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The city of Danville has been awarded $20 million through the federal New Markets Tax Credit program. The city will use the tax credits to attract private investment capital for real estate and business projects that produce jobs and leverage private investment.
Redevelopment of the River District could be a major beneficiary, said Linwood Wright, a consultant with the Danville Office of Economic Development.
“The availability of New Market Tax Credits provides an excellent opportunity for larger development projects in Danville to get adequately funded,” Wright said Monday. “Although tax credits generally require a significant amount of effort on the part of the developer, the net benefit of such credits often allows projects that might not otherwise be economically feasible to be successfully implemented.”
Wright thanked U.S. Sens. Mark Warner and Tim Kaine and U.S. Rep. Robert Hurt for their assistance in securing the allocation. Danville was one of 87 designated entities in 32 states and the District of Columbia to receive allocations. A total of 310 entities applied for credits.
Congress established the program 14 years ago. Administered by the U.S. Department of the Treasury, the program permits investors to receive a credit against their federal income taxes for making qualified equity investments in designated entities. In turn, entities must re-invest the funds by making a loan or equity investment in a project or business.
“For Danville to have and to control its own New Markets Tax Credit allocation is extremely valuable,” Wright said.
As a designated entity, Danville will be required to offer financing with non-traditional or more flexible terms than conventional financing. As a result, borrowers benefit from below market interest rates and underwriting terms.