Earlier this month the U.S. Treasury Department awarded the Rockland Trust Community Development Corp. $66 million in tax credits under its New Markets Tax Credit program. The credits will be used to subsidize loans to qualified businesses and individuals in low-income communities in Massachusetts and Rhode Island.
James T. Rizzo is the senior vice president and regional lending manager of commercial banking at Rockland Trust. He is responsible for managing the daily activities of Rockland Trust’s Providence commercial lending team.
PBN: How does the new markets tax credit program work?
RIZZO: The New Markets Tax Credit program was enacted in 2000 as a way to encourage investment in businesses and real estate in low-income communities across the country. The program provides tax incentives for organizations, like banks, to invest funds in the communities in which they operate. Rockland Trust deploys its New Markets Tax Credit awards by making loans through our wholly-owned community development subsidiaries to qualified businesses and individuals in local, low-income communities on advantageous terms and conditions. The funds are also used to provide investment counseling and direct technical assistance, free of charge, to qualified businesses.
PBN: What are its benefits?
RIZZO: The benefits for communities are substantial Not only do the funds go to low-income communities, helping grow business and revitalizing real estate, but these projects also fuel job growth. Since first receiving funds in 2004, Rockland Trust has helped create or maintain almost 3,000 jobs—many of which have been filled by local, low-income community residents. This year’s award is the largest we’ve received to date at $66 million and will certainly assist in Rhode Island job creation.
PBN: Out of 314 applicants nationwide, 70 were awarded credits. Why Rockland Trust?
RIZZO: We believe the U.S. Treasury Department recognizes our efforts in supporting economic growth by distributing NMTC funds across a wide range of projects which allows for a much greater effect than using this capital on just a few large projects. We have enjoyed an excellent track record of deploying this capital responsibly resulting in a high level of positive community impact. To date, through this program we have financed the acquisition and/or rehabilitation of more than 2.7 million square feet of real estate in low-income communities, and helped provide technical assistance to almost 1,000 businesses
PBN: What are some local projects you accomplished using new markets tax credits?
RIZZO: Over the past year we provided a low-cost financing package to an experienced, successful development team to support its repositioning of five buildings in Providence’s Baker Street neighborhood. The redevelopment effort has attracted new activity to the once desolate neighborhood, resulting in the creation of new jobs and reactivating much needed tax-revenue for the city of Providence.
These funds have also helped to drive the revitalization of the former Providence Steel & Iron Co. property and provide critical financing support to the Olneyville Housing Corp. to help expand its community service offerings.
NMTCs were also a critical component of the capital structure of the redevelopment of the St. Francis Chapel/Hampton Inn & Suites project in downtown Providence.
It’s important to note that in certain circumstances NMTCs can also be used to help support operating companies. We utilized NMTCs to help fund the growth of MEDport LLC, a Providence-based consumer products company that enjoys a long history of innovation.
We are excited to say that we have several very worthy projects and partnerships in the works.
PBN: Are there any pitfalls to the program?
RIZZO: The program has certain hard and fast criteria regarding location of the business or project and the use of proceeds. These criteria, along with several other qualifiers, must be met. Every project will not fit the program. One of the major advantages of our strategic use of NMTCs is that we use a very simple approach to deploying the capital in the form of loans with advantageous terms versus utilizing the program for equity contributions.