CHICAGO-Aries Capital, through its subsidiary Urban Development Fund, has been awarded $45 million in New Markets Tax Credits from the US Department of Treasury. The company is one of 70 firms selected for a total of $3.6 billion of the credits, which attract investment capital from the private sector to stimulate economic development and job creation in low-income communities.
The NMTC, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making equity investments in investment vehicles known as Community Development Entities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period.
This is the Urban Development Fund’s seventh year as a community development entity, or CDE, in the nine-year federal program. Neil Freeman, a partner at Aries, tells GlobeSt.com that his firm has been awarded about $390 million in state and federal credits over the years, for roughly $1 billion of projects.
He says the company hasn’t selected the projects that it will assist this year. All of the projects, he says, will be in low-income areas. “These credits are to focus on areas where there’s a need to improve value and create an economic impact, such as providing jobs or improving businesses or services,” Freeman says.
In 2011, the UDF was awarded $35 million in the federal tax credits, and was able to parlay that into six projects, three in Florida and three in the Chicago area. The local projects included $32 million in federal and state credits for two Chicago hospital expansions, the Chicago Lakeshore Hospital at 4720 N. Clarendon and the Roseland Community Hospital at 45 W. 111th St.
At Chicago Lakeshore, the hospital will add on a 41,000-square-foot children’s hospital that will include 60 beds, to allow the location to serve about 1,000 more children per year. The hospital is in the Uptown neighborhood, with a 44.2% poverty rate and median family income of only 31.4% of the national benchmark.
Roseland is slated for a new maternity ward and teen clinic, thanks in part to US Bank, which bought the tax credits from Aries. Roseland’s neighborhood has a poverty rate of 23.2% and a median family income of 60.9%. Both the Uptown and Roseland neighborhoods are considered Medically Underserved Areas, as designated by the US Health Resources and Services Administration’s Bureau of Primary Health Care.
Finally, Aries’ UDF also arranged $14 million in financing for the Blue Northern National Trail project in Newton, IL. The minority-owned company intends to build and operate a production facility to produce biodiesel, as well as jobs for the local area.
The newly awarded funds will be placed throughout the year, Freeman says, and the firm is heavily selective. “For every 10 projects we evaluate, we may end up funding one,” he says.
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