Over a decade ago, St. Louis lawyers Donna and Howard Smith created an innovative model for neighborhood renewal using a federal tax credits program to finance for-sale affordable housing in the city’s Jeff-Vander-Lou area. Over the next 14 years, they shepherded a total of $18.3 million in tax credits investments and, in collaboration with the city’s Habitat for Humanity nonprofit, built a total of 103 affordable homes across the city, The Washington Post reports.
Following the success of Donna and Howard Smith’s St. Louis housing project, the SmithNMTC corporation has worked with nonprofit community development entities in 30 other cities nationwide to build more than 4,200 affordable for-sale homes using nearly $500 million in New Markets Tax Credits. Their work has revitalized neighborhoods in Atlanta, Charlotte, Newark, Baltimore, Santa Fe, N.M., Pittsburgh, Memphis and dozens of other metros across the U.S.
Here’s how the program works: The New Markets Tax Credits program is designed to attract investors to distressed areas by offering them a 39 percent income-tax break over seven years. The corporations use that investment in several ways to subsidize the cost of housing. Buyers, for instance, may get down-payment assistance or may benefit from a second loan payable when they sell the property. Developers may be paid to reduce the price of a home in amounts ranging from $30,000 to $100,000, depending upon the neighborhood.