1 / 19

Leveraging Funds for IDAs: Strategies for Linking to Existing State Programs

Friday, November 8, 2002 State IDA Policy Conference • St. Louis, MO. Leveraging Funds for IDAs: Strategies for Linking to Existing State Programs. Carl Rist, Program Director Corporation for Enterprise Development. Funding Environment. Vast majority of states facing budget deficits.

hashim
Download Presentation

Leveraging Funds for IDAs: Strategies for Linking to Existing State Programs

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Friday, November 8, 2002 State IDA Policy Conference • St. Louis, MO Leveraging Funds for IDAs: Strategies for Linking to Existing State Programs Carl Rist, Program Director Corporation for Enterprise Development

  2. Funding Environment • Vast majority of states facing budget deficits. • New funding for IDAs likely to face stiff challenges. • Existing funds in danger of being withdrawn or re-captured. • How can states leverage related sources of funds for IDAs in a time of scarcity?

  3. IDAs and Housing • Most common use of IDAs: • 61% of participants in ADD demonstration intend to save for home purchase or repair. • 80% of participants used IDAs for homeownership in NC (according to recent evaluation).

  4. Options for Leveraging Housing Funds for IDAs • Community Development Block Grant (CDBG) funds • Federal Home Loan Bank • Family Self-Sufficiency Program • State Housing Trust Funds • Low-Income Housing Tax Credits

  5. CDBG Funds • Why CDBG? • One of the largest sources of funds for community development. • Funds a broad range of c.d. activity. • What CDBG funds can be used for: • Match for first-time homebuyers (or small business start-up) • Administrative costs

  6. CDBG Funds • Models: NC, OK, TN, VA • Pros: • Funds match and admin • Available in every state • Considered non-federal for purposes of matching federal dollars • Cons: • Regs • Restrictive funding categories • Only small towns and rural areas qualify • Applicants must be unit of local government

  7. Federal Home Loan Bank • Why FHLB? • Affordable Housing Program (AHP) – matched savings program for low-income families. • What FHLB funds: • Up to 3:1 match for downpayment assistance.

  8. Federal Home Loan Bank • Models: Many • Cons: • Have to apply through FHLB member bank • Account must be held by member bank • Pros: • Good source of funds for downpayment assistance • Mortgage does not have to be with member bank

  9. HUD Family Self-Sufficiency Program (FSS) • Why FSS? • Structured saving program for public housing residents with earned income • Many FSS savers have used escrow accounts to purchase homes • What FSS escrow accounts fund: • Downpayment or other uses.

  10. HUD Family Self-Sufficiency Program (FSS) • Models: Many • Cons: • Not additional source of funds • FSS programs also not always well staffed • Pros: • Existing system for structuring saving for key target population • Economies of scale in linking FSS and IDAs

  11. State Housing Trust Fund • Why Housing Trust Funds? • Own-source stream of funds for states • Dedicated to affordable housing • What Housing Trust Funds fund: • Housing development • Housing rehab • Downpayment assistance • Low-interest financing

  12. State Housing Trust Fund • Model: NC DOL-HFA collaboration • “Virtual” match from Housing Trust Fund provides non-federal match for AFIA grant • Pros: • Source of state funds for asset-building as appropriations and tax credits dry up • Leverages housing funds at a time when many states are not reinvesting in their Trust Funds • Cons: • Not every state has a Housing Trust Fund • Feds approved NC application, but nothing in writing

  13. Low-Income Housing Tax Credits (LIHTC) • Why LIHTC? • One of most significant sources of funds for low-income housing development • LIHTC continue to be in great demand on part of housing developers • What LIHTCs fund: • Housing construction

  14. Low-Income Housing Tax Credits (LIHTC) • Models: None • Modest proposal: • Give extra credit to applicants for LIHTC if they set up IDA programs for their tenants.

  15. IDAs and Small Business Development • Second most common use of IDAs: • 18% of participants in ADD demonstration intend to save for microenterprise or small business start-up.

  16. Options for Linking Small Business Development Funds and IDAs • Integrating microenterprise development products and services and IDAs

  17. Integrating Micro and IDAs • Why integrate micro and IDAs? • Both share common goals – accumulation of wealth by poor.

  18. Integrating Micro and IDAs • Models: FSCLF in Delaware (“high integration” model); others • Pros: • Minimize program costs (economies of scale) • Establishing ability to save can increase credit-readiness and credit-worthiness • IDA “equity” valued as a credit enhancement during consideration for loan • Cons: • Not new money, rather cost savings

  19. THE END Carl Rist Corporation for Enterprise Development 123 W. Main St. 3rd Floor Durham, NC 27701 Tel: 919-688-6444 Fax: 919-688-6580 rist@cfed.org Website: www.cfed.org Visit the Internet IDA Learning Network at http://idanetwork.org

More Related