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NEW YORK CITY-The Rose Urban Green Fund, the community development entity of Jonathan Rose Cos., has been allocated $20 million through the $5-billion New Markets Tax Credit program, an allocation that the RUGF’s Nicole Sherwood says will be used to foster as many as three projects in targeted areas.

“We’re specifically interested in green educational, cultural and community facilities,” Sherwood, executive director of the RUGF, tells GlobeSt.com. Examples would be charter schools and arts exhibition and performance space. The fund is also interested in green incubator space as well as retrofits and re-tenanting of existing class B office space, she adds. And in keeping with the parent company’s overall mission, the RUGF focuses on “exemplary model” projects that can be replicated, incorporating job training services, healthier green working and learning environment, lower transportation costs and reduced greenhouse gas impact in low-income, distressed areas.

Sherwood explains that as a CDE, the RUGF acts as an intermediary through which tax credits are created. “It’s actually third parties, which will be mainly banks, that will be the NMTC investors and provide the funds to the projects,” she says. “During the application process, we were very pleased to receive letters of interest from US Bank, JPMorgan Chase, Wells Fargo, Capital One and First Bank. We look forward to working with them on deploying our allocation.”

The RUGF says it will use its NMTC allocation to provide below-market debt and equity with flexible features that include extended interest-only periods, no origination fees and lower debt service coverage requirements for eligible projects. Through traditional loans and NMTC equity investment, the allocation will provide $20 million for projects for low-income communities in the RUGF’s target states of California, Colorado, Connecticut, New Jersey, New Mexico, New York and Washington State. However, Sherwood says, “The value of those projects is likely to be greater.”

At current market values, the NMTC works out to about 25 cents of subsidy for every dollar allocated to the project, Sherwood says. So with the RUGF’s $20-million allocation, $5 million will be provided in subsidy, providing what Sherwood calls “critical-gap financing without which these projects probably could not proceed.”

That will entail the RUGF investing in two or possibly three projects, each with a dollar value of $15 million to $25 million. “We could actually invest in larger projects–$50 million or more–if we partnered with other CDEs to provide allocations,” says Sherwood.

The NMTC program, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making equity investments in CDEs. To date, more than $14 billion of private-sector capital has been invested through the program into urban and rural communities throughout the country.

Jonathan Rose Cos. was one of 99 applicants nationwide to receive funding during this application round. It marks the first NMTC allocation the company has received, and Sherwood says she hopes it’s the first of many. However, the RUGF has participated in a number of other federal programs, including Community Development Block Grants.

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