The Community Development Financial Institution Bond Guarantee Program was enacted through the Small Business Jobs Act of 2010 (Public Law 111-240). The legislation directs the Department of the Treasury to guarantee bonds up to $1 billion per year to community development financial institutions to provide low interest, long-term capital for qualifying projects. In the 2016 fiscal year the program guaranteed up to $750 million in bonds.
The loans tend to have low rates and carry long terms of up to almost 30 years, making it a viable program for tribal governments. Although this program has been praised as a valuable source of credit and capital to tribes, it has failed to consider many of the nuances of Indian Country. One of the issues NAFOA has raised during testimony at a Senate Committee on Indian Affairs Oversight Hearing is Treasury’s strong emphasis on land-based collateral, which leaves tribal applicants at a significant disadvantage as tribes are unable to collateralize loans using trust lands. The CDFI Fund has been willing to include tribal comments and entertain alternatives for tribes in an effort to make the program more accessible; however, NAFOA encourages Congress to ensure that promise is kept and the Bond Guarantee Program includes tribes.
NAFOA has been working with the Department of the Treasury and the CDFI Fund to devise solutions to the barriers currently precluding tribal applicants from participating in the CDFI Bond Guarantee Program. NAFOA has engaged with the four eligible CDFIs to gain insight on their distinctive methods of issuing CDFI Bond Guarantee Program loans to best assess how to include tribal projects in their deal portfolios. NAFOA has also encouraged the CDFI Fund to amend the capital guidelines in an effort to increase lending to Native CDFIs and tribal governments. For the fiscal year 2017 tribal government budget request, NAFOA has requested a $10 million loss reserved for tribal government economic and community development projects that the CDFI Fund can leverage as a guarantee for tribal projects.
Current Status and Action:
The Indian Community Economic Enhancement Act of 2016 (S. 3234) introduced by the Senate Committee on Indian Affairs includes language to study the capital program to determine how tribes can collateralize this program and how the program may be altered to serve the needs of tribal governments and Native CDFIs.