Helms said he and Shank would bring proposed avenues for financing the vertical evacuation center, 60-room inn and tourism lodging before the harbor commissioners for review and approval.
Shank hails from Miami and is a member of the National Community Reinvestment Coalition and the National Mortgage Finance Community Council. He said he had most recently been CEO for Neighborhood Housing Services of South Florida, counseling more than 12,000 families on how to avoid foreclosure following the market crash of 2008. During his 17-year tenure with that organization, Shank said he and other partners used $90 million in grant money, bank loans and other investments to develop more than 1,500 housing units in the Miami area.
Shank said he has been working with Helms to determine how to go about funding the harbor’s vertical evacuation center, 60-room inn and other improved amenities for visitors to the area. Shank and Helms met with city and county representatives Tuesday to discuss partnerships.
According to Shank, the New Market Tax Credit program has been in place since 2000 and allows investors to put money into a project for tax credit. The program is similar to a low-income housing tax credit program, which was managed by the Internal Revenue Service, Shank said.
Meanwhile, Opportunity Zones are areas identified by governors in most states as low income, Shank said. There are two in Crescent City, he said.
“That means that the development projects we’re looking at could benefit from Opportunity Funds because the zones have already been established,” Shank said. “The federal legislation’s in place and the state has identified these two census tracts.”
Shank said the Opportunity Zone tax initiative program is a tax benefit for investors, not a tax credit. The program is based on people who have capital gains that will likely be taxed if the money is not reinvested, he said. Any individual, family or business that has capital gains could invest money in an Opportunity Zone via the Opportunity Fund.
While an individual could invest in a project on their own, Shank said it’s likely a bank or a large non-profit finance organization would create funds and invite businesses with capital gains to put money into that fund. Shank said he and Helms met with representatives from U.S. Bank and Tri Counties Bank as well.
“Charlie and I will be talking with both of them; they’ve both expressed interest,” Shank said. “There are two nonprofit companies that have experience with, not only lending to small business-type efforts as this is, they also have experience with New Market Tax Credits and they’re large enough they can assign research and policy time to understanding this new funding source, Opportunity Zones and Opportunity Funds.”
One nonprofit is Clearinghouse CDFI, based in California, Shank said. Another is Enterprise Community Partners based in Maryland, he said.
Since the Opportunity Zone program is new, however, it’s not regulated, although it’s overseen by the IRS, Shank said. Since Congress has approved the program for just 10 years, any projects the harbor puts forward to investors have to be revenue-generating to pay back the investment, he said.
According to Helms, the only stipulation the IRS put on the Opportunity Zone tax initiative is that the projects don’t result in gentrification in the investment areas. Helms said there is also a forgiveness component built into the tax initiative.
“If you hold your investment for five years you get a certain forgiveness of your capital gains obligations,” he said. “If you hold them for seven you get a little higher forgiveness, depending on the size of your investment, and if you hold it for 10 or more any gains you make off of your investment, there are no capital gains obligations on those.”
Shank said all the financing for the harbors’ projects should be in place before the permitting process and construction takes place.
“Plenty of construction projects have failed because they started before financing was complete,” he said.
Harbor Commissioner Pat Bailey, noting the board talked about putting in a 3D/4D theater before discussing turning the Tsunami Experience into a vertical evacuation center, asked Shank and Helms if there were funding sources for the vertical evacuation center.
Bailey also noted the Tsunami Experience would be a revenue-generating facility. Bailey also asked Shank if all the revenue the facility generates will be returned to investors.
“Not all of it, only what they put in,” Shank said.
Shank said it could be some time before the projects are shovel-ready.
In a Sept. 8 article, Helms told the Triplicate the harbor would be lucky to get a vertical evacuation center built in five years.
Artist renderings of the Tsunami Experience depict a five story structure that would include breakaway exterior walls and a helipad. The first two floors would be a parking structure. The third and fourth floors would be part of the Tsunami Experience, which would include a 3D/4D theater as well as conference rooms and a commercial kitchen.
The Tsunami Experience would also provide refuge to those living and working in and around the harbor during an actual tsunami.