Access to affordable, flexible and efficient public and private capital remains the primary barrier to economic development in the United States. Over the past four decades, federal support for capital formation and capital access has shifted from a heavily subsidized system to one focused on leverage, credit enhancement and the removal of financing barriers. Despite this migration to a risk-reduced approach, access to capital for numerous sectors – small business, entrepreneurs, manufacturing, clean energy, agriculture, rural infrastructure, urban revitalization – remains a significant challenge.

With the 2016 Presidential election finalized, the development finance industry is excited to move forward with recommendations and innovative strategies for unlocking access to capital. The ideas offered in this transition paper provide a roadmap for the next Administration to unlocking capital to support and maximize America’s potential in numerous economic areas. These are the economic engines of our state and local governments with the potential to create high-paying jobs and increase private sector investment.

These recommendations are borne out of CDFA’s 35 years as a leader in the development finance industry. They have been carefully crafted to address myriad challenges to capital formation, access, and private leverage. Each of these recommendations provides a new look at how the federal government could and should approach capital formation and capital access. These recommendations focus on three key policy considerations.

• First, they focus on efficiency. Federal financing/funding programs must be efficient. The delivery system of federal-to-state, federal-to-local and specifically federal/state/local-to-private sector must be efficient in order to be effective. Currently, the federal development finance delivery system is very bureaucratic and extremely cumbersome. Efficiency must be a focus of the next Administration when attempting to unlock capital for economic development and infrastructure. The private sector relies on accessing efficient capital. This must be a priority for the next Administration.


• Second, these recommendations all highlight private sector leverage strategies. It should be the policy and mission of the federal government to expect, encourage and demand private sector leveraged financings. The key to the country’s economic resurgence will be the ability of state, local and the federal governments to leverage private sector capital. To do so, our cities and states must use small amounts of public capital to leverage large amounts of private investment. This model has been shown to work when implemented in an efficient and effective manner. Again, this must be the next Administration’s priority.


• Third, these recommendations are focused on bi-partisan approaches. Everything offered in this transition paper is uncontroversial and is supported by both political parties in Washington. CDFA believes it is important to support federal initiatives that reach the widest swath of Americans as possible. These recommendations all ensure a bi-partisan opportunity to advance development finance. These recommendations unlock access to capital and provide private-sector investment based approaches to job creation and investment. Whether urban or rural, development or redevelopment, or industry or small business, these recommendations provide solutions that serve all Americans equally.

Finally, CDFA is prepared to assist the next Administration with developing the recommendations and opportunities outlined in this transition paper. Collectively, all of these recommendations could be tackled within the first two years of the new Administration. These recommendations provide for immediate advance of unlocking capital access throughout the United States to help create jobs, increase investment, build infrastructure, improve the environment and increase the quality of life for every American.

CDFA’s Administration Transition Paper outlines numerous recommendations to some of the nation’s most difficult development finance issues. CDFA hopes that the incoming Administration will use this paper as a roadmap to improvements in these areas. This summary outlines immediate action items and provides recommended time frames for each reform unlock development finance in the United States today. Further guidance and recommendations can be found in the detailed sections of the Transition Paper.

Part 1: Manufacturing
Support American Manufacturing through Improved Tax Code & Specific Continued Programmatic Efforts

• Reform Manufacturing Bonds by passing the “The Modernizing American Manufacturing Bonds Act” which allows for increased investment in American Manufacturing and greater opportunities for public-private partnerships to create jobs and prosperity now.


• Permanently Reauthorize the Investing in Manufacturing Communities Partnership (IMCP) Program and fund the program at $10 million annually to facilitate ongoing manufacturing growth and collaboration.

Part 2: Small Business
Catalyze Small Business and Entrepreneurial Expansion through Critical Program Reauthorization & Appropriation

• Permanently Authorize the SSBCI Program and office to ensure that a critical economic development need is fulfilled, and to strengthen America’s continuing economic recovery. This program needs permanent and immediate authorization to continue without interruption.


• Fund SSBCI Annually at a minimum appropriation of $400 million to continue program success and efficient operation.

Part 3: Infrastructure
Reform and Bolster Federal Financing Mechanisms that Focus on Leveraging Private Investment in Critical Infrastructure

• Establish an Independent Infrastructure Task Force to establish a comprehensive infrastructure roadmap and policy for the next half century driven by a market based approach to encouraging greater private-sector investment in infrastructure.


• Establish 6-7 Public-Private Partnership Regional Infrastructure Accelerators that would authorize and encourage collaborators (primarily states) to work hand-in-hand on infrastructures needs that span multiple geographic areas and allow for long-range planning and investment.


• Increase Transportation Infrastructure Financing and Innovation Act (TIFIA) Funding at a minimum of $5 billion annually to leverage an additional $50 billion in private sector investment. The $5 billion minimum should be set in federal law and during the appropriation process to provide stability in the funding cycle. With dedicated resources, state and local governments can begin to plan for considerable and cost efficient infrastructure investment.


• Remove Water and Sewer Bonds from Volume Cap to allow states and municipalities to finance more infrastructure projects through bond issuance than are currently possible, and to allow the private sector to enter into public-private partnerships for a new era of critical water and sewer infrastructure investment.


• Rollout and Fund the Water Infrastructure Finance and Innovation Act (WIFIA) at an escalating pace over the next four years at $1 billion in years one and two followed by an annual appropriation of $5 billion to support water infrastructure.


• Launch a Federal Urban Tax Increment Finance Program to allow the federal government to redirect very specific federal income tax revenue to catalytic and transformative urban revitalization efforts.

Part 4: Clean Energy
Reduce Barriers to Clean Energy through Credit Enhancement Models that Encourage Private Sector Led Investment while Reducing Public Risk

• Create the State Clean Energy Finance Initiative (SCEFI) Pilot Program authorized for five years with a one-time $5 billion appropriation to leverage $50 billion in additional private investment. The program requires little, if any, federal administrative burden.

Part 5: Federal Programs
Implement Measured Comprehensive Reforms and Improvements to the Federal Development Finance Delivery System

• U.S. Department of Housing & Urban Development – Convene a working group to advise and implement efficient and effective reforms to the HUD Community Development Block Grant (CDBG) Program.


• U.S. Department of Agriculture –Work to comprehensively remove bureaucratic and programmatic barriers within USDA Rural Development with a full-scale analysis of program delivery structures, funding process, and application requirements.


• U.S. Department of the Treasury, Community Development Financial Institutions Fund – Permanently authorize the New Markets Tax Credit Program (NMTC) with a minimum annual appropriation of $2 billion.


• U.S. Customs and Immigration Services EB-5 Program – Permanently authorize the EB-5 Program to continue the program’s success as a catalyst for direct foreign investment in U.S. job generating projects.


• U.S. Department of Energy – Accelerate the success of the DOE Loan Guarantee Program by reducing bureaucratic barriers and unreasonable credit requirements.


• Small Business Lending Fragmentation – Take a comprehensive look at the fragmented federal small business access to capital programming and improve upon this delivery system to drive job creation, small business development and improve federal efficiency.


• U.S. Economic Development Administration – Appoint a strong leader to head the U.S. EDA that can drive new direction and expanded services with an annual appropriation of no less than $600 million.

Part 6: Tax-Exempt Bonds
Preserve and Strengthen the Federal Tax Code as It Relates to Tax-Exempt Bonds Including Both Governmental and Private Activity Bonds

• Preserve & Protect Tax-Exempt Bonds – The next Administration must commit to preserving and protecting tax-exempt bonds under any and all circumstances. The restriction, capping and/or elimination of the tax-exemption for municipal and private activity should be outright and unquestionably dismissed. The next Administration should be a strong and vocal voice in this preservation and protection effort.


• Improve Tax-Exempt Bonds – In the process of comprehensive tax reform, the next Administration should take any and all measures to ensure that the tax exemption for municipal and private activity bonds be preserved and strengthened. Any talk of reform should be based on common sense, efficiencies, and effective public policy that remains fair to state and local governments.

Part 7: Rural Development & Agriculture
Reimagine the Federal Approach to Supporting Rural Development and Agriculture to Address and Eliminate Critical Market Barriers

• Reform the USDA Community Facilities (CF) Program to unlock capital to rural communities immediately.


• Update the Agricultural Bond Tax Code to provide first time famers access to affordable startup capital.


• Catalyze the Food System Asset Class to provide institutional and every-day investors the opportunity to invest in food as a market rate return option.