Economic Development Spotlight: FIRE Completes $13 Million in New Market Tax Credit Allocation for Racine Belle City Square Project
First Ring Industrial Redevelopment Enterprise, Inc. (FIRE), a West Allis-based Community Development Entity (CDE) recently announced today it has funded $13 million in New Markets Tax Credits (NMTC) to Belle City Square Holdings, LLC. The allocation supports the redevelopment sponsored by J. Jeffers & Co. that will preserve four historic buildings for a creative studio space, private office space, and inclusive coffee shop at 2100 Northwestern Avenue, Racine, WI.
The $23.9 million, 32,000 sq. ft. project is part of the larger Belle City Square development and will create 80 indirect and direct jobs, serve community organization, and retain quality and accessible jobs in a severely distressed area. The buildings will be LEED certified, and the project will recycle seven tons of materials. A focal point of the project will be the Inclusive Bean, a coffee shop partnering with Sonnenberg Schools, to provide employment opportunities for students that have special needs.
Jeffers and Co., the sponsor of the development is a real estate firm that focuses on developments that enhance neighborhoods and create value. “We are excited to continue our transformation of this truly catalytic project for the City of Racine. Our first three phases brought a range of residential uses, from much needed affordable housing to market rate units, through a combination of historic rehabilitation and architecturally sensitive new construction. This next phase brings the commercial component into our LIVE WORK PLAY community vision,” says Joshua Jeffers, CEO of J. Jeffers & Co.
“The project meets the mission and core values of FIRE,” said John Stibal, President of FIRE. Stibal added further, “the City of Racine, especially Mayor Cory Mason, and J. Jeffers and Co., are great partners, in launching a catalytic redevelopment that can leverage the economic power of the NMTC program to bring change and opportunity to a distressed neighborhood.”
Belle City Square, when fully completed, will offer 400+ multi-family units and 200K+ SF of commercial/retail space on the 13-acre parcel. Four hundred thousand square feet of the total development will be historic rehabilitation and adaptive reuse with an additional 400k SF of new construction, fully reimagining this blighted complex, once home to Horlick Malted Milk Company. Anchoring the new neighborhood center through this project is 55,000 square feet of shared workspace that will provide flexible, below-market lease rates to emerging, scaling and mature enterprises across business sectors. Additional activation includes high-quality, accessible space reserved for nonprofit business development support providers, a cooperative workforce development program serving the local building trades, a coffee shop providing employment opportunities across the neurodiversity spectrum, and the retention of existing light manufacturing operations.
Governed by a comprehensive Community Benefits Agreement, the project is anticipated to create 200 construction jobs and 179 full-time equivalent jobs over a 7-year time horizon. At least 90 percent of jobs will exceed the Massachusetts Institute of Technology living wage threshold for Racine County and at least 95 percent will be accessible to individuals with no more than a high school degree or equivalent.
This phase of the BCS development totals 134K SF and features a complex capital stack with various incentives and loans, including:
- FIRE is providing $13M of New Market Tax Credit allocation to the project.
- The National Trust Community Investment Corporation (NTCIC) is providing an additional $8M of NMTC allocation to the project.
- US Bank is purchasing the New Markets Tax Credits, as well as the Historic Tax Credits.
- Bremer Bank is providing the construction financing for the project.
- Lincoln Savings Bank is providing a Historic Tax Credit Bridge loan to finance the project until the Historic Tax Credit Equity is contributed.
- The project is also utilizing incentives provided by the City of Racine to finance the project.
- Jeffers & Co. has entered into a development agreement with the City of Racine outlining tax-increment financing for the project over 24 years, as well as a storm water grant.
- Untamed Equity is providing up-front TIF monetization to help finance the project.
“We are truly grateful to all of our partners that have helped support our vision and worked in true collaboration with us to make this phase and our continued progress possible at BCS” states Jeffers.
The NMTC program, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as Community Development Entity (CDEs). The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. Substantially all the taxpayer’s investment must in turn be used by the CDE to make qualified investments in low-income communities.
Headquartered in West Allis, WI, First-ring Industrial Redevelopment Enterprise, Inc. (FIRE) was formed in 2007 to attract tax credit and other funding incentives for projects that can demonstrate significant and measurable community impact. The company provides below-market rates and terms for equity-equivalent, senior, and subordinate loans products in healthcare, education, commercial, mixed-use, and industrial projects located in highly distressed communities throughout its four-county service region. FIRE is an equal opportunity provider.
For more information about Belle City Square, visit: bellecitysqaure.com. For more information about J. Jeffers & Co., visit jjeffers.com.