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New Markets Tax Credits News Briefs - November 2013

On Sept. 19, a joint letter signed by more than 1,200 businesses, investors, nonprofit organizations and community leaders was sent to Congress advocating for an increase in credit authority and for a permanent extension for the new markets tax credit (NMTC). The letter asserts that the NMTC is an effective and economical tool for attracting private sector capital, creating jobs and business opportunities and improving the local economies of some of the poorest urban and rural communities in the United States. The signatories call on Congress to make an investment in America’s rural and urban communities by extending and expanding the program. The letter notes the benefits of the NMTC, including the creation of 350,000 jobs since 2003. The NMTC program also leveraged $55 billion in capital investment to credit-starved businesses in communities with high poverty and unemployment rates. The letter also notes that during the last 30 years, federal spending on community development, measured as a share of Gross Domestic Product (GDP), has fallen by 75 percent and that in many economically distressed urban and rural communities, the NMTC is the only capital resource available for revitalization.

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The U.S. Department of the Treasury on Sept. 30 announced it has approved term sheets for $325 million in community development bonds, which it will guarantee through the fiscal year 2013 round of the Community Development Financial Institutions (CDFI) Fund Bond Guarantee program. The four recipients are Clearinghouse CDFI, Enterprise Community Loan Fund Inc., the Community Development Trust LP and Local Initiatives Support Corporation. The three qualified issuers of the bonds are the Community Reinvestment Fund, Opportunity Finance Network and TriSail Funding Corporation. The CDFI Bond Guarantee program is a federal credit program, under which bond proceeds are debt instruments to be repaid. The program operates at no cost to taxpayers. The FY 2013 round is the inaugural round of the Bond Guarantee program.

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The University of Louisville Foundation received $20 million in federal NMTCs in September for the development of the first building in its downtown Nucleus Innovation Center life-sciences park, located in Louisville, Ky. The development of the former Nucleus Innovation Center is the first of four phases. The Nucleus Innovation Center life-sciences park received $15 million in NMTCs from the National New Markets Fund (NNMF) and $5 million from PNC Community Partners Inc. The park is being developed by Kentucky’s Life Sciences and Innovation Center LLC, the economic development arm of the University of Louisville Foundation. Deborah La Franchi, NNMF president, said the organization was drawn to the Nucleus project primarily because of its goal to support the growth of early-stage companies.

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U.S. Bank and the Cincinnati Center City Development Corporation (3CDC) closed on more than $2.4 million in NMTCs in September to finance the fifth phase of Mercer Commons, mixed-use development located in Cincinnati’s Over-the-Rhine neighborhood. U.S. Bank has provided $18.6 million to finance the development of 67 affordable and market rate housing units, including a $9.3 million construction loan through the U.S. Bancorp Community Development Corporation. Mercer Commons, which has three phases of development, includes the renovation of 19 buildings and 26 vacant parcels of land on a total of 2.67 acres. With a total cost of $63 million, the property will provide 126 apartments – 30 of them affordable units – 28 condominiums, 17,600 square feet of commercial space and a 340-space parking garage. As of the beginning of September, the first residents moved in, and five of the 11 Mercer Historic units have been sold and three more are under contract, at press time. The 12-unit Mercer mixed-use building and the five-unit Mercer Townhomes are expected to be completed in the fall of 2013.

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On Sept. 19, Miles College received $2.5 million in Alabama NMTCs for a recreation center. U.S. Bank and Stonehenge Capital Company provided NMTC equity for the new center, which is one of three buildings under construction on campus. The development will create 150 construction jobs and 45 new full-time equivalent positions.

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The St. Louis Development Corporation awarded Bissinger’s, a gourmet chocolate producer, $5 million in federal NMTCs to relocate to and rehabilitate a 103-year-old, National Register of Historic Places-listed building that it purchased in downtown St. Louis for $4 million. The rehabilitation will total $11 million for office and factory renovations. Renovations will include a new entrance and parking lot, as well as an event space for up to 300 people. Tim Fogarty, CEO of Bissinger’s, said about 90 people will be employed initially at the new plant, and he expects to add another 100 workers within five years. The development is anticipated to be completed by the end of 2014. The building will also serve as the company’s headquarters.

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On Sept. 20, U.S. Bank partnered with the Philadelphia Industrial Development Corporation (PIDC) to close on more than $4.9 million in NMTC financing for the renovations of the Drexel University’s Dornsife Center for Neighborhood Partnerships. This is in addition to $10.25 million in NMTC financing obtained in August. The center will provide services such as a free law clinic, health and wellness screenings and classes, job training, architectural design-build studios and environmental engineering demonstrations. The center will be located in two vacant historic properties and a former elementary school. Development of the property has already begun. In addition to the NMTCs, a $10 million gift from Dana and David Dornsife will also be used for the development of the site and operating costs of the center.

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Michigan Renewable Carbon will develop a new production facility at the closed Sawyer Air Force Base in Marquette County, Mich. The company closed on $20 million in NMTC financing with lenders National New Markets Fund LLC (NNMF) and $2 million with Chase, which served as the tax credit investor, to fund the project. The facility for producing renewable carbon products will process biomass from wood feedstock. The new facility’s production technology will also achieve more than a 90 percent reduction in the emission of greenhouse gasses, sulfur dioxide and mercury. Marquette County is designated as severely distressed with a poverty rate of more than 30 percent and an unemployment rate of 26 percent. The new production facility is expected to create 45 permanent jobs.

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Metro Center Atrium, a mixed-use commercial development, located in the Pelham Bay area of the Bronx, N.Y., received NMTC financing from Citi and Simone Development Companies, in partnership with Monge Capital. Financing is for the construction of the center in the medically underserved community. Part of the Hutchinson Metro Center development, the 370,000-square-foot development provides community health care and social services. It will also house the first LA Fitness health club in New York City and a 95,000-quare-foot, 125-room Residence Inn by Marriott. The inn will be the first Class A hotel in the Bronx. Proceeds from the investment will be used to keep leases affordable for community organizations. Additional financing was provided through the federal EB-5 program.

Journal Category:

New Markets Tax Credit

Authors:

Novogradac

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