The U.S. Treasury Department has awarded $125 million in tax credits to two midstate nonprofits that use the credits to support economic development in their communities.
Lancaster-based Community First Fund, received $45 million in credits, and the Pennsylvania Housing Finance Agency’s Commonwealth Cornerstone Group, received $80 million. The two were among five Pennsylvania organizations and 120 groups nationwide to be awarded allocations in 2016 under the New Markets Tax Credit Program.
The credits provide incentive for groups, usually banks, to invest in projects that build up low-income communities. As a result, the people behind the projects generally have to take out fewer loans, which means they incur less debt, explained Dan Betancourt, president and CEO of Community First Fund.
“It’s sort of the last thing these projects need to get off the ground,” he said.
This year marks the third time Community First Fund, which helps provide loans and other resources for under-served communities across the midstate, has received credits from the treasury’s program. It received $30 million in credits in 2015 and $15 million in 2013.
Commonwealth Cornerstone Group, meanwhile, has received New Markets Tax Credits seven times since the program’s start. The treasury has awarded the group a total of $351 million in credits, which it has used to find funding for 30 projects across the state.
“This is the largest New Markets Tax Credit award ever provided to Commonwealth Cornerstone Group,” said Brian Hudson Sr., executive director and CEO of PHFA and chairman of Commonwealth Cornerstone, in a news release. “We appreciate the faith shown in us by the Treasury Department, and we’re excited about the positive impact the funding can have in communities large and small.”
Community First Fund, Commonwealth Cornerstone Group and other community development entities use these allocations to attract investors to areas that might otherwise struggle to find them. The investors can then claim the tax credits – totaling 39 percent of the cost of their equity investment – against federal income taxes over a seven-year period.
Commonwealth Cornerstone Group is evaluating projects that could benefit from this year’s credits, Hudson said. The group has more than $500 million in requests in its pipeline.
It has previously used the allocations to help projects like the Hamilton Health Center in Harrisburg, Lancaster’s Keppel Building and the renovation of Gettysburg’s Schmucker Hall.
Community First Fund has used its past allocations to spur redevelopment in areas like downtown Harrisburg, York and Reading. In the coming year, the group hopes to help fund another seven or eight projects across the region.
The New Markets Tax Credit Program has awarded $50.5 billion in credits nationwide since Congress established it in 2000, leading to the construction or rehabilitation of more than 164 million square feet of commercial real estate.
The tax credits are not the only boost Community First Fund has received in the past week. Wells Fargo also named the group one of 12 organizations across the country to receive a piece of its second round of funding under its Diverse Community Capital program. The program, which will have six total rounds, will provide $75 million in lending and grant capital to community development financial institutions over a three-year period.
Community First received a $2 million investment from the program to support diverse businesses in the region, including African-American and Latino entrepreneurs. It also received a $250,000 grant to hire outreach staff to better connect with those business owners.