NEW YORK - The New York Fed announced today that it is launching its Investment Connection program to boost investments in regional community development financing. The program will help match banks with organizations whose needs qualify for credit under the Community Reinvestment Act (CRA). The program’s first phase will begin in Fall 2019 in Puerto Rico, where the New York Fed is working to rebuild the island’s economic resiliency in the aftermath of Hurricane Maria.
Investment Connection will provide nonprofits, development agencies and other local actors an inclusive and accessible setting to engage with banks and other potential investors. Through the program, participants seeking funding will be able to present proposals eligible under the CRA, which requires banks to lend, invest and offer services to low- and moderate-income communities in the areas in which they operate. The program will also offer educational resources to applicants on the CRA and community development investments.
“Investment Connection will help to enhance the impact of community investments by encouraging effective partnerships between capital providers and local stakeholders,” said Adrian Franco, Director of Community Development Finance (CoDeFi) at the New York Fed. “This program reflects the New York Fed’s strong commitment to addressing the economic needs of distressed communities and fostering inclusive economic development strategies.”
The program marks a critical step in the New York Fed’s Community Development Finance (CoDeFi) Progression Model, a framework designed to support and enhance the community development finance ecosystem in the Bank’s region. In addition to the Investment Connection program, the Progression Model outlines efforts to foster dialogue between community stakeholders on development needs and to create data-driven, analytical resources for potential investors. Earlier stages of the model were first piloted in Elmira, NY, and Middlesex County, NJ. More information about the CoDeFi initiative and Progression Model can be found here.
In the New York Fed’s region, the first iteration of the Investment Connection program will begin in Puerto Rico, where the unprecedented destruction of Hurricane Maria resulted in significant damage to vital infrastructure, homes and businesses. The government of Puerto Rico has estimated that the total cost of recovery is approximately $94.4 billion.
In the storm’s aftermath, the Federal Reserve Board of Governors, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, issued the Interagency Statement on CRA Consideration for Community Development Activities in the U.S. Virgin Islands and Puerto Rico Following Hurricane Maria. The statement established that financial institutions located outside of Puerto Rico can receive CRA credit for supporting eligible activities on the island, providing a unique opportunity to implement the Investment Connection program. The proposal submission process for the Puerto Rico initiative will begin in Fall 2019.
In May, the New York Fed, in collaboration with its regional partners the Community Foundation of Puerto Rico and Inclusiv, held the first CoDeFi Community Development and CRA Programming workshop in Puerto Rico. Fostering dialogue and offering educational resources, the event focused on enhancing the capacity of local organizations to develop CRA-eligible community investment proposals. The next event will be held on September 12, 2019. Details on the CoDeFi Progression Model in Puerto Rico and the May event can be found here.