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Large-Scale Telemedicine Comes to Ohio via Tax Credit Financing from National New Markets Fund and U.S. Bank
Project to Connect Rural and Urban Health Care Providers is Among First to Use
New Markets Tax Credits (NMTCs) for IT Infrastructure
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Los Angeles and Cleveland, Ohio --National New Markets Fund, LLC --a New Markets Tax Credit (NMTC) fund created by Los Angeles-based Strategic Development Solutions (SDS) and Boston-based Economic Innovation International, Inc. --has closed an investment of $7 million in NMTC allocation with U.S. Bank to complete funding for the Next Generation Health Care telemedicine project in Northeast Ohio.
When it is completed in February 2011, the $25 million project will employ high-speed fiber optic technology to connect Ohio's rural health clinics and hospitals to world-class medical facilities in other parts of the state and across the U.S. The goal is to improve quality of care while reducing healthcare costs. Participating rural healthcare providers are located within a 22-county region in Northeast Ohio designated as a Medically Underserved Area (MUA) with "highly-distressed" census tracts.
The project, officially dubbed "Next Generation Health Care: Closing the Urban Rural Divide," is among the largest telemedicine projects thus far in the U.S.
Upon launch, it will provide remote diagnostics and other telemedicine services to an initial 16 medical facilities in Ashland, Ashtabula, Columbiana, Coshocton, Erie, Huron, Ottawa, Sandusky, Tuscarawas and Wayne Counties. Additional facilities will be added to the network over time in order to serve more than seven million residents throughout northeast Ohio. The network will be facilitated by OneCommunity -a Cleveland-based nonprofit provider of broadband services connecting public and nonprofit institutions.
In terms of direct economic impact, the project will generate 300 long-term health provider jobs in a region with an unemployment rate of 29.3 percent and a poverty rate of 41.8 percent. Beyond creating a new model for how such projects can be developed, Next Generation is also creating a new model for how such projects can be funded.
"We're thrilled to be investing in a project that is pioneering the use of New Markets Tax Credits for advanced telemedicine development," said Deborah La Franchi, co-founder and president of National New Markets Fund. "We believe the Next Generation project will serve as a national model for how communications technology can connect disadvantaged rural communities to affordable, high quality healthcare."
Next Generation is among the first information technology (IT) infrastructure projects funded with federal New Markets Tax Credits, which are typically used to fund financially-challenged real estate development projects. An example of a more traditional NMTC-funded project is in nearby Cleveland, where National New Markets Fund recently provided $13 million in NMTC allocation to enable redevelopment of the Cleveland Institute of Art's historic McCullough Center.
La Franchi added, "Beyond just funding real estate projects in low-income communities, New Markets Tax Credits are also proving to be invaluable in bringing potentially life-saving technologies to those communities."
"Ohio's Next Generation Health Care project has nationwide significance because it will serve as a roadmap for delivering quality, efficient care to many of the 32 million additional citizens who will be covered under the new healthcare legislation," commented Belden Hull Daniels, cofounder of National New Markets Fund. "Many of these individuals are in rural and low-income areas best served by remote diagnostics and telemedicine. This project provides a model applicable to rural areas all over the nation."
Funding for the Next Generation Health Care project comes from NMTC allocation provided by National New Markets Fund and NCB Capital Impact, and a $11.3 million grant from the Federal Communication Commission's (FCC's) Rural Health Care Pilot Program. The FCC grant was provided by OneCommunity. US Bank serves as the tax credit investor providing tax credit equity financing for the project.
"US Bank seeks out projects that will have a profound impact locally while creating a model that can be replicated," said Marc Hirshman, senior vice president and director of New Markets, Historic and Investment Tax Credits in Renewable Energy at U.S. Bancorp Community Development Corporation. "We're proud to help bring this project to life."
About the U.S. Treasury Department's New Markets Tax Credit Program
Created in 2000, the New Markets Tax Credit (NMTC) Program is administered by the U.S. Treasury Department's Community Development Financial Institutions Fund (CDFI Fund). The program serves as a catalyst for private capital investment in urban and rural low-income communities by allowing investors to receive a credit against federal income taxes for equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities.
About National New Markets Fund
National New Markets Fund, LLC invests in projects that serve targeted low-income communities nationwide. Its mission is to provide funding and technical assistance for projects that foster job creation and overall economic and social development. The Fund, consists of $125 million in New Markets Tax Credit (NMTC) Allocations awarded by the U.S. Department of the Treasury. It was launched in 2005 as a partnership between Los Angeles-based Strategic Development Solutions (SDS) and Boston-based Economic Development International. SDS was founded in 2001 by Deborah La Franchi and has become a market leader in the creation of Double and Triple Bottom Line private equity and real estate funds. Economic Innovation International, Inc. was founded in 1970 by Belden Hull Daniels and is recognized internationally for building more than $100 billion of privately capitalized, innovative institutions that generate wealth and high quality jobs. More information about National New Markets Fund is available at www.SDSgroup.com/nnmf-project-list.html.
About U.S. Bancorp Community Development Corporation
With assets of over $6 billion, U.S. Bancorp Community Development Corporation (USBCDC) finances community development and affordable housing projects through the use of New Markets Tax Credits, Historic Tax Credits, Low-Income Housing Tax Credits, and Investment Tax Credits in Renewable Energy. USBCDC is a subsidiary of U.S. Bank, the 5th largest commercial bank in the United States, whose parent company is U.S. Bancorp (NYSE: USB). With $281 billion in assets, the company operates over 3,000 banking offices and over 5,100 ATMs in 24 states, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at www.usbank.com.
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