Tax credit lets Phoenix pave way to area lending

Phoenix will have access to $53 million in tax credits that it will use to bolster businesses and non-profit organizations in low-income areas.

The New Markets Tax Credit allocation will go to the Phoenix Community Development and Investment Corp., a non-profit started by the city. It, in turn, will work with local banks to make low-cost loans for the purchase, expansion or renovation of commercial and non-profit buildings. The program is operated by the U.S. Department of the Treasury.

Phoenix previously received two tax-credit grants: $170 million in 2002 and $40 million in 2008.


"I'm really glad Phoenix has gotten another round of funding," said Greg Heiland, president of ValuTek, which outfits high-tech clean rooms. "Having products like this makes it more appealing for high-tech businesses and high-end jobs."

ValuTek took advantage of a $4.4 million loan to buy a vacant Motorola building in east Phoenix that had a clean room, enabling the company to customize products for its customers.

"It's given us a competitive advantage in the market," Heiland said.

The loan enabled ValuTek to hire 15 to 20 new employees.

The money has been used for projects as large as the remodeling of Christown Spectrum Mall at 19th Avenue and Bethany Home Road and the expansion of the Phoenix Biomedical Campus downtown. Those projects received loans of $37.5 million and $25 million, respectively.

It also has gone to much-smaller projects, including a $700,000 loan to Desert Taco at 19th and Northern avenues, and a $2.4 million loan to 3-Dawg Real Estate for the purchase of a building near Cave Creek Road and Greenway Parkway.

Several non-profit organizations have taken advantage of the loans, including Arizona Bridge to Independent Living, which borrowed $16 million for a new Disability Empowerment Center. Phil Pangrazio, its executive director, said 11 disability agencies use the new building.

"It's a good deal, it really is," he said of the loan program.

Don Keuth, president of the Phoenix Community Alliance and a member of the Phoenix Community Development and Investment Corp. board, said the corporation has been able to make $276 million in loans, with an economic impact of double or triple that.

Roberto Franco, deputy director of the Phoenix Community and Economic Development Department, is president of the corporation. He said the loans result in several thousand new or retained jobs.

Many of those jobs are in the distressed construction industry; loans supported the building of the downtown Phoenix CityScape, creating an estimated 5,400 positions.

The loans will focus on parts of the city where the poverty rate exceeds 30 percent or the income level is at 60 percent or less of the metro area's norm. That includes a broad swath of central, west and south Phoenix, the Sunnyslope area, the Palomino neighborhood and a large area northeast of Loop 101 and Interstate 17, near Deer Valley Airport.

The loans are issued for seven years.

Several of the loans already have been repaid. If they are repaid early, the money can be reused for additional lending.

by Michael Clancy The Arizona Republic Mar. 12, 2011 12:00 AM





Tax credit lets Phoenix pave way to area lending