HR Ventures wins another $60 million in tax credits

By Philip Newswanger 

Inside Business

Here’s the concept: Low income residents buy shares in their community, whether it’s a shopping center or a mix of apartments and retail shops.

Bob Jenkins Jr., CEO of Hampton Roads Ventures, and his board of directors want to make that a reality next year.

HRV, a for-profit subsidiary of Norfolk Redevelopment and Housing Authority, won another $60 million in tax credits from the U.S. Treasury in October. The tax credits are meant to spur investment in impoverished urban and rural communities across the country.

Investors can claim up to 39 percent in tax credits for seven years, provided they abide by the regulations for investing in low income communities.

The mechanism can be as simple as investing in the community development entity, such as HRV, which, in turn, raises capital for investment.

Or it can be a complex deal structured as debt and equity ventures based on the tax credits.

HRV has won more than $100 million in tax credits since 2003 when the program was launched. It has spurred investment in rehabilitating properties, new hotels and community centers, all in economically distressed neighborhoods.

HRV was the first to combine funds from the New Markets Tax Credit program with both tax-exempt bond financing and historic tax credits programs, providing financing to local developers and nonprofits in order to help finalize community projects.

Two examples of HRV’s financing techniques include the redevelopment of Norfolk’s Historic Attucks Theatre & Cultural Center and Roanoke’s Dumas Hotel into contemporary entertainment centers.

In Norfolk, HRV leveraged $14 million in tax credits for the 110-room Spring Hill Suites hotel on Hampton Boulevard, on the campus of Old Dominion University.

Other Norfolk projects leveraged with tax credits include the Berkley Shopping Center and a boatel in East Ocean View.

What’s more, HRV invested $700,000 in the NCP Federal Credit Union, shoring up the nonprofit credit union in Berkley.

The money will be loaned to low income borrowers at low interest rates for vehicles, homes and commercial enterprises.

HRV’s activities are not confined to Norfolk or Virginia.

“Our service area is national,” Jenkins said. “We have probably five or six projects lined up; we have some very interesting projects in Mississippi.”

Jenkins also plans to chase after projects in which residents will invest.

The initiative was mentioned in HRV’s application to Treasury for another round of New Markets Tax Credits.

HRV “seeks to facilitate opportunities for residents of low income communities to become co-owners of the major commercial and real estate assets in their communities,” the application said.

“The community ownership concept is something I’ve worked for over a decade and was pleased to work with HRV to make it possible in our area,” said Rodney Jordan, vice chair of HRV.

Jordan said he and his brother have been working on a community-ownership model for a number of years where residents who invest in their community will see their wealth and the wealth of the community rise.

But it wasn’t until Jordan had a chance to tour the Market Creek Plaza in San Diego, which is based on community ownership, that he decided that the tax credits could develop this type of ownership.

“We looked at incorporating some of these community investment-based models into the application,” Jordan said.

“We not only meet the goals of the New Markets Tax Credits, but also the long-term sustainability and wealth of the communities,” Jordan said. “The community ownership model creates a new paradigm for 21st-century community development.”

In November 2006, San Diego residents purchased shares in a nearby development under the name of Market Creek Partners LLC, a company comprising the local community’s residents under an initial public offering, according to its Web site.

The Market Creek IPO raised $500,000 through a total of 423 investors, representing 600 individuals, couples, nonprofit and for-profit entities.