Supporters of Detroit's M-1 (or M1) streetcar project said Tuesday, Dec. 23, 2014, that agreements had been "finalized for the second phase of an approximately $40 million total in New Markets Tax Credit [NMTC] financing."
M-1 RAIL received the first tranche earlier this year, and the second tranche brings net proceeds to $8 million, project backers said, adding "The deal marks the first time that NMTCs have been used to fund a public transportation initiative."
"We have received unprecedented support from our partners, donors and the community," said M-1 Rail CFO Jenilyn Norman. "This project is the standard for what NMTCs are meant to support, providing a catalyst for growth, inclusion and access for community residents who need good jobs and dependable public transportation."
The NMTC program was established as an element of the Community Renewal Tax Relief Act of 2000 to stimulate investment and economic growth in low-income urban neighborhoods that lack access to capital for business support, job creation, and sustaining healthy local economies. Its goal is to spur revitalization of communities and provide tax credit incentives to investors for their investments in certified Community Development Entities (CDEs), which invest in low-income communities. M-1 RAIL is a qualified project under the program.
Numerous financial institutions comprise the partnership of investors for M-1 RAIL's NMTC, including: JPMorgan Chase, Invest Detroit, The Great Lakes Capital Fund, Local Initiatives Support Corporation (LISC), and United Fund Advisors (UFA).
A NMTC investor receives a tax credit equal to 39% of its total qualified investment in any community development entity, with the credit realized over a seven-year period – 5% annually for the first three years, and 6% thereafter.
Norman said the NMTC is a critical piece of the 2014 funding, which also includes investment from private foundations, corporations, donors, and the Federal Transit Administration through the Transportation Investment Generating Economic Recovery (TIGER) program.
Construction proceeds on the 3.3-mile streetcar traversing Woodward Avenue. Last month M-1 Rail awarded a $30 million contract to Inekon Group for six vehicles.