March 11, 2011
The Phoenix Community Development and Investment Corporation (PCDIC) today announced that PCDIC received a $53 million New Markets Tax Credit allocation from the United States Department of the Treasury's Community Development Financial Institution Fund (CDFI).
"This allocation means we have new funding to assist new projects and we are open for business," said Mayor Phil Gordon. "By working with qualified organizations, this allocation will create thousands of new jobs in Phoenix and reinvestment in our community."
The New Markets Tax Credit (NMTC) program provides below market rate commercial real estate loans to small businesses, developers and mission-focused nonprofits, to encourage neighborhood revitalization and stabilization in qualified low- to moderate-income communities in Phoenix.
"This program allows us to leverage public/private partnerships that enhance downtown Phoenix's redevelopment and renaissance efforts," said District 8 Councilman Michael Johnson, chairman of the City Council Downtown, Aviation and Economy Subcommittee. "Doing so brings in a sustainable tax revenue source and long-term jobs that benefit the entire city."
"The PCDIC board is committed to working with our investor partners to create economic opportunities by providing below market rate commercial real estate loans," said Don Keuth, president and chief executive officer, Phoenix Community Alliance and PCDIC board member. "We will be able to target real estate development for community facilities and energy efficiency retrofits for small businesses to help them move forward with their projects by filling the financing gap that many of these projects face in this economy."
PCDIC was one of 99 organizations receiving awards, selected from 250 nationwide applicants that requested more than $23.5 billion. PCDIC has financed more than $276.5 million in commercial real estate projects in the NMTC census tracts.
"We want to thank all of PCDIC's investors and lenders in this program who have a commitment to improve the lives of the low- to moderate-income population in these NMTCs census tracts and have been pioneers in this U.S Treasury program," said Roberto Franco, assistant director, Community and Economic Development Department and PCDIC board member. "This includes US Bank, Mutual of Omaha Bank, M&I Bank and Prudential Insurance. PCDIC will be reaching out to the local financial community to hopefully recruit new investors and lenders in this program as well."
The PCDIC allocation announcement was made today at The University of Arizona College of Medicine—Phoenix, a prime example of an NMTC success, as funding was used to rehabilitate three former Phoenix Union High School buildings in downtown Phoenix. PCDIC approved a $25 million loan to remodel and rehabilitate the three historic buildings as part of the downtown Phoenix Biomedical Campus development. The project served as a catalyst for the campus development. The school currently has 120 medical students at this site. At the completion of phase one of the Phoenix Biomedical Campus, more than 3,500 jobs will have been created and there will be $2 million in direct economic impact to the Phoenix economy.
The NMTC, established by Congress in 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making equity investments in investment vehicles known as Community Development Entities (CDEs). The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period.
PCDIC also has utilized the NMTC program in providing financing to these community development projects in the Phoenix area:
- Native American Connections, 4520 N. Central Ave., $6.1 million loan
- Hacienda Skilled Nursing Center, 1402 E. South Mountain Road, $6 million loan
- Arizona Bridge to Independent Living, 5025 E. Washington St., $16.5 million loan
- YMCA, 3825 N. 67th Ave., $6 million loan
- Phoenix Rescue Mission, Changing Lives Center for Women and Children, 338 N. 15th Ave., $4 million loan
Other commercial redevelopment projects in Phoenix also financed through PCDIC and its NMTC program are:
- Spectrum Mall, 1703 W. Bethany Home Road, $37.5 million
- Clarendon Hotel, 410 W. Clarendon Ave., $4.2 million
- Riverside Industrial Center (new Amazon center), 4950 W. Mohave St., $44.5 million
The NMTC program supports a range of economic development strategies. It is highly effective in attracting private-sector investment to Phoenix's NMTC Census Tracts, characterized by highly stressed demographics, including a poverty rate above 30 percent and/or family median income that is 60 percent or below the Phoenix Metropolitan Statistical Area's median income.
To implement the NMTC program, the city created the nonprofit corporation, PCDIC, governed by a seven member board of directors. In 2002, PCDIC received a $170 million NMTC allocation and in 2008 a $40 million allocation. PCDIC created commercial real estate loan funds that have closed on 23 loans totaling $276.5 million, resulting in $370 million in private investment and creating 4,800 construction jobs and 3,611 long-term jobs.
For information about PCDIC or obtaining a New Markets Tax Credit loan, call 602-495-5247.