What can $28 million in tax credits do in revitalizing Cincinnati's urban core? That's a good question to ask the
Cincinnati Development Fund (CDF), which just learned that it is one of two organizations in Greater Cincinnati being awarded this amount in New Markets Tax Credits for the year 2010.
The
New Markets Tax Credit (NMTC), established by Congress in 2000, allows individuals and corporate taxpayers to receive a 39% credit against federal income taxes in exchange for making qualified equity investments into community development enterprises. The projects must happen in qualified low income neighborhoods and benefit those neighborhoods through job growth and community revitalization.
"In most cases, the NMTCs are used in larger scale development projects that are challenging to do and require large amounts of equity. These tax credits make these projects affordable," particularly in neighborhoods that need renewal, and often serve as a catalyst to jump start new development, according to Alicia Townsend, CDF loan officer and consultant.
CDF has funded ten NMTR projects in the last five years, since receiving its first award of $52 million in 2005. Working then with the
Uptown Consortium, CDF set up a loan fund that supported projects like the Cincinnati Herald office building and the Hampton Inn hotel and helped to fund the land banking of underdeveloped property for future use.
Three notable projects using NMTCs are currently underway in Cincinnati's urban core. The historic Vernon Manor's renovation into office space is one such project. Group Health Associates' new medical office building on Good Samaritan Hospital's campus will benefit the local residents of Clifton Heights with better access to medical care and job creation. And
Washington Park's rejuvenation as a modern outdoor playground and community gathering space is funded in part with $16 million in NMTCs.
This year, out of the 250 applicants for this tax credit program, only 99 received funding, and two of those organizations are local: CDF and the Cincinnati Center City Development Corporation (
3CDC), which received $18 million for 2010. 3CDC and CDF recently partnered on the Washington Park garage and redevelopment and are exploring other opportunities to work together in leveraging tax credits for much needed equity in deserving development projects.
Because of the good these tax credits do, CDF's president and CEO Jeanne Golliher wishes for more. "We had asked for $75 million [this year] so we have to scale back" in funding projects.
Still, with a five year total of $110 million in tax credit investments, Cincinnati's at-risk neighborhoods have benefitted from the program already. Because the CDF is among only three non-bank community development financial institutions to be approved for membership in the Federal Home Loan Bank of Cincinnati, it has greater access to capital to support their housing development financing. This, in combination with its NMTC loans, will give CDF even greater resources in revitalizing Cincinnati's urban core communities.
Writer: Becky Johnson
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