The below was originally posted on Treasury's Notes Blog.
Over the past weekend, I had the pleasure of joining a groundbreaking ceremony for Crosstown, an exciting revitalization project in Memphis, Tennessee that was financed in part by New Markets Tax Credits from the Community Development Financial Institutions Fund (CDFI Fund). Crosstown is an example of how the CDFI Fund’s programs attract investments where they are needed the most in underserved and low-income areas throughout the country.
Photo credit: Crosstown Development Project.
Crosstown rests on the site of a former retail distribution center that is now being transformed into a 1.1 million square foot urban center dedicated to the cultivation of health, education, arts and wellbeing for the Memphis area. The development will incorporate new restaurants, retail, health clinics, a public charter school, a grocery store, community space, offices, and mixed-income apartments. When completed, 3,000 people are expected to pass through the building every day—an exciting prospect considering the site has been vacant for decades.
The financing for Crosstown includes $56 million leveraged using New Markets Tax Credits. The New Markets Tax Credit Program was designed to help low-income communities attract private sector investment capital by providing investors with a federal tax credit. Since 2001, the CDFI Fund has allocated $40 billion of New Markets Tax Credits to community development entities nationwide. On average, each dollar of New Markets Tax Credits generates eight dollars in private investment, magnifying the economic impact in low-income areas. The Crosstown development shows what the New Markets Tax Credit can do.
Public and private resources got this project off of the ground. Six different organizations contributed the New Markets Tax Credits used to help finance the Crosstown project, including the Low Income Investment Fund, SunTrust Community Capital, Dudley Ventures, Mid-City Advisors and Urban Atlantic, Midwest Renewable Capital, and National Trust Community Investment Corporation. In total, 21 unique philanthropic, private, and public groups have collaborated to make this project possible. The amount of teamwork involved to secure all of the sources of funding required is impressive, and it demonstrates how the New Markets Tax Credit can be a flexible tool for community development organizations to fill in those financing gaps when needed.
I was honored to be a part of the groundbreaking ceremony for such an inspiring project, and I look forward to seeing Crosstown when it is completed in 2017. To learn more about the New Markets Tax Credit Program, please visit the CDFI Fund’s website at www.cdfifund.gov/nmtc or view the program fact sheet.
Annie Donovan is the Director of the Community Development Financial Institutions Fund at the U.S. Treasury Department.