Community development corporations have long been active in Connecticut, and the state will begin formally certifying them as a step to funneling more cash to support their work in boosting struggling neighborhoods.

Gov. Ned Lamont on Monday signed a budget adjustment for the 2023 fiscal year that would allow the state to borrow up to $50 million to support community development corporations, or CDCs, under a new program in the state Department of Economic and Community Development.

DECD will create an Office of Community Economic Development Assistance to work directly with nonprofit CDCs as long as the eligible nonprofits have boards of directors who live in the communities they exist to support and otherwise align demographically with those neighborhoods.

A department spokesperson indicated the DECD is still analyzing next steps in setting up the new office.

The initiative made it into the state's budget adjustment bill after the Connecticut General Assembly did not move ahead on a standalone bill to create a $100 million program, which would have included a tax credit to draw more private-sector investment in CDCs.

Lamont's interim budget chief argued against the standalone bill in March when he testified to the Finance, Revenue and Bonding Committee of the Connecticut General Assembly.

But the idea had champions in the General Assembly, including Sen. John Fonfara, D-Hartford.

"A community development corporation can transform communities, and they have a history of this across the country," Fonfara said, speaking in March during a hearing of the Finance, Revenue and Bonding committee. "We just haven't had much in Connecticut."

Community development corporations date back more than a half-century, with Robert F. Kennedy promoting the concept while he was a U.S. senator in New York. The National Alliance of Community Economic Development Associations estimates there are more than 4,500 organizations nationally that identify as CDCs.

Aside from their 501(c)3 status as nonprofits, CDCs do not carry any other official governmental designations, and many nonprofits use the term to describe their activities. Under the budget provision signed Monday by Lamont, the new OCEDA office in DECD would offer a formal certification for community development corporations operating in Connecticut.

DECD is also tasked with promoting the formation of new CDC nonprofits, if it spots opportunities where they could make a difference.

"It will give a community such as North Hartford an opportunity to create a CDC where none currently exists," Vicki Gallon-Clark, executive director of the Blue Hills Civic Association in Hartford, said during the March hearing of the Finance, Revenue and Bonding Committee. "I have a colleague who I keep in close contact with in New Haven, and he shared with me examples of how residents are coming together making these local decisions in partnership with area employers, and they're doing some astounding things — and I know that we could do the same thing here in Hartford."