Arkansas Capital Corporation (ACC) has been awarded $35 million allocation from the U.S. Department of Treasury through its Community Development Financial Institutions Fund (CDFI). Arkansas Capital Corporation was one of only 73 applicants selected to receive a portion of the $3.5 billion in New Markets Tax Credits (NMTCs) this funding phase.
This allocation brings Arkansas Capital’s total NMTCs funding to $300 million. The organization has received six allocations since NTCMs were first awarded in 2003. “We’ve been successful five other times in that program to the tune of $265 million, so that will put us at $300 million in market allocation,” Sam Walls, president of Arkansas Capital Corporation says.
The Community Development Financial Institutions Fund (CDFI) is a fund that allocates tax credits to Community Development Entities (CDEs), like Arkansas Capital Corporation, to make investments and/or loans within distressed areas. The New Markets Tax Credit Program is designed to help “economically distressed communities attract private investment capital,” according to the CDFI. These tax credits help projects fill investment gaps and enable investors to make larger deals than they previously could.
Obtaining NTCMs has enabled Arkansas Capital Corporation to make significant economic development deals throughout the state. “Through the $265 million in NMTC allocations we’ve received in the previous five rounds, Arkansas Capital Corporation and our partners have produced 1,777 direct jobs and 924 construction jobs in the most distressed census tracts in our state,” Walls said in a statement. “These jobs are part of more than 30 projects deployed so far. With our local and state partners, we’ve been able to finance rural manufacturing operations, nonprofit, and educational facilities; and rehabilitated historic buildings in abandoned Main Street corridors,” he said.
Looking forward, the AAC does not have a specific set of projects ready to announce, Walls says, but the decision is expected to be made soon. The application process prevents organizations from pinpointing specific projects ahead of time because of the length of the application timeline.
“It is a very thorough, long application which quantifies your impact and the types of deals you would do. It takes them a while to get through it,” Walls says. “With the timeline, often, the projects that you think you would help, aren’t around or have already moved on by the time you get an allocation like this
However, the projects will likely focus on economic development and education. “Education and economic development are two boxes were two boxes that we look very hard,” Walls says.
“We’ll look at the eligible Census tracts in Arkansas, we’ll talk to AEDC, local economic developers, business leaders and chambers, and find out what eligible projects are happening in those communities,” he says. “We’ll look for the ones are viable and ready to move forward but for the capital side. We’ll look at the impact…what does this do for that community and that Census tract?”
Eligible projects are determined by the Census tract they are in and the type of business requesting funding. Certain types of businesses, such as gambling, massage parlors, golf courses, liquor stores and more, are ineligible to receive funding.
The projects receiving funding from the AAC are expected to be decided on within the next 60 days and closed on by the end of the fall. Walls says there will likely be four to six deals.
Since 2010, AAC has injected $443 million into Arkansas, creating 7,300 jobs and has had a $2.3 billion impact, according to an Arkansas Capital release.