Trenton— June 30, 2023—Social justice, housing, small business, and union advocates urged state lawmakers to pass legislation adopting an innovative and practical approach to closing critical investment gaps for New Jersey communities on the last day of the voting session. S3977/A567 would establish the Social Impact Investment Fund (SIIF), designed to address the state’s affordable housing crisis, support clean water projects, and provide for other critical infrastructure needs.
In a letter to Senate President Nicholas Scutari and Assembly Speaker Craig Coughlin advocates noted that the bill “provides financing for affordable housing and clean water projects not currently supported by traditional financing institutions and public financing programs.” They urged lawmakers to “ensure the full $20 million allocation for the SIIF, which Governor Murphy included in his FY2024 budget proposal, remains in the budget.”
The SIIF’s legislative champions and primary sponsors are Senate Majority Leader Teresa Ruiz and Assemblyman John Mckeon. The fund is an initiative and key milestone of Governor Phil Murphy’s Public Bank Implementation Board as it continues its work towards establishing a New Jersey public bank.
The SIIF would enable the state to utilize the $20 million allocated in the YR2024 budget to leverage private impact investments and direct them to socially beneficial but under-invested projects. Private lenders tend to avoid these projects due to financial risks and low projections for return on investment, while public funding sources are often constrained by statutory limitations.
“From Cape May County to Bergen County, cities across the state struggling to access funding for water infrastructure clean-up would be able to secure financing through the SIIF,” said New Jersey Citizen Action President Phyllis Salowe-Kaye. “The fund could also provide predevelopment financing for affordable housing developers.”
While the SIIF’s immediate focus would be on affordable housing and clean water, the state could identify additional investment opportunities for the SIIF and expand the permissible uses of the fund, such as for school construction in communities of need. The state can also allocate additional funding with legislative support.
The SIIF would also strengthen the existing local financial ecosystem by deploying investments, in part, via Community Development Finance Institutions (CDFIs), Minority Depository Institutions (MDIs), and Credit Unions. The SIIF will both build the capacity of these existing institutions in the state and attract high-performing national and regional CDFIs and MDIs to increase their investments in New Jersey.
“This is exactly the kind of alternative finance mechanism cities across New Jersey need for critical investments in low-and moderate-income communities,” said Salowe-Kaye. “The SIIF will act as a multiplier for public funding and expand the number of solutions to our state’s most pressing social and economic problems. It also models some of what a New Jersey public bank could achieve in the future.”