Government leaders continually struggle for funding. Budgets are constrained and critical needs are great. That creates great stress.
However, public officials have options. Lots of alternative funding is available for projects that result in certain positive outcomes. Alternative revenue sources can be accessed through a number of federally funded programs. And, while these are attractive funding options, many of the programs are not as well-known as they should be.
Much of the funding from federal programs comes from incentivizing private- sector investment. The programs offer tax incentives for investing in projects that meet certain criteria – projects that provide a desired outcome such as job creation, revitalization of underserved areas, rural upgrades, healthcare facilities, etc. If President Trump’s promised Infrastructure Plan becomes a reality, even more tax incentives for private-sector investment will be announced.
One of the very popular alternative revenue sources comes from New Market Tax Credits (NMTC). This program is designed to stimulate private investment in capital projects in underserved areas. It offers tax credits to investors. Administered by the Department of the Treasury, the program has awarded $50.5 billion in NMTC allocation authority to community development entities. And, at the end of last year, every $1 of federal funding leveraged another $8 of private investment. For projects in rural or underserved areas or projects that are related to healthcare, job creation, small business upgrades or affordable housing, the program is extremely valuable.
One project, the Northeast Ohio Revitalization Project, was launched by a private-sector partner and the Cuyahoga County Port Authority. The end result was that an underserved area was revitalized, several small businesses were upgraded and the region got a new high school and an urban community school.
Another project in Memphis, Tenn., involved the renovation of a 164,000-square-foot mall facility. It was redesigned to become a commercial truck center and a technical training facility. The City of Memphis and Shelby County worked together and the region will get a $20 million renovated facility and 205 new full-time jobs. Completion of this ongoing project is scheduled in December.
Another interesting revenue source is the New Business Tax Credits (NBTC) program that also incentivizes investment in certain types of projects. Most states have different criteria but the program provides much-needed revenue for local government leaders. Rural governmental leaders should know that 20 percent of all the funding is allocated for rural projects.
Chatham County in Georgia used New Business Tax Credits to incentivize investment in a new County Courthouse complex in Savannah. This project is also currently underway and will not be completed until 2019. It will result in not only a new courthouse, but also a new parking garage and a number of new retail spaces.
EB-5 Grant Funding, another federal program, makes funding available for various types of projects. Funding of up to $1 million is available for projects located in impoverished areas. Projects over $1 million can be located anywhere in the U.S. but the funding requires the creation of new jobs.
Cleveland, Ohio, was able to use EB-5 funding for a university hospital system expansion. Approximately $60 million was available to finance the construction of both a hospital and a cancer center. More than 3,000 jobs were created and the medical center is the only one in the region.
Funding is available. The sources outlined here are just the tip of the iceberg. Most of the federal programs incentivize private-sector investing. This is obviously the future. Here’s hoping that government executives throughout the country are aware of the resources available to them.