State Gets $105 Million For Low-Income Projects
Federal New Markets Tax Credit awards spur economic development in low-income areas.
Three federally-designated Community Development Entities (CDEs) in Wisconsin secured a total of $105 million in New Markets Tax Credits to support economic development in low-income communities.
The three entities, FirstPathway Community Development (which received $45 million), First-Ring Industrial Redevelopment Enterprise, Inc. ($15 million) and Forward Community Investments ($45 million), secured the credits as part of a $3.5 billion federal allocation to 73 entities.
The amount is up $25 million from the $80 million awarded to state entities in 2018 by the United States Department of the Treasury Community Development Financial Institutions (CDFI) Fund.
The entities offer the federal income tax credits for sale to investors when an applicable project is created. With the capital, the CDEs are able to make loans and investments where the private market won’t, often at below market rates.
FirstPathway Community Development, controlled by Milwaukee-based FirstPathway Partners, is authorized to make investments in Wisconsin and Illinois. The firm also specializes in the use of EB-5 financing, where the federal government issues green cards in exchange for targeted, job-creating investments by immigrant investors
First-Ring Industrial Redevelopment Enterprise (FIRE) was created by the City of West Allis in 2007 to make investments in southeast Wisconsin. It’s invested its past credit allocation in a host of Milwaukee projects including The Brewery, Freshwater Plaza, Super Steel, Discovery World and Milwaukee World Festival.
Forward Community Investments is based out of Madison and invests statewide. The organization’s Milwaukee office, located in Lindsay Heights, is run by Sarah Greenberg. For more on what Forward Community Investments does, listen to the interview with Greenberg on the City Beat podcast.
Eligibility for New Market Tax Credits investments is determined by census data.
The CDFI Fund has made $57.5 billion of allocations to date over a total of 15 rounds. It estimates that in the latest round, 76 percent of the funding will go towards investments or loans for businesses already operating in low-income communities. Approximately $1.65 billion of the $3.5 billion allotment is expected to be invested in “major urban areas.”
A program report touts that for every $1 invested by the federal government $8 of private capital is invested. The report states that the program has supported the construction of 51 million square feet of manufacturing space, 89 million square feet of office space, and 65 million square feet of retail space.
The credits are awarded competitively. Applications from 214 CDEs for $14.8 billion in allocations were received, with less than 25 percent winning an award.
According to the CDFI fund report on the 73 winners: All “committed to providing at least 75 percent of their investments in areas characterized by: 1) multiple indicia of distress; 2) significantly greater indicia of distress than required by NMTC Program rules; or 3) high unemployment rates.”
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