M-1 Rail has fit a big piece into its funding puzzle. The 3.3-mile-long streetcar line has agreed to a second round of funding though the federal New Markets Tax Credit (NMTC) program. In addition to NMTCs received earlier in 2014, the recent agreement on a second phase of tax credit funding brings M-1 a grand total of $40 million. This is the first time a transit project has received NMTC funding since that program's creation in 2000.
NMTCs were designed to spur development, economic growth, and investment in low-income urban neighborhoods by offering tax credits to organizations contributing to qualifying projects. NMTC investors receive a tax credit equal to 39 percent of their total qualified investment. That tax credit is spread out over seven years; the first three years of the credit returns at five percent and the last four returns at six percent.
JPMorgan Chase, Invest Detroit, The Great Lakes Capital Fund, Local Initiatives Support Corporation (LISC), and United Fund Advisors contributed to the NMTC fund. Major contributions include $18.4 million from Invest Detroit and $14 million from JPMorgan Chase.
Tahirih Ziegler, executive director of Detroit LISC, says her organization is investing in M-1 Rail for various reasons. "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," she says. "We think this project ties into other opportunities for small businesses to come in and create new jobs available to local residents."
The approximately $40 million in funding through NMTCs covers just a portion of the M-1 Rail construction costs. M-1 Rail projects that it will cost $140 million to acquire the streetcars and build the streetcar line and vehicle maintenance facility. The rest of the money has been obtained from a combination of private and public entities, including a recent $12.2 million TIGER grant from the U.S. Department of Transportation in September 2014.
Source: M-1 Rail press release
Writer: MJ Galbraith
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