New Markets Tax Credit News Briefs - March 2017

Thursday, March 2, 2017

The Native Nations Institute Feb. 1 released the report, “Access to Capital and Credit in Native Communities” and a supplemental data review. Information included in the documents focused on the status of access to capital and credit in American Indian, Alaska Native and Native Hawaiian communities. Specifically, the data describes access to capital and credit for Native consumers, Native business owners and tribal communities and governments. The two-part study is intended to provide research and analysis in support of improving access to capital and credit in Native communities. The data review concludes that Native-controlled community development entities (CDEs) were underrepresented among both applicants and recipients of new markets tax credit (NMTC) awards. Native Nations Institute points out that the success rate of Native CDEs that applied for the credits was lower than that of non-Native CDEs. The report said that the NMTC program has been less available to native CDFIs than the industry hoped. Both documents are available at www.newmarketscredits.com.

***

On Jan. 24, Palermo Villa Inc. announced First-Ring Industrial Redevelopment Enterprise Inc. (FIRE), a CDE formed by the city of West Allis, Wis., is providing $9.3 million in NMTCs for upgrades of its Milwaukee production facility. The 250,000-square-foot pizza manufacturing facility will have new equipment installed in stages throughout the next several months, with a completion date of the end of 2017. 

***

The grand opening of Artspace Macaroni Flats in Salt Lake City was Jan. 15. There are 13 residential one- and two-bedroom apartments and eight street-level commercial spaces for artists, nonprofits and small businesses. The historic Western Macaroni Manufacturing Company warehouse, built in 1900, was transformed into this mixed-use, mixed-income development with both NMTCs and historic tax credits (HTCs). U.S. Bancorp Community Development Corporation provided $2.3 million in NMTC equity and $1.2 million in federal HTC equity, as well as $501,000 in state HTC equity. In addition, the Community Development Finance Alliance provided $7 million in NMTC allocation and a $4.7 million leverage loan. Ally Bank and American Express each provided a $500,000 loan. Artspace provided $2.2 million in equity. Artspace develops mixed-use affordable housing properties that promote small business while serving as catalysts for revitalizing the neighborhood.

***

U.S. Sen. Shelley Capito, R-W.Va., reintroduced the Creating Opportunities for Rural Economies (CORE) Act (S. 76) Jan. 10. The bill would dedicate 5 percent of each NMTC allocation round to communities impacted by job losses in the coal industry, beginning with the calendar year 2017 allocation round. Rep. Evan Jenkins, R-W.Va., introduced companion legislation (H.R. 405) in the House, also Jan. 10. The CORE Act was first introduced in the House and Senate late last year but did not progress before the 114th Congress adjourned. Both bills are available at www.newmarketscredits.com.

***

Southwest Florida Community Foundation announced Jan. 5 the closing of a $10 million NMTC transaction with the Florida Community Loan Fund for the restoration of the historic Atlantic Coast Line railroad station in Fort Meyers, Fla. The building will be converted into a technology hub and headquarters. The foundation plans to construct a 10,000-square-foot addition that will include offices and state-of-the-art shared space for the community and tenants. Plans also include 15 blocks of upgraded utilities and $2.5 million of streetscaping. The Atlantic Coast Line railway station was presented to the city Feb. 4, 1924. Construction costs are expected to total $10 million. 

***

Construction on the Eastside Community Center in Tacoma, Wash., is set to begin this spring. The $30 million center will be funded with $3 million to $5 million in NMTC equity. The 60,000-square-foot building will have a common area, an aquatic center, a gymnasium, fitness areas, a social hall, a multipurpose room, a technology lounge, a recording studio and a commercial kitchen. Metro Parks Tacoma will operate the center in collaboration with Boys & Girls Clubs of South Puget Sound. The center is scheduled to open summer 2018. 

***

CleanFund Commercial PACE Capital, a provider of long-term financing for energy efficiency, water conservation, renewable energy and seismic improvements for commercial, multifamily and other nonresidential properties in the U.S., announced Jan. 10 its investment in the redevelopment of the Brookfield building in Kansas City, Mo. PACE investments will provide nearly $2.5 million through the Property Assessed Clean Energy program, which provides funding for building improvements that boost energy efficiency, for the $36 million redevelopment. The financing package also includes nearly $14 million in state and federal HTCs, brownfield tax credits and NMTCs. Equity Bank is also providing a $17 million loan. Brookfield Hotel Investment LLC’s plans for the 86-year-old building will transform the 12-story office tower into a 118-room Hotel Indigo, with three upper floors of market-rate apartments. The planned open date is January 2018.

***

A recent study found that the NMTC program has had modest, but positive impacts on supermarket entry in low-income communities. The report, “Supply-Side Subsidies to Improve Food Access and Dietary Outcomes: Evidence from the New Markets Tax Credit,” examined whether the federal government’s NMTC program has affected the entry of retail food establishments, and in turn food shopping and purchasing patterns, in low-income communities. Authored by Matthew Freedman, of the University of California, Irvine’s Department of Economics, and Annemarie Kuhns, of the U.S. Department of Agriculture’s (USDA’s) Economic Research Service (ERS), it explores the NMTC program’s impact on the entry of retail food establishments in low-income areas across the country, finding that in an effort to improve diet and health outcomes, policymakers have increasingly turned to supply-side subsidies aimed at encouraging investment by supermarkets and other food retailers in traditionally underserved areas. Data in the report includes data from the U.S. Treasury on tax credit allocation and tract-level demographic and housing information, as well as comprehensive data on retail food establishments between 2004 and 2009 from A.C. Nielsen’s TDLinx database. Freedman and Kuhns compare outcomes among tracts within a narrow window around the income threshold determining eligibility under the program.

***

On Feb. 7 the CDFI Fund released its progress report, “Investing in Opportunity: Fiscal Year 2016 Year in Review.” The CDFI Fund stated that through fiscal year (FY) 2016, the CDFI Fund made $3.16 billion in loans and investments through the NMTC program, of which 74.5 percent were made in severely distressed communities. NMTC allocatees financed 530 businesses and 37,600 jobs were created. In addition, the CDFI Fund in 2016 awarded $7 billion in NMTC allocation authority through a combined 2015 and 2016 calendar year round. FY 2016 also saw the following landmarks for the cumulative achievements of the NMTC program: $50.5 billion in allocated tax credit investment authority, 5,400 businesses financed by NMTC allocatees, 710,000 jobs created and 13,900 affordable housing units developed.

Journal Category: 
New Markets Tax Credit