Bloomington Cooperative Living volunteers purchased and are renovating their latest project house with funding coordinated by CDFI Friendly Bloomington (Devan Ridgeway WFIU/WTIU)
An expansive renovation is underway of what is essentially a 7,500 square foot box in a quiet neighborhood in Bloomington’s near west side. But when volunteers with Bloomington Cooperative Living are finished, there will be 18 bedrooms and two full kitchens and living rooms – a cooperative living space for families.
Bloomington Cooperative Living board member Zackery Dunivin calls the Ninth Street location “fantastic,” noting the large house languished on the market because the cost to renovate it as a single-family home would simply be too expensive.
Funding the project had its challenges, Dunivin said, because it looked like a risky project. And banking and lending is about trust and profit.
“It's just really different trying to convince [lenders] that you are a group of people that have the capability of running an organization, even though nobody's getting paid to do it,” he said.
Dunivin said he put roughly 400 hours into building relationships. One of those relationships was with Brian Payne and CDFI Friendly Bloomington. CDFI Friendly Bloomington partnered with a Massachusetts community development financial institution (CDFI) known as LEAF that has experience with “cooperatives and social purpose ventures.”
Together, they financed the bulk of the house’s mortgage. CDFI Friendly Bloomington also assisted with a grant from the City of Bloomington to support renovation costs.
“They put in the time to figure out what we were doing and to understand that we were capable of doing this,” Dunivin said.
What is CDFI Friendly Bloomington?
It’s a nonprofit corporation with a mission of making affordable financing available for community development projects, according to CDFI Friendly Bloomington Executive Director Brian Payne.
“That can mean a lot of things, but typically, it means affordable housing, small businesses, public facilities or nonprofit capacity building, things that have important impacts for the public that aren't necessarily terribly profitable for the lender,” Payne said.
Typically that means finding a fit between projects that need money and mission-based CDFIs that could fund them.
Payne said the CDFI industry nationally has more than $190 billion in assets, but as lenders they tend to go where the portfolio sizes and borrowers are -- usually big cities and population centers but not so much in rural areas.
“So it's my job and our organization's job to organize our market, promote the borrowing opportunities and the projects that need money out to the CDFIs -- find a fit -- and to do the same for the CDFIs,” he said. “If they have programs and capital available that is looking for borrowers, I want Bloomington and the 13 counties we serve around Bloomington to have access to those resources.”
CDFI Friendly Bloomington is not itself a certified CDFI yet, but a recent $125,000 Technical Assistance grant from the Department of the Treasury will support the organization’s efforts toward becoming a federally certified CDFI.
In the meantime, it is leveraging its own loan enhancement fund, often by “blending down” the loan rate for borrowers.
“So we don’t take on loans all by ourselves, but our model is to work with CDFIs that have underwriting expertise and loan processing expertise, borrow onto their processes and then add money in when it’s helpful,” he said. “If the CDFI is small and doesn’t want to take on the risk of a bigger loan, we can add to the capital and mitigate the risk.”
In addition to being a matchmaker, the organization can also provide technical assistance. For example, shepherding a borrower through the city’s planning process, as was the case with Bloomington Cooperative Living’s Ninth Street project.
Payne says the majority of the funding CDFI Friendly Bloomington has channeled so far is in support of affordable housing. But some unique local businesses have also been helped.
Bloomington Center for Global Children is a Spanish language immersion preschool for kids 6 weeks through 6 years. In the reception area, the children have decorated the walls with colorful Day of the Dead masks and marigolds. BCGC board member Crystal Love says the preschool sorely needed an HVAC system upgrade after its air-conditioning system died last summer.
“…which, you know in the 90-degree days, it heated up the toddler rooms so much that we had to close the rooms and send the kids home,” she said. “Because regulations are you can’t have the room get over 78 degrees.”
CDFI Friendly Bloomington helped the center connect with the City’s Solar and Energy Efficiency Loan program. A midwestern CDFI known as IFF provided an energy assessment, and a SEEL matching grant is helping the center upgrade its HVAC system as well as transition to more energy efficient LED lighting. Love says the center could not have managed either of the projects alone.
“Our only income is tuition, and we bring in just enough tuition to cover all of our costs every month, so it’s really month to month just kind of treading water,” she said.
At the city’s new Trades District Garage, colorfully lit panels of textured tiles brighten dull stairwells. The art installation’s creator, artist Esteban Garcia Bravo, remembers feeling overwhelmed at the prospect of funding his first public art project.
“To get the project started, I had to put down, like, 12 grand that I obviously didn’t have in cash,” he said.
CDFI Friendly Bloomington provided Garcia Bravo with a very low interest loan and helped him get additional funding through the Community Investment Fund of Indiana. Garcia Bravo said not only were the two funders enthusiastic about his art installation, but they also helped him better position himself to pursue future projects.
“They advised me that if I want to continue on this public art career that it would be better for me to start an LLC, so I did,” he said. Payne said the artist has already paid back his CDFI loan.
Grants and small interest payments from CDFI borrowers such as Garcia Bravo help CDFI Friendly Bloomington pay its own bills.
“So far, we’ve relied on charitable grants from bank foundations, and competitive grants --one from the federal government and one from ROI, Regional Opportunity Initiatives, Inc.”
In a Forbes article earlier this year, Chicago financial planner Brian Thompson wrote:
“Ideally both borrowers and the CDFI win. Borrowers receive guidance that makes them more successful, while the CDFI gains deeper knowledge of the local market and community.”
Thompson sees investing in CDFIs as one avenue to social impact investing because of their emphasis on “delivering responsible, affordable lending to help low-income, low-wealth” individuals and organizations.
But Payne said CDFI Friendly Bloomington isn’t an investment vehicle like a real estate income trust or a mission-based pension fund. However, he said there are ways a potential investor can help. Since CDFI Friendly Bloomington is a registered charity with the IRS, any grants to the organization are tax deductible. Also, a lender could lend the organization money in its capacity as a loan fund.
Payne said perhaps the best way to invest is to become part of the network that enables CDFI Friendly Bloomington to identify people with great projects that need funding.
“Anybody who has their finger on the pulse of the community in South Central Indiana can help,” he said.
