MMCDC gets $60 million for NMTC financing
When the Detroit Lakes Community & Cultural Center was looking for a little help in financing its Backyard expansion three years ago, project organizers looked to the Midwest Minnesota Community Development Corporation’s New Markets Tax Credit program — as did the Detroit Mountain Recreation Area, which is set to open its doors to the public just in time for the 2014-15 ski season.
The recent expansion of the Park Rapids hospital and clinic was also partially funded through this program, which offers tax credits to a project’s investors during its early development stages.
“It’s set up like a loan to the business, with very favorable terms,” explains MMCDC President Kevin Shipley.
The company pays interest on this loan for seven years, at below-market rates.
“At the end of that seven-year loan they have the potential for partial debt forgiveness,” said Julia Newmark, director of MMCDC’s New Markets Tax Credit financing program.
In the past 10 years, the MMCDC has been allocated more than $480 million in New Markets Tax Credit through the federal government’s Community Development Financial Institutions Fund — with another $60 million due to become available in August.
“We were awarded $60 million, which was the largest allocation in the nation, and were one of only two companies in Minnesota to receive an allocation this year,” Shipley said.
“There were 10 entities that got that much ($60 million), but nobody got more,” added Newmark.
“That brings our total new markets allocation to $544 million over the past 10 years,” she added.
The tax credits are then, in turn, offered to new or expanding businesses, and have thus far been allocated to businesses in Minnesota, North Dakota, South Dakota and Wyoming, said Shipley — though the majority of the funding has remained in Minnesota, he added.
“The program is geared toward business expansion and creation,” Newmark said, noting that job creation is also a key factor in determining which businesses might receive the financing.
“The MMCDC has helped to create 2,800 new jobs and retain 1,500 at-risk jobs through this program,” she said, adding that over 3,400 construction jobs were also created to help build the facilities that housed the new or expanded businesses.
“The majority of that activity has been in Minnesota, and 65 percent of it has been in rural and non-metro areas,” Shipley said.
Businesses that are looking to receive financing through the NMTC program must go through an application process, just as they would for a standard business loan, he added.
Applications for the NMTC financing program are available online through the U.S. Department of Treasury website.
“We’ve already received $3 million in requests (for the $60 million allocation),” Newmark said, adding, “The demand is high. It’s a very efficient federal program, but it’s very attractive to the borrowers as well.”
The community also benefits from the new jobs and revenue the business brings in.
“All of the parties involved benefit from this program,” Newmark said.
The NMTC financing program has “played a role in large-scale redevelopment and expansion of landmark facilities in urban areas,” saidShipley.
“As always, we appreciate the support of our Congressional delegation — including Rep. Rick Nolan, Rep. Collin Peterson and Sens. Al Franken and Amy Klobuchar —for authorization of the program,” he added.
“We are thankful for the support the program has received from metropolitan representatives to Congress… we look forward to making additional investments in Minnesota and nearby states.”
Follow Detroit Lakes Newspapers reporter Vicki Gerdes on Twitter at @VickiLGerdes.