Three community lending organizations in Michigan received a combined $170 million through a federal tax credit program that’s meant to spur investments in low-income communities.
Michigan Community Capital, Cinnaire New Markets LLC and Invest Detroit CDE were awarded $65 million, $60 million and $45 million, respectively, through the New Markets Tax Credits Program, the U.S. Treasury Department announced Friday.
The program awarded a total of $5 billion to 102 community development entities in the 2022 round of the program. A total of 197 applicants requested $14.8 billion in tax credits. The New Markets Tax Credits Program aims to attract investments in distressed communities by allowing investors to receive a tax credit against their federal income tax in exchange for making equity investments in designated Community Development Entities.
Michigan Community Capital created a strategy to deploy the financing, as required by the program’s highly competitive application process, said Eric Hanna, president and CEO of the Lansing-based organization.
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Since its formation in 2005, the CDFI has assisted in creating more than 1,500 housing units and 4.3 million square feet of commercial, retail and industrial space. It has allocated New Markets Tax Credits for several housing and commercial developments in Grand Rapids, including Grand Valley State University’s Seidman Center, Cherry Health’s Heart of the City Health Center, and the restoration of Clearwater Place.
“We kind of have adopted workforce housing as the biggest mission of our organization, and it is by far the largest thing we do as far as capital investing,” Hanna said.
Michigan Community Capital’s investments in real estate developments typically involve mixed-use projects that incorporate a combination of the CDFI’s other priorities, which include workforce housing paired with job training or access to healthy food, Hanna said.
“We work with a lot of great partners across the state,” Hanna said. “A lot of times we’ll end up partnering with other organizations that also got a (New Markets Tax Credit) allocation in order to get a project across the finish line.”
Lansing-based Cinnaire New Markets LLC plans to focus its New Markets Tax Credits on projects that support education, vocational training and job opportunities. Since 1993, Cinnaire has invested $4.9 billion to support the development of 863 housing communities and 53,146 affordable apartment homes in 10 states.
Invest Detroit said in a statement today that’s the sixth time the organization has received the tax credits since 2009, and this year’s is one of the largest.
“The New Markets Tax Credit (program) plays a critical role in financing many vital businesses and community projects in our nation’s low-income communities,” Treasury Department Assistant Secretary Graham Steele said in a statement on Friday. “The investments that will result from today’s announcement will help preserve and create hundreds of thousands of jobs and spur economic growth in these urban, rural and Tribal communities across our country. It is important that Congress sustains these investments by making the New Markets Tax Credit permanent.”
Since the program’s formation in December 2000, award recipients have deployed $62.9 billion in investments in low-income communities and businesses. Through the end of 2022, the financing from NMTC has led to more than 857,000 jobs created or retained, and more than 239 million square feet of commercial real estate constructed or rehabilitated, according to federal officials.
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