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comment Enterprise Uses Recovery Act Financing to Promote Green Development in Poor Neighborhoods
Enterprise Community Investment, a leader in creating affordable green housing, has received a major boost to its efforts in the form of $95 million in tax credit authority through the New Markets Tax Credit (NMTC) program. Since NMTC’s inception in 1990, Enterprise has been allocated $610 million in the tax credits. It used $100 million in NMTC financing for its projects in 2008; $89 million of that went toward projects with a green focus. With this year’s allocation, Enterprise intends to make environmental attributes central to all of its New Market projects.
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The American Recovery and Reinvestment Act of 2009 made $1.5 billion in NMTC awards available, which was allocated to Enterprise and 31 other development entities. The NMTC program, established in 2000, makes available tax credits for investors in community development projects in low-income areas; these tax credits are allocated through organizations like Enterprise, and offer investors a tax credit worth 39 percent of the investment, over seven years. John Ducey, Enterprise’s director of structured finance, says, “This is a financing tool that fills gaps,” tipping the balance for projects in need of capital that lack sufficient promise of return to attract investors without such a subsidy. The ideal project for financing through NMTC is located in a low-income area, employs people from that area, and serves the local community.
Although Enterprise has been focused primarily on housing, it will use the New Markets tax credits to attract investors to commercial and mixed-use developments that are at least 20 percent commercial, in economically distressed communities. These developments will incorporate energy efficiency, transit-oriented locations, renewable energy, green building techniques and brownfield reclamation. Commercial projects will ordinarily be expected to achieve LEED certification; for mainly residential projects, Enterprise will apply its own green building standard, the Green Communities Criteria, which it has used in building more 14,500 affordable housing units in 30 states.
Copyright 2009 by BuildingGreen, LLC
