The Transformative Tool

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3 min read

My heavy old dictionary – a thousand-plus yellowed pages – defines transformation as a major or radical change in the appearance or nature of someone or something.

Too often, people exaggerate – using words like transformative or awesome – when speaking of the impact of actions, events, or other things.

That’s not the case with the federal new markets tax credit program. Indeed, this financing tool, established by legislation enacted in 2000, truly has transformed low-income neighborhoods across the country and the lives of the residents living in them. This incentive has funded real estate projects and new or expanded businesses generating tens of thousands of construction and permanent jobs, providing much-needed services such as health care to low-income families, and sparking other “follow-on” investments around them to lift up these neighborhoods.

Like the low-income housing and historic rehabilitation tax credits, the new markets tax credit has been hugely successful because the program is driven by public-private partnerships that sponsor, support, and fund projects. Unlike the other credits, though, the new markets tax credit has funded a much wider variety of projects – charter schools, manufacturing plants, mixed-use real estate projects, health care facilities, small business loans, power facilities, theaters, hotels, and more. According to the Community Development Financial Institutions Fund, between fiscal years 2003 and 2011 new markets tax credits have been utilized in more than 2,600 businesses and 3,990 real estate investments across the country.

In this issue we focus on the new markets tax credit program and describe – in words and through images – some of the impressive projects that the program has financed in communities across the U.S. of all sizes. (“Making a Difference,” p. 14)

Regarding impact, we also examine an innovative approach that the Wisconsin Housing and Economic Development Authority (WHEDA) has taken in its low-income housing tax credit program. This year, for the first time, WHEDA held a separate LIHTC application round for “high impact” projects – developments not only providing affordable rental housing but also linkages to jobs, job training, and employment centers. (“A Stronger Alignment,” p. 10) Drilling down deeper, we write about one of the four selected high impact projects, a joint venture by two for-profit developers in Milwaukee that will acquire and renovate foreclosed vacant homes in the city’s challenged Harambee neighborhood to create new affordable rental housing units. (“Blight Busters,” p. 4) Coincidentally, Harambee is one of the neighborhoods targeted in the city’s Transform Milwaukee initiative.

Sometimes transformative really is the right word to use.

I hope you enjoy this issue.