Magazine article American Banker

Downstate Illinois Banks Get Option for Development

Magazine article American Banker

Downstate Illinois Banks Get Option for Development

Article excerpt

A law signed by Illinois' outgoing governor could give banks in downstate Illinois more opportunities to invest in economic development -- provided funding becomes available.

As Gov. George Ryan wound down his term in office, he drew a lot of attention for giving clemency to death-row inmates. There was little notice of his Jan. 7 signing of a bill that created the Illinois Investment and Development Authority.

The authority will provide technical assistance and funding for banks and other community development financial institutions that offer microloans and other financial services to poor communities. It is designed to complement the federal Department of Treasury program, which was started in 1994 and has provided more than $534 million in awards to community development organizations.

Some banks are certified by the Treasury Department as community development financial institutions, but most of these institutions are microlenders, credit unions, and other nonbanks. Banks typically partner with them as investors or co-lenders on a project.

Illinois -- where about three dozen entities are certified as community development financial institutions by the Department of Treasury -- is the fourth state to create this type of authority. The others, Pennsylvania, Texas, and South Carolina, take varying approaches -- from offering tax credits to giving grants for providing funds to CDFIs -- but Illinois' will focus on technical assistance in the beginning because funding for the program is not yet in place.

The law was passed when the Illinois legislature was in its veto session and the appropriations cycle was finished, so no money was set aside for the authority. With a new administration coming in and the state facing a budget shortfall, supporters of the authority hope the state government will view this as a good way to involve private industry in economic development rather than a burden to the government. …

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