Board of Estimates Approves $51.7 Million Loan to Neighborhood Impact Investment Fund

BALTIMORE, MD.  — Today, the Baltimore City Board of Estimates approved a $51.7 million loan to the Neighborhood Impact Investment Fund (NIIF), a new public-private nonprofit partnership designed to spark investment in and spread economic opportunity to neighborhoods struggling to overcome decades of disinvestment.

“The Neighborhood Impact Investment Fund is a critical part of the most ambitious neighborhood revitalization strategy we’ve ever attempted in Baltimore,” said Mayor Catherine E. Pugh.  “We will continue to make progress now, but just as decline took time, so will rebirth.  For me, it’s not ultimately about what the city will look like in two or three years.  It’s what the city is going to look like over decades – and for our children.”

NIIF joins a range of tools aimed at reversing decades of disinvestment and deliver much-needed resources to provide opportunity and growth.  These include: the Community Catalyst Grant Program to help locally driven community revitalization through operating and capital support for neighborhood-based initiatives and organizations,; the new Affordable Housing Trust Fund,  the $30 million Choice Neighborhoods grant in East Baltimore; and the Opportunity Zone federal tax credit, among others.

Earlier this year, the City Council appropriated funds in the fiscal 2019 budget from the lease of three City-owned parking facilities – with strong leadership from Council President Bernard “Jack” Young – to generate the funding necessary to capitalize  NIIF.  In November, NIIF’s legal structure was put in place, a diverse, experienced Board of Directors was appointed, and Mark Kaufman – a native Baltimorean with experience in community development banking, a former Maryland Banking Commissioner and a former US Department of Treasury official in the Obama Administration – was named President and CEO.

Anchored by the City loan, NIIF will leverage additional support and investment from philanthropies, financial institutions and mission investors.  Unlike other funds, it has significant flexibility to invest in sectors ranging from housing to community and commercial facilities to small businesses.  This flexibility will enable NIIF to be able to offer pre-development and acquisition loans, construction financing, bridge and mezzanine loans, and equity investments, among other potential financing tools. 
NIIF will make its investments exclusively in eligible neighborhoods that are approved by the City as a condition of the loan.  These historically disinvested neighborhoods comprise roughly 65% of the City.  The City also intends to designate priority areas within the eligible footprint to further ensure alignment with NIIF’s public purpose.

This approach – using public-private partnerships to fill lending gaps and catalyze private investment – has been successful in improving neighborhoods in other cities, including Detroit, San Francisco and New York.

NIIF will operate with a small staff.  To minimize operational costs and provide oversight and advisory capacity, NIIF staff will be supported by Forsyth Street Advisors, a financial advisory firm with unique experience in using social impact investing tools to advance public community development goals.  Forsyth plays a similar role in public-private partnership funds operating in San Francisco and New York, among other cities.

With today’s approval by the Board of Estimates, NIIF is now working to secure additional support and investment from philanthropies and financial institutions and to establish the programmatic infrastructure to begin making investments in the first half of 2019.

 

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