EDA looks to program for help on area projects
FRONT ROYAL – A federal program could help Warren County and Front Royal pay for major projects if they qualify.
The Front Royal Warren County Economic Development Authority recently applied for funds through People Inc. financial services division and the New Market Tax Credit Program, a financing tool that allows communities to complete projects aimed at enhancing the economic vitality of that area, according to information from the county. The EDA asked the town and county to submit projects they would like to see as part of the program.
EDA Executive Director Jennifer McDonald said Thursday the creative financing program could help the town and county accomplish capital projects.
“It’s a real unique financing tool,” McDonald said.
The EDA submitted the application to see if the agency even qualifies for funding through the program, McDonald noted. The program awards credits to an economically distressed or highly distressed area, McDonald said.
“The whole county is not eligible but certain parts of the town are eligible,” McDonald said.
The program is designed specifically to attract private investment capital to high-impact, community development projects located in low-income communities. The program defines such communities as those with a poverty level of at least 20 percent, a median household income below 60 percent of the state or area median income and an unemployment rate of 1.5 times the national rate.
The EDA must obtain a loan through a financial institution equal to 68 percent of the total investment for the calendar year. The tax credit program would cover the remaining 38 percent. The bank then reimburses the EDA for the loan at the time of closing all project-related invoices paid within the prior three years.
With $40 million worth of projects in a calendar year, the EDA could receive the credits at 1.5 percent interest for seven years amortized over 40 years at $48,500 per month, with $33,800 flowing back to the authority for serving as a 68-percent investor. At the end of the seven years, part of the tax credits are forgiven and the remainder would be refinanced at that time.
The county would need to adopt a resolution of support for its projects. The EDA listed the following county projects as part of the program:
• Technical centers to potentially include renovations to Ressie Jeffries Elementary School for a total of $12 million
• Leach Run Parkway with $10 million cost covered by the town and county.
• West Main Street extension with a $2.5 million cost covered by the town.
• Redevelopment of the former Avtex Fibers site with $30 million covered by the town, county, EDA and developers.
• New town police headquarters at a cost of $9 million.
• Sidewalks in town for $350,000.
• ITFederal with $10 million cost covered by the developer.
• Workforce housing with $3.5 million covered by the EDA.
• Happy Creek Road Phase II at $2.5 million covered by the town.
Information from People Inc. indicates that the federal New Market Tax Credit Program, administered by the U.S. Department of the Treasury, allows taxpayers to take a credit against their federal income tax liability in return for making investments in community development entities.
The treasury department fund authorizes community development entities to issue $40 billion in qualified equity investments, stimulate economic growth, support job creation and foster small-business growth in distressed communities in the country.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org