The Leviticus Fund, a Tarrytown-based nonprofit lender, received a $1.6 million Financial Assistance Award last month from the U.S. Department of Treasury”™s Community Development Financial Institution (CDFI) Fund.
The FA Award followed a highly active 2022 for the Leviticus Fund, which closed $25.6 million in loans and made $22.1 million in loan disbursements. Many of the projects financed by the fund encompassed nonprofit affordable housing as well as supportive services for those who were formerly or are currently homeless. The award also coincided with the Leviticus Fund”™s 40-year anniversary.
The formal name for this entity is Leviticus 25:23 Alternative Fund ”“ and as the name suggests, it is based in the faith-based community. The roots of the fund were planted in a December 1981 meeting of religious leaders from the Tri-State Coalition for Responsible Investment, who were considering new vehicles for advancing their values to help the less fortunate members of the regional society.
In May 1983, 27 religious congregations pooled $360,000 in capital to form the fund, which made its first two loans in 1984 in support of a tenant-owned cooperative in New York City and a workplace and training center for mentally challenged adults in Nyack. The fund became one of the nation”™s first certified CDFIs in 1994.
Executive Director Greg Maher explained that Leviticus Fund is a lender that serves nonprofit developers in the Tri-State Area. He stressed that the fund does not operate as a charity, nor is it focused on giving grants that are not expected to be repaid.
“Loan funds are nonprofit corporations, so we are not at a bank-founded depository institution,” explained Executive Director Greg Maher. “We are part of the community development finance movement ”“ we provide financing and technical assistance to developers that are doing work in high-poverty neighborhoods, and we provide them with a range of very flexible loan products to get their projects up off the ground during pre-construction. We also provide construction and rehab financing, and also during the operating phase of the project.”
Maher stated that the Leviticus Fund focuses on nonprofit developers rather than their for-profit counterparts because “we feel that’s the best strategy if you’re talking about housing that’s affordable to lower income families ”“ not only building the housing, because they do it well, but also holding on to it over the long term. Because if you have a for-profit that owns it, once it becomes deregulated and if it’s in a neighborhood that’s gentrified or where values have risen, they’re much more likely to sell it, evict the tenants and go to market on it.”
Today, roughly three-quarters of Leviticus Fund”™s lending is focused on affordable housing developments. Maher also noted that despite the stereotype of high risks in this sector of lending, the fund”™s history has been mostly free of delinquent borrowers.
“Over the last five years, we’ve had very low default rate of less than 1%,” he said. “And our write-off rate has been zero ”“ we have no write-offs at all. The real risks are there, certainly, but we usually try to address that in a very careful way with our underwriting and our due diligence.”
Maher further explained that Leviticus Fund makes a serious effort to establish relationships with potential borrowers, pointing out that “the nonprofits we lend to we know really well ”“ we get to know them, we meet with them. It’s kind of like the old-fashioned lending based on close relationships and really knowing who you’re working with. And that’s helped in terms of the lower default rates.”
Maher noted the federal Low-Income Housing Tax Credit program as being crucial in affordable housing development, though he also acknowledged that developments are often stymied by multiple obstacles in many localities.
“Zoning is the major impediment in Westchester and Fairfield County to more affordable rental housing,” he said. “On the for-sale side of homeownership, it’s even more challenging. Not only is zoning a problem, because you have restrictive zoning in certain places ”“ especially in wealthier communities ”“ but the cost of land is so significant because there are relatively few
parcels left that can be developed into for-sale housing that’s affordable.”
Looking ahead, Maher said the Leviticus Fund will be planning a major celebration in Manhattan on Oct. 12 to mark the organization”™s 40th anniversary by highlighting its achievements and calling attention to its newest projects.
“The theme for that 40th anniversary is ”˜seed to the sower,”™” he said. “The sowers would be the nonprofits that do the work in communities, and Leviticus is the one that provides them seed, which are financial resources to do their work. And I think we’ll be looking forward to the next 40 years, and I think we have a lot of momentum. The grant we received from the CDFI Fund is a real vote of confidence from the CDFI Fund.”
