Tax Credits Could Spark Economic Development in Pittsburgh
Pittsburgh Urban Initiatives (PUI) has been awarded $35 million in tax credits by the U.S. Department of the Treasury to help spur investments in the city’s low-income communities.
The New Markets Tax Credit Program began in 2000 and allows individual corporations and investors to receive a credit against their federal income tax in exchange for making equity investments in Community Development Entities such as the PUI.
Investors can then receive 39 percent of their total investment in credits over seven years.
The PUI is an affiliate of the Urban Redevelopment Authority.
URA Acting Executive Director Robert Rubinstein said New Market Tax Credits help to finance projects that might not get done without financiers.
“We hope to do maybe seven additional projects that otherwise might sit on the sidelines and not be able to close their financing gap,” Rubinstein said.
Rubinstein said because of the legal complexities of New Market Tax Credits, a lot of money goes into legal and accounting teams that supervise the transferring of credits.
He said that of their $35 million, they hope to raise $7-10 million in investments in their projects.
The PUI has received $90 million in New Market Tax Credits since February 2011, including this recent allocation. Those credits have gone to help finance projects such as the East End Cooperative Ministry’s Community House, the Riverhounds' soccer stadium at Station Square, the Hill District grocery store and the Gardens at Market Square.
According to Rubinstein, more than 2,000 full- and part-time jobs have been created through PUI projects funded with New Market Tax Credits.
Rubinstein said investors who buy the credits normally have higher federal tax obligations such as banks and insurance companies, but the PUI is looking for others.
“There are other investors that we have been meeting with and nurturing over the past two years and trying to attract to our market and to specific projects,” he said.
Rubinstein said they have a 36-month time frame in which the credits must be fully deployed.
He said sponsors looking for financing from investors must submit an application that is reviewed by an advisory committee comprised of members of the project’s community and a PUI governing board.