City, Bioworks Receive $30 Million in Tax Credits
The Memphis Bioworks Foundation and the city of Memphis have new incentives to lure private investment to struggling areas with a $30 million allocation of New Markets Tax Credits.
The allocation is the largest ever received through this program by a Tennessee-based institution. The program is administered by the U.S. Treasury Department’s Community Development Financial Institutions Fund.
How the money is distributed largely depends upon which projects private investors embrace or bring forth. The city and Bioworks submitted the joint application to spur development in federally designated low-income census tracts.
“Receiving these tax credits is a tremendous addition to our arsenal of tools available to encourage investment in our community,” said Robert Lipscomb, the city’s director of Housing & Community Development.
“We will be able to help investors who are willing to create the programs and businesses that will generate jobs and long-term financial momentum for Memphis. And with the Memphis Bioworks Foundation’s knowledge and experience in helping build businesses through an integrated focus on infrastructure, education and entrepreneurship, we have a partner that clearly understands how viable businesses are built and jobs created.”
Brandon Wellford, the chief financial officer of Bioworks, said the federal tax credits have to be used for sound business projects.
“Each project has to be underwritten and stand on its own,” he said. “It’s critical that when you look at each proposed deal that it has the strength to perform and pay whatever outstanding debt there is.”
An obvious starting place to use the tax credits is in areas of Downtown’s Memphis Medical District near low-income neighborhoods. However, Wellford said the tax credits also can be used in other struggling areas throughout the greater Memphis area. The focus will be on projects that create jobs, Wellford said.
The next step for Bioworks and the city is to enter into a contract with the U.S. Treasury Department.
The credit provided to the investor totals 39 percent of the investment and is claimed over a seven-year credit allowance period.
