Vermont to get $30 million in stimulus funds for economic development
US Senator Patrick Leahy (D-Vt) says Vermont will receive $30 million under an innovative and proven economic development program – New Market Tax Credits (NMTC) – to spur economic growth and affordable housing in the state. The funds, included in the recently enacted American Recovery and Reinvestment Act (ARRA), will be formally announced by Secretary Timothy Geithner at noon today. The New Market Tax Credit Program, created in 2000, offers incentives to private investors to invest in economic development projects that primarily benefit low-income Americans, by offering them 39 percent of their investments back as a federal tax credit. As a result, the developer can pay investors below-market interest rates, resulting in the equivalent of a federal grant to help buy down the developer’s borrowing costs.
Leahy, a senior member of the Senate Appropriations Committee, played a key role in including the program in the stimulus package and had also laid the groundwork for it in letters he sent both to President Obama and Senate leaders last winter while the recovery act was being drafted.
The American Recovery and Reinvestment Act included $3 billion to meet the needs of unfunded 2008 NMTC applications and an anticipated high number of 2009 applications. During the summer of 2008, Vermont Rural Ventures, an organization consisting of Housing Vermont, the Vermont Economic Development Authority, the Vermont Housing Finance Agency and the Vermont Community Loan Fund, submitted an unsuccessful application. Leahy worked to ensure that the new ARRA funding would allow funding of the Vermont application.
Leahy said, “These tax credits will leverage private investment dollars that are sorely needed by several Vermont communities. The program will take root immediately, putting Vermonters to work at construction sites, creating housing for vulnerable Vermonters and laying the groundwork for long-term economic growth.”
“The New Market Tax Credit program will give us tremendous new resources to help communities meet their economic development and related affordable housing needs,” said Nancy Owens, President of Housing Vermont. “Private equity raised by the program will help close the affordability gap on critical local projects."
No Vermont entity has successfully competed to administer New Market Tax Credits in the past, though two affordable housing and community development projects have used the investment tool in recent years. In 2008, Champlain Housing Trust used $2 million in New Market Tax Credits to help build its new headquarters and 20 units of affordable housing on King Street in Burlington. In 2007, Housing Vermont used New Market Tax Credits to help rehabilitate downtown Richford’s Sweat Cummings building which currently provides space for a downtown grocery store, the Richford Community Health Center and housing. According to Owens, Vermont Rural Ventures, which is controlled by Vermont organizations, will expand access to this proven federal program while minimizing operating costs. “The many advantages of the NMTC program have been difficult to work on a Vermont scale,” Owens said. “This announcement means that Vermont finally has a program which fits our needs.”
Vermont Rural Ventures anticipates funding between six to twelve housing and economic development projects statewide as a result of the new tax credits. According to the Department of Treasury, projects must be in eligible census tracts – which limits projects to severely economically distressed communities in the following counties: Grand Isle County, Franklin County, Orleans County, Essex County, Caledonia County, Chittenden County, Rutland County, Bennington County and Windham County.
U.S. Senator Bernie Sanders (I-Vt.) and Congressman Peter Welch (D-Vt.) also supported the American Recovery and Reinvestment Act.
Source: Senator Leahy (WEDNESDAY, May 27) –