City will use tax credits to help small businesses
EVERETT - The city finally found a way to use $25 million in federal tax credits, and a local bank is where half the money will be going.
Whidbey Island Bank is getting $13 million worth of Everett’s federal stimulus tax credits to use to give out low-interest loans to local small businesses.
City attorney Tim Benedict said it’s rare for a bank to receive these tax credits, but it is an allowed use.
The tax credits are meant to boost major private projects in low-income areas where developers traditionally won’t build in. The credits are called New Markets Tax Credits, and the program is run by the Treasury Department.
Letting a bank use the credits for loans “was one of the ways New Markets Tax Credits were intended to work,” but it’s rare, Benedict said.
Usually developers apply for the tax credits.
The other $12 million in credits is going toward the Hampton Inn hotel being built within the same project as the downtown year-round farmer’s market at Pagoda Village at the corner of Grand Avenue and Wall Street.
If the Hampton Inn project doesn’t materialize, the city will divert the rest of the money to Whidbey Island Bank.
The Everett City Council approved allocating the credits to the bank last week. The council had until Dec. 31 to figure out how to use the credits.
The council will determine how Whidbey Island Bank disburses the small business loans. All of the loans should be in place by the end of this year.
Everett applied for the credits in 2009, but the projects the city wanted to give the credits to each fell through.
The city originally applied for the tax credits to give to Riverfront Development developer OliverMcMillan. The Great Recession scuttled those plans and OliverMcMillan ended up walking away.
The city then tried to give the credits to other projects such as the long-delayed and yet-to-be-built downtown Courtyard by Marriott hotel. The city also offered credits to any developer willing to build a mixed-use high rise development near Everett Station, which attracted nobody.
Giving away the credits is not simple. The credits have to go toward a new commercial development in a federally designated low-income area of town, which eliminates most of the downtown core.
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