May 7, 2009
Funding Completed for Redevelopment of Detroit’s Historic Argonaut Building
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DETROIT and LOS ANGELES – Once a symbol of America’s dominance in the automotive industry, the now vacant 760,000 square foot Argonaut Building will soon be redeveloped into an arts-focused educational center with the help of $145 million in funding from a range of sources including U.S. Bank, Chase and Los Angeles-based National New Markets Fund, which invested federal New Markets Tax Credits (NMTCs).
Located in Detroit’s New Center area, the iconic building is scheduled to reopen in Fall 2009 as a second campus for The College for Creative Studies (CCS). The College will occupy about 400,000 square feet for studios, classrooms, administrative offices and student housing for its various design majors. In addition, CCS is partnering with the Thompson Educational Foundation and the Henry Ford Learning Institute to make the building home to an arts-focused charter middle school and high school for students of the Detroit Public School System.
“Our investment will help make the transformation of the Argonaut Building a reality, and in turn bring new jobs, opportunity and hope to a community hit extraordinarily hard by the troubled economy,” said Deborah La Franchi, co-founder of the $125 million National New Markets Fund. “It serves as a powerful example of how New Markets Tax Credits can be used to fund challenging, yet critically important, redevelopment projects.”
The Argonaut Building is located in an area designated as an Empowerment Zone by the US Department of Housing and Urban Development. The community has a poverty rate of 26.6 percent, and its residents earn just 61% percent of the area median income.
The construction phase of the project is expected to create more than 200 temporary jobs. In the long-term, nearly 200 permanent jobs are expected to be created as the building’s new tenants become fully operational.
Redevelopment of the Argonaut Building will incorporate a range of green building practices and systems including Brownfield remediation, reuse of on-site materials, energy optimizing building systems and recycled products. The entire design is focused on environmental sustainability and future LEED Certification.
“This is precisely the type of project that we’re committed to helping facilitate,” added Belden Hull Daniels, who serves with Ms. La Franchi as co-founder of the National New Markets Fund. “The tax credits we invest provide a critical link in the funding process.”
U.S. Bank serves as the project’s Historic and New Markets Tax Credit investor, while Chase serves as the primary lender. A collaboration between five Community Development Entities (CDEs) including National New Markets Fund, Enterprise Community Investments, USBCDE, NCB Capital Impact, New Markets Support Company, and Consortium America generated $66.91 million in federal and state Historic Tax Credits (HTCs), Brownfield Credits, and federal New Markets Tax Credits (NMTCs).
Created in 2000, the New Markets Tax Credit (NMTC) Program is administered by the US Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund). It serves as a catalyst for private capital investment in urban and rural low-income communities by allowing tax paying investors to receive a credit against their federal income taxes for making equity investments in designated Community Development Entities (CDEs). To date, the CDFI Fund has made 364 awards totaling $19.5 billion in allocation authority.
About the National New Markets Fund
The National New Markets Fund, LLC (the “Fund”) is a partnership created by two mission-driven firms – Los Angeles-based Strategic Development Solutions and Boston-based Economic Development International - dedicated to investing in low-income communities nationwide. The Fund supports economic and community development investments in real estate projects, and provides a range of technical assistance to facilitate such projects. The Fund consists of $125 million in New Markets Tax Credit (NMTC) Allocations awarded by the U.S. Department of Treasury in 2006, 2007 and 2008. Investments are currently focused on a variety of projects throughout the South, California’s Central Valley and the Pacific Northwest. Visit www.sdsgroup.com/nnmf-project-list.html for more information.
About Strategic Development Solutions
Los Angeles-based Strategic Development Solutions (SDS) is a market leader in the creation of Double and Triple Bottom Line private equity and real estate funds. Founded in 2001, SDS has, in conjunction with Economic Innovation, built more than $2 billion in mission-related investment funds that do ‘good’ and do ‘well’ by providing superior market rates of return to investors (1st Bottom Line), positive social impacts (2nd Bottom Line) and environmental sustainability (3rd Bottom Line). At the community level, SDS provides funding for projects that foster economic growth in low income communities. More information is available at www.SDSGroup.com .
About Economic Innovation International, Inc.
Founded by Belden Hull Daniels in 1970, Economic Innovation International is recognized internationally for building more than $100 billion of privately capitalized, innovative institutions that generate wealth and high quality jobs for residents of targeted communities in North America, Europe and Asia. In the last decade, Economic Innovation has partnered with SDS to pioneer the creation of the Double and Triple Bottom Line private equity investment industry, which now has more than $20 billion of capital under management in the U.S. and overseas. More information is available at www.economic-innovation.com .
About U.S. Bancorp Community Development Corporation
With assets of over $5.5 billion, U.S. Bancorp Community Development Corporation (USBCDC) is the largest New Markets Tax Credit (NMTC) investor, investing billions of dollars nationwide in hundreds of transactions. These equity investments have provided much needed revitalization and new resources to communities throughout the country. USBCDC finances community development and affordable housing projects through the use of New Markets, Historic, Low-Income Housing and Renewable Energy tax credits. USBCDC is a subsidiary of U.S. Bank and U.S. Bancorp (NYSE: USB).
About Chase
Chase is the U.S. consumer and commercial banking business of JPMorgan Chase & Co. (NYSE: JPM), which operates more than 5,000 branches and 14,000 ATMs nationally under the Chase and WaMu brands. Chase has 168 million credit cards issued and serves consumers and small businesses through bank branches, ATMs and mortgage offices as well as through relationships with auto dealerships and schools and universities. It also serves more than 30,000 commercial banking clients, including corporations, municipalities, financial institutions and not-for-profit entities. More information about Chase is available at www.chase.com.
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Erik Deutsch
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