Terms and topics defined

Government and Tax Related

Community Development Block Grant: Awards of federal dollars to states, cities and counties to facilitate affordable housing, business expansion and other anti-poverty programs in low-income communities.

Historic Tax Credit: Incentivizes private sector investment in the rehabilitation and re-use of historic buildings. The tax credit is equal to 20% of the eligible investment.

Low Income Housing Tax Credits (LIHTC): An indirect federal subsidy, LIHTC offsets investors a tax liability in exchange for financing the development of affordable rental housing.

New Market Tax Credit: Attracts capital to low-income communities by providing investors with a federal tax credit for investments in businesses or economic development projects. The tax credit is equal to 39% of the total qualified equity investment made in a community development entity realized over a seven year period.

Opportunity Zone: A census tract designated as low-income where new investments, under predetermined conditions, can be eligible for favorable capital gains tax treatment.

Qualified Allocation Plan (QAP): A document that housing finance agencies (or other state agencies) must produce to govern the distribution of Low Income Housing Tax Credits. Each QAP must state the priorities of the housing finance agency and describe the methodologies used to award tax credits allocations.

Tax Credit (generic): A tax incentive that reduces the amount owed against a tax liability.

CDFI Fund: A department of the US Treasury that provides financial and other assistance to Community Development Finance Institutions (CDFIs) with the objective of promoting economic revitalization in distressed communities throughout the United States. Banks, credit unions, loan funds and other institutions can apply to the CDFI fund for certification as a CDFI.

HUD: The United States Department of Housing and Urban Development is an agency that governs federal programs designed to help Americans with getting access to affordable housing, increasing homeownership, and supporting community development.

Small Business Administration: A government agency that promotes small business growth through financial assistance and advisory services.

Housing Finance Agency: An organization at the state or local level that offers housing assistance in the form of low-interest financing products and services to qualified buyers.

Public Development Authority: An entity legally separate from the establishing municipality that operates as a tax increment authority. Tax increment financing allows the public development authority to capture a portion of property tax revenue to finance future public improvement initiatives.

Financing Related

Tax-Exempt Bond: A bond on which the interest is exempt from federal taxation and usually also exempt from taxation by the state in which the issuer is located.

Subordinate debt: Unsecured debt that ranks lower than senior debt in the capital structure of an organization.

Impact investment: Investments made into organizations, companies, or funds that generate a financial return as well as a positive and measurable social or environmental impact.

Program-Related Investment or PRI: An investment aligning with the programmatic objectives of a foundation in the form of equity, a loan, or guarantee at below market rates.

Bond: Used by municipalities, states, and governments to finance projects at a pre-determined interest rate. Bonds represent debt owed from the issuer, the borrower, to its lenders, the holders. 

Senior debt: Debt that takes precedence over other unsecured or junior debt. Senior debt has more seniority than subordinated debt in the capital structure of an issuer.

Equity: Represents a stakeholder’s share in a company, organization, or asset such as a house.

Organizations

Community Development Financial Institutions: Private institutions committed to serving low-income and other disadvantaged people with the objective of expanding economic opportunity through services including affordable loans for residents and businesses.

Community Development Bank: Provide capital to economically distressed communities through targeted lending and investing.

Community Development Credit Union: Provide affordable credit options among other financial services to promote the ownership of assets and savings by low-income people.

Community Land Trust: A nonprofit that on behalf of a community develops and maintains civic buildings and affordable housing among other community assets.

Community Development Corporation: A non-profit organization incorporated to provide neighborhoods and cities with community economic development offerings such as investment in education and real estate development.