Community Development
Access to Funds
Community Reinvestment Fund
Community Reinvestment Fund (CRF) is the national leader in bringing capital to community-development lenders through the secondary market for loans. Started in 1989, CRF has injected hundreds of millions of dollars into low-income and economically disadvantaged communities across the country to help stimulate job creation and economic development, provide affordable housing and construct community facilities.
CRF is a nonprofit organization, headquartered in Minneapolis, MN. It is supported primarily by its own revenue-generating activities, including loan purchasing, loan servicing and training and technical assistance. CRF gets further support from foundations, corporations and individuals that want to use their social-purpose investments in a way that maximizes their effectiveness. These dollars help CRF continue to expand its activities.
CRF is not affiliated with any governmental agency.
Department of Housing and Urban Development - Funding
Tax Credit Programs
Low Income Housing Tax Credits (LIHTC)
Created under the Tax Reform Act of 1986, the low-income housing tax credit has become the chief mechanism to make the creation of low-income rental housing financially feasible.
Congress created the federal Low Income Housing Tax Credit (also known as the federal Housing Credit program) because building and rehabilitating apartments costs too much in the private market to rent at rates low-income families can afford. The Housing Credit makes apartments affordable for working people with below-median incomes.
How do Housing Credits work?
Housing Credit investors get a 10-year federal income tax benefit in exchange for immediate cash infusions for new construction and restoration projects. Usually used in conjunction with developer equity, bank loans and other funding sources, the Housing Credit has leveraged $7.2 billion in investments nationwide each year to produce 75,000 reasonably priced apartments for low-income families and the elderly. (Housing Credits are not available for use by individuals seeking affordable shelter.)
How do Housing Credits benefit communities?
Housing Credit apartments help stabilize neighborhoods by improving housing quality and supply. They rent up quickly, because the need for them is so much greater than can be met under the present Housing Credit volume limit — $1.50 times a state's population. Credit demand outstrips supply by a ratio of 2-to-1 or higher. The credit amount per person, $1.50 as of January 2001, is set to increase to $1.75 in 2002. The credit amount was created at $1.25, and received no increase for the first 14 years of the program.
What are some other Housing Credit advantages?
Housing Credit apartments often attract young people just starting out on their career paths, seniors who can no longer maintain a house but want to stay in their home towns and workers in comparatively low-paying jobs. Housing Credit properties are privately owned by developers who run them at a profit. They are not owned by any unit of government. Housing Credit developments compete with market-rate properties. They are indistinguishable from surrounding market apartments and often offer amenities like clubhouses, tennis courts and playgrounds.
How are Housing Credits allocated in Illinois?
As the state's primary affordable housing finance agency, IHDA administers Illinois' share of the annual Housing Credit allowed by Congress. (Chicago gets the city's portion of credits and administers its own, separate program.) Under the "$1.50 multiplied by state population" federal formula, Illinois gets about $14.5 million in Housing Credits each year. IHDA allocates Housing Credits twice a year.
Bonds
The Illinois Housing Development Authority (IHDA) is empowered to issue tax-exempt and taxable bonds to provide construction and permanent financing for multifamily rental developments. The program offers developers low-interest rate construction and permanent loan financing through one application process. Rehabilitation and refinance loans are considered on a case-by-case basis. Proposed developments wholly owned by non-profit organizations may be eligible for 501(c)(3) bonds. (Contact IHDA for 501(c)(3) bond eligibility requirements).
Illinois Affordable Housing Trust Fund
Created by the Illinois Legislature in 1989, the Illinois Affordable Housing Trust Fund assists in the provision of affordable, decent, safe and sanitary housing for low- and very low-income households.
What type of funding is available?
The source of Trust Fund revenue is half of the state real estate transfer fee. This provides approximately $20 million to $22 million each year. The maximum award from the Trust Fund for a project is typically $750,000. Sponsors are generally limited to applying for up to $1.5 million in any 12-month period.
The Trust Fund makes loans available at less than the prevailing commercial rate to all applicants. Grants are available to not-for-profit applicants when the project demonstrates a strong very low-income orientation and is not feasible without Trust Fund assistance.
Who is eligible to apply for Trust Fund Financing?
Not-for-profits and for-profit corporations as well as units of local government may seek Trust Fund dollars. Individual citizens are not eligible for Trust Fund financing.
Projects eligible for consideration include, but are not limited to:
- Acquisition and rehabilitation of existing housing
- New construction (single family and multifamily)
- Adaptive reuse of non-residential buildings
- Special housing
- Technical Assistance (for non-profit organizations only)
How are funds distributed statewide?
The U.S. Census data for the state determines the resource distribution targets for the Affordable Housing Trust Fund. The approximate distribution target, assuming adequate demand, is:
- 64% of available funding: Metropolitan Chicago counties
- 18% of available funding: Other metropolitan counties
- 18% of available funding: Non-metropolitan counties
Federal Home Loan Bank of Chicago
The Chicago Federal Home Loan Bank is a $85 billion wholesale bank, serving the needs of member housing finance institutions located in Illinois and Wisconsin.
As a lender of low-cost, short-and long-term funding, the Chicago FHLB offers its members products with maturities ranging from one day to 20 years at very competitive rates. These products take the form of fixed and adjustable rate loans, known as "advances," standby letters of credit, and off-balance sheet instruments. Advances may be customized to meet institutions' special funding needs, using a variety of interest rate indexes, maturities, amortization schedules, caps, floors, and collars.
The Chicago FHLB is one of 12 district banks chartered in 1932 by the U.S. Congress to ensure a secure source of mortgage funds to thrift and housing finance institutions. In 1989, the charter was expanded to include commercial banks, credit unions, and insurance companies, through the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). Today, the FHLB System has over 8,000 members.
Rural Development
The United States Department of Agriculture, Office of Rural Development is committed to helping improve the economy and quality of life in all of rural America.
USDA RD financial programs support such essential public facilities and services as water and sewer systems, housing, health clinics, emergency service facilities and electric and telephone service. RD promotes economic development by supporting loans to businesses through banks and community-managed lending pools; offers technical assistance and information to help agricultural and other cooperatives get started and improve the effectiveness of their member services; as well as technical assistance to help communities undertake community empowerment programs.
Rural Development achieves its mission by helping rural individuals, communities and businesses obtain the financial and technical assistance needed to address their diverse and unique needs. Working to ensure that rural citizens can participate fully in the global economy.
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Illinois Association of REALTORS®
