‘We weren't going to get that project done’ — How the New Markets Tax Credit helped fuel the Linwood YMCA
The Linwood YMCA / James B. Nutter Sr. Community Center has been a fixture in southeast Kansas City since it opened in 1975.
But unlike modern YMCAs across the U.S., the Linwood Y’s inflexible design limited its service offerings, said Mark Hulet, Chief Operating Officer at YMCA of Greater Kansas City.
“There needed to be updates — the building was just awkwardly built,” Hulet said. “It wasn’t multi-functional and didn’t give people the space and place to be flexible with their programming.”
For decades, the facility’s imperfect layout rendered it to serve largely as a community meeting space. It lacked a dedicated membership base as well as flexibility for other services, including health and fitness amenities that many have come to expect with YMCAs. And without such offerings, the Linwood Y struggled to serve as an after-school destination for youth.
“One of the biggest components that we found in the research was that we need to have a safe space for kids,” Hulet said. “We wanted to try and find programs and services that could support and give kids a place to go instead of hanging out on the streets.”
The Linwood Y’s inflexible space, a desire to reinvigorate the urban core and community demand for an overhaul helped spur a new vision for the YMCA of Greater Kansas City. The organization kicked off a large, multi-year capital campaign in 2010 that would eventually become its largest to date.
After three years of fundraising, however, the YMCA of Greater Kansas City still had a gap in necessary capital for the Linwood Y’s renovation. That’s when the organization was introduced to AltCap and its services to facilitate New Markets Tax Credit funding.
The New Markets Tax Credit (NMTC) is a program managed by the CDFI Fund, a branch of the U.S. Department of the Treasury. Launched in 2000, the program helps incentivize community development and economic growth through the use of tax credits that attract private investment to distressed communities.
If you live in or have visited Kansas City, you’ve likely encountered the impact of the NMTC program. In Missouri, for example, developers and organizations have leveraged more than $2.07 billion in NMTCs, according to the CDFI Fund. In Kansas, that total is roughly $194 million. The credits are used for a variety of real estate projects, including health facilities, schools, manufacturing, arts and culture, retail, hospitality and more.
In Kansas City, NMTC credits helped fund new construction and renovations with such projects as the Emmanuel Family & Child Development Center, the Lyric Opera of Kansas City and J.R. Rieger and Co.
In 2015, AltCap provided the Linwood Y with $10 million in NMTC allocation for the $10.3 million renovation. This resulted in roughly a $3 million subsidy to the project. That capital — and AltCap’s guidance along the way — was crucial in making the project a reality, said Kelli McClure, CFO for the YMCA of Greater Kansas City.
“As complex as it was, it was also a fairly smooth process,” McClure said of the NMTC funding. “It is the reason we got the project done. Without that funding, we weren't gonna get that project done.”
The funding enabled the Linwood Y to build a facility the community is proud to have. The project included a grand main entry, new multi-purpose studios for exercise and health education, renovated gym, a teaching kitchen, an indoor/outdoor swimming pool with a retractable glass ceiling and doors, and a new parking area.
It also allowed the Linwood Y to partner with Truman Medical Center and construct the 7,000-square-foot University Health Community Care Linwood clinic attached to the building.
With a revamped facility and sparkling new amenities, the Linwood Y could begin developing a member base, offer more fitness classes, water safety courses, and provide more programming for seniors and youth. The health clinic also helped patrons see their local YMCA in a new light, which helped drive new memberships, McClure said.
The Launch Pad program for youth has had a particularly inspiring impact, McClure said. The program engages 75 kids from around the area to participate in health, fitness and gaming activities as well as courses on science and technology. Meals are also provided to participants.
“The hopeful outcome is to engage trends and keep them off the streets,” McClure said. “We’re learning how to talk to kids through the program and even get kids to work for us a bit by talking to them while they're gaming. It’s definitely a different way for us to deliver service.”
It’s common that NMTC-backed developments are the first new project in an area, which can bring a positive ripple effect to the neighborhood, said Michael Bland, AltCap’s Director of Tax Credit Financing and Consulting Services.
“These are often the first deals in a neighborhood that needed a domino to fall — especially in historic areas where you can layer the New Markets Tax Credit with historic tax credits,” Bland said. “It can help set the vision for what others can try to do. Not everybody has the ability to look at a street and see what it can be, and having that initial NMTC investment helps someone see what the area can look like.”
Such was the case for the Linwood Y, which helped spur a new grocery store to its Northwest and new retail stores nearby.
“It kind of started a centrifugal force of other things coming in,” Hulet said. “There’s just an organic growth of opportunity.”
Click here to learn more about the New Markets Tax Credit and AltCap’s NMTC consulting service.
