The East Baton Rouge Parish Redevelopment Authority is considering expanding the geographic scope of one of its boards beyond Baton Rouge to improve its chances of being awarded federal New Market Tax Credits.
In 2009, the RDA was awarded $60 million in New Market Tax Credits, which are part of a federal program targeting investment and real estate projects in low-income communities. Since then, every RDA application for the credits has been turned down by the U.S. Treasury Department. The organization’s budget is rapidly dwindling and expected to dry up within a year, despite significant staff cutbacks.
At Thursday’s RDA meeting, Van Mayhall Jr., vice chairman of the board, asked Tammy Propst, president of the Tax Advantage Group, why the organization isn’t getting new tax credit allocations, despite having good results and spending the money in an impactful way. TAG is a Greenville, South Carolina-based company that provides consulting and compliance services for the RDA’s New Market Tax Credits. Propst was in town to provide an update on the credits to the RDA, the East Baton Rouge Community Development Entity board of directors and the East Baton Rouge Community Development Entity advisory board, which were set up to administer the credits.
Propst said she thinks several factors are keeping the RDA from getting additional credits. The first is that Louisiana received a large number of credits to help with Hurricane Katrina recovery and rebuilding. About five or six years ago, the Treasury Department found that Louisiana and Washington, D.C., got about $500 per capita in tax credits, while Nevada got 74 cents per capita.
“They want the program to remain competitive, but they don’t like that spread,” she said. This has led the Treasury to spend more money on developments in states that ranked low for New Market Tax Credits, such as Texas, Florida, Georgia, West Virginia and Nevada.
Another factor is that competition for the credits has become stiffer, leading the Treasury Department to take a big-picture view. In Greenville, Propst said the agency set up to administer the tax credits expanded its scope from the just the city to a 10-county area and eventually to include the entire state of South Carolina.
“We have a different depth of projects and we pull a larger service area,” Propst said. “If I were in the Treasury Department and I had the job of awarding tax credits, I would put them in the state that has a larger, broader portfolio.”
Propst said the Greenville agency was awarded tax credits after a five-year drought.
Mayhall and John Noland, chairman of the RDA board, said expanding the geographic scope of the local community development entities to include all of metro Baton Rouge may be worth looking at.
“What’s the downside?” Mayhall said. “We’re not getting any new market credits right now. We might as well change our service area and design that thing as strategically as possible.”
One model for the expansion is the recent rebranding of the East Baton Rouge Mortgage Finance Authority to the Capital Area Finance Authority. The organization, which was set up to help low- to moderate-income East Baton Rouge Parish residents buy homes, now assists homebuyers in the eight parishes surrounding Baton Rouge.
Norman Chenevert, a member of the CAFA board, told the RDA that he was interested in seeing the two boards work together since they have similar missions. Chenevert stressed he was speaking as a private citizen and not a CAFA board member.
THE ELYSIAN II: In other business, the RDA approved an $800,000 loan for the Gulf Coast Housing Partnership to build The Elysian II, a mixed-income development on Spanish Town Road. The RDA is acting as a conduit for the money; the actual funding is coming from federal Community Development Block Grant funds received by the city-parish.
The 100-unit development will be built at 1120 Spanish Town Road, to the west of the first section of The Elysian. The first 100 units in The Elysian opened in 2013 and RDA officials said the development has been successful, filling up with tenants and revitalizing a blighted section of the city.
Plans are to start construction on The Elysian II in December, and the new development is estimated to open in December 2016.
Follow Timothy Boone on Twitter, @TCB_TheAdvocate.