Posted 6/16/2014 12:00 am
Updated 4 months ago
Our House Inc.’s $5 million Children’s Center that opened June 7 was paid for with help from New Markets Tax Credits.
In September, the Little Rock nonprofit that helps homeless adults and children with housing, job training and education, closed on a $5 million New Markets Tax Credits deal; the credits are issued by the U.S. Treasury.
“It’s really an innovative financing model,” said Georgia Mjartan, Our House’s executive director.
The tax program allows corporate taxpayers to receive a credit against federal income taxes for qualified projects involving economic development or job creation.
“So with our Children’s Center we were producing community value,” Mjartan said.
The 19,000-SF youth development center on Our House’s campus at 302 E. Roosevelt Road serves children up to 17 years old.
To get the money from the tax credits, Our House was involved in a complex set of transactions.
“There are very limited numbers of allocated tax credits each year by the federal government,” Mjartan said.
The tax credits don’t come directly from the federal government, but rather through a community development entity. Our House found Brownfields Revitalization LLC of Raleigh, North Carolina, a CDE, and applied.
In addition to the standard qualifications, Mjartan said, Brownfields was looking for a project that had a minority controlled board and a site where environmental remediation had taken place.
“Our project fit both of those qualifications,” Mjartan said.
Brownfields awarded Our House the tax credits, but “we don’t need tax credits because we’re a nonprofit,” she said.
So Our House negotiated a deal to sell the credits to the global financial services firm, JPMorgan Chase & Co. of New York. Our House received $1 million in cash from the transaction, which was used for construction and to furnish the center.
“It’s a win-win scenario for Chase,” said Sam Walls III, president of the Heartland Renaissance Fund, which is an affiliate of the Arkansas Capital Corp. Group. Heartland handles New Markets Tax Credits in Arkansas, and Walls offered advice to Our House. Chase is “doing good things, but obviously they get some value as well,” he said.
And Mjartan said that with the money from Chase, Our House was able to open the center debt-free.
The center will serve about 150 homeless and near-homeless children.
Herron Horton Architects Inc. of Little Rock designed the building and Nabholz Construction Corp. of Conway was the general contractor.