The state's first, $10 million round of New Markets Tax Credits awards could help finance projects and business development in low-income communities, including Cleveland. Two local community development entities will receive a total of $5 million in credits, and a Franklin County fund set to receive $3 million in credits could invest in Cleveland-area projects.
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View full sizeThe renovation of the Allen Theatre is one of several Northeast Ohio projects that could benefit from Ohio New Markets Tax Credits announced today. The state is awarding tax credits to established community development entities, which can attract investors to projects using the tax benefits.CLEVELAND, Ohio -- Businesses and developments in Cuyahoga County could benefit from about half of $10 million in new state tax credits created to encourage business investment in low-income communities.
The credits might fund renovations of the Allen Theatre in PlayhouseSquare; support new employee-owned, for-profit companies called Evergreen Cooperatives; or help tenants furnish spaces at a planned technology park in Midtown.
State development officials on Thursday announced the first round of $10 million in New Markets Tax Credits, half of them for community development entities in Cuyahoga County.
These entities can use the credits to create lower-risk, more attractive financing for projects or to attract banks and insurance companies to invest in low-income communities. In exchange, the investors would get a break on their state corporate franchise taxes or premium taxes.
The state's program mimics a popular federal program that provides income tax credits to investors in low-income communities. Federal New Markets Tax Credits have kept some real estate projects alive, enabling developers to close deals despite the difficult economy. The state's program focuses on businesses rather than real estate.
Key Community Development New Markets, a KeyBank affiliate, will receive $3 million in state credits to put toward at least $7.7 million in investments statewide. During the past few years, Key has used federal tax credits to support projects including the Park Building condominiums on Public Square, the University Lofts apartments on Euclid Avenue and the Uptown apartment-and-retail development in University Circle.
"We're consistently looking for new and creative ways to create real economic development in low- and moderate-income neighborhoods," said Paul Ettorre, Great Lakes regional manager for KeyBank Community Development Lending.
Key has identified several potential investments, including the Allen Theatre project; Ohio Solar Cooperative, an employee-owned company that installs solar panel arrays on buildings; and TechSouth, an industrial and flex campus in Columbus.
The other Cuyahoga County tax-credit recipient is the Northeast Ohio Development Fund, a community development entity affiliated with the Cleveland-Cuyahoga County Port Authority. The fund, which already has a $30 million federal tax-credit allocation, will receive $2 million in state credits to support at least $5.1 million in local investments.
Those investments might include helping a Canadian clothing company set up a Cuyahoga County facility; financing a Cleveland special improvement district focused on alternative energy; and assisting with projects like the Cleveland Athletic Club building renovations or a new hotel in University Circle.
Brent Leslie, the Port's chief financial officer, said the fund hopes to start putting all of its credits into projects early next year.
Two other funds will split the remaining $5 million in state credits. The Cincinnati Development Fund will receive $2 million. The Finance Fund, based in Franklin County, will receive $3 million. The Finance Fund could put credits toward several Evergreen Cooperatives, including a worker-owned, hydroponic greenhouse planned in Cleveland.
Ohio launched its New Markets Tax Credits -- one of the first state programs in the country -- in August and plans to award $10 million in credits annually. The state expects to announce the schedule for its second round of credits in early 2011.