| The Port Orchard City Council recently approved a measure that will allow businesses developing, buying, or remodeling in Port Orchard to take advantage of a special federal tax incentive program that offers below-market loans. Banks or other organizations that invest in the businesses receive 39 percent tax credits over seven years.
Kitsap County Consolidated Housing Authority administers the New Market Tax Credit program through a private subsidiary, NMTC Facilitators I, LLC. It has offered the tax credits to businesses who want to stay or relocate to downtown Bremerton for over two years. The program helped a non-profit social service agency save over $500,000 in interest costs on its $5.6 million headquarters, and a developer save over $260,000 in interest on a $1.5 million loan to remodel a two-story office building.
“As a board member of KCCHA, I’ve seen first hand what this program has done for Bremerton redevelopment,” Port Orchard Mayor Kim Abel explained. “So I asked our city council if they were interested in bringing the program here. The US Department of the Treasury awarded NMTC Facilitators $40 million in New Markets Tax Credits in May 2004, which was the second largest award on the West Coast.
Lenders receive the tax credits if they offer low-interest loans to new businesses that use the funds to locate or expand in the eligible low income census tracts. For businesses looking to locate in downtown Port Orchard, it means acquiring a loan at interest rates 1.5-3.0 percent lower than the going market rate. The interest payments are interest-only for 7 years.
“The intent of this program is to help businesses either remain or come to Port Orchard,” Abel said. “This program has been successful in Bremerton, Tacoma, and Seattle, and we want to add it to our toolbox of incentives for businesses to move and stay in Port Orchard.”
The city council’s action completed the final steps in the process that will allow NMTC Facilitators to offer New Markets Tax Credits to businesses looking to remain in or move to Port Orchard. In February, the City Council took the first step, by passing an ordinance authorizing the KCCHA to serve as the city’s Public Development Authority.
The US Congress created the New Markets Tax Credit program in 2000 to help create jobs and stimulate private investment. The US Treasury Department administers the program. For more information on the New Markets Tax Credit program, visit www.kccha.org, www.kitsapnmtc.com or call Roger Waid with the Kitsap County New Markets Tax Credit Facilitators at (360) 337-7219. | 