Housing units. As individuals become more selfsufficient, their reliance on social welfare programs decreases, so these decreased costs in the long run. Cdfis are innovative and flexible. We have a long track record of layering varied Funding Sources, finding multiple ways to use new tools. As an industry, we are collaborating in a few National Groups to access epas Green House Gas reduction fund. The proposed cdfi tax credit and Scaling Community lenders act are also promising options to add essential liquidity. A growing segment of the cdfi industry are native cdfis serving largely rural reservations villages and homelands. With many facing high rates of poverty, 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 covid impacts, took out several internet loans then capable to us asking for refinance, but their loan docs required them to pay nearly all of the service fee, equating to nearly 50 percent interest. They did not understand what they signed and have 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 percent less than in an urban area. Put that property on trust land, and it drops another 20 to 25 percent. A tribal business we helped finance before covid cost roughly 12 Million Dollars to build, but appraised new at about 6. 5 Million Dollars. A bank could not finance that fully, and the [inaudible] could not fill the entire gap. The project used additional land for collateral and via three cdfis accessed tax credits, a federal Loan Guarantee and special purpose sources. Its now doing well, but only because of those multiple layers of funding. Title issues and lease hold improvement mortgages were additional issues, not uncommon with native projects. Many banks do not understand and avoid the complex legal status of trust land. A second challenge in rural work is census data. Large rural census tracks spend multiple towns or entire counties and average out or mask pockets of poverty often making them ineligible for Funding Sources we use. Recent census changes for 2020 further narrowed Data Available in many tribal areas. Minor wording changes to allow for the use of census data at the count or block group level or to allow the use of locally collected data sources would greatly improve access in those areas. A third challenge relates to lowincome 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 cdfis and new market tax credit permanency with specific rural and native allocations. The cdfi guarantee improvement act to make these less expensive and more accessible. And Housing Support through both [inaudible] improvements and continued support for neighbor works america. I greatly appreciate your longterm continuing support for cdfis. Our impact numbers show how helpful you have been. We were excited at the formation of the cdfi caucus and the increased efforts you are bringing to this work. Thank you for the opportunity to discuss cdfis with you today. Thank you very much. We will go to you now. Thank you, chair smith and Ranking Member. Im the president and ceo of the Neighborhood Development center, in d. C. It is an entrepreneurial focused cdfi based in st. Paul minnesota. For over 30 years ndc has created a model of excellence for serving bipoc Small Businesses located in low income neighborhoods. Im a proud member of the build from within alliance, a group of organizations from 50 communities replicating the ndc model. Also a member of the African American alliance of cdfis ceos, the minnesota cdfi coalition, and the opportunity finance network. Our ndc model features four pillars of wrap around support to provide access to opportunity and financing to populations who are unbanked. These pillars are training, Small Business financing through loans, Technical Assistance, and real estate incubators. Ndc will be building a new innovation incubator focused on second stage businesses in 2024. Thanks to senator smith and klobuchar for their help securing a 1 Million Dollars grant for this project in chicago which was destroyed during the murder of george floyd. During the pandemic, cdfis like ndc were trusted local intermediaries for federal and state funds