Mercy Loan Fund
Mercy Loan Fund's (MLF) advocacy efforts for 2012 are focused on community development and affordable housing. MLF refreshes our public policy priorities annually and is flexible enough to respond to issues of importance that arise during a given year.
Rebuilding healthy communities is a top advocacy priority of MLF in the community development policy area. MLF’s New Markets Tax Credit applications and requests to the U.S. Treasury’s CDFI Fund all revolve around the need to integrate and link affordable housing with other community support such as education, transportation and health services. MLF’s advocacy efforts in community development are highlighted below.
2012 CDFI Fund Appropriations Request
The CDFI Fund was created in 1994 by the Riegle Community Development and Regulatory Improvement Act. The CDFI Fund achieves its purpose by directly investing in, supporting and training CDFIs that provide loans, investments, financial services and technical assistance to underserved populations and communities. Since its creation, the CDFI Fund has awarded over $1.4 billion to community development organizations and financial institutions.
The FY 2013 Administration budget proposal for the CDFI Fund matches the FY 2012 funding level. The Administration is not requesting a waiver of the matching funds requirement. MLF received an award of $1.5 million in 2011 that it is investing in affordable housing projects in highly distressed communities. MLF advocates for the current requested levels and a further expansion of CDFI Fund funding without a requirement for matching funds as such funds are very scarce in today’s depressed economic climate.
CDFI Bond Program
The Small Business Jobs Act of 2010 created a new, potentially transformational tool to expand CDFIs’ capacity to serve low-income, low-wealth and other disadvantaged communities. The CDFI Bond program will provide a new source of long-term permanent loan capital that CDFIs can use to better serve their markets.
The Administration’s budget proposal forecasts that the CDFI Fund will issue $1 billion in CDFI bond guarantees in FY2013, and has calculated that Congress need not appropriate additional monies for a credit subsidy in order to issue bond guarantees. MLF is encouraging the CDFI Fund and the US Treasury Department to make implementation of the CDFI Bond program a high priority.
New Markets Tax Credits
The President’s budget proposes to extend the New Market Tax Credit (NMTC) Program through FY2013 and requests $5 billion in allocation authority in each year. Since the program’s inception, private-sector investments totaling $29.5 billion have been attracted by allocations of NMTCs. MLF received its first NMTC allocation in 2009. MLF used its $20 million allocation to provide low cost equity to a non-profit county hospital to build an orthopedic clinic in Hattiesburg, MS – part of the Gulf Opportunity Zone – that will serve 19 medically underserved counties. This tax credit helps revitalize economic growth, especially for small business in low income communities, by attracting investment to capital projects. The NMTC should be extended and made permanent to foster economic growth.
Low Income Housing Tax Credits
As the nation’s largest and most successful affordable rental housing program, the Low Income Housing Tax Credit has financed more than 2.5 million affordable apartment homes since 1987, about 9/10ths of the entire stock. Mercy Housing, in partnership with a coalition of industry and affordable housing professionals, is actively participating in a campaign that would extend some common-sense legislative provisions and protect the Housing Credit from being a target in tax reform discussions. MLF’s borrowers, affordable housing developers, rely heavily on the Low Income Housing Tax Credit to serve low income people and communities.
Capital grants and long term operating subsidies provided by HUD are key to MLF’s work because they allow MLF’s short term financing to be paid off and reinvested in another worthy project. As permanent funds grow scarcer, the role played by CDFIs like MLF becomes riskier. MLF therefore supports maintaining and expanding HUD resources for multifamily housing development such as HOME and CDBG, Section 202/811 and Project Based Section 8.
CDFIs have always played an important role in helping low income people reach their dreams of homeownership in a fiscally responsible manner. The recent housing crisis offers new opportunities to show that the model of responsible, affordable homeownership works in a variety of economic climates. MLF provides bridge financing to non-profit housing developers who are using HUD’s Neighborhood Stabilization Program to buy and renovate foreclosed single-family and multifamily properties. We support the use of place-based strategies and targeted investments that maintain neighborhood home values. We also support housing finance reform proposals that recognize the need for multiple channels of public and private capital in the housing market with appropriate government support.