$200 million for businesses in low-income areas available in state tax credit program
Businesses in rural Nevada and in economically-distressed parts of the state’s cities will have a new funding source to look to in 2014.
Seven community development entities — CDEs, for short — authorized under the Nevada New Markets Tax Credit Program will have $200 million to loan, the bulk of which they are obligated to invest in the next 12 months.
“These CDEs are going to be under a lot of pressure to get this money out in one year,” says Ash Mirchandani, deputy director of the State of Nevada Department of Business and Industry, which manages the program. “They will need help identifying projects.”
To that end, the department and the CDEs have been reaching out to city and county managers, economic developers, business development centers and the state’s colleges to help find opportunities.
“Reno has been aware for some time of benefits of the New Market program, and we are contacted periodically by developers who have questions about it,” says Maureen McKissick, strategic development administrator in the Reno city manager’s office. “We hope to take advantage of the program as a financing option for new projects.”
The CDEs were authorized last month and have until Dec. 15 to raise the capital by selling tax credits for the state’s insurance premium tax to insurance companies in order to become certified. They then can start loaning money, with a few restrictions on industry, for real estate and as operating capital as long as the businesses are in geographic areas that qualify under federal guidelines.
“The rural areas have a leg up on this program,” says Mirchandani. “In urban areas, only some areas will qualify, but in rural areas it will be almost everywhere.”
Some of the CDEs expect to work outside Las Vegas and Reno.
“ACP has a history of investing in rural areas with more than 20 percent of all of our companies nationally being in non-metropolitan designated zones,” says Timothy Hassler, a principal with Advantage Capital Partners in St. Louis, Mo., which has been authorized for $32 million under the program. “We will be working hard to do the same in Nevada.”
Hunter Chase & Company, in Carlsbad, Calif., which operates the KHC New Markets Fund LLC, was issued $32 million in tax credits and is already looking at several businesses in northern Nevada. It hopes to find more.
“Our highest priority is to invest in deals that create the maximum community impact and job growth,” says David Carr, principal. “We believe this is highly correlated to economic success.”
Eventually, the CDEs will invest a total of $300 million. Once businesses start to pay off the seven-year loans, the CDEs are required to reinvest half the money, says Mirchandani. The other five CDEs are Enhanced Capital Partners, Inc., Stonehenge Community Development, LLC, Urban Development Fund, LLC and USBCDE, LLC, all of which were issued $32 million in tax credits, and The Clearinghouse CDFI, which received $8 million.
Despite ongoing difficulties, Northern Nevada’s office real estate market will endure, experts predict
IGT’s decision to list its 1.2 million sq. ft. campus for lease this month and the recent $3.8 million sale of Harley Davidson’s 3-story financial services building in Carson City are the latest examples of companies no longer needing larger-scale office properties to maintain productivity levels and meet customer needs.