By Marty Trese, KnoxPages.com Editor
MOUNT VERNON – Just after the announcement Tuesday that the Woodward Development Corporation and longtime Woodward tenant Sips Coffee House have ceased negotiations on a new lease, WDC Secetary and Project Manager Pat Crow released a transitional organizational chart. The chart outlines the tax credits and other funding sources that are making the restoration of the downtown landmark possible.
Crow released the following statement:
“In order to access the funds needed to complete the Woodward Opera House Restoration Project, the Woodward Development Corporation sought tax credit funding through 4 sources – Federal New Market Tax Credits, State New Market Tax Credits, Federal Historic tax Credits, and State Historic Tax Credits. This program required generous contributions from the Woodward’s local donors.
In order to qualify for tax credits, a non-profit entity such as the Woodward Development Corp. (WDC), must partner with for-profit entities who have a “taxable income” thru which eligible tax credits are received. The process then allows the for-profit entities to take the tax credits and then provide the non-profit project a majority of the credit as a grant to complete the project. This process is regulated and defined by the IRS, and is subject to audit by multiple layers of professional oversight, including the IRS.
The IRS Tax Credit Procedures require a specific organizational structure that impacts the project for a period of at least 7 years. At the end of that period, the tax credit structure is dismantled, and the non-profit entity (in this case – WDC), becomes the sole owner of the property and project.”
This first ownership model chart below shows that there are now four for-profit LLC’s (limited liability corporations) in the mix. They are Woodward Manager LLC, Woodward Tenant LLC, Woodward Lender LLC, and Woodward Landlord LLC.
There are also not for profit LLC’s: Knox Partnership for Arts & Culture, Inc. and Woodward Local Foods Initiative, Inc.
Crow’s statement continues, “Through this process, the Woodward Restoration Project will net over $10 million in dollars to apply to the project. The two “Tax Credit Organizational Ownership Models” show the before and after structure. The structure then returns to the original ownership when the tax credit structure is dismantled.”
