[Congressional Record Volume 143, Number 106 (Thursday, July 24, 1997)]
[Extensions of Remarks]
[Pages E1512-E1513]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
             INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1998

                                 ______
                                 

                               speech of

                       HON. CAROLYN C. KILPATRICK

                              of michigan

                    in the house of representatives

                        Wednesday, July 16, 1997

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 2158) making 
     appropriations for the Departments of Veterans Affairs and 
     Housing and Urban Development, and for sundry independent 
     agencies, commissions, corporations, and offices for the 
     fiscal year ending September 30, 1998, and for other 
     purposes:

  Ms. KILPATRICK. Mr. Chairman, I rise in opposition to the Foley-
Bachus-Miller amendment to freeze the community development financial 
institutions [CDFI] fund at fiscal year 1997 levels, that was 
considered recently in debate on VA/HUD appropriation bill and support 
the level reported by the committee.
  The CDFI Program was established in 1994 at the request of President 
Clinton and received bipartisan support. Public money from the CDFI is 
leveraged with private capital to increase much needed investment in 
distressed urban and rural communities. The purpose of CDFI is to 
provide technical assistance, loans, and grants to institutions and 
programs such as micro-loan funds, venture capital funds, community 
development banks, and low income credit unions. These ventures are 
purely established for the purpose of serving underserved communities 
and populations and are filling the void left by traditional lenders in 
urban and rural communities.
  The Bank Enterprise Act, [BEA] which receives one-third of the funds 
appropriated to

[[Page E1513]]

CDFI, rewards traditional financial institutions that serve the credit 
needs of distressed communities. The money from CDFI is used to create 
new jobs, promote small businesses, and build affordable housing.
  Congress authorized nearly $400 million for CDFI between fiscal year 
1995 and fiscal year 1998. As part of the budget agreement, the 
President prevailed in increasing the authorization to $125 million for 
fiscal year 1998.
  CDFI and BEA have issued one round of awards. Out of 268 applicants 
requesting over $300 million last year, CDFI selected 31 community 
development organizations to receive $35 million. BEA awarded 38 banks 
and thrifts $13.1 million. The demand for increased funding is evident 
by the level of interest that has been displayed by the increase in 
applicants and it is apparent that there is a lack of capital in the 
communities these institutions serve.
  It has been alleged that the CDFI fund has no demonstrable record of 
success and raises questions about its practices in selecting grantees. 
After reviewing these allegations, the VA-HUD Appropriations 
Subcommittee and the full Appropriations Committee dismissed the 
charges. The subcommittee said in its report ``the Committee 
wholeheartedly endorses the goals of the program'' and voted to 
appropriate the full administration budget request.
  I would like to further expand on the merits of the CDFI program by 
citing an example from the district which I represent. The Shore Bank 
Corp. received $3 million from the CDFI program that were matched with 
$8 million of private funds. These funds will go toward a new effort 
for a comprehensive community development bank holding company with a 
strategic plan to revitalize a well defined investment area on the east 
side of Detroit. This presents a promising approach to achieve large-
scale community revitalization in Detroit.
  The Detroit holding company, which is being established in stages, is 
designed to have three subsidiaries. One, a full service bank in the 
target area, is providing small business loans and housing loans to 
minority entrepreneurs and can leverage its equity many times over 
through deposits. The second a for-profit real estate development 
company, will initially focus on the development of 500 affordable 
houses to homeownership in a 30-square block area. The third, a 
nonprofit enterprise development affiliate, will have three functions--
small business assistance to strengthen small manufacturers in the 
region and businesses in the target area, creation of a labor force 
development strategy to link potential workers with employers' skill 
needs, and homebuyer training and prepurchase services for first time 
homebuyers. Mr. Chairman, these services are much needed in my 
district, and in fact I wish I could have more financial institutions 
in my district with the same objective and purpose.
  It has also been suggested that CDFI was making awards based on 
connections to the Clinton administration. In a letter to Secretary of 
the Treasury Robert Rubin, more than 220 CDFI's around the country said 
that recipients of the first round awards include ``some of the 
strongest CDFI's in the field'' and called the funds's evaluation 
process ``exhaustive, competitive, and careful, assessing the 
management strength, systems, and business planning of each 
applicant.''
  Shore Bank has pioneered the field of community development finance, 
for over 25 years. Their work has attracted bipartisan national and 
international support. Mr. Chairman, I strongly urge all of my 
colleagues on both sides of the aisle to oppose the Foley-Bachus-Miller 
amendment.

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