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By TIMOTHY GEITHNER

Commentary
672 words
31 May 2009

The Bradenton Herald
English

(c) Copyright 2009, The Bradenton Herald. All Rights Reserved.

On Feb. 17, President Obama signed into law the most sweeping economic recovery package in our nation’s history. The Recovery Act was a crucial first step toward restoring economic growth and getting Americans back to work.

In the 100 days since, more than 3,000 transportation construction projects have been funded in 52 states and territories, and 95 percent of working families have begun seeing a tax cut in their paychecks.

Now, building on that early progress, Treasury is announcing 32 New Markets Tax Credit awards, made possible through the Recovery Act, which will enable community development organizations serving Florida and other states across the country to invest $1.5 billion into struggling neighborhoods.

The awardees represent a broad cross-section of community development groups, including non-profit real estate developers and local banks. They are planning to build renewable energy projects, charter schools, health care facilities, manufacturing companies and retail centers.

The reason the Recovery Act added such substantial support for the New Markets Tax Credit Program is because it works. Since 2000, these tax credits have helped reduce the risks of investing in low-income communities by providing a guaranteed income source to investors in the forms of a tax credit valued at 39 percent of the investment’s total cost and claimed over a seven-year period. This innovative approach lowers the cost of entry for private funding.

Since the program was enacted, Treasury has made 386 New Markets Tax Credit awards totaling $21 billion, helping to finance thousands of projects, including a sustainable forestry business in rural Maine; an alternative energy provider in Mississippi; charter schools in Newark, Boston and Detroit; grocery-anchored retail centers in Cleveland and Washington, D.C.; facilities for the homeless in Portland and Los Angeles; a Native American-owned pharmacy in Montana; and an airline parts manufacturing company in rural Oklahoma.

I have seen how these projects help turn around troubled communities. Just two weeks ago I visited Carver Federal Savings Bank, a community bank in Harlem. Carver Bank is the largest African-American operated bank in the United States, serving neighborhoods throughout New York City, and will receive a $65 million New Markets Tax Credit award because of the Recovery Act.

To illustrate the impact of these awards, in 2006 Carver Bank received a similar award for $59 million and, in turn, loaned a portion to a minority non-profit developer. That loan is enabling the developer to remake the Renaissance Ballroom, a long-vacant cultural icon in Harlem. Where a theater once thrived, a new facility is emerging with 113 mixed-income housing units and new space for community programs. According to Carver Bank, the project employed several hundred temporary and construction workers and could employ more than 1,000 additional full time workers.

Another example is Project Hope in Roxbury, Mass. In 1981, as their community confronted a devastating economic situation, the Little Sisters of the Assumption opened their Convent doors becoming one of the first neighborhood family shelters in the state.

Over the years, they expanded their efforts to build advocacy networks and develop education and job training programs. And in 2005, with $4.8 million in New Markets Tax Credits supported financing, they broke ground on a new headquarters to double the number of families they could serve.

During construction, according to Project Hope, 50 workers were employed and of the permanent jobs that resulted from the project, more than half are held by local residents. The center is enabling Project Hope to expand its adult education, job placement and career development programs. It has turned an empty lot into a hub of community activity and, with a focus on the environment, become Roxbury’s first certified “green” building. The success of Project Hope is a lesson for us all.

Timothy Geithner, is the current U.S. Secretary of Treasury. Florida is among the 19 states that will be receiving the awards discussed above.

Last Updated: June 2, 2009