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Denver and Colorado Awarded Federal Tax Credit Allocation for Community Development
(DENVER) Mayor John Hickenlooper, in conjunction with the Colorado Housing and Finance Authority (CHFA) and the Colorado Enterprise Fund, announced Wednesday that Denver and Colorado will receive a $40 million allocation of federal New Markets Tax Credits (NMTC) to boost economic development in the Denver metropolitan area and in rural areas of the state.
While this is the third round of funding since the NMTC program’s inception five years ago, this is the first time a Colorado-based entity has received an allocation that will be used entirely for Colorado communities. The Treasury Department received over 200 applications and awarded tax credit allocations totaling $2 billion to just 41 organizations.
“This is an exciting and important achievement for the Denver region and the entire state,” said Mayor Hickenlooper. “The New Markets Tax Credit is an emerging tool in community development, and we believe this allocation will enable us to tackle some of the toughest projects across the region, thereby expanding economic opportunity and improving the quality-of-life for people in areas that need it most. We want to thank the entire Colorado congressional delegation for supporting us in this request.”
The Hickenlooper administration has been working on several fronts to expand and diversify the financial tools that are available to Denver for community revitalization and economic development, which led the administration to focus on the federal New Markets Tax Credit program.
Mayor Hickenlooper met with U.S. Treasury Department officials in June 2004 to discuss this opportunity and having made the decision to aggressively pursue an allocation, asked CHFA and the Colorado Enterprise Fund to partner in this effort. The joint application was submitted in October 2004 by the City and County of Denver, CHFA, and the Colorado Enterprise Fund, working together as the Colorado Growth and Revitalization Fund, LLC (CGR Fund).
“We were very happy to learn that we received an allocation of these valuable tax credits,” said CHFA Executive Director Milroy A. Alexander. “Working closely with Mayor Hickenlooper’s office and the Colorado Enterprise Fund, we were able to access investments to aid some struggling areas both in Denver and in rural Colorado. We are committed to providing financial aid to some of the hardest-hit areas of the whole state through these tax credits.”
The CGR Fund’s goal is to promote job creation and economic revitalization through investment in commercial real estate and mixed-use projects, as well as small business development. Eighty percent of the tax credit allocation will be deployed in urban areas and 20% in rural census tracts.
City of Denver officials worked closely with officials from other urban municipalities such as Aurora, Lakewood and Commerce City to identify a pipeline of NMTC-eligible projects in metropolitan Denver for the application and will continue working closely with these municipalities to prioritize the projects now that the allocation has been announced.
“This is a wonderful example of what can happen when communities work together,” said Mayor Hickenlooper, who credits his economic development policy advisor Peter Chapman with bringing this opportunity to light and marshalling the regional efforts around it.
CHFA, which has 30 years of experience managing housing and business development finance programs, will facilitate investments in projects in rural areas and will administer the entire tax credit allocation via the CGR. The Colorado Enterprise Fund, a Treasury Department-certified Community Development Financial Institution (CDFI), will serve as a technical assistance provider for small businesses.
“These tax credits will help us add a new and important financing product to Colorado’s economic development toolbox; we’re thrilled to be a part of it,” said Colorado Enterprise Fund Executive Director Ceyl Prinster.
The NMTC program was created by Congress as part of the Community Renewal Tax Relief Act of 2000 to stimulate private investment in economic development projects in low-income and distressed communities. The credit provided to the investor totals 39 percent of the value of the investment and is claimed over a seven-year period.
Now that the allocation has been officially announced by the U.S. Department of Treasury, the CGR Fund will finalize its strategy and process for investing the tax credits. It is anticipated that there will be funding available by the end of the year, or early 2006.
The press release, remarks and additional information from the Treasury Department’s national New Markets Tax Credits announcement in Washington today are available at www.treasury.gov.
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