The final piece of the 2014 funding for M-1 RAIL has been completed, with agreements finalized for the second phase of an approximately $40 million total in New Markets Tax Credit financing. M-1 RAIL received the first tranche earlier this year, and the second tranche brings net proceeds to $8 million. The deal marks the first time that NMTCs have been used to fund a public transportation initiative.
“We have received unprecedented support from our partners, donors and the community,” said Jenilyn Norman, chief financial officer for M-1 RAIL. “This project is the standard for what NMTCs are meant to support, providing a catalyst for growth, inclusion and access for community residents who need good jobs and dependable public transportation.”
The NMTC program was established as an element of the Community Renewal Tax Relief Act of 2000 – a bi-partisan effort to stimulate investment and economic growth in low-income urban neighborhoods that lack access to capital for business support, job creation, and sustaining healthy local economies. Its goal is to spur revitalization of communities and provide tax credit incentives to investors for their investments in certified Community Development Entities (CDEs), which invest in low-income communities. M-1 RAIL is a qualified project under the program.
Several financial institutions comprise the partnership of investors for M-1 RAIL’s NMTC including: JPMorgan Chase, Invest Detroit, The Great Lakes Capital Fund, Local Initiatives Support Corporation (LISC), and United Fund Advisors (UFA).
“There is an economic recovery underway in Detroit, and a first class public transportation system, beginning with M-1 RAIL, will accelerate the progress the city is making in attracting new businesses and residents to the Woodward corridor,” said Aaron Seybert, vice president of Community Development Banking, JPMorgan Chase. “JPMorgan Chase and our partners are proud to contribute $14 million in New Markets Tax Credit equity to this unprecedented public/private partnership connecting Detroit’s growing population centers to areas of employment.” Seybert said this is the largest NMTC deal Chase has closed since 2012.
A NMTC investor receives a tax credit equal to 39 percent of its total qualified investment in any community development entity, with the credit realized over a seven-year period – five percent annually for the first three years, and six percent in years four through seven.
“The Invest Detroit team considered M-1 a priority transformational project and was extremely pleased to commit two NMTC allocations totaling $18.4 million. With M-1 centered at the core of its collaborative renewal efforts, Invest Detroit also worked to recruit other CDEs to support the effort, one of which is new to the Detroit market. To the best of our knowledge, this is the first time NMTCs have been utilized for a transit project,” said Mary Seaberg King, senior vice president of Invest Detroit. “We applaud the vision of the entire team and their commitment to the Greater Downtown Detroit community.”
A Principal at United Fund Advisors, Colin Rowan said: “UFA has a long history of using NMTCs to support innovative public-private projects which contribute to the vitality and prosperity of their communities. The M-1 RAIL project is just such a project: ambitious, transformative and resulting from a broad collaboration of community partners.”
Tahirih Ziegler, executive director of Detroit LISC, said that while LISC doesn’t typically invest in public transportation, “all of the catalytic affordable housing and other development that will result as part of the project is really important to our “Building Sustainable Communities” activities in the Grand Woodward neighborhood. We think this project ties into other opportunities for small businesses to come in and create new jobs available to local residents.”
President and CEO for Great Lakes Capital Fund, Mark McDaniel said: “As we fulfill our mission to uplift all communities and corridors in the City of Detroit and beyond, we are honored to partner in delivering New Markets Tax Credits to finance a world-class, public transit-corridor development along Woodward Avenue. “We are confident the M1-RAIL lays the groundwork for unprecedented economic prosperity for Detroit and the surrounding region.”
Norman said the NMTC is a critical piece of the 2014 funding, which also includes investment from private foundations, corporations, donors, and the U.S. Department of Transportation (USDOT) through its TIGER grant, the last award acknowledged in September during a visit to Detroit by U.S. Secretary of Transportation Anthony Foxx.