New Markets Tax Credits News Briefs - January 2011

Saturday, January 1, 2011

Not-for-profit National Dance Institute (NDI) established a new headquarters and the Center for Learning and the Arts at PS90, an L+M Development Partners' residential development in Harlem New York, N.Y. The 18,000-square-foot space in PS90's community facility will enable NDI to expand its arts and education programming to reach more children across the city. The center, part of which is planned for the former elementary school's auditorium, will consist of four dance studios, office space, and a lobby and gallery. NDI has raised more than half of the $20 million needed to complete construction, furnish the center, and establish building reserve and programming initiative funds. To help NDI acquire the space, Goldman Sachs' Urban Investment Group (UIG) is providing $3.4 million through a new markets tax credit (NMTC) allocation from McCormack Baron Salazar.

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A recently-opened Keller Electrical Industries facility, Project High Voltage, will allow the Phoenix, Ariz.-based industrial motor repair, manufacturing and installation company to retain 100 jobs and add 125 jobs in a low-income area of the city by 2015. The facility also features a 270-kilowatt rooftop solar system that is expected to halve the company's power usage. The $15.9 million facility and land acquisition was financed with an $8.8 million loan from Colorado Business Bank and an allocation from Community Reinvestment Fund. U.S. Bank served as the NMTC equity investor for the transaction.

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Louisville, Ky. officials broke ground on a 20,000-square-foot grocery store in the city's Park DuValle neighborhood that will give an estimated 35,000 citizens access to fresh produce, a deli counter and a bakery. First Choice Market is the first phase of a retail center called Wilson Crossing. The $4.4 million project's funding includes $1.2 million in equity from NMTCs allocated by the Louisville Community Development Bank and a $3.2 million forgivable loan funded by the Community Development Block Grant Recovery Act program. U.S. Bank provided the NMTC equity. The grocery store's construction will create approximately 200 construction jobs, and more than 30 jobs will be added when the store opens in the summer.

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The first phase of an addition to the Lynn Community Health Center to support new ambulatory care was recently completed in Lynn, Mass. An atrium connects the current center to the new two-story facility, which contains an expanded walk-in clinic with 10 exam rooms and offices for nurses and providers, centralized registration and waiting area; and shell space for future development. MassDevelopment provided the project with an $11.5 million NMTC financing package. Other funding for the first phase included a $6.5 million tax-exempt bond, NMTC equity, a $3 million grant from Partners HealthCare, and brownfields site assessment and predevelopment funds. Parts of the new wing are expected to be operational by summer.

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The Federal Reserve Bank of San Francisco's Center for Community Development Investments (CCDI) released a working paper examining the NMTC program's performance during the recession. The report, "Enhancing New Markets Tax Credit Pipeline Flow: Maintaining a Continuous Deal Flow in Spite of Funding Gaps and Volatility," makes policy recommendations for maintaining the NMTC project pipeline and overcoming financing gaps. Based on the author's findings and data from a winter 2010 CCDI survey, one of the paper's conclusions is that NMTCs have made it possible for stakeholders to fill financing gaps and keep projects in motion despite credit market challenges. The author, Columbia University's Kevin Leichner, suggests that Congress strengthen the program by permanently authorizing it, expanding the definition of poverty, allowing NMTCs to offset the alternative minimum tax and shortening the holding period. Download a copy of the report online at www.newmarketscredits.com.

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