In the midst of clamor, distress, insecurity, and despair, 2009 was a good year for Finance Fund though it was, by most accounts, unique and demanding. William Shakespeare said “Is it not strange that desire should so many years outlive performance?” If 2009 were to judge us by performance and not desire my characterization might not stand. From investor fatigue, credit anxiety, client frustration, and employment turmoil there wasn’t much that the year didn’t throw at us. But, despite the challenges confronted I stand by my declaration. “What doesn’t kill you makes you stronger.”

This was a year of staging for the next step. Though not necessarily sought, it provided and opportunity to examine, scrutinize, and calibrate a response to the dramatically changed market conditions. This realignment of staff and strategy has resulted in a stronger staff, new approaches at deploying resources, renewed enthusiasm for engaging staff and board, and an invigorated passion for new initiatives that help distressed communities. We’ve gone back to check our values, vision and mission, held them up against our strategies and recharged our batteries. Finance Fund’s renewed circumstance is due primarily to the growing strength of our people and their ability to embrace change by making it work for us not against us.

2009 has positioned us to explode into 2010 with a new fervor for mission and accomplishment as yet un-experienced by Finance Fund.  We have more than $75 million in loan funds and nearly $3 million in grants and linked deposits to place into Ohio’s distressed communities in the next 12 months. This is five times more resources than ever before. We have a number of initiatives that are moving forward with deliberate speed; i.e. “Wisely, and slow. They stumble that run fast.” (William Shakespeare) These, like the bank initiative and the CDFI funding initiative, will be “blossoming” in 2010. To say we are excited is to significantly underestimate our sense of expectancy.

One man’s remorse is another man’s reminiscence. (Ogden Nash)

On the radio show hosted by former Sen. Fred Thompson, New York lieutenant governor Betsy McCaughey stated that the House’s proposed health care bill contained a provision that would institute mandatory counseling sessions telling seniors how “to do what’s in society’s best interest…and cut your life short.” Citing page 425 of the bill, McCaughey claimed that “the Congress would make it mandatory … that every five years, people in Medicare have a required counseling session that will tell them how to end their life sooner, how to decline nutrition, how to decline being hydrated, how to go into hospice care … all to do what’s in society’s best interest … and cut your life short.”

Here’s what the bill says, “An explanation by the practitioner of the continuum of end-of-life services and supports available, including palliative care and hospice, and benefits for such services and supports that are available under this title.” The accepted definition of end-of-life planning means thinking ahead about the care you would like to receive at the end of your life – which may include the choice to reject extraordinary measures of life support, or the choice to embrace them.  The section would require Medicare to pay for, not mandate, some end-of-life planning counseling sessions with a health care practitioner once every 5 years. It is clear that McCaughey’s distorted interpretation of the content of page 425 was offered not to stimulate debate but to frame an atmosphere of fear and mistrust.

Several television ads sponsored by Patients United Now claim that Canadian citizens survived serious illness only by leaving the country to get treatment in the U.S. because of the length of their wait for service in the Canadian health care system, claiming “Washington wants to bring Canadian-style health care to the U.S.” The reality is that no one is advocating for a government run health care system. The president and the leaders of both parties resound with the words of Sen. Max Baucus, Chair of Finance Committee, “single-payer (government run health care) is not going to get even to first base.” Yet the ads continue for what purpose? Not to stimulate debate but to frame an atmosphere of fear and mistrust.

There was a time in this country that I can remember when someone or some group publically making a misstatement or an outright lie, the journalistic community would stand up on their hind legs and demand accountability, and there was an American public that had not abdicated their role in the republic and given place to apathy believing everything we are fed. Naked again.

Sure you know what the 1603 program is.   You don’t?    In fact, we’re pretty sure that you who follow our messages about CDFI and New Markets Tax Credit won’t immediately relate to this important announcement.  But the Finance Fund has been looking into ways to participate in renewable energy initiatives as it is indeed aligned with our mission.   In that spirit, we thought the availability of $3 billion was worth sharing.    If you have ideas or interest in this topic, let us know.  In the meantime, here are some links to learn more about this new initiative.

The U.S. Department of Treasury and the U.S. Department of Energy announced recently that they are accepting applications for a federal cash grant program that will make direct payments to eligible renewable energy project owners in lieu of federal income tax credits.

With the goal of expanding the development of renewable energy projects throughout the United States and creating new jobs, The U.S. Government anticipates distributing at least $3 billion in financial support to approximately 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities.

The funding for this grant program has been made available through the American Recovery and Reinvestment Act of 2009 which authorizes Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009.  Previously, these companies could only file for a federal income tax credit to cover a portion of the renewable energy project’s cost.

Under the Section 1603 grant program, applicants may elect to forgo future tax credits in favor of an immediate cash reimbursement for a portion of the property expense.

The week included two NMTC conferences (Novogradac and NMTC Coalition), a NMTC Coalition Board meeting, a couple of media interviews (Cleveland Plain Dealer and Wall Street Journal), a panel presentation at the Coalition conference, a fundraising breakfast with Rep. Richard Neal of Massachusetts, and a number of hill visits.

The week was capped off by offering testimony to a Congressional public hearing held by the Select Revenue Measures (Chair Richard Neal (MA)) a subcommittee of Ways and Means and Domestic Monetary Policy and Technology (Chair Melvin Watts (NC)) a subcommittee of Financial Services. The topic was a report by the Government Accounting Office (GAO) entitled “NEW MARKETS TAX CREDIT: Minority Entities Are Less Successful in Obtaining Awards Than Non-Minority Entities” (blogged – A D.C. Visit, June 15, 2009). There were seven witnesses; Donna Gambrell, CDFI Fund; Michael Brostek, GAO; Ron Phillips, NMTC Coalition; Blondel Pinnock, Carver Federal Savings Bank; William Cunningham, Creative Investment Research, Inc; Joseph Haskins, Harbor Bank; and me.

It was a long but productive trip. We’re working on the Child Care Facilities Financing Act of 2009 (H.R.1625), the 5 year extension of the NMTC program(H.R. 2628) and the CDFI funding in the budget bill. Looks like I’ll be heading back that way in July.

The morning of June 17th, I sat eagerly listening to Chairman Bernanke give a speech that substantially focused on Community Development Financial Institutions (CDFI). Please check out the Chairman’s speech, as he gives his thoughts about CDFI lenders and the challenges they face in the current economic and financial environment.

In 2002 I wrote an article called “The Great Placebo” that postulated our common perspective of “talk about anything but do nothing.” Regrettably this is what has happened to discussions of safe, sanitary, and developmentally appropriate space for children to grow over the past twenty years. Economic Impact of Early Care and Education, Step Up to Quality, School Readiness Solutions Group, Reggio Emilia approach, and the list goes on, have talked about the importance and integration of developmentally appropriate facilities in the early lives of children. But, that talking has resulted in zero resources.

Yesterday I met with a group of educators called the Futures Group that thinks and acts around the issues of change in early care and education, and I heard the same frustration yet again. Of course facilities are important, but there are so many important issues that call for a limited set of resources and facilities drops to the bottom of the list. I shared with them one of the only organizations that I know of that is nationally advocating for resources focused on child care space.

The National Childrens Facilities Network (NCFN) is a coalition of nonprofit financial and technical assistance intermediaries involved in planning, developing, and financing facilities for low-income early care and education programs. The Network’s purpose is to share information on child care facilities issues, initiate legislation and regulations affecting low-income early care and education facilities and develop and support various financing strategies and programs.

With the urging of NCFN, Representative Carolyn McCarthy (NY) has introduced H.R. 1685 (Child Care Facilities Financing Act of 2009) into the House of Representatives, and Senators Robert Casey (PA) and Blanche Lincoln (AR) have introduced a companion bill S. 1002 into the Senate. These bills call for a $250 million five year investment to the financing of child care facilities nationally. Though this concept has a long way to go before it becomes reality, it is one of the only bright spots in the discussion of space for children to grow that fading memory can recall.

I would seek out my friends all of whom where the product of the same rural existence and we would cavort.  This night was wet and windy filled with the excitement of climatic pyrotechnics and the thrill of intrigue, which was not an abundant commodity on the prairie. We ran to escape the torrent and ducked into the door way of Gordy’s Tavern. Giggles and titters of youth were soon extinguished by a sinister unseen voice from the darkness, “What do you boys think you’re doing here?”

I am about to be asked a question not dissimilar to the one I was asked decades ago in that dark doorway.

“In today’s market where we are starting to see more defaults, how has your underwriting and due diligence changed in originating a transaction compared to prior years?”

While Finance Fund spends some additional time looking at external credit reports it should be remembered we have been working with and funding marginally acceptable projects for a long time. The corporation has developed around the ethos that distressed communities have value. It is not always obvious or even self evident but experience has shown that we have never worked in a community, no matter how distressed, and not found value. Our interpreted mission is to create value from the value already in existence. It is an imperative that we keep one foot on the street, no matter how sophisticated we think we are, it must be remembered who we are and what we are about.

No matter if we’re in a boom or bust we have experience working in this climate. And in the midst of this “dark and stormy night” that’s what we think we’re doing here.

Attendees enjoy the Finance Fund annual reception May 7.

Something about longevity peaks curiosity. Have you been here long? How old are you? That looks like a new dress? Worked here long?  This current curiosity stems from our recent propensity for immediate consumption -  because there was a point in time that longevity meant endurance – and endurance meant survival.

In our 22 years of stamina we have come together 20 times to talk and celebrate the idea that is Finance Fund. The idea is that anyone no matter what education, race, economic, or social status has the right to basic access to opportunity.  This year’s event was stellar in its essence a good mix of people, good food and drink, and great conversation.

We talk about anything and everything. About what we’ve done, what we’re doing, and what we will do. We talk about friends here and departed, times past and remembered, and future plans and aspirations. We did what we have come to do so well and that is join in the conversation. From conversation grows familiarity and familiarity accumulates knowledge and knowledge precipitates trust. Thursday night was a testimony to this concept. It’s always better to work with someone you trust and that is a reason to celebrate.

Dawn Hays receiving the Community Champion Award from Finance Fund's Jim Klein

Dawn Hays from Hahn Loeser Parks LLP was our largest individual donor helped fund projects throughout Ohio. At Hahn Loeser & Parks, Hays focuses her practice in the labor and employment and litigation areas and serves on the firm’s diversity committee. She is a frequent presenter on labor and employment issues, including the Fair Labor Standards Act.

Reginald Johnson receiving a Community Champion Award from Finance Fund's Jim Klein.

Reginald Johnson serves on Finance Fund’s Board of Directors and is a member of our Credit Review Committee.  Johnson played a key role in community development initiatives in 2008, by referring and partnering with Finance Fund on four New Markets Tax Credits projects. Johnson is also a member of Finance Fund’s board of directors and the CRC loan committee. Johnson is a vice president of Huntington National Bank and also senior asset manager of Huntington Community Development Corporation, where he is responsible for overseeing the due diligence and asset management of tax credit investments, venture capital and small business investment corporations. He is also the treasurer of the Greater Linden Development Corporation.

Patricia Barnes and Finance Fund's Jim Klein.

Last Thursday also included recognition of Patricia Barnes, Executive Director of the Ohio Community Development Corporation Association.  Patricia was a founding member of Finance Fund and a loyal Board member and partner, announced her plans for retirement from OCDC recently.  We are extremely grateful for her vision, leadership and service.

Lastly, I would be remiss not to thank those who took the time and effort to recognize my 20 years of service with Finance Fund.  I can truly say it’s been as fun as it has been rewarding. I’m honored to be a part of this amazing organization. – J.K.

The kicker here is the research indicates a strong relationship between self control problems and credit card use in present-biased individuals. We all have the tendency to fall prey to present-bias; i.e. I want it now not later, but low-income people tend to face much more often. Further, not everyone is aware of their self control problem according to Lorenz Goette, University of Geneva/Federal Reserve Bank of Boston. This according to Goette is “by far the biggest policy challenge.”

So does H.R. 627 address this “biggest” challenge? The bill ends unfair and arbitrary rate increases.  Retroactive increases are only permitted if the cardholder is more than 30 days late.  The bill allows consumers to set their own fixed credit limit, and would require consumer permission before charging over-limit fees.  The bill establishes a fair allocation of consumer payments, requiring consumer payments to be applied to the high-rate balances first.  Also, the bill would require teaser promotional rates to be offered for at least the first six months, and protects students by liming student accounts to $500 or 20 percent of the students’ income, whichever is higher. This might do something to mitigate the results of present-bias and lack of control but little to stem the problem which, in agreement of Mr. Goette, is a big policy challenge that I’m not sure politics is up to.