Nov 4, 2009

New Market Tax Credits

Some Good News from Vice President Jerome Sullivan of the Great Lakes Capital Fund.

Great Lakes Capital Fund is a not for profit organization that applied for New Market Tax Credits to assist the Build the Block and Hotel projects in Peoria

They received $26,000,000 in New Market Tax Credits. Mr Sullivan will advise the city on the next steps.

The general guidelines are driven by the requirements of the U. S. Treasury department. Great Lakes Capital will use the New Markets Tax Credit allocation to provide a below market interest rate (and interest only) loan for 7 years. Final pricing will be determined based upon future interest rates but rates currently would be fixed at 3% to 4% interest rate.

Additionally, Great Lakes would allow for higher Loan to Value levels.

Downtown Peoria fits most of the categories below:

1) Projects are located in Low Income Communities. These are generally Census Tracts that are eligible for Community Development Block Grants funds.

2) serve low-income residents… i.e. if a project isn’t located in a LI Census Tract, but will provide jobs, goods & services to Low Income Residents, that could qualify as well

3) create jobs (esp. jobs for low income residents). A manufacturing operation that relocates to a LI Census Tract (or expands its facility that’s already in a LI area, would be a prime investment). Hotels provide jobs, neighborhood shopping centers provide jobs, goods & services, … etc.

4) revitalize low income communities (i.e. a mixed use project in a neighborhood or small town commercial district .. commercial 1st floor & apartments above).

5) Green developments (LEED certified and/or Alternative Energy projects)

6) Rural developments

7) At least $5 million in Total Dev. Costs