The new allocation of $55 million in New Markets Tax Credits to Fort Wayne’s New Markets Revitalization Fund could, for the first time, help finance projects in surrounding counties as well.
This is the third time Fort Wayne’s community development entity (CDE) has been awarded funding through the U.S. Treasury Department, and the first time that it is considering projects outside the city.
“We have expanded our footprint for this round, and now we have the same footprint as the (Northeast Indiana) Regional Partnership,” said Sharon Feasel, director of the CDE. “I think the treasury would like to see more projects be done in rural areas…We are talking to some folks in other counties and hopefully we’ll be able help them out.”
To qualify, a project must be in a census tract designated as low income. As a practical matter, projects also need to be in the $6 million to $8 million range, at a minimum, because of the complexities involved in structuring the deal, Feasel said.
Tax-credit funding cannot be used for projects that are purely residential, but multiuse projects that have a residential component may qualify. The first time the city of Fort Wayne used the new markets credits was to complete the financing package for The Harrison, the office/residential building adjacent to Parkview Field, in 2008.
The tax credits can’t be the sole funding for the project, but they can be leverage other private and public investment and be the final piece of the puzzle for projects that are otherwise almost ready to go.
Of the 230 community development entities that applied for new markets funding, only 73, or 32 percent, won an allocation in the most recent round. Fort Wayne’s first award, in 2008, was $15 million; and its second, in 2014, was $33 million. This allocation is more than both of the others combined, Feasel noted.
“New Markets Tax Credits have played a significant role in key projects that have helped revitalize and transform our community,” Mayor Tom Henry said in the announcement of the award Feb. 15. “This new allocation will allow us to continue our efforts to make Fort Wayne and northeast Indiana an exceptional place for all residents to live, work and play.”
CDEs are awarded tax credits based on their history and future plans to deliver significant community impact through the sale of the credits to investors. In turn, the proceeds from the sale provide equity to the projects to close financing gaps while transforming communities
Investors — generally large banks or investment funds — get a 39 percent credit on their tax allocation.
Fort Wayne also used new markets credits to help with Turnstone’s Plassman Athletic Center. The Landing redevelopment project downtown attracted tax-credit allocations from two national CDEs in addition to Fort Wayne’s. In all cases, the credits leveraged additional investments from the private and public sectors and helped fill a financing gap.
The Fort Wayne revitalization fund may use some of its new award to assist with the new Fort Wayne Rescue Mission project and the Boys & Girls Club, Feasel said. The fund is governed by its own board, which makes decisions independent of city government. The fund will look to deploy the tax credits over the next two years, and already has a list of projects that could be considered.