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“The people who could benefit most from lowering energy costs are those struggling with the high cost of housing in Southern California.”
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USC Credit Union, a certified CDCU and CDFI, recently developed several green loan products that make emissions-reducing energy upgrades more equitable for communities near the University of Southern California campus in South Los Angeles and East Los Angeles . Created by Biden’s 2021 Inflation Reduction Act (IRA), the Greenhouse Gas Reduction Fund creates an opportunity for CDCUs and CDFIs to take on more risk and ultimately bring emissions-reducing and cost-effective energy products to the communities that need them most. more is required.
The IRA provided $27 billion to the Environmental Protection Agency for the Greenhouse Gas Reduction Fund. Through competitive grants, the Fund will assist in funding clean energy and climate projects that reduce greenhouse gas emissions. The program will meet the requirements of the Justice40 initiative, Biden’s commitment to direct 40% of the benefits of specific federal investments to disadvantaged communities.
While the gap is narrowing, a 2021 study on US solar adoption patterns from Berkeley Lab and the US Department of Energy shows that solar adopters tend to have higher incomes. In 2019, the annual average solar adopter’s income was approximately $113,000, while the overall US median income was $64,000. The annual income gap between solar adopters and the general population fell from $72,000 in 2010 to $49,000 in 2019, indicating that low-income communities are still in need of equitable solar upgrade solutions.
Many USC Credit Union customers have been left behind by traditional financial institutions, disproportionately affected by climate change, and underserved due to lack of access for Hispanic and immigrant populations. These three factors highlight an opportunity for CDFIs to meet a mutual need for green loans in low-income Hispanic communities.
“South Los Angeles in East Los Angeles is now a predominantly Latino community,” says Gary Perez, CEO of USC Credit Union. “Several decades ago, the South Los Angeles area was predominantly an African American community. So as the racial composition of the community has changed, we felt we needed to understand more about the needs of the Latino community. We turned to the Juntos Avanzamos for advice.
Juntos Avanzamos is a designation for credit unions committed to serving Hispanic and immigrant consumers. USC Credit Union became a renamed Juntos Avanzamos CDCU, created by CDCU membership organization and CDFI Mediator Inclusive.
“We had to understand more about the needs of the Latino community, especially the first and second generation members of that community,” Perez says. Despite how convenient remote banking tools are, “the general consensus is that these individuals prefer to bank in person. Why would these people like to go to the bank? Our thesis is that they cannot access the same tools that the English prefer or that English natives can. That’s why we have developed a new bilingual mobile banking system.”
With tailored access to the Latino community, grant funds from the Greenhouse Gas Reduction Fund will allow USC Credit Union to take on even greater risk and lend to its customers with a wider diversity of financial circumstances.
“The grant funds will be used as loan loss reserves and will allow us to make loans to credit-challenged or income-challenged individuals who may have non-traditional sources of revenue,” Perez says. “We feel strongly that this type of application of IRA funds will be of further benefit to the inner city community.”
While the Greenhouse Gas Reduction Fund will assist various community financial institutions in developing financial products, financial products need additional support, according to Neda Arabshahi, vice president of Inclusive. “They should be combined with technical support, training, help vetting contractors, how to form partnerships with providers of clean energy services, and consumer education,” Arabshahi says.
Perez and other USC credit union leaders completed the Virtual Solar Lending Professional Training and Certificate Program, developed in part by the Inclusive Center for Resilience and Clean Energy and the University of New Hampshire (UNH) Carsey School of Public Policy Center for Impact Finance and I went. Funded by the US Department of Energy’s Office of Solar Energy Technology.
“The people who could benefit most from lowering energy costs are those struggling with the high cost of housing in Southern California,” Perez says. “By providing more accessible solar financing, we can help lower energy costs for those individuals and allow them to maintain a home in this expensive LA market.”
This story is part of our series, CDFI Futures, which explores the community development finance industry through the lens of equity, public policy and inclusive community development. This series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.
Bianca Gonzalez (he/she) is a writer who seeks to use words as a tool for social change. She is a solutions journalist for Next City, a case study writer for Community Solutions and a daily news writer for Biometric Update. As a gay, Latina brain cancer survivor, her belief in justice is fundamentally conflicting.
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