Paseo Verde and New Markets Support Company
7 Aug 2012
PASEO VERDE AND New Markets Support Company
In the early 1990s, Philadelphia’s Eastern North neighborhood was drained of hope. Known to residents as the Badlands, ravaged in the name of urban renewal, it had lost factories, jobs and housing. A 2001 survey found almost 2,200 vacant lots and empty building over several dozen blocks. Drugs and crime were rampant, and, in the words of one resident, the area was “old, abandoned, [and] ugly.”
But twenty years ago, a remarkable partnership between Local Initiative Support Corporation (LISC) and a community group, the Asociation Puertorieuenos en Marcha (APM) began to turn things around. LISC has invested $1 billion in Philadelphia since 1981, connecting community groups and organizations with the resources they needed to rebuild distressed neighborhoods. In Eastern North, LISC and APM worked together to bring new life to the community, meeting by meeting, block by block. To date, they have created almost 300 affordable homes and apartments along neat, tree-lined streets. Employment is on the rise, crime is down and children are back in the playground where drug dealers no longer feel safe to congregate.
The crowning achievement of this partnership is a $47 million project called Paseo Verde, which broke ground earlier this year using $31.8 million of New Market Tax Credits (“NMTC”) financing along with $15.4 million of Low Income Housing Tax Credit financing. Paseo Verde, which will seek LEED certification, is a mixed-use development with rental apartments, retail space, green roofs, a health clinic, a community center. It will also house a Financial Opportunity Center where residents can learn job skills that will help them raise their income, lower their expenses and build assets both for themselves and for their community.
Because it sits right next to the Temple University commuter train station, Paseo Verde represents a transit-oriented development (TOD) that links neighborhood revitalization with a transportation hub. TODs are becoming a significantly useful tool for neighborhood recovery. Designed to open up communities, they create a healthy two-way flow of population and resources between and among affluent and struggling neighborhoods. Philadelphia LISC’s director, Andrew Frishkoff, calls Paseo Verde “a bridge, a development right on the edge of what had been a barrier between the university and the neighborhood.” He hopes it will connect residents to jobs, especially at the Philadelphia International Airport, where the city is embarking on a 15-year, $6.5 billion expansion. “People in this neighborhood - if they could get the right training - would be well-positioned to get those jobs.”
This landmark development could not have happened without financing through the federal NMTC program, and about a third of this financing -- $10 million -- was provided by the New Markets Support Company (NMSC), a LISC affiliate. Paseo Verde is LISC’s first New Markets project in Philadelphia. Kevin Boes, NMSC’s President and CEO, describes the crucial importance of tax credits to distressed communities like Eastern North: “They enable large-scale development, by connecting private investors to the future of communities in which they might not otherwise see promise. They give financial institutions and other corporations a major stake in the recovery of low-income neighborhoods.”
Simply put, every dollar of tax credit allocation leverages $8 in development capital. Tax credit financing will bridge the gap in Paseo Verde’s capital budget and provide terms flexible enough to keep the project viable over the long term. “Now we have something on a scale to attract more investment and take the neighborhood to the next level,” Boes explains, citing Paseo Verde as the newest of several Transit-Oriented Developments that LISC has financed using NMTCs.
Getting to groundbreaking was a complicated, year-long process. As Boes describes it, “There was a long history of talking, pulling together bidders and lenders.” By the project’s completion in May 2013, all involved are confident that it will be a success. The key?: New Markets Tax Credits, applied to a development that grew out of a well-grounded, creative partnership.
Around the Paseo Verde construction site, changes are already visible. There’s a new vibrancy in the air. Temple University students are finding their way into the neighborhood they once avoided; private investors are eying properties. The community workers at APM are happy to see healthy diversity and excited at the prospect of new networks that will enrich the existing population. “This is going to be a catalyst,” says APM’s Rose Grey. “Once this is done, the marketplace changes. But it will not change the face of the community.”
Article Type: News