Subsidies intended for poor communities funded upscale developments
A federal development progrtam aimed at helping poor communities has been used to fund hundreds of upscale projects, including hotels, condominiums, office buildings and a car museum, David Dietz reports at Bloomberg Markets Magazine.
The 10-year-old New Markets Tax Credits program is supposed to be used in areas with at least a 20 percent poverty rate or with a population earning 20 percent less than the median family income of the surrounding metropolitan area. In an example cited by Deitz, developers were able to get subsidized financing for a $116 million renovation of the historic Blackstone Hotel in Chicago because the census tract in which it is located has a poverty rate of 26 percent.
But Deitz notes that that high poverty rate is due almost entirely to the large number of college students living in the area; among families, the poverty rate is just 3.9 percent, according to the 2000 Census.
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