Federal Policy Priorities
IACED is a member of the National Alliance of Community Economic Development Associations (NACEDA). The following are some federal policies that IACED is currently championing.
Community Reinvestment Act (CRA)
IACED supports the Community Reinvestment Modernization Act of 2009 (HR1479), which will apply CRA more broadly throughout the financial services’ industry including:
- independent mortgage companies that originated the majority of the sub-prime loans,
- penalize financial institutions that engage in predatory and abusive lending practices, and
- enhance accountability by linking Home Mortgage Disclosure Act (HMDA) to a new loan performance database tracking foreclosures and loan modifications.
Action requested: ask members of the Indiana delegation to co-sign HR 1479.
Also, ask members of Congress to include CRA strengthening provisions in the legislation to create the Consumer Finance Protection Agency that is now before the House Financial Services Committee.
The Community Economic Development Expertise Enhancement Act
CDCs and other community-based nonprofit developers are on the front lines of the economic crisis (give examples of what your CDCs have done to address neighborhood and community issues). IACED seeks to help CDCs weather the financial crisis and expand service capacity over the long term.
We strongly support the reintroduction in the 111th Congress of The Community Economic Development Expertise Enhancement Act of 2007 (HR 4328 in 110th Congress). NACEDA expecxt Congressman John Lewis (D-Georgia) to file the bill later this year. It was sponsored in the last Congress by the late Rep. Stephanie Tubbs Jones (D-Ohio.)
The Community Economic Development Expertise Enhancement Act includes provisions to:
- Provide technical assistance and flexible working capital throughout the nation for CDCs (current programs are limited to specific geographic areas);
- Provide financial and technical capital for emerging and established CDCs
- Establish an advisory council at HUD to examine CDC capacity needs
- Authorize funding to support CDC infrastructure needs
Action requested: ask members of the Indiana delegation to sponsor or cosponsor the Community Economic Development Expertise Enhancement Act in the 111th Congress.
Low Income Housing Tax Credit (LIHTC)
For nearly 20 years, IACED members have used the LIHTC to build high quality affordable rental housing that has met the needs of working families while also advancing broader neighborhood revitalization efforts. Now, due to the economic recession and the credit crunch, the LIHTC investor market has been devastated. Nationally, we are seeing a 50 percent decline in investment and in Indiana dozens of well conceived and badly needed projects have been stalled. The Recovery Act provided some temporary relief through the Tax Credit Exchange Program and the Tax Credit Assistance Program. That money is expected to hit the street in the fall.
Action requested: IACED strongly supports the consensus proposal now being presented to Congress to extend the Low Income Housing Tax Credit Exchange program for one more year and asks the Indiana delegation to support it as well. The tax credit provisions in the Recovery Act were an extremely important step, however, they were temporary and only extend through 2009. We believe further extensions will be needed, but think Congress can make the one year extension now and see how the markets respond before considering 2011 and beyond. IACED is a signatory to the Rental Housing A.C.T.I.O.N., a national coalition of organizations calling on Congress to support neighborhoods by supporting affordable housing. A.C.T.I.O.N. has called for congressional support for proposals to offset the adverse effects to the Low-Income Housing Tax Credit (LIHTC) caused by the financial crisis.
- First, Congress should extend the Housing Credit exchange program for one more year and allow states to exchange Housing Credits generated from tax-exempt bond financed housing.
- Second, to stimulate and restore long-term investment, Congress should increase the Housing Credit carry-back to up to five years in two ways:
- For existing housing investments, this proposal would only apply to Housing Credits if investors reinvest the entire amount carried back into new Housing Credit investments.
- For new housing investments, this proposal would make the Housing Credit more competitive with other tax credits and attract investors concerned about long-term tax position by permitting future credits to be carried back up to five years.
- Third, broaden the investment base by permitting pass-through entities – LLCs and Subchapter S corporations – and closely held corporations to utilize the Housing Credit program as a means of attracting equity capital to rural areas of the country. This would diversify the investor base to include entities such as S-corps community banks.
Every small business deserves a chance to stabilize, thrive and grow—and many entrepreneurs need support. Indiana requires a healthy small business sector to create economic opportunity, local prosperity and jobs. Every dollar spent in a locally-owned small business means 60 cents will be reinvested in the neighborhood. For every dollar spent in a chain store, only 20 cents is reinvested in the community.
The Federal SBA Microloan Program provides very small loans ($35,000 or less) to start-up, newly established, or growing small businesses. Funds are made available to nonprofit community based lenders which in turn, make loans to eligible borrowers. Funding for the SBA Microloan Program is appropriated in two parts – lending dollars and funding for business training and technical assistance.
Action requested: IACED strongly supports the SBA Microloan Program receiving $25 million in lending (as proposed by the House) and $22 million in technical assistance (as proposed by the Senate) in the FY2010 Budget.