ELKHART — The Corporate Partnership for Economic Growth banded together with area economic development groups, cities and local banks to try to draw $100 million worth of investment to this area, and they expect an answer within the next few weeks.
The joint effort is an attempt to catch investments spurred by federal New Markets Tax Credits that allow banks and corporations to invest in economically distressed areas.
While the odds are against the regional consortium’s application getting into the program in the first year, they’re willing to try again if the feds say “no,” and they hope the application process itself will draw these investments to this area. “At its heart, the program allows an individual to invest their federal tax liability in low-income community and those individuals are typically corporations and banks.”
Those low-income areas are defined by census tracts, and this area was in the throes of recession during the 2010 census. “The number of low-income communities went up dramatically as a result of the last census,” Peterson said. Elkhart County went from three qualifying census tracts in 2000 to 15 in 2010. St. Joseph County jumped from 24 to 37 census tracts qualifying as distressed for the program, he said.
“We’re an area that has been spotlighted, both in the downturn of the recession and the ability for recovery,” Peterson said.
That made this area “much more competitive” in getting funding for the program.
The problem was that the companies that use the tax credits to reinvest in poor parts of major metropolitan areas, he said.
“Our community had difficulty getting our projects on their radar screen,” Peterson said. Just going through the application process points out to lenders “our community is available for investment, as well. These tax credits can provide somewhere between 20 and 25 percent of equity in a project,” he said.
It’s been 13 years since the tax credits started. If the Elkhart, St. Joseph, Marshall and Kosciusko counties region gets the full $100 million in investments, that would reduce federal taxes by $39 million under the program, according to the U.S. Treasury, which oversees the program.
Peterson figures, “as long as the program is in place, we should be able to leverage it.”
The treasury could grant the full amount, a smaller amount, or it could reject the application outright, Peterson said. If it rejects the application, “in all likelihood we’ll apply again,” Peterson said.
In the meantime, the application process helped give visibility to the region that each city, county or economic development organization wouldn’t have gotten on its own, Peterson said.
“We have some very bold ideas in this community about projects to move forward. This is another tool to help that,” he said.