Illinois Facilities Fund

Description

Brick by brick, the Illinois Facilities Fund (IFF) is building a foundation for effective supports and services for nonprofits serving families in Illinois. The IFF is a community lender that provides low-interest loans and technical assistance to non-profits, including child care providers, for facilities renovation and construction. The IFF accomplishes its work by pulling together the public- and private-sector resources and expertise necessary to support capital improvements. It is helping to build child care capacity in Illinois in many ways: as a lender, owner, and developer of child care facilities, as well as a management and financial consultant.

Public-private partnership is central to the work of the Illinois Facilities Fund. Leaders of the IFF assemble the substantial resources and expertise needed to undertake capital improvement projects. This frequently involves bringing together resources and stakeholders from the public and private sectors. Different partnerships form, depending on the project, but IFF has worked with the following partners on child care facilities projects:

• The Illinois Department of Children and Family Services, which contracted with the IFF to finance and construct seven family resource and child care centers in 1995;
  
  
• The City of Chicago, which unveiled a partnership with the IFF in 2000 to make funds available for the construction and repair of child care centers in 20 low-income neighborhoods;
  
  
• National and local Foundations, which provide grants and low-interest loans;
  
  
• Financial institutions, which provide loans;
  
  
• Community development corporations and other community organizations; and
  
  
• Child care providers.
  
  

The Illinois Facilities Fund started in 1988 as a program of the Chicago Community Trust, Cook County's community foundation. Through their grant-making work, Chicago Community Trust staff realized that non-profits frequently struggled to meet capital needs and that there was little public or private funding available to support these needs. Leaders of the Trust also knew that non-profits lacked technical expertise in real estate financing and development and had limited cash flow to support loans. In response, they created the IFF to provide below-market real estate loans and consulting to non-profits. The IFF became an independent non-profit in 1990.

From the beginning, IFF leaders recognized that building facilities to house child care programs was essential to substantially increasing child care capacity. They made loans available to child care providers for construction and improvements, and designed an ambitious facilities development project in partnership with the Illinois Department of Children and Family Services (DCFS). In 1990, DCFS was struggling to expand child care capacity to accommodate increasing numbers of working parents and increasing federal investments in subsidies for low-income families. The IFF proposed that it would borrow funds to support the construction of new child care facilities using its own equity and that DCFS make an additional appropriation to cover debt service. DCFS agreed to the project and the IFF put together financing and managed the selection and construction process for seven new child care centers. The $22-million program, completed in 1995, increased the IFF's expertise on the design, economics and operations of successful child care programs.

The IFF is currently involved in two public-private partnership projects that will substantially increase child care capacity in Chicago.

The first is a project to build two new family resource centers serving 200 children each in Chicago's Lawndale and Little Village neighborhoods, part of Chicago's Empowerment Zone. The IFF works closely with community development organizations, child care providers, and parents from each of the neighborhoods to design and implement the project. They assembled $6.8 million to support the project from public and private sources, including Empowerment Zone funding. Construction on both projects should be completed in the fall of 2000.

The second project is a partnership with the City of Chicago to increase the number of licensed child care facilities in the 20 Chicago communities with the most need for new child care resources. The project grew out of an IFF assessment of child care needs in Chicago's 77 communities in 1999. The assessment found that many low-income communities lack licensed early childhood development programs. In fact, only seven Chicago communities have center-based infant/toddler care. In response to the assessment, the Mayor announced a new Early Child Care and Education Plan for the City of Chicago. The cornerstone of the plan is the creation of the Children's Capital Fund. The Fund will invest approximately $40 million in new child care facilities over the next three years: half the funds will come from the City of Chicago, and the IFF will provide the remainder by creating a bank consortium.

The IFF receives core operating and program support through grants from a number of foundations, corporations, and individuals. Their loan programs are funded by foundations through grants and by loans from financial institutions. In 1995, the IFF developed the Bank Consortium Program, through which six banks invested $8 million in the IFF. The IFF has also received close to $3.5 million in capital grants from the U.S. Department of Treasury Community Development Financial Institution Fund.

The IFF also develops financing packages from a variety of sources to support specific projects. For example, construction of the Family Resource Centers in Chicago's Empowerment Zone was financed through a combination of Empowerment Zone funding, community fundraising, a below-market loan from the City of Chicago CD Float program, a mortgage from the Northern Trust Bank, and a loan from the IFF loan fund.

In their 12 years of operation, the IFF has been a driving force behind many child care capital development projects that would not have been feasible without their technical expertise and loan resources. The following examples are samples of their most significant results to date.
IFF:

• Financed and developed seven new child care facilities serving 1,385 children in low-income neighborhoods in partnership with the Illinois Department of Children and Family Services;
  
  
• Provided low-cost loans to 23 child care centers for new construction and improvements;
  
  
• Financed and developed two new family resource centers in Chicago with the capacity to serve approximately 140 infants and toddlers, 200 pre-school children, and 50 school-age children; and
  
  
• Assembled the $41-million Children's Capital Fund, which is expected to increase licensed child care capacity in Chicago by 5,000 spaces.
  

Sustaining and Replicating

The IFF provides unique and needed resources and expertise to the non-profit sector in Illinois, and expects to continue to grow and diversify their services in response to needs. The following factors indicate the IFF's strong position and promising future.

• The IFF's resources and the demand for its services have grown considerably since its inception. From 1991 to 1999, the IFF's loan portfolio grew from $2.7 million in loans outstanding to $17 million.
  
  
• Public- and private- sector leaders now depend on the IFF's policy, financing, and management capabilities.
  
  
• The IFF's interest and involvement in child care capacity-building continues to grow, as demonstrated by their 1999 assessment of Chicago's child care resources and their new partnership with the City of Chicago.

Seek to leverage both resources and expertise. Capital improvement projects are too expensive and complex for most non-profits to implement on their own. Building relationships and working in partnership with government, financial institutions, technical experts, community organizations, and many others have been key to the IFF's success.

Deliver when you say you are going to deliver. The IFF built trust among the many public- and private-sector partners that make their work possible by establishing a record of meeting deadlines and following through on agreements precisely.

Establish legal agreements. In real estate development and financing, it is extremely important to solidify partnerships through legal documentation of roles and responsibilities. This will help partners to avoid unnecessary disagreements and setbacks.

Contact Information

Trinita Logue
President
Illinois Facilities Fund
300 West Adams St.
Chicago, IL 60606
Phone: (312) 629-0060
Fax: (312) 629-0065