Project funded via tax credit

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A U.S. Treasury Department program filled a financing gap to get work started this week on an affordable housing complex and day care center in Adams Morgan.

Called the New Markets Tax Credit, the program gives lending institutions tax credits when they loan money to redevelop properties in low-income neighborhoods.

PNC Bank loaned $3 million under the program to help developers pay for renovation of the 90-year-old Ontario Court building at 2525 Ontario Road NW.

"This particular project doesn't work without it," Jim Knight, president of Jubilee Housing, said about the financing arranged under the New Markets Tax Credit.

Jubilee Housing is a faith-based nonprofit organization founded in the District in 1973 to provide affordable housing and support services to low-income residents in the Adams Morgan area. The organization purchased Ontario Court in 1980 and has managed it as affordable-housing apartments since then. Years of wear and tear took their toll, leading to the need for renovation.

Its $9 million project involves renovating the 29,700-square-foot building to include 27 apartments and 4,000 square feet of space for an early childhood development center. The center would provide day care and early education for as many as 46 children.

One-third of the cost is financed by a low-interest loan from the D.C. Department of Housing and Community Development. Another third comes from a traditional loan from PNC Bank.

Initially, Jubilee Housing was struggling with a "gap" to find the rest of the money, Mr. Knight said.

The gap was filled by partnering with Enterprise Community Investment, Inc., a Columbia, Md.-based company that arranges financing for affordable housing and community development projects.

Enterprise Community Investment acquired the Treasury Department tax credit, then sold it to PNC Bank. Enterprise Community Investment then acted as the broker for the low-interest loan to Jubilee Housing.

"It was important to us to find partners for this sophisticated form of financing," Mr. Knight said.

The New Markets Tax Credit was approved by Congress in 2000. After a start-up period, large lending institutions made markets in them beginning around 2004.

Among projects funded in the District by the program are redevelopment of the Atlas Performing Arts Center, a Giant Food Store in Southeast Washington and the Thurgood Marshall Academy charter high school.

PNC Bank is getting a 39 percent tax credit on their investment in the Ontario Court redevelopment for the next seven years.

"It was a unique solution to a unique transaction," said Craig Pascal, PNC Bank's territory manager for community development banking.

"It brought $3 million into a $9 million deal. Without it, it would have been difficult for the project to go forward," he said.

The redevelopment is Enterprise Community Investment's first project in the District but not its last.

"We'll continue to look for projects," said Suzanne Brown, the company's director of structured finance.

• Property Lines runs on Thursdays. Call Tom Ramstack at 202/636-3180 or e-mail tramstack@washingtontimes.com.