Los Angeles – Destination Crenshaw, the largest public/private Black art program and reparative development project in the United States, has been awarded a $30 million allocation of New Markets Tax Credits, an innovative federal program designed to direct private investment to underserved communities. Four financial firms supported Destination Crenshaw in the successful effort.
The $30 million in tax credit allocation ultimately will yield over $6 million for Destination Crenshaw, which will use the funds for construction and operating costs.
“When it is completed, Destination Crenshaw will be the most dynamic expression of Black art and culture in the United States,” DC President Jason Foster says. “But it is much more than an arts project; it is designed to be an economic engine for the surrounding neighborhoods in South LA. This investment will allow us to direct resources to expand our support for small businesses, hire Black construction workers onto the project and provide commissions and training opportunities for Black artists from South Los Angeles.”
The NMTC partners include lead investor US Bank, Local Initiatives Support Corporation National, Lendistry and AFL-CIO/Building America. The allotment will net DC a total of $5,975,803. Of that sum, a portion will fund construction of the project’s planned anchor attraction, Sankofa Park. The remaining amount will provide working capital for DC to scale its operational and programmatic capacity through the end of 2022.
“I’m deeply appreciative of our partners’ investment in the Crenshaw community and their leadership in providing new markets tax credits to Destination Crenshaw,” says Foster. “We hope that this begins a long-lasting relationship with each of them investing in our community, our residents and our entrepreneurs.”
The federal New Markets Tax Credit program was designed to increase the flow of private sector capital to businesses, nonprofits, community facilities and other important projects in communities that have endured historic disinvestment. It provides tax credits to investors in qualifying real estate and business ventures. The U.S. Treasury Department awards the credits through its Community Development Financial Institutions Fund.
The buyers, generally large banks and corporations with significant federal tax liability, purchase the credits at a discount, and the proceeds go to the project, administrative costs and various fees.
Other South Los Angeles community-based entities have received the funding in the past, including the Debbie Allen Dance Academy, Community Eye Center and Youth Orchestra Los Angeles. Destination Crenshaw, however, was the only recipient in the latest round.
Competition for funding is keen, and applicants must successfully undergo a rigorous three-month super audit of their finances.
The credits are given to ventures with a track record of supporting underserved communities. At the outset of the pandemic, Destination Crenshaw formed a sister venture, DC Thrive, that has helped dozens of local businesses obtain federal loans and other resources to survive, and even expand, during a time of widespread economic distress.
Destination Crenshaw ultimately will comprise: 6 pocket parks and landscaping with 800+ newly planted trees; 100+ works of public art commissioned by Black artists; support for more than 40 local businesses and nonprofits; the creation of 60 new permanent jobs and 600 construction jobs throughout the project, among other initiatives.
The project’s financial partners expressed unanimous commitment to the people who live in the Crenshaw area and their ventures.
“U.S. Bank is committed to supporting projects that drive racial equity, and we’re excited about this unique opportunity to support the Crenshaw community while also spotlighting Black artists and Black history,” said Laura Vowell, business development director with U.S. Bancorp Community Development Corporation (USBCDC), the community investment and tax credit division of U.S Bank. “It’s why we’re not only supporting Destination Crenshaw as a NMTC investor but bringing NMTC allocation through our own community development entity.”
“Destination Crenshaw is a groundbreaking cultural effort that will revitalize the South LA community through supporting small businesses and fostering the Black LA creative economy,” said Tunua Thrash-Ntuk, Executive Director of LISC LA. “LISC LA is proud to be a key partner on this project that creates these ladders of economic opportunity, and we look forward to continuing this work through the development of Destination Crenshaw and beyond.”
“Destination Crenshaw is a great example of New Markets Tax Credits being used to invest in local, community-driven initiatives” says Donna Nuccio, VP of NMTC Investing at NMSC, “we are honored to work in partnership with LISC LA to bring NMTC allocation to such a dynamic project that creates economic opportunity while embracing the rich culture and community of South LA.”
Building America CDE
“Destination Crenshaw is an exemplary reflection of what community action can accomplish. Building America is proud to be part of this project and its outcomes, which honor the community’s rich Black culture by supporting neighborhood businesses, promoting local artists and creating pathways to careers in union trades.”
“Destination Crenshaw is an innovative investment and game changer for how infrastructure projects can be positioned to support and sustain community development,” says Jeffrey Monge, managing partner of Monge Capital.
What is the New Markets Tax Credit program?
The New Markets Tax Credit was designed to increase the flow of private sector capital to America’s poorest communities. Rather than providing a direct federal grant to projects, the program marshals the private sector resources by providing an incentive for taxpayers to invest in community development organizations with a proven track record of impact in low income communities. These organizations put that capital to work, financing everything from manufacturing expansions to health clinics and daycare centers. Since 2000, the program has delivered $110 billion to more than 6,500 projects, creating over a million jobs.
Who Benefits from the NMTC program?
NMTC projects are designed to create jobs and address unmet needs in low income communities. For example, the program finances health care facilities in medically underserved areas, grocery stores in areas without access to fresh food and manufacturing facilities in communities hit hard by the multi-decade decline of American manufacturing. In Destination Crenshaw’s case, the DC NMTCs deal is centered around five central components: a culturally stamped infrastructure project, a transformative union training and employment program, a local small business resiliency program, environmental equity and a Black artist job program.