Presentation on theme: "Tools for Redevelopment Courtney Knight Managing Director, Redevelopment Revitalizing Atlanta 1."— Presentation transcript:
1 Tools for Redevelopment Courtney Knight Managing Director, Redevelopment Revitalizing Atlanta1
2 Redevelopment Programs Tax Allocation DistrictsEstablished to publicly finance certain redevelopment activities in under-developed areasCosts are financed through the pledge of future incremental increases in property taxes generated by the resulting new developmentPrivate Investment ProgramsNew Markets Tax CreditsEB-5 Foreign InvestmentBusiness Financing InitiativesGreen Building Fund2
4 What is a Tax Allocation District? Creates incentive for development that would otherwise not occurTax increment financing (TIF) is a tool used to publicly finance certain redevelopment activities in underdeveloped or blighted areasLocally, TAD creation results from legislation passed by the City, County, and Atlanta Public SchoolsTADs attract private investment which results in increased development, new jobs, reduced crime and greater economic vitalityNew development within the TAD increases property values and thereby increases tax revenue
6 City of Atlanta TADs 10 Tax Allocation Districts To date, approximately $560 million in TAD bonds have provided gap financing for over $3.4 billion in private developmentAssessed property values in TADs have grown 20% since 1998 while City of Atlanta has grown at 5%Incentivize development in blighted and underdeveloped areas of CityBeltline Exception: Other TADs’ tax increment or bond proceeds are used primarily as developer incentive, while the Beltline TADs increment or proceeds are used to fund the construction of Beltline infrastructure.
7 Livable Centers Initiative (LCIs) Atlanta Regional Commission City of Atlanta and Invest Atlanta will jointly submit an application to Atlanta Regional Commission for Livable Centers Initiatives (LCIs).LCI designation will provide funding for major transportation improvements that will improve access to the University site by improving access to the main roads north of the site.Planning grants to enhance connectivity, accessibility by multiple transportation modes, walkability, and mixed-use development in activity centers, town centers and corridors.
9 New Markets Tax Credits Federal program enacted by Congress in 2000 to attract private sector investment to communities with high rates of poverty and unemploymentNMTC investment finances commercial and mixed-use projectsInvest Atlanta’s NMTC entity has $148MM in NMTC AllocationFederal priorities for NMTC investments:Job CreationJobs Accessible to Low-Income PersonsGoods and Services to Low-Income CommunitiesFlexible Lease Rates for Locally-Owned Businesses
10 New Markets Tax Credits – Deal Structure80% Developer Funds: Bank Loan, Grants or Charitable Contributions20% Equity: Tax Credit Investor ContributionNMTC Investment FundBlack arrow is debt.Red arrow is tax credit purchase.Yellow arrow is tax credit.Purple arrow is investment.Green arrow is NMTC allocation.Blue arrow is limited Principal and Interest.Orange arrow is cash equity of Borrower.Project receives a 7-year below-market rate loan.20% of loan does not have to be repaid at end of term.
11 New Markets Tax Credits Program Invest Atlanta has been awarded $148 million in NMTC allocation since 2007.$48 million of NMTC allocation is currently available (as of October 2014)NMTC Investment Priorities:Job CreationServices for Low-Income CommunitiesCreate holistic, healthy neighborhoodsImprove access to:EducationHealth careHealthy foods
12 EB-5 Foreign Investment Program United States federal program created in 1990 to attract foreign investmentProgram allows families to expedite US citizenship process with investment of $500,000Program targets investments to projects in low-income areasInvest Atlanta is creating a new EB-5 regional center to match investors with eligible projectsTarget Areas for Investment
13 EB-5 Foreign Investment Program Invest Atlanta EB-5 Regional Center Matches foreign investors to local projectsCollects $500,000from each investorFunds are combined then released when project is readyInvestors get a visa for residency when project is completeEB-5 Program requirements for developers:Target Area – Projects must be located in low-income areasJob Creation – Each $500K investment must create 10 jobsDeveloper Loan – Typically funds are provided as a 5 year loanIdeal Deal Size – $ million range is best for EB-5 tool
14 EB-5 Foreign Investment Program EB-5 Program Financing for Development ProjectsAmountInvestor #1$500,000Investor #2Investor #3Investor #4Investor #5Investor #6Investor #7Investor #8Investor #9Investor #10Total EB-5 Investment$5,000,000Development projects typically get a 5-year loan with 4-6% interest rateEB-5 Job Creation RequirementsFor each $500,000 invested, 10 jobs must be created.In this example, the project must create 50 jobs.Once funds are received and construction starts, visas can be issued.
15 Business Financing Initiatives Atlanta Catalyst Fund$500K revolving fund for small business loans.Loan amounts range from $50,000 to $100,000.Eligible for real estate improvements or operating capital.Atlanta Seed Equity Initiative$400K fund for equity investmentsProgram will address the need for venture capital to support startups with high growth potential in AtlantaPartnership with Startup Atlanta and private investors.NMTC Business Loan Fund$8 million revolving loan fund.Loan amounts range from $1-$3.5 millionLoans serve a niche range that is currently underserved by existing financing programs in Atlanta.
16 Property Assessed Clean Energy Financing (PACE) Private financing for building owners to make energy efficiency upgrades.Funds provided 100% upfront.Repayment over 20 years along with annual property tax bill.