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October 31, 2009
How Does A Sports Arena Qualify For $55 Million In Federal Tax Credits?
The Federal Government has just given $55 million to "Forest City Community Development Entity, LLC" headquartered in Brooklyn.
It is not clear if it is a $55 million "tax credit" or if it is a straight out grant. We're attempting to find out.It appears to be a $55 million "tax credit."It is also not clear if all the money is for Atlantic Yards, but one would assume most of it is since Atlantic Yards is the only supposedly vertical construction project the parent company Forest City Enterprises is undertaking (according to them). We're attempting to find out.
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The money comes from the Community Development Financial Institutions Fund. Here is an overview of what that Fund does:
Through monetary awards and the allocation of tax credits, the CDFI Fund helps promote access to capital and local economic growth in urban and rural low-income communities across the nation.
Through its various programs, the CDFI Fund enables locally based organizations to further goals such as: economic development (job creation, business development, and commercial real estate development); affordable housing (housing development and homeownership); and community development financial services (provision of basic banking services to underserved communities and financial literacy training).
Funny, but it doesn't mention the most expensive arena in the history of humankind.
Forest City Community Development Entity, LLC, a Brooklyn-based subsidiary of Cleveland-based Forest City Enterprises, has been awarded $55 million in federal tax credits for "real estate retail development projects located in highly distressed low-income communities." (See pages 7 and 72 of this PDF.)
Do the tax credits "seem to be for Atlantic Yards," as Develop Don't Destroy Brooklyn suggests?
Yes.
Updated: While I initially wrote that I doubted that the credits would be predominantly used for AY, Empire State Development Corporation (ESDC) spokeswoman Elizabeth Mitchell confirms that the description below is "a summary of the State's agreement to allocate $55 million of State bond volume capital to the Atlantic Yards project. It is not the State providing money – rather it is the State allowing some of the capital for this project."
(The state only has a limited amount of "volume cap" for tax-exempt funding. It's unclear whether the bonds would be used for the arena, for housing, or associated retail.)
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While Atlantic Yards--as DDDB notes--may be Forest City's only new project, it's not like other projects aren't ongoing, such as East River Plaza. Hence the mention of New Mexico, home of the ongoing Mesa del Sol project, or so I thought.
Then again, wouldn't it be tough to argue that Atlantic Yards--unlike, say, East River Plaza--would be located in a "highly distressed low-income communit[y]"?
I've asked the ESDC how exactly AY qualifies. (Remember, $1217/sf condos in 2015!)
Posted by steve at October 31, 2009 8:01 AM