Why New Market Tax Credits Matter: Three Success Stories
New Markets Tax Credits (NMTC) help localities build stronger neighborhoods by investing in housing, schools, and other vital projects that are targeted at helping low-income communities. Between 2003 and 2015, $42 billion in direct NMTC authority has generated almost $80 billion in capital for local businesses and revitalization projects. NMTC investment has resulted in the creation or retention of over 750,000 jobs, and the financing of over 178 million square feet (sq. ft.) of commercial real estate and almost 14,000 affordable housing units. NMTCs are a proven and effective tool for generating private-sector investments in communities in need. This is one in a series of articles that show how public housing authorities (PHAs) and community development agencies have successfully used federal tax credits and tax-exempt bonds to build and/or preserve public housing and affordable housing and to increase the sustainability of communities.
Norfolk Redevelopment and Housing Authority: Hampton Roads Ventures
In 2008, the Norfolk Redevelopment and Housing Authority (NRHA) became the nation’s first and only redevelopment and/or housing authority to win an allocation of NMTC. Following a rigorous and competitive application and review process, NRHA received a $15 million allocation and then – as required by the U.S. Treasury Department – created an affiliate community development entity (CDE) called Hampton Roads Ventures (HRV), LLC to manage the allocation and to collaborate with private-sector investors. Today, HRV has been awarded six allocations of NMTC that total $260 million and is an investment firm that specializes in attracting private-sector capital into pioneering economic community developments located in emerging domestic areas, including lower income urban and rural communities.
East St. Louis Housing Authority: Jazz @ Walter Circle
Developed by Hampton Roads Ventures in partnership with the East St. Louis Housing Authority (ESLHA) and others, the East St. Louis development called Jazz @ Walter Circle is the first project to combine public housing funds with New Market Tax Credits. Completed in 2012, this 100,000 sq. ft. hi-tech senior facility offers over 70 senior living units and cultural activities. The facilities include a locally owned greengrocer, credit union, wellness center, commercial kitchen, community center, and roof and terrace gardening/farming initiative. The project was made possible by $17 million in NMTCs and various public/private partnerships that further generated the financial resources needed for the development. The ESLHA collaborated with HUD, City of East St Louis, Eco Jazz, Inc., NFP (an ESLHA affiliate), Dudley Ventures, and HRV.
District of Columbia Housing Authority: Canal Park
In 2008, the District of Columbia Housing Authority (DCHA) created a non-profit subsidiary called DC Housing Enterprises (DCHE), which is one of the few PHA organizations certified as a CDE. DCHE is able to originate NMTCs by providing tax credits to investors in return for equity investments in businesses that serve low-income communities. Since 2009, DCHE has received $83 million in NMTC allocations and invested over $450 million in community-oriented real estate and business sector capital that contributes to DCHA’s broader mission of creating stronger communities for all residents, especially those with low incomes.
The Canal Park mixed-use/mix-income sustainable community project, which was completed in 2012, received DCHE’s very first investment of NMTCs. Located in DCHA’s fifth HOPE VI Arthur Capper and Carrollsburg public housing communities, the project’s NMTC allocation helped to develop the LEED Gold Certified eco-friendly and art-filled community park that serves as a “front yard” to Capitol Quarter, a new 323-townhome neighborhood that was being redeveloped as a part of DCHA’s HOPE VI project. The Office of the DC Deputy Mayor for Planning and Economic Development invested $135 million, DCHA provided $3.9 million equity and allocated $13.5 million in NMTCs.
Questions or comments about this article? Please email Georgi Banna at gbanna@nahro.org. If you are a PHA/CD agency and would like to share your own LIHTC, Project Activity Bonds (PAB) or NMTC success story, contact Sylvia Gimenez at sgimenez@nahro.org.