Treasury Awards $35 Million in New Markets Tax Credits to Building America CDE, a Subsidiary of the AFL-CIO Housing Investment Trust
March 15, 2011
The HIT announced today that its subsidiary, Building America CDE, Inc. (BACDE), has been awarded a $35 million allocation under the federal New Markets Tax Credit program. BACDE will use the tax credits to attract capital for high-impact projects in under-served communities, creating needed housing, jobs and economic development.
BACDE is one of 99 organizations awarded a total of $3.5 billion in New Markets Tax Credits (NMTCs), according to a statement by Donna Gambrell, Director of the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund. Two hundred and fifty organizations had competed for NMTC allocations under the 2010 program round.
“We are pleased to be chosen to participate in this effort to meet the needs of communities that are often overlooked by traditional investors,” said Eric W. Price, CEO of BACDE and Executive Vice President of the HIT. “The tax credits will help fill gaps in financing to make innovative development projects possible.”
Mr. Price explained that BACDE will offer the federal tax credits to private investors to encourage them to bring needed capital to low-income communities. “This is an exciting opportunity for BACDE to attract private investment capital to distressed neighborhoods and provide much-needed construction and permanent jobs,” Mr. Price said.
BACDE has identified prospective projects that include mixed-use housing and commercial developments, as well as health care facilities. The organization is currently evaluating prospective projects with the goal of making financing decisions by late spring.
“We expect many of these projects could offer sound investment opportunities for the HIT as a debt lender,” said HIT Executive Vice President and Chief Portfolio Manager Chang Suh. “BACDE’s allocation of tax credits should serve as a catalyst for the kinds of community development projects in which the HIT specializes.” The HIT has a 45-year history of investing union pension capital in mortgage securities for projects that generate competitive returns while achieving other goals important to working people, including support of union job creation, affordable housing, and community revitalization.
This is the first NMTC allocation for BACDE, which was established as a subsidiary of the HIT in 2010. BACDE’s mission of financing projects in disadvantaged communities fits closely with long-held labor investment goals. “BACDE brings us closer to the vision of the ‘auxiliary housing corporation’ first voiced nearly 50 years ago by the AFL-CIO’s founding president, George Meany,” observed Mr. Price. “The projects financed through BACDE should help transform neglected communities by meeting their urgent needs for housing, business development, and good union jobs.”
The New Markets Tax Credit program, administered by the Treasury Department’s Community Development Financial Institutions Fund, was established by Congress in 2000 to encourage investments in businesses and real estate projects located in low-income communities. It has been a catalyst for over $20 billion of private investments in urban and rural communities throughout the country. Companies or individuals can make these investments through a financial intermediary – such as BACDE – that has been certified by the Treasury Department as a community development entity (CDE).