New Market Tax Credits
St. Louis was recently awarded a large new slug of New Market Tax Credits. These credits are intended to enhance development in underserved economic areas. This is good news. Attached is the article:
Microsoft plans to anchor a new office and lab building set to open in mid-2018 in the Cortex technology district.
The U.S. Treasury Department announced Tuesday that the city of St. Louis’ lead economic development arm would receive a $35 million allocation of federal new markets tax credit authority.
The award is part of $3.5 billion in federal new markets tax credits authority allocated Tuesday to 73 organizations. The credits are designed to spur more investment in low-income and distressed areas by reducing the risk. Local organizations awarded the tax credits authority offer it to investors to attract them to projects in certain areas. Qualified investments are eligible for a 39 percent tax credit.
The St. Louis Development Corp., which aids developers and other economic development in the city, has received nine allocations of new markets tax credits totaling $418 million since 2004. It received $75 million in new market tax credit authority in late 2016, which combined the 2015 and 2016 allocations. In the 2014 round, it received $45 million.
“This is fantastic news for the City of St. Louis,” Otis Williams, SLDC’s executive director, said in a statement Tuesday. “New Markets Tax Credits have been a tremendous tool for us as we seek to redevelop and strengthen the City’s low-income neighborhoods.”
Otis Williams, executive director of the St. Louis Development Corp., in a portrait on Monday, Sept. 9, 2013, in downtown St. Louis. St. Louis Development Corp. was awarded $45 million in New Markets Tax Credits. Photo by Erik M. Lunsford firstname.lastname@example.org
Another local entity winning an allocation this year was U.S. Bank’s community development corporate entity, USBCDE, which was awarded a $70 million allocation. The U.S. Bank Community Development Corp. is based in downtown St. Louis. USBCDE invests in projects around the country, not just St. Louis.
Demand should be high for the latest round of credits, said Matt Philpott, who heads the new markets tax credit program at USBCDE.
“I would expect of this new round of award … most of that will get used in 2018,” he said.
The credits have been used to fund multiple developments in St. Louis, including the restoration of the Central Library downtown, the headquarters for the Big Brothers Big Sisters of Eastern Missouri in Grand Center, the Cortex tech district’s new office building for Microsoft and the ongoing International Shoe building restoration on Washington Avenue.
The credits were in danger of being killed in the original U.S. House version of the federal tax overhaul. But the Senate’s tax cut bill retained the credits for the next two years at existing levels. Philpott said Sen. Roy Blunt, R-Mo., helped keep the credits alive in the tax legislation.