Norfolk redevelopment authority lands significant new federal funding source
By Nancy Chapman
		
NRHA’s New Markets Tax Credits will be used to help develop a shopping center in Norfolk’s inner-city Berkley neighborhood. Standing on the shopping center site are (l-r) Hampton Road Ventures executives Stephen Blair and Bob Jenkins; Norfolk City Councilman Paul Riddick; NRHA Board Chairman W. Sheppard Miller III, and NRHA Executive Director Ernie Freeman.			
			
Few people at the Norfolk Redevelopment & Housing Authority took its deputy executive director seriously when he started tossing around the phrase New Markets Tax Credits.
But when NHRA turned out to be the nation’s only redevelopment and/or housing authority to win an allocation of them, Robert K. Jenkins Jr. turned out to be man of the hour.
“We didn’t realize what Bob was on to at first,” said NRHA Executive Director Ernest Freeman. “Then again, Bob often helps us break new ground.”
In March 2003, after what is known to be an arduous application process and rigorous competitive review, the U.S. Treasury Department awarded NRHA a $15 million allocation of New Markets Tax Credits during the program’s first round. The agency was one of only 66 organizations chosen from the 345 that applied, as well as the only entity in Virginia to win an allocation.
A tax attorney, Jenkins quickly realized that the new federal program, created through the Community Renewal Tax Relief Act of 2000, could be an innovative source of funding for NRHA development projects.
Albert L. Elder III is interim commissioner for the D.C. Department of Banking and Financial Institutions and has known Jenkins for 20 years.
“Bob has demonstrated a history of developing creative approaches for generating significant capital for historically underserved communities,” Elder said.
NRHA’s executive team also knew that federal and state funding for community development was declining every year.
“We’re in the business of building neighborhoods, not just houses,” Jenkins explained. “So the question we were asking was, how do we continue to serve our neighborhoods well with fewer public dollars?” He saw the NMTC program as a much-needed incentive to attract private-sector investments into inner-city developments.
“It was designed to stimulate economic growth and job opportunities in low-income neighborhoods,” Jenkins explained, “areas that historically have had little access to low-interest development capital.”
The NMTC program focuses primarily on commercial development opportunities. Other eligible categories include healthcare centers, charter schools, daycare centers, and small business loans. Raymond Christman, president of the Federal Home Loan Bank of Atlanta, described the NMTC program as “the biggest stimulus for economic development in the last 20 years.”
As required by the Treasury Department, NRHA created a community development entity, Hampton Roads Ventures, as the company to manage the NTMC allocation and work with the private-sector investors. Jenkins is managing director of Hampton Roads Ventures; Stephen Blair, NRHA’s programs planning manager, is operations director. Blair now spends most of his hours handling the myriad details that go into NMTC administration.
Today, financial experts consider inner-city communities to be promising markets for business investment. According to the Boston Consultant Group and the Initiative for a Competitive Inner City, inner-city consumers constitute $100 billion in annual retail buying power. But in many inner-city neighborhoods, unmet retail demand exceeds 25 percent.
New Markets Tax Credits stimulate investment in these underserved neighborhoods by providing a 39 percent tax credit, reaped over a seven-year period, to taxpayers that make equity investments in community development entities like Hampton Roads Ventures. About 40 percent of U.S. census tracts are eligible for NMTCs.
				
	University Village at Norfolk’s Old Dominion University is one of the community development projects that will benefit from the 2003 New Markets Tax Credits allocation won by Norfolk Redevelopment & Housing Authority.			
				
In a speech at a recent New Markets Tax Credits Investors Conference, the director of the Treasury Department’s Community Development Financial Institutions Fund explained that NMTC allocation decisions are based solely on merit.
“This is a process about who can perform the best in helping to create jobs and economic opportunity in low-income communities,” Tony Brown said. 
“This is a process about who can forge the best public/private partnerships focused on improving America.”
NRHA’s $15 million allocation will support four economic and job opportunity initiatives in Norfolk, chosen with input from the city of Norfolk and community partners: retail development in the Berkley and Old Dominion University Village shopping centers; development of a family fitness and recreation center in the Broad Creek revitalization area; and support of economic development loans and small business loans in several neighborhoods.
Gary Perlow is a principal with the national CPA firm of Reznick Fedder & Silverman, which specializes in community development through the NMTC program and has advised Hampton Roads Ventures on use of the tax credits.
“Consistent with the U.S. Treasury’s initiatives for this project, the goal here is to diversify the allocation through multiple investments,” Perlow said. 
“This will enable Hampton Roads Ventures to have a significant community impact. Another plus is that Jenkins and Blair are aggressively working to close these deals, which is what it takes to build the NMTC program into a successful long-term business.” In March, Hampton Roads Ventures will learn if it wins an allocation in the NMTC program’s second round.
The distinction of winning the tax credits is far from the first time NRHA has earned national attention in its 64-year history serving the citizens of Norfolk. During the 1990s, the agency received the Urban Land Institute Award for the nation’s best large-scale residential development – Ghent Square – and the Presidential Design Award for revitalizing the Diggs Town public housing community. In 2002 NRHA was honored with the International Downtown Association’s Economic Development Award for leading the creation of the Norfolk campus of Tidewater Community College. Also in 2002, NRHA was recognized by national newspaper columnist William Raspberry for its youth entrepreneurial programs.
In November 2003, Jenkins made a presentation in Richmond at the Federal Reserve Bank’s workshop, “New Markets Tax Credits: The Partnership Connection.” Since then, he has heard from leaders of public and private community development organizations across Virginia who are interested in bundling projects statewide in a third-round to be filed by Hampton Roads Ventures later this year.
Kenneth Powell, a senior vice president and community development finance expert based in Legg Mason’s Richmond office, describes New Markets Tax Credits as a 21st century solution to economic growth in inner-city communities. 
“By making the most of this federal program in its first year,” Powell said, “NRHA proves not only that it’s a leader in its industry but that its leaders are doing everything possible to serve their customers.”

About the Author
Nancy Chapman is senior communications specialist for Norfolk Redevelopment & Housing Authority.