Restoring the Great Lakes: What Opportunities from FY 2010

Appropriations, ARRA and the Bailouts?

Charlie BartschVice President/Senior Fellow – ICF International

Great Lakes Metros and the New Opportunity SummitBuffalo, NY – June 19, 2009

www.icfi.com

• Private sector – Lenders; also developers, investors, transaction

support partners

• Public sector– Federal, state, and range of local governments

• Quasi-public sector– Development, port, housing authorities

• Non-profits– CDCs, CBOs, universities, cultural-social institutions

Finding the Right Financing Mix for Sustainable Great

Lakes Revitalization: Who Should Play?

Financing Programs: A Federal “Laundry List”

Loans EDA capital for local revolving loan funds HUD funds for locally determined CDBG

loans and “floats” EPA capitalized revolving loan funds SBA’s microloans SBA’s Section 504 development company

debentures EPA capitalized clean water revolving loan

funds (priorities set/ programs run by each state)

HUD’s Section 108 loan guarantees SBA’s Section 7(a) and Low-Doc programs USDA business, intermediary, development

loans

Grants HUD’s Brownfield Economic Development

Initiative (BEDI) HUD’s Community Development Block

Grants (for projects locally determined) EPA assessment, cleanup grants EDA public works and economic adjustment

Grants (continued) DOT (various system construction, preservation, rehabilitation programs) Army Corps of Engineers (cost-shared services) USDA community facility, business and industry grants

Equity capital SBA Small Business Investment Cos. Tax incentives and tax-exempt financing Targeted expensing of cleanup costs Historic rehabilitation tax credits Low-income housing tax credits Industrial development bonds Energy efficiency construction credits

Tax-advantaged zones HUD/USDA Empowerment Zones HUD/USDA Enterprise Communities

What’s Been Used to Support Sustainable Redevelopment?

“Big blast” of ARRA is over – resuming

more traditional funding levels • Promoting competitive advantages in Great Lakes communities

– Distinctive older structures– Waterfront locations– Educated/adaptable/trainable work force– Breadth of supportive institutions – colleges, non-profits,

CDCs • Exploring creative ways for federal funding to support them

– Usual suspects – CDBG, EPA, EDA, DOT, training funds

– Unexpected -- ACE, CZM, USDA

It’s all about linkages...

It’s all about leveraging...

Appropriations and Budget Proposals –

What impact of FY2009 funding provided by Congress, FY 2010 Obama Administration requests on efforts critical to Great Lakes communities?

EPA brownfields appropriations

FY 2009 -- $145.7 million • $97.0 million for project grants• $48.7 million for state VCP support

FY 2010 proposed -- $149.5 million • $100 million for project grants • $49.5 million for state VCP support

EPA LUST/cleanup activities FY 2009 -- $112.6 million FY 2010 proposed -- $113.1 million

HUD/Community Development Block Grant appropriations

FY 2009 -- $3.9 billion• includes $3.64 billion in CDBG formula grants FY 2010 proposed -- $4.45 billion • includes $4.19 billion in CDBG formula grants • includes $150 million Sustainable Communities Initiative• allocation formula change being prepared

EDA

FY 2009 – $230 million (key programs) • planning grants -- $31 million• public works -- $148 million• economic adjustment -- $35 million • climate change initiative -- $16 million

FY 2010 proposed – $245 million (key programs) • planning grants -- $31 million• public works – $73 million• economic adjustment – $125 million • climate change initiative -- $16 million

Most common include: • Historic rehabilitation tax

credits

• Low income housing tax credits

• New Markets tax credits

• Brownfield cleanup expensing

Federal tax incentives that can be linked to sustainable

development – at little or no cost to the community or

project….

Increase project’s internal rate of return Ease borrower’s cash flow by freeing up

cash ordinarily needed for tax payments Some credits can be sold for cash, or

syndicated to attract additional investment Credits attract different players to the

redevelopment table (i.e., passive investors) Not subject to competitive public grant

process – you qualify, you win!

Advantages of Using Tax Incentives in Revitalization

Projects

• New Markets Tax Credits -- new $3.5 billion allocation for 2009 *

• Brownfield cleanup expensing extension (to 12/31/09)• Energy efficiency incentives

– Authorized $800 million in clean renewable energy bonds (CREBs) *

– Authorized $800 million in energy conservation bonds *– Renewable energy tax credit (thru 1/1/11)– Green building/sustainable design project incentives

* Increased by stimulus

New opportunities from the 2008 bailouts– what could be applied to Great Lakes

revitalization efforts?

Neighborhood Stabilization Program -- $4 billion nationally under NSP-I

• New York state allocation -- $54.6 million• 6 NY jurisdictions getting additional $45.7 million • Eligible activities include:

– Establishing land banks – Demolishing blighted structures

• NSP II -- $2 billion via stimulus– Distributed competitively; RFP due June 12

New opportunities from the 2008 bailouts– what could be applied to Great Lakes

Revitalization efforts?

American Recovery and Reinvestment Act –

What leveraging opportunities remain for Great Lakes communities in the stimulus funding ?

New opportunities from the stimulusClean Water RLFs -- $4 billionDrinking Water RLFs – 2 billion • state matching waived; priority for “green” projects * state to target 20% of allocation, if possible • states can identify brownfield/vacant site needs

Brownfield targeted assessments -- $8 million• communities can request assessment help independent of regular grant cycle for sites, projects with reuse potential• distributed by EPA regional offices

New opportunities from the stimulusSBA -- $730 million • increase guarantee levels (to 90%)• waive guarantee fees (thru end of 2009)• $255 million for a new loan program for small business debt stabilization loans (up to $35,000) • expand Section 504 to allow refinancings

EDA – $150 million• to address economic dislocation, including corporate downsizing

New opportunities from the stimulus

New Markets Tax Credits -- $3 billion in additional allocations• adds $1.5 for FY 2008 allocation (to $5 billion) • adds $1.5 billion to FY 2009 allocation in Wall Street rescue (to $5 billion)

Industrial development bonds• expanded eligible activities in 2009, 2010

* manufacturing related/supportive projects

New opportunities from the stimulusRelated opportunities with opportunities to “connect the redevelopment dots” • weatherization assistance -- $5 billion • energy efficiency/conservation block grants -- $3.2 billion• authorizes new taxable “recovery zone” bonds – $10 billion and tax-exempt “recovery zone facility” bonds -- $15 billion • adds $800 million in authority to CREBs (to $1.6 billion) • adds $2.4 billion in authority to energy conservation bonds (to $3.2 billion)

Thank you!

If you have questions…If you need additional information….

Charlie Bartsch cbartsch@icfi.com

(202) 862-1134