It’s no secret that Connecticut’s housing affordability and availability picture is grim.

The lack of for-sale inventory, insufficient starter home and rental stock, rapidly escalating rent, and a growing homelessness crisis have been well-documented of late.  The legislature and Gov. Ned Lamont have made housing, especially affordable housing development, a top priority this session. 

According to the Connecticut Housing Finance Authority, approximately 92,560 housing units are needed to meet the demand of extremely low-income households.  Low- and moderate-income households are similarly challenged to find stable, housing within budget.  Employers are wary of locating or growing in Connecticut due to insufficient housing – stifling economic and job growth.

Unfortunately, many of those who regularly work on these challenges – non-profit developers, emergency service providers, housing authorities and others – are now faced with significant cuts to federal funding and capacity – further straining the sector and deepening the state’s housing challenges.  Federal cuts threaten the financing and capacity-building that nonprofits and local developers need to develop affordable housing, create jobs, and offer vital community services.

One of the most effective yet often overlooked tools in our state’s housing arsenal is Community Development Financial Institutions (CDFIs).  As mission-driven lenders, we have been crucial in funding affordable rental and homeownership housing in a wide variety of communities, bridging the gap between private capital and the real needs of low- and moderate-income families.  By creatively allocating existing and new state resources to CDFIs, the state has the potential to multiply its impact with private and philanthropic dollars to create housing and help low- and moderate-income households achieve stability much more quickly than almost any other investment vehicle.

One example would be re-allocating $100 million in Concentrated Poverty bond funding, which the governor’s budget proposes to cancel for two years, so it could be leveraged through CDFIs to support the creation of thousands of new affordable units.  Increased allocations to the state’s Small Multifamily Loan Fund, operated by the Connecticut Housing Finance Authority, would similarly support CDFIs in assisting small multifamily property owners with rehabbing existing housing and constructing new units that fit neatly in Connecticut’s landscape in a matter of months in many cases.

CDFIs have already made a significant impact in Connecticut. The federal CDFI Fund reports that CDFIs in the state have issued loans totaling approximately $1.02 billion across 26,600 transactions, playing a crucial role in affordable housing projects, revitalizing neighborhoods, and fostering economic growth in under-resourced areas.  State funding for CDFIs – especially at this moment in in our housing history – would be a wise and efficient investment, leveraging state dollars to go further and much faster in solving our burgeoning housing crisis.

Kiley Gosselin is CEO of the Housing Development Fund. Jim Horan is Senior Executive Director, LISC Connecticut. Diane Smith is CEO of Capital for Change. Michael Haynes is CEO of the Hartford Community Loan Fund. Greg Maher is Executive Director of the Leviticus Fund. Micha Josephy is Executive Director of the Cooperative Fund of the Northeast. Dan Marsh III is President and CEO of Grow America, Formerly NDC.