The federal government’s New Markets Tax Credit Program has spurred development in several low-income communities across the Midwest. The latest example is in Cleveland, where KeyBank has provided $9 million in New Markets Tax Credit loans and nearly another $9 million in equity to the Uptown development, a new apartment and retail project in University Circle, one of Cleveland’s oldest neighborhoods.
Construction crews, led by developer MRN Ltd., are now tackling the second phase of this development, one that will bring retail, traditional housing and dorm rooms for the Cleveland Institute of Art to the University Circle community. Once construction wraps, the institute of art will have 50 new dorm spaces and nearly 130 new beds for its students.
The second phase will also bring a Corner Alley bowling center, 40 units of traditional housing and 20,000 square feet of ground-level retail space.
“The project helps to create a neighborhood,” said Kevin Nowak, National Equity Investment Manager of KeyBank’s Key Community Development Corporation.
Nowak said that local institutions, including Case Western Reserve University and area community development corporations, identified a problem with University Circle. It wasn’t acting as a neighbohood. People lived there. But they didn’t gather for community events. They rarely interacted with each other. And when they needed to shop or they wanted entertainment? They often left University Circle and headed for other areas of the city.
The Uptown development’s goal? Change this.
“They wanted to create a neigborhood environment that would help facilitate street-level retail and pedestrian traffic,” Nowak said. “They wanted more residential options. The University Circle neighborhood was lacking that component. They wanted to build a community, not just a place where people live.”
The New Markets Tax Credits have played an important role in KeyBank’s efforts to help finance the Uptown project. Overall, KeyBank has received $330 million worth of New Market Tax Credit allocations through the federal government’s Community Development Financial Institutions Fund. Under the program, individual and corporate investors receive a tax credit against their federal income tax return in exchange for making equity investments in institutions called Community Development Entities.
Established in 2000, the New Markets Tax Credit Program was created as a way to funnel new investments into operating businesses and new real estate projects in low-income communities.
“Through the program, we’ve done some very complex deals that provide true stabilizing effects on a community,” Nowak said. “The program has helped create neighborhoods within our communities. It’s helped create jobs. It’s been a very successful program.”