Tools for Redevelopment Tools for Redevelopment Courtney Knight
Managing Director, Redevelopment Revitalizing Atlanta
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Redevelopment Programs 2 Tax Allocation Districts Established
to publicly finance certain redevelopment activities in
under-developed areas Costs are financed through the pledge of
future incremental increases in property taxes generated by the
resulting new development Private Investment Programs New Markets
Tax Credits EB-5 Foreign Investment Business Financing Initiatives
Green Building Fund
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TAX ALLOCATION DISTRICTS Revitalizing Atlanta
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Creates incentive for development that would otherwise not
occur Tax increment financing (TIF) is a tool used to publicly
finance certain redevelopment activities in underdeveloped or
blighted areas Locally, TAD creation results from legislation
passed by the City, County, and Atlanta Public Schools TADs attract
private investment which results in increased development, new
jobs, reduced crime and greater economic vitality New development
within the TAD increases property values and thereby increases tax
revenue What is a Tax Allocation District?
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How do TADs work?
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10 Tax Allocation Districts To date, approximately $560 million
in TAD bonds have provided gap financing for over $3.4 billion in
private development Assessed property values in TADs have grown 20%
since 1998 while City of Atlanta has grown at 5% Incentivize
development in blighted and underdeveloped areas of City Beltline
Exception: Other TADs tax increment or bond proceeds are used
primarily as developer incentive, while the Beltline TADs increment
or proceeds are used to fund the construction of Beltline
infrastructure. City of Atlanta TADs
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Livable Centers Initiative (LCIs) Atlanta Regional Commission
City of Atlanta and Invest Atlanta will jointly submit an
application to Atlanta Regional Commission for Livable Centers
Initiatives (LCIs). LCI designation will provide funding for major
transportation improvements that will improve access to the
University site by improving access to the main roads north of the
site. Planning grants to enhance connectivity, accessibility by
multiple transportation modes, walkability, and mixed-use
development in activity centers, town centers and corridors.
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PRIVATE INVESTMENT PROGRAMS Revitalizing Atlanta
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Federal program enacted by Congress in 2000 to attract private
sector investment to communities with high rates of poverty and
unemployment NMTC investment finances commercial and mixed-use
projects Invest Atlantas NMTC entity has $148MM in NMTC Allocation
Federal priorities for NMTC investments: Job Creation Jobs
Accessible to Low-Income Persons Goods and Services to Low-Income
Communities Flexible Lease Rates for Locally-Owned Businesses New
Markets Tax Credits
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Project receives a 7-year below-market rate loan. 20% of loan
does not have to be repaid at end of term. 80% Developer Funds:
Bank Loan, Grants or Charitable Contributions 20% Equity: Tax
Credit Investor Contribution NMTC Investment Fund New Markets Tax
Credits Deal Structure
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NMTC Investment Priorities: Job Creation Services for
Low-Income Communities Create holistic, healthy neighborhoods
Improve access to: Education Health care Healthy foods -Invest
Atlanta has been awarded $148 million in NMTC allocation since
2007. -$48 million of NMTC allocation is currently available (as of
October 2014) New Markets Tax Credits Program
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United States federal program created in 1990 to attract
foreign investment Program allows families to expedite US
citizenship process with investment of $500,000 Program targets
investments to projects in low-income areas Invest Atlanta is
creating a new EB-5 regional center to match investors with
eligible projects Target Areas for Investment EB-5 Foreign
Investment Program
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EB-5 Program requirements for developers: Target Area Projects
must be located in low-income areas Job Creation Each $500K
investment must create 10 jobs Developer Loan Typically funds are
provided as a 5 year loan Ideal Deal Size $5 - 20 million range is
best for EB-5 tool Matches foreign investors to local projects
Collects $500,000 from each investor Funds are combined then
released when project is ready Investors get a visa for residency
when project is complete EB-5 Foreign Investment Program Invest
Atlanta EB-5 Regional Center
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EB-5 Program Financing for Development ProjectsAmount Investor
#1$500,000 Investor #2$500,000 Investor #3$500,000 Investor
#4$500,000 Investor #5$500,000 Investor #6$500,000 Investor
#7$500,000 Investor #8$500,000 Investor #9$500,000 Investor
#10$500,000 Total EB-5 Investment$5,000,000 Development projects
typically get a 5-year loan with 4-6% interest rate EB-5 Job
Creation Requirements For each $500,000 invested, 10 jobs must be
created. In this example, the project must create 50 jobs. Once
funds are received and construction starts, visas can be issued.
EB-5 Foreign Investment Program
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Atlanta Catalyst Fund $500K revolving fund for small business
loans. Loan amounts range from $50,000 to $100,000. Eligible for
real estate improvements or operating capital. Atlanta Seed Equity
Initiative $400K fund for equity investments Program will address
the need for venture capital to support startups with high growth
potential in Atlanta Partnership with Startup Atlanta and private
investors. NMTC Business Loan Fund $8 million revolving loan fund.
Loan amounts range from $1-$3.5 million Loans serve a niche range
that is currently underserved by existing financing programs in
Atlanta. Business Financing Initiatives
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Property Assessed Clean Energy Financing (PACE) Private
financing for building owners to make energy efficiency upgrades.
Funds provided 100% upfront. Repayment over 20 years along with
annual property tax bill.