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A gold shipment for LR 

Feds provide help to finance downtown dreams.

A recent $15 million deal between the U.S. government and Arkansas Capital Corporation, the Little Rock-based finance and venture capital firm, may be a catalyst for downtown Little Rock development and lead to a mechanism for paying for a new baseball stadium. Last week, Arkansas Capital signed a formal agreement with the Treasury Department to raise $15 million in private investments under the New Markets Tax Credit initiative. In return, investors will receive 39 percent worth of their investment in tax credits over seven years. If you have tax liabilities, a tax credit is as good as cash. A $1 million investment would be guaranteed of receiving $390,000 back. This tax credit program is restricted to organizations that serve "low-income communities." Downtown Little Rock census tracts fit the definition, based on the poverty rate among residents in the neighborhoods. This is good news for developers who have big ideas for projects in qualifying neighborhoods, but who need an extra incentive to attract investors. "We're not going to entice an investor to do an economically unfeasible deal," said Todd Brogdon, who has been handling most of the tax credit work for Arkansas Capital Corporation. "But this is an added incentive to get a deal done." Arkansas Capital Corporation created a separate entity, Heartland Renaissance Fund, through which it will serve as a middleman, matching investors with ventures that are eligible under the program. Neither Arkansas Capital nor the Treasury Department will talk about specific potential projects. But according to a profile released by the Treasury Department, mixed-use real estate projects are among the expected beneficiaries, include "several mixed-use real estate projects that have been in the development stage for years, but have yet to fill the remaining financial gap." The profile also said, "Heartland's investment fund will offer new products to low-income communities that are currently being overlooked or overpriced. A combination of federal and state tax credits will allow this allocatee to offer below-market interest rates, increased loan-to-value ratios up to 95 percent, and offer near-equity and equity investments to owners of qualified businesses." Brogdon says he already has received proposals totaling more than the $15 million Arkansas Capital Corporation is authorized to fund. "We can't help everyone with the $15 million," Brogdon noted. "We have to do the deals we can do quickly." That's because Arkansas Capital Corporation agreed to raise at least half of the capital by March 2005. One of the local organizations requesting support through the program is Our House, the homeless shelter on Main Street raising money for a new headquarters outside of downtown. Barry McDaniel, chair of the Our House board of directors, said that the organization is halfway toward its goal of $1.4 million, and could potentially receive a cash infusion through Arkansas Capital Corporation. Brogdon confirmed that Arkansas Capital Corporation has had conversations with Our House, but cautioned that they would have to find someone willing to invest in the project. Nevertheless, it helps that Our House has an immediate need at the same time that Arkansas Capital Corporation needs to quickly disburse funds. Another potential beneficiary of tax credits are the Main Street real estate projects detailed in a recent Times cover story. These include Warren Stephens' Center Theatre, a new home for the Arkansas Repertory Theatre, and various residential and retail developments. Brogdon confirmed that representatives from Arkansas Capital Corporation and Stephens have had preliminary discussions. Already Arkansas Capital Corporation is planning to apply this fall for another $100 million through the tax credit program. Their case will be bolstered if they fund projects that please the government. If the larger application is successful, it may open up an avenue to enticing capital investment in a new downtown baseball stadium for the Arkansas Travelers, an AA affiliate of the major league Anaheim Angels. Frank Thomas, chair of the Travelers board of directors, said that a new ballpark would probably cost between $20-25 million, but that raising that much money from the private sector would be almost impossible in the current environment. But a 39 percent tax credit may sweeten the deal, and Brogdon thinks a stadium project could qualify for funding through the tax credit program.
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