Lancaster-based Community First Fund has added a federal tax credit program to its portfolio of economic development tools.
The U.S. Treasury's Community Development Financial Institutions Fund has allocated the local nonprofit $15 million in New Markets Tax Credits for use in the midstate, Community First Fund said Tuesday.
New Markets Tax Credits were established in 2000 as a way to spur real estate investment in needy communities. Investors in eligible projects can receive credits totaling 39 percent of their investment over seven years, according to the CDFI Fund.
Projects must be built in low-income census tracts, generally those with a poverty rate of 20 percent or more. Neighborhoods in Harrisburg, York, Lancaster, Columbia and Reading are among those that would qualify, Community First Fund said.
Midstate projects have received funding assistance through the credits before, but developers had to work through agencies based outside the area, Community First Fund President and CEO Dan Betancourt said. Community First Fund is the first midstate-focused community development entity to qualify for an allocation, he said.
As a local organization, Community First Fund has the in-depth knowledge needed to put the tax credits to effective use, Lancaster Mayor Rick Gray said.
"To say we're excited would be an understatement," he said.
The $15 million is the first of what Community First Fund hopes will be yearly allocations, Betancourt said. The organization hopes to secure $50 million over five years.
Possible projects include grocery stores, charter schools and urban revitalization projects, Community First Fund said.
The credits are designed to be one element of a project funding package. On average, New Markets Tax Credits generate $8 in private investment for every $1 invested by the federal government, according to the CDFI Fund.
The Lancaster County Community Foundation underwrote Community First Fund with grants totaling $300,000 over three years to assist with applying for the allocation and implementing the program.
"We are excited that Community First Fund has been able to leverage Community Foundation dollars to obtain the tax credit allocation," foundation President and CEO Sam Bressi said in a statement.
Community First Fund was one of 85 organizations selected from 282 applicants that requested about $21.9 billion in allocations, according to the CDFI Fund. The 85 were awarded $3.5 billion, the CDFI Fund said.
The CDFI's application process is extremely rigorous and technical, Betancourt said. Community First Fund officials estimated their chances of qualifying on their first attempt at 15 to 20 percent.