The city of Indianapolis announced Tuesday that it has secured $55 million in tax credits from the U.S. Department of Treasury to help fund “transformative neighborhood projects.”
Mayor Joe Hogsett said the award of the New Markets Tax Credits will provide gap financing for "developments designed to jump-start economic development, create jobs in at-risk areas and revitalize distressed neighborhoods.”
The award from the Treasury is from the same fund that in 2010 supported the development of the Avondale Meadows YMCA and the Ivy Tech Culinary School and Conference Center.
“The New Markets Tax Credits program has proven to be one of the most effective tools in making community development projects not only a possibility, but a success,” Hogsett said in a written statement.
The program, established by Congress in the Community Renewal Tax Relief Act of 2000, utilizes private equity contributed by investors. The investors receive non-refundable tax credits in exchange for an equity investment in a local project.
Indianapolis was one of 120 recipients of about $7 billion in tax credit allocations.
“This program is a powerful vehicle for neighborhood revitalization,” said Emily Mack, director of the Department of Metropolitan Development.
Officials say $38 billion in direct New Markets Tax Credit investment were made in businesses between 2003 and 2014, and those businesses leveraged nearly $75 billion in total capital investment to businesses and revitalization projects in communities with high rates of poverty and unemployment.
Under the program, investors receive credits equal to 39 percent of the total Qualified Equity Investment made in a Community Development Entity. The credit is realized over a seven-year period—5 percent annually for the first three years and 6 percent in the remaining four years.
The city said it is accepting inquiries and applications for the financing.