The YMCA of the Inland Northwest and the YWCA of Spokane have secured almost $5.9 million for the new facility theyre constructing at 930 N. Monroe by obtaining tax credits through the federal New Markets Tax Credit program.


Because they could secure the credits, the two organizations were able to obtain a loan from U.S. Bank, in Spokane, to launch construction on the $25 million project, which their contractor, Garco Construction Inc., of Spokane, began Nov. 15, says Rig Riggins, president and CEO of the YMCA.


In a complex set of transactions that culminated when they all closed in late December, Spokane Y Investment Fund LLC, which the YMCA and YWCA set up to take part in the tax-credit program, made investments in three so-called community development entities, or CDEs. Those entities loaned the same amounts less fees to Central Y Owner LLC, another YMCA-YWCA entity. The investments made by Spokane Y Investment Fund LLC, called qualified equity investments, resulted in tax credits that totaled just over $10.3 million and equaled 39 percent of the investments.


The CDEs were the National Development Council and Local Initiatives Support Corp., both of New York, and U.S. Bancorp Community Development Entity, of St. Louis. A fourth player, U.S. Bancorp Community Development Corp., of Los Angeles, then bought the $10.3 million in tax credits by making an equity investment in Spokane Y Investment Fund LLC of almost $8.4 million, the present value of the tax credits, which have a seven-year life. After deducting legal fees, transaction fees, and the CDEs asset-management fees for required monitoring of the project, the YMCA and YWCA were left with just under $5.9 million in net cash for the project, says Michelle Morlan, a Seattle-based director of the National Development Council, which she describes as a mission-driven nonprofit.


As the YMCA and YWCAs capital campaign for the building progresses, another entity that was created, Central Y SLL LLC, will replace U.S. Bank as the construction lender, Morlan says. The equity investment neednt be repaid.


While complying with the tax-credit programs requirements was difficult and time consuming, Riggins says, Ill go the extra mile to get a $6 million donation, and thats really what this is. He says it took from April 2007 until the end of last year to complete the tax-credit arrangement.


Under the federal program, tax credits are allocated by the Treasury Department to CDEs in a national competition based on their track record in creating economic development, Morlan says.


What theyre allocating to the CDEs is amounts of tax credits that the CDEs can go and sell, Morlan says. An investor that makes a qualified equity investment in a CDE must generate sufficient profits later to take advantage of the tax credits, she says. Nonprofit organizations, like the YMCA and YWCA, can apply for New Markets Tax Credits with the intention of transferring the credits to a for-profit CDE.


Morlan says the program is probably the most important economic-development tool the federal government has come up with in the past 50 years. It is that powerful. If you think about it, there arent many economic-development tools that cities and counties have any more. She says the $10.4 million in tax credits for the project here is one of the largest amounts ever awarded for a project in the West.


The federal program makes tax credits available for ventures in low-income areas such as Spokanes West Central area, where the YMCA-YWCA facility is being built, Riggins says.


Riggins says a 54,000-square-foot YMCA-YWCA project planned for 16 acres just north of the Newport Highway near its intersection with Nevada Street didnt qualify for a New Markets Tax Credit. Still, he says, a joint YMCA-YWCA $40.5 million fundraising campaign that has been launched to build the two facilities got a shot in the arm from the $5.9 million raised in the sale of the tax credits for the 80,000-square-foot project on Monroe. The project near the Newport Highway will cost an estimated $15 million, Riggins says.


The YMCA and YWCA now have raised $27.3 million, or nearly 70 percent, of the money theyre seeking for the two projects and hope that a $1 million appropriation will be approved by the Washington Legislature in its current session for the projects, Riggins says. He says both the House and the Senate have included that appropriation in their budgets, and the state provided a $2.5 million appropriation last year.


The YMCA and YWCA hope to open the facility on Monroe in April 2009 and are working now to start construction of the Newport Highway facility soon enough this spring so that it could open at about the same time as the facility on Monroe, Riggins says.


Vandervert Construction Inc., of Spokane, has been named the contractor for that project. Both of the facilities were designed by ALSC Architects PS, of Spokane.


When the two facilities open, they and a YMCA facility in Spokane Valley will serve one of every six people in Spokane County, and at least one of the three facilities will be within a 15-minute drive of most residents of Spokane County.


Contact Richard Ripley at (509) 344-1261 or via e-mail at


[email protected].