A New Nationally Recognized Model is Bringing Creative Financing to the Indiana Uplands

In 2017, community leaders in Bloomington identified significant, unmet needs for flexible, affordable financing. The community and the region needed more creative capital sources for affordable housing, small businesses, and other community-focused projects. Mayor John Hamilton, who had prior experience helming a community development financial institution (CDFI), suggested that the growing CDFI industry could address these needs.

CDFIs are private financial institutions working for public purposes, using flexible, affordable financing to foster inclusive, equitable, and sustainable prosperity. Mayor Hamilton and the Community Foundation of Bloomington & Monroe County formed a working group of community leaders to explore possibilities for CDFIs to help address these local issues.

Understanding that Bloomington and the greater region might not generate the capital or deal flow to sustain its own CDFI, a new model was explored and piloted to bring creative CDFI capital to small metros and rural regions. This new CDFI-friendly approach, now a nationally recognized model, positions an intermediary to match local projects that require creative capital with state and national CDFIs with the capacity to provide the necessary financing. The local intermediary provides technical assistance to potential borrowers and helps them navigate through the process.

With seed funding from the Community Foundation, Bloomington Urban Enterprise Association, and charitable foundations associated with several banking institutions, CDFI Friendly Bloomington was established in late 2018 as a new nonprofit organization ready to attract CDFI investments into the region. To make deals more appealing, CDFI Friendly Bloomington also created a capital co-investment enhancement fund, CFB Capital, for participation in local deals alongside CDFIs.

CDFI Friendly Bloomington applied for an ROI Ready Communities grant and was awarded $100,000 in September 2019 to help support the new entity as it strived to become an innovative, efficient and effective organization. In addition to providing operational funding, this grant allowed the organization to expand its services to all 11 counties in the Uplands region.

In October 2019, CDFI Friendly Bloomington facilitated its first investment by partnering with Cinnaire, a Michigan CDFI, and other local entities to develop Kinser Flats. This 50-unit complex will provide affordable housing for homeless families and individuals with substance abuse disorders or co-occurring substance abuse and mental health disorders.

Kinser Flats Groundbreaking, October 2019

CDFI Friendly Bloomington’s second project closed in May 2020, facilitating Bloomington Housing Authority’s renovation of the Reverend Butler and Walnut Woods affordable housing properties. Cinnaire provided $5.7 million of the project’s $17.7 million total costs. This project will renovate and preserve 116 affordable units and retain nine local jobs in Bloomington.

By July 2020, CDFI Friendly Bloomington had assisted eleven applicants from across the region to file for funding from six CDFI partners.

CDFI Friendly Bloomington Activity (2019-2020)
CDFI Capital Investment$15,585,000
Participating CDFIs6
New Affordable Housing Units Created50
Affordable Housing Units Renovated116
Jobs Created/Retained10
Federal and State Incentives Leveraged$16,900,000
Total Investment in CDFI-Supported Projects$28,575,912

CDFI Friendly Bloomington has also taken a meaningful step toward its first capital investment from the CFB Capital enhancement fund. The Board of Directors approved a $408,000 loan from the fund to support Bloomington Cooperative Living. This local nonprofit will acquire a blighted single-family home and renovate it into an 18-unit affordable housing co-op. These units will be affordable to individuals and families making 30% of the area’s median income (AMI). This project was made possible by a partnership with Local Enterprise Assistance Fund, a Massachusetts CDFI specializing in co-ops, which will lend $425,000 to the project.

CDFI Friendly Bloomington is still a young organization, but in its first year, it has generated valuable partnerships with CDFIs and a pipeline of potential projects in Bloomington and the Indiana Uplands region. In addition to bringing opportunities and investments to the Indiana Uplands region, the CDFI Friendly Model has gained national recognition. It is being studied closely by CDFIs, financial institutions, and communities. CDFI Friendly South Bend launched in early 2020, and we expect that other CDFI Friendly communities will continue to pop up around the nation as as the concept continues to spread.