A quasi-public state agency that hoped to draw $63 million in federal tax credits to finance nonprofit development projects in low-income and distressed areas has struck out on its first attempt.
The Connecticut Health and Educational Facilities Authority (CHEFA) was not on a list — released by the U.S. Treasury last week — of successful applicants for the so-called New Market Tax Credit program, created in 2003 to attract private investment for developments in poorer census tracts.
The application process was competitive: A total of 206 applicants requested $14.7 billion in NMTC credits for the recently announced annual round. Only 76 of them were successful. They will share the annual allotment of $3.5 billion in credits.
CHEFA formed a subsidiary last year called CHEFA Community Development Corp. and was certified to participate in the NMTC program as an intermediary that solicits investors for the credits in exchange for equity in the projects they finance.
The agency hoped to broaden its portfolio of assistance it provides to nonprofits in Connecticut, and had identified seven projects — including in Greater Hartford — that could potentially receive financing. They include:
- The Boys and Girls Club of Hartford’s proposed $20-million clubhouse at the corner of Meadow and Ledyard streets in southeast Hartford.
- Hartford Community Loan Fund’s plan to bring a supermarket and nearby nutrition counseling office to North Hartford, an $18-million project coined the Healthy Hartford Hub.
- Community Mental Health Affiliates’ $8-million acquisition and renovation of a headquarters building in New Britain.
- Odyssey Community School in Manchester’s $5.5 million building acquisition and expansion.
Being shut out of the NMTC allotment for this year is a setback, but CHEFA Executive Director Jeanette Weldon said in an interview Monday that it won’t be a death-knell for the projects, which can pursue other financing or grants. In fact, several of the seven projects in CHEFA’s application are already under construction.
“People will continue to pursue other ways to try to get projects done,” Weldon said.
CHEFA will try again when it submits an application later this year for the next round of credits, which will be awarded about a year from now.
Connecticut has historically been underrepresented in the annual NMTC allotments, based on credits awarded per low-income resident in the state.
One reason for that is that Connecticut hasn’t had an active entity certified to compete in the program in more than a decade. CHEFA wants to fill that hole.
Developers of Connecticut projects, nonprofit and otherwise, have still been able to attract NMTC financing — to the tune of $360 million over the years.
But to do so, they have had to turn to NMTC entities in other states, where the competition tends to be steeper, since some accept applications from projects in multiple states, including for-profit developments.
CHEFA would have awarded the tax credits solely to nonprofit projects based in Connecticut, which would have likely guaranteed more NMTC financing than has been typical in the past.
