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Neighborhood Development
....The primary sources of funding for neighborhood development initiatives are the federal, state and local governments. Foundations also provide local funding. The federal government is the largest single funder. Generally funds are provided to local government agencies, which then disburse the funds to local non-profit and government organizations that implement the development programs. In 1996, Stark Community Foundation1 began organizing and funding neighborhood associations in Canton and later in Massillon and Alliance to provide residents with the opportunity to participate in the development of their own neighborhoods. In more recent years, the federal government has developed incentives aimed at making community development in low- and moderate-income neighborhoods profitable for private developers and organizations.
Federal Funding: CDBG and HOME
Two of the larger sources of federal funding are the Community Development Block Grants (CDBG)2 program and the Home Investments Partnerships Program (HOME)3 of the US Department of Housing and Urban Development (HUD). The CDBG program provides annual grants on a formula basis for affordable housing, maintaining suitable living environments and expanding economic opportunities, principally for low- and moderate-income persons. HOME grants fund a wide range of activities that build, buy, and/or rehabilitate affordable housing for rent or homeownership or provide direct rental assistance to low-income people.
CDBG grants are awarded to and administered by the community development departments of Alliance4, Canton5 and Massillon6 for those cities and the Stark County Regional Planning Commission7 for the remainder of Stark County. HOME funds are awarded to the city of Canton and to the Stark Regional Planning Commission. These two governmental agencies award HOME grants on a competitive basis to non-profit and government organizations. Between 1993 and 2001, HUD disbursed CDBG and HOME funds to Stark County totaling between $8,003,000 and $9,577,000.8
Much of the CDBG disbursements have been used by the cities and the county for housing rehabilitation; public services for seniors, youth and the battered; and for public infrastructure improvements. Only a small percent of the disbursements have been used for categories of economic development.9
State Funding: Department of Development Community Development Division
In addition to the CDBG and HOME funds provided through HUD, numerous Stark County communities receive money from the state for development projects through the Ohio Department of Development Community Development Division (CDC).10 Between 2000 and 2002 the CDC funded programs in Stark County that addressed home weatherization, emergency home assistance and housing development assistance.11
Local Funding: Stark Community Foundation Neighborhood Program
Locally, Stark Community Foundation provided funding for neighborhood development through the Neighborhood Partnership Grant Program. The primary goals of the program are to:
- encourage discussion about issues that are important to neighborhood residents,
- provide resources for community development,
- leverage grass roots volunteers and additional community resources,
- provide lasting community improvements, and
- provide an opportunity to share neighborhood successes.12
Neighborhood groups are among the beneficiaries of these initiatives, including some of the 26 neighborhood associations in Canton13 and Massillon.14
National Private Funding Support for Neighborhood Efforts
There are private national organizations that provide funding and technical assistance to neighborhood groups for development efforts. The Local Initiatives Support Corporation (LISC) of New York City provides grants, loans and equity investments to Community Development Corporations (CDC) for neighborhood redevelopment. When LISC begins a new program, national LISC matches locally raised funds and gives that much more to the community for renovation.15
The Enterprise Foundation works to provide low-income people with affordable housing, safer streets and access to jobs and child care. The Enterprise Foundation network consists of nonprofit, community-based organizations, public housing authorities and Native American Tribes from around the country creating partnerships to rebuild communities and empower people in neighborhoods nationwide.16
Expanding Credit and Capital Access Supporting Private Neighborhood Development
Businesses and individuals located in low- and moderate-income neighborhoods have frequently had difficulty accessing capital and credit. In 1977, Congress enacted the Community Reinvestment Act (CRA) to encourage federally insured banks and thrifts to meet the credit needs of their entire community, including low- and moderate-income residents.17
Locally, the Financial Institutions Community Interest Group (FICIG) consisting of CRA officers from local banks, community developers, real estate representatives, government fair-housing officials and others involved in community development provides a forum for the discussion of community development issues.
In recent years the federal government has developed programs of individual and business tax credits and other incentives to make development in low- and moderate-income neighborhoods profitable for private for-profit developers and organizations.
One such program is the Community Development Financial Institutions (CDFI) Fund.18 The CDFI Fund is a wholly owned government corporation within the US Department of the Treasury. The Fund’s mission is to expand the capacity of financial institutions to provide credit, capital and financial services to underserved populations and communities. The strategic goal is to improve the economic conditions of underserved communities by providing 1) capital and technical assistance to community development financial institutions, 2) capital to insured depository institutions, and 3) tax credit allocations to Community Development Entities (CDE). CDEs are organizations that leverage federal new Markets Tax Credits in exchange for private capital, which they use to finance development in low- and moderate-income communities.19
The New Markets Tax Credit Program (NMTC)20 permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated CDEs. Substantially all of the qualified equity investments must in turn be used by the CDE to provide qualified investments in low-income communities. The CDFI Fund certifies the CDEs and allocates the NMTCs. Developers and financial institutions can qualify as a CDE and apply for NMTCs to raise equity for projects. The NMTC can be worth more than 30% of the amount invested over the life of the credit.
There were 340 CDEs as of June 20, 2002 in the United States. Eleven of those were in Ohio, including the Enterprise Community Fund in Akron and the Portage Area Development Corporation in Ravenna. At that time there were no CDEs in Stark County.21
The first NMTC allocations22 were announced March 14, 2003. Nationally, a total of $2.5 billion in NMTCs was allocated. CDEs in Ohio received $313 million, Lorain and Cleveland being the nearest recipients. LISC, mentioned earlier which serves Ohio, received $65 million.23