Chicago–Urban Development Fund L.L.C. (UDF), an affiliate of Chicago-based Aries Capital, has received an allocation totaling $35 million under the New Markets Tax Credit (NMTC) program for redevelopment of low-income areas in the United States. This is UDF’s sixth NMTC award, bringing its total received to $292.5 million.
UDF’s primary focus is the redevelopment of commercial real estate and community centers in low-income areas. The impact on area multifamily properties is indirect, but real, as the increased employment opportunities generated by the redevelopment enable area residents to remain in their places of residence, or even trade up to higher-quality properties.
Previously, UDF has supported community facilities such as the Briscoe Art Museum in San Antonio and the Clemens Center Theater in Elmira, N.Y. Also, the allocations have enabled UDF to assist in the Hurricane Katrina Gulf Opportunity Zone, an area that was, and still is, in dire need of new economic endeavors. Going forward, UDF says it is researching redevelopment projects such as the St. Charles Hilton in New Orleans, La Gran Plaza in Ft. Worth, and Roseland Medical Center in Chicago.
NMTC was created by the federal government in 2000 to stimulate economic opportunity and job creation in low-income communities by allowing individual and corporate taxpayers to receive a credit against federal income taxes for making qualified investments in investment vehicles known as Community Development Entities. There is some question now, however, about how much funding the program will see under the newly parsimonious Congress.
“There was a $3.5 billion allocation approved by congress for both 2010–announced in February 2011–and 2011,” Neil Freeman, president of both Aries Capital and UDF, tells MHN. “These allocations are down from $5 billion per year during the past two years. So it may be more difficult to finance larger projects with New Markets Tax Credits than the past two years. Many allocatees such as UDF focus investments in highly distressed areas, which also tend to be mid-sized.”