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Developers, bankers, investors, and government officials were among the audience at a seminar held this month on New Markets Tax Credits (NMTC).

The District of Columbia Housing Enterprises, a subsidiary of the D.C. Housing Authority, held the seminar to educate the audience about the tax credits and to identify potential borrowers who may have projects that can qualify for NMTC financing particularly in Ward 7 and 8. DCHE’s NMTC program assist schools, parks, and other vital commercial and business development that can strengthen neighborhoods, but have difficulty getting financing from traditional sources.

“These tax credits help revitalize communities with needed services and amenities, but more importantly provide jobs for our clients,” said DCHA Executive Director Adrianne Todman. “New Markets Tax Credits are vital to improving an entire neighborhood’s quality of life.”

DCHE, a certified development entity was established in 2002 to support DCHA’s mission and originates tax credits from the U.S. Department of the Treasury’s Community Development Financial Institution Fund. U.S. Treasury’s CDFI Fund aims to revitalize low-income and distressed neighborhoods.

Nationwide, $31 billion in NMTC have financed 3,800 projects totaling $63 billion in project costs, according to the December 2014 NMTC Coalition’s Economic Impact Report. Those projects have provided almost 458,000 construction jobs and 286,781 full-time jobs. DCHA’s share of that totals $83 million in NMTC financing.

Presenters at the seminar explained that the credits get awarded in highly distressed areas that have low-income residents and high unemployment rates. NMTCs provides gap financing for projects therefore, proposal for the NMTCs should highlight how the project will improve the community and have all of the other funding in place.

For example, Volunteers of America provided $8.5 million in NMTC funding to 1770 Tchoupitoulas Street in New Orleans. The area has a 25.7 percent poverty rate and the unemployment rate is nearly three times the national average. It also is classified as a food desert, or an area where no fresh food is available within a 10-mile drive.

The 1770 Tchoupitoulas Street project totaled $19.1 million. The successful renovation created 52 affordable units, a job training program for veterans, and a food service company that provides healthy school lunches to 8 percent of the city’s school system.

“We want to hear from people what development opportunities are in wards 7 and 8 that could benefit from New Markets Tax Credits,” said Kerry Smyser, deputy director of the Office of Capital Programs.

For example, a low-interest loan and equity investment from DCHE helped fill the financing gap to renovate Howard Theatre. The equity provided the theater a working capital cushion as it re-established itself as a cultural destination, while the low-interest rate minimized pressure on the theater’s cash flow as it built its revenue stream.

Howard Theatre is a National Historic Site that is older than the Apollo and part of the Chitlin Circuit, said Zemira Jones, board member. It was destroyed during the 1968 riots and fell into total disrepair and stood vacant in the 1980s, he said.

“This renovation created an economic resurgence here, which is the goal of the New Market Tax Credits,” Jones said, and he credited DCHE’s ingenuity for making the project possible. “If it wasn’t for their creativity and the New Markets Tax Credits, you would not be seeing what you are seeing here.”

Because the future capacity of the theater limited the project’s revenue projections, banks could only justify a $5 million loan, not the $29 million they needed, Jones said. Using NMTCs helped fill the gaps and financing became possible.

Shirley Boubert, a DCHA manager of the NMTC program, said DCHE assumes the full role as a lender.

“We lend project funds and the equity stays with the project,” said Boubert, explaining DCHE then gets a portion of the interest payments from the borrower to pay back the loan and we earn fees for providing the loan “It is a decent line of business for us considering the funding cuts we are suffering.”

NMTC funding was also used at Progression Place, the new headquarters for the United Negro College Fund mixed-use commercial project located around the corner from Howard Theatre. Progression Place was just made a semi-finalist in the National Development Council Academy’s 2015 awards for community development in the creative financing category.

For more information, please contact Shirley Boubert at (202) 535-1445 or sboubert@dchousing.org.

 

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Progression Place in the Shaw area of Northwest received NMTC and is a semi-finalist in the National Development Council Academy’s 2015 awards for community development in the creative financing category.
Last modified: 4/1/2015 2:03:52 PM