The community development group has millions that could be used in Norfolk
Hampton Roads Ventures, the subsidiary of the Norfolk Housing Authority, has $43 million in tax credits that have not been earmarked for projects, according to a federal report.
A pandemic exception to the program’s strict investment regulations means some of that money could go to a qualified Norfolk project, bypassing barriers to supporting local projects that HRV officials have detailed to city officials these days. last months.
Representatives from Hampton Roads Ventures said they were open to considering including a Norfolk project in their next application for tax credits in early 2023. But they did not disclose the allocations available in exchanges. extensive emails with the city attorney’s office and the Department of Economic Development. . These exchanges followed a series of stories by The Virginia Mercury which detailed how Hampton Roads Ventures earned $360 million in new market tax credits, but only invested a fraction of it in Norfolk.
In an email the day after NRHA and HRV representatives met with city council, Delphine Carnes wrote that she was aware of the pandemic exception. She added that Norfolk businesses interested in the tax program could complete HRV’s intake form or contact the economic development department. She did not respond to the question of whether there was an opening to include a Norfolk project in HRV’s current allocations.
Asked about the exception in an email two days earlier from Jared Chalk, the city’s director of development, Jennifer Donohue, general manager of HRV, described it as more difficult to use than described in the federal regulations.
Ronald Jackson, executive director of the NRHA, and Alphonso Albert, chairman of the board of directors of HRV, did not mention the exception or the allocations available during a presentation where some members of the city council pushed the entity community development to invest in Norfolk.
In a letter to council, Jackson said HRV had become a “rural” community development entity focused on three business strategies – healthcare facilities, healthy food and manufacturing – and that investing in Norfolk would be difficult. This, they added, could jeopardize future tax credit awards and threaten profits that have been paid to the housing authority. It is unclear whether Jackson was aware of the available tax credits and the exception. He refused to answer questions.
The pandemic exception allows community development entities like HRV to invest up to 30% of their allocations outside of their usual business strategies without receiving Treasury Department approval (could exceed 30% with approval).
In short, HRV could invest anywhere in any qualifying project without jeopardizing its eligibility for more tax credits. The amount available to spend on a Norfolk project would be based on the $100 million already allocated to urban areas. He could reach $10 million, or even more if he asked for permission to exceed the 30% threshold.
HRV has funded projects worth hundreds of millions of dollars to benefit cities and rural areas in at least 15 states, including Idaho, Texas and Nebraska. It has backed just four projects in Norfolk, including a boat hotel near East Beach, a hotel near Old Dominion University, a medical plaza across from the Sentara Norfolk General complex, and the refinancing of the Attucks Theatre. He hasn’t invested in a Norfolk project since 2008.
Over the past two awards cycles, HRV has won a total of $100 million in New Market Tax Credits designed to stimulate investment in distressed or distressed areas that would otherwise not attract of capital. The Treasury Department May and June reports tax credits reveal that HRV has $6 million remaining from its 2019 allocation and $37 million from its 2020 allocation. The report also shows that HRV is only required to invest 50% of its allocations in areas not metropolitan.
Chalk forwarded an email from a Mercury reporter regarding the exception the day before NRHA and HRV officials met with the city council. In a response obtained through a public registration request, Jennifer Donohue, chief executive of HRV, said the company would consider a proposal from the city and seek approval to invest from the CDFI Fund, which administers the program, “if it is a project that addresses the impacts of COVID-19 but is not part of HRV’s business strategy.
This is incorrect. The exception allows a CDE to invest in any eligible project, including those outside its business strategy, whether or not it addresses COVID impacts, according to expert policy officials.
In response to a question this week, Chalk said HRV had not told him about the allowances available. Delphine Carnes, the lawyer for HRV and NRHA, and Donohue have repeated repeatedly in emails that they want the city to propose eligible projects. Chalk said Hampton Roads Ventures should take the lead in marketing the tax credit program to local developers, banks and community organizations to identify opportunities.
Carnes and Donohue did not respond to an email asking for the basis of their interpretation of the exception, asking whether they had sought clarification from the CDFI Fund and asking how much would be available to invest immediately in a qualified Norfolk project.
Jackson and Donald Musacchio, chairman of the board of commissioners, also declined to comment through the authority’s public relations staff.
In another development, The Mercury asked the housing authority’s public relations officer if the board of commissioners would subject HRV to Virginia’s freedom of information law. The NRHA board of directors is also the board of directors of Hampton Roads Ventures. They refused.
“Chairman Musacchio has confirmed that every commissioner on the NRHA Board of Directors agrees with Chairman Albert’s statement that HRV is not subject to FOIA, HRV will not voluntarily submit to any implications of FOIA, and HRV and NRHA will continue to cooperate. with the city and provide relevant information and documents to the city,” the authority’s email response reads.
After last month’s city council meeting, Mayor Kenneth Alexander said Hampton Roads Ventures’ records should be subject to the law.
Since Hampton Roads Ventures last backed a project in Virginia, other community development entities have invested nearly $327 million in 86 projects across the state, including one in Norfolk, one in Portsmouth, two in Newport News and seven in Richmond, according to a Treasury Department database. . Meanwhile, Hampton Roads Ventures has funded over $100 million in out-of-state projects.
The Mercury has public records requests from the Treasury Department pending since August for HRV’s tax credit claims, which would reveal the projects they have pursued over the years, and its closing reports on the projects. , which would show the money trail. The Treasury Department’s Freedom of Information Act Officer recently said these requests are in the final stages of processing.
Companies like Hampton Roads Ventures are called community development entities. These may be branches of banks, non-profit organizations, public agencies or other financial institutions. They apply for new business tax credits from the Treasury Department and, if they win the highly competitive process, they match projects and investors who receive a 39% tax break over seven year.
The Mercury series describes approximately $250 million in HRV-spurred investments, including a mixed-use seniors’ apartment complex in Illinois, a peanut shelling plant in Georgia, grocery stores in Ohio , Louisiana, Illinois and Ohio, a grain terminal company in Mississippi, an aluminum company in Alabama, a hair gel company in Tennessee and a cotton mill in Louisiana.
Alexander said the town will draft a resolution requiring the housing authority subsidiary to focus on Norfolk while understanding it could still invest in other areas. This resolution has not yet been prepared.
In an email to Alexander after the city council meeting obtained through a request for documents, former NRHA executive director and HRV chief John Kownack offered a lengthy draft resolution. In part, he said HRV should do “its best to include eligible Norfolk projects in future applications” and use HRV revenue to create a position within the Department of Economic Development to use federal tools. , state and local to attract private investment in countries in difficulty. neighborhoods. Norfolk has 16 high-struggle census tracts, which would be a target for proposed new market tax credits.
Kownack’s suggestions did not require HRV to include Norfolk’s projects in its requests, nor did it make the development entity records public. It’s unclear whether the city will adopt any of his recommendations. The mayor and some members of council have called on HRV to invest in Norfolk and make its records public.
During the council session, Albert and Jackson defended HRV, saying the funding it provides was essential for the housing authority as federal and municipal funds dwindled. According to NRHA documents, HRV transferred $2.3 million to the housing authority, all since 2016. It is unclear what funds, if any, were transferred between 2003, when HRV was established. , and 2016.