State asks for share of 'billion dollar' market

Real Estate Weekly, March 2, 2005

Chairman Charles A. Gargano announced that Empire State Development Corp. (ESD) has applied to the federal government to take part in the New Markets Tax Credit program that could result in billions of dollars in new private sector investment for community and economic development projects in some of New York State's neediest areas over the next three years.

"We are looking for ways to help some of the state's most disadvantaged communities and neighborhoods by providing a federal tax incentive to developers that could make the difference in whether an important community or economic development project gets built," Gargano said. "Too often there is a missing piece that needs to be in place before a local project can go forward, and through the New Market Tax Credit program, we are looking to close the gap with private sector investment."

Gargano, speaking at a joint Senate and Assembly Budget Committee hearing, estimated that New York State's participation in the U.S. Treasury Department program would create more than 10,000 new permanent and temporary full-time jobs while creating more than 1,100 new housing units and 4.4 million square feet of new industrial and commercial space.

"We have applied for an allocation of $150 million in federal tax credits under the U.S. Department of Treasury program," Gargano added.

"If we are successful, we will be able to allocate these tax credits to developers who are investing in projects, such as brownfields and blighted urban land, in targeted disadvantaged communities.

"This program, coupled with our existing economic development programs, will provide a catalyst for additional development and thus new jobs and new opportunities in the communities that need them most."

The New Markets Tax Credit (NMTC) program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated community development projects.

The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period.

ESD has applied to the U.S. Department of Treasury to take part in program, asking for a $150 million allocation from a total tax credit allocation of $2 billion, Gargano said.

The strategy is to work with the state's financial institutions as well as other strategic partners and alliance, including the Governor's Office of Small Cities, to identify qualified projects, he added.

"With our experience and successful record of identifying community and neighborhood needs and leveraging public and private investment through such entities as the 42nd Street Development Project, Queens West Development Corp., and USA Niagara Development Corp., we are well positioned to take on projects that will help to revitalize and rebuild our communities," Gargano said.

"We want to use this program to continue doing positive things in our communities throughout the state, while creating new opportunities and enhancing private investment," he continued.

"It is going to help us do even more with our existing economic development resources."