Community Development Field

5 (More) Things Dividing the Government and CDCs

I was recently in a room with representatives from government, banks, private developers, and CDCs for a conversation about community development needs. Those in the room expressed frustration with government […]

I was recently in a room with representatives from government, banks, private developers, and CDCs for a conversation about community development needs.

Those in the room expressed frustration with government “operating in a bubble” and “not talking to practitioners” about how policies, program requirements, and the timing of grant cycles affect a CDCs' ability to operate.

The discussion that morning, along with several other observed interactions since I wrote ”Restoring Confidence in the CDC Model“ for the latest issue of Shelterforce, echoed multiple issues I noted in that article. CDCs have different needs and will have different outcomes than those working in the private sector, yet they are often held up to the same measuring stick, causing frustration from all sides.

At the conclusion of my article, I propose that there is a better alternative to the existing CDC model: A model in which we trust and give adequate funding to CDCs.

Here are five concrete things about the way things work now that are unfairly undermining CDCs and their work:

  1. Governments expect too much and pay too little. Unpredictable deadlines and ever-changing requirements for funding applications keep CDCs scrambling administratively, often in the midst of busy construction season. Some housing programs require long-term monitoring such as regular unit inspections and tenant eligibility checks, but provide no assistance or compensation to CDCs for carrying it out. (Remember that CDCs often have to “donate” their developer fee to make a development project financially feasible?)
  2. Government often pays late. Government payments and reimbursements can arrive so late that CDCs have to take out lines of credit to cover operating costs in the interim, like securing contractors and paying them on time.
  3. Government processes and CDC actions can work at cross purposes. CDCs work hard to plan and fund neighborhood revitalization just to turn around and see their targeted properties demolished. Other buildings cycle through the tax foreclosure process multiple times without any meaningful stabilization or rehabilitation, sitting vacant and neglected next to millions of dollars of reinvestment activity in the neighborhood.
  4. Private developers aren't expected to take this. Private developers can care about communities, but will not take the same risks as CDCs, nor endure the same unfair treatment by government. They serve an important purpose by building and rehabbing larger properties and contributing high levels of capacity and expertise (and often equity). Private developers have no need, however, to endure complicated financing and layer upon layer of regulation to make a project happen simply because the community wants or needs it. They won’t work for a 0 percent rate of return (and probably not even 10 percent), and they certainly won’t stand delays in payment. Once burned by inefficient programs, funding, and regulations, they can simply go elsewhere.
  5. Government still struggles with trusting and understanding CDCs. The signs of this include strict (and often complex) regulations within programs highly-accessed by CDCs, extra administrative (and political) hoops to jump through for funding, and a constant questioning of the motives of CDC work and belittling of their outcomes, both tangible and intangible.

CDCs are deeply concerned about community. They will stretch resources and pull them out of thin air (though they shouldn’t have to) to highlight community needs and meet them. They pursue projects based on need and impact versus the ease of financing or political popularity. CDC leaders speak passionately about local residents and businesses, and endure high levels of stress, tight budgets, long waits, and even deep disappointments in their efforts to serve the community.

For the sake of thousands of neighborhoods across the nation—urban to rural—these rifts (and many others) must be overcome.

A good example of effective supportive for CDCs is the Brownfields Utilization, Investment and Local Development Act being championed by Sen. Kirsten Gillibrand and Rep. Paul Tonko. Essentially, the act expands nonprofit eligibility for funding for brownfield assessment and planning, rather than just implementation, and allows for administrative costs for the program for the first time. This bill is a positive example of government understanding the critical role of nonprofits in urban revitalization and brownfield identification, cleanup, and site reuse, as well as recognizing the administrative burden of this work and being able to pay for it.

More common ground must be found between public purpose, private investment, and nonprofit mission and dedication to community development. CDCs stand at the heart of this system. They need to be acknowledged for their contributions and strengthened in their ability to serve struggling communities by stable funding and restored confidence.

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