February 27, 2014 It’s exciting to see new projects revitalizing downtown Cleveland and older neighborhoods that have endured generations of neglect.
From Smart Business
Marcia L.Fudge: Tax vehicles can help rebuild places — and rebuild lives
It’s exciting to see new projects revitalizing downtown Cleveland and older neighborhoods that have endured generations of neglect. Redevelopment of the East Ohio Building and The 9 on East Ninth Street, Fairmont Creamery in the Tremont neighborhood and St. Luke’s Pointe on Shaker Boulevard come to mind. All of these projects incorporate mixed-use design. People can live, work or shop under one roof. The wonderful amenities of city life — theaters, restaurants, stadiums and other attractions — are within easy walking distance. It’s no wonder living space in and around downtown is in high demand. In the case of St. Luke’s Pointe, new senior housing compliments an innovative micro-entrepreneur center, an array of commercial space, schools and community organizations, all within walking distance.
Incentives are key
These projects have something else in common. They relied on a combination of funding sources that include federal programs and tax credits. Without federal incentives such as New Markets Tax Credits and Low Income Housing Tax Credits, it’s quite possible one or more of these developments would never have left the drawing board. NMTC and LIHTC projects are transformative; they rebuild places and rebuild lives. Both tax incentives encourage investment in distressed, underserved communities. While the LIHTC program focuses exclusively on the residential component, the NMTC program has a broader mission and serves as the catalyst for mixed use and commercial developments in Northeast Ohio and the nation. Both leverage private capital and state dollars with impressive results.
The incentives work by allocating tax credits to investors through authorized entities called Community Development Entities. Investors who make qualified equity investments reduce their federal income tax liability by claiming the credit. In turn, investors agree that at least 20 percent or more of new housing units are income based — they are free to set market rates for the remainder.
Under the auspices of the Greater Cleveland Partnership, the CDE known as Cleveland New Markets Investment Fund II has financed 30 projects and invested $102 million since 2003. That $102 million attracted other loans, state funding and private equity to create a total of $664 million in development. Over the past 10 years, NMTCs have helped to create 4,600 permanent jobs and 2,200 construction jobs, 1,171 market rate rental housing units and 216 affordable rental housing units in Cuyahoga County. The credits have helped finance more than 2.7 million square feet of new office, retail and commercial space.
As I mentioned, these tax vehicles lift up both people and communities. In 2012, the median household income in my district was $31,331 and 16 percent of all seniors lived in poverty. Moreover, Cleveland has lagged behind other major cities in attracting and retaining college graduates. A livable city center helps.
The demand for quality, affordable housing is acute for all age brackets. Yet over the past 30 years, federal spending on community development — as a share of gross domestic product — has fallen by 75 percent.
The next round of NMTC allocations to be awarded this year will be the last unless Congress reauthorizes them. As an enthusiastic supporter, I will encourage my colleagues to approve reauthorization. With stronger communities, we all benefit.
U.S. Rep. Marcia L. Fudge, D-11, is now serving in her third consecutive term. She was elected in a special election in November 2008, re-elected in the general election that was held that same month. In 2012 she was unanimously elected by her colleagues to serve as chairwoman of the Congressional Black Caucus in the 113th Congress. For more information, visit www.fudge.house.gov.