Vermont Nets $30
Million In Tax Credits
From Economic Recovery Plan
For Economic Development And Housing Initiatives
…Leahy Played Crucial Role In Including
Program In Stimulus Package
(WEDNESDAY, May 27) – U.S. Sen. Patrick Leahy (D-Vt.)
says Vermont will receive $30 million under an innovative and proven
economic development program – New Market Tax Credits (NMTC) – to spur
economic growth and affordable housing in the state. The funds,
included in the recently enacted American Recovery and Reinvestment Act
(ARRA), will be formally announced by Secretary Timothy Geithner at Noon
on Wednesday (today). Leahy, a senior member of the Senate
Appropriations Committee, played a key role in including the program in
the stimulus package and had also laid the groundwork for it in letters
he sent both to President Obama and Senate leaders last winter while the
recovery act was being drafted.
The New Market Tax Credit Program, created in 2000,
offers incentives to private investors to invest in economic development
projects that primarily benefit low-income Americans, by offering them
39 percent of their investments back as a federal tax credit. As a
result, the developer can pay investors below-market interest rates,
resulting in the equivalent of a federal grant to help buy down the
developer’s borrowing costs.
The American Recovery and Reinvestment Act included $3
billion to meet the needs of unfunded 2008 NMTC applications and an
anticipated high number of 2009 applications. During the summer of
2008, Vermont Rural Ventures, an organization consisting of Housing
Vermont, the Vermont Economic Development Authority, the Vermont Housing
Finance Agency and the Vermont Community Loan Fund, submitted an
unsuccessful application. Leahy worked to ensure that the new ARRA
funding would allow funding of the Vermont application.
Leahy said, “These tax credits will leverage private
investment dollars that are sorely needed by several Vermont
communities. The program will take root immediately, putting
Vermonters to work at construction sites, creating housing for
vulnerable Vermonters and laying the groundwork for long-term economic
growth.”
“The New Market Tax Credit program will give us
tremendous new resources to help communities meet their economic
development and related affordable housing needs,” said Nancy Owens,
President of Housing Vermont. “Private equity raised by the program
will help close the affordability gap on critical local projects."
No Vermont entity has successfully competed to
administer New Market Tax Credits in the past, though two affordable
housing and community development projects have used the investment tool
in recent years. In 2008, Champlain Housing Trust used $2 million
in New Market Tax Credits to help build its new headquarters and 20
units of affordable housing on King Street in Burlington. In 2007,
Housing Vermont used New Market Tax Credits to help rehabilitate
downtown Richford’s Sweat Cummings building which currently provides
space for a downtown grocery store, the Richford Community Health Center
and housing. According to Owens, Vermont Rural Ventures, which is
controlled by Vermont organizations, will expand access to this proven
federal program while minimizing operating costs. “The many
advantages of the NMTC program have been difficult to work on a Vermont
scale,” Owens said. “This announcement means that Vermont finally
has a program which fits our needs.”
Vermont Rural Ventures anticipates funding between six
to twelve housing and economic development projects statewide as a
result of the new tax credits. According to the Department of
Treasury, projects must be in eligible census tracts – which limits
projects to severely economically distressed communities in the
following counties: Grand Isle County, Franklin County, Orleans
County, Essex County, Caledonia County, Chittenden County, Rutland
County, Bennington County and Windham County.
U.S. Senator Bernie Sanders (I-Vt.) and Congressman
Peter Welch (D-Vt.) also supported the American Recovery and
Reinvestment Act.
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