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New Markets Tax Credit Program helps bring broadband services to rural Alaskan residents
Thousands more Alaskans will have access to broadband services as GCI’s TERRA-NW project moves its way up the northwest coast, thanks in part to NMTC financing provided by Travois New Markets, a nationally certified Community Development Entity.
NMTC funds will help finance TERRA-NW Phase 2 and Phase 3. Phase 2 will extend the network west to Nome, and Phase 3 will move the broadband network up the northern coast to Kotzebue.
GCI provides voice, video and data communication services to Alaska residential, commercial and government customers, and a previous phase of TERRA (Terrestrial for Every Rural Region of Alaska) (http://terra.gci.com) has already added more than 400 miles of fiber optic cable and 13 new microwave towers to connect 65 communities in southwest Alaska. NMTC financing will now help GCI to extend the northwest broadband network to the surrounding distressed villages in these areas. This project will extend the network hundreds of additional miles and will add new microwave towers and associated facilities, some of which will be remote, prime-power relay sites.
“GCI is proud to add Nome and Kotzebue to the list of rural Alaskan villages that will benefit from the increased capabilities provided by the TERRA network,” GCI Vice President and General Manager Martin Cary said. “TERRA is good for business, but more importantly, TERRA is good for the future of rural Alaska.”
Rural Alaskan villages, where more than half of Alaska Natives live, are often not connected by roads; travel between them is possible only by air, snowmobile or riverboat, depending on the season. Kotzebue, for example, is located about 30 miles above the Arctic Circle, and 75 percent of its residents are Iñupiat Eskimos. The thousands of residents who will receive new services now rely on satellite connections that can be slow, expensive and unreliable. The improved connections will increase access to education, telemedicine and e-commerce. High definition video conferencing is widely used for medical care and class presentations, and the improved connections will improve the availability of services and reduce costs.
The project’s extremely remote location and harsh weather conditions and terrain create high construction and operating costs, and NMTCs were needed to help offset this burden. Financing includes $12 million of NMTC allocation authority from Travois, project sponsor equity, and more than $3.8 million of NMTC equity from U.S. Bancorp Community Development Corporation.
“GCI’s willingness to literally and figuratively ‘go the extra mile’ is helping to ensure that more Alaskans have access to broadband, no matter where they’re located,” said Matt Philpott, director of New Markets, Historic and Renewable Energy Tax Credit Investments for U.S. Bancorp Community Development Corporation. “We’re pleased that our partnership with Travois and the financial benefit of the New Markets Tax Credit Program is helping to make this project possible and improving social and economic interactions in the region.”
This is the second time Travois New Markets and USBCDC have partnered to provide NMTC financing to TERRA; both companies were involved in the first northwest phase that closed financing in August 2011. Alaska Growth Capitol (AGC) acted as a consultant on the project.
“Community leaders in rural Alaska believe infrastructure is crucial for economic development,”
This phase of the project will create 80 construction jobs and 95 full-time jobs and will retrain 95 full-time jobs. Construction on the next two phases is expected to be completed by the end of 2014.
About the New Markets Tax Credit program
The New Markets Tax Credit program is administered by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury. Enacted by Congress in 2000, the program encourages the investment of private equity capital into low income communities and, in exchange, allows investors to receive federal tax credits equaling 39 percent of the investment over a seven-year period. These investments are made to spur community and economic revitalization. The NMTC statue requires that investments be located in census tracts where the individual poverty rate is at least 20 percent or where median family income does not exceed 80 percent of the area median. NMTC investments of $15.5 billion have generated a total of $50 billion in capital that has been invested in some of the nation’s most underserved communities. For more information, visit www.cdfifund.gov.
About U.S. Bancorp Community Development Corporation
With more than $10.8 billion in assets as of December 31, 2012, U.S. Bancorp Community Development Corporation, a subsidiary of U.S. Bank, provides innovative financing solutions for community development projects across the country using state and federally sponsored tax credit programs. USBCDC's commitments provide capital investment to areas that need it the most and have contributed to the creation of new jobs, the rehabilitation of historic buildings, the construction of needed affordable and market-rate homes, the development of renewable energy facilities, and the generation of commercial economic activity in underserved communities. Visit USBCDC on the web at www.usbank.com/
About U.S. Bancorp
U.S. Bancorp , with $354 billion in assets as of December 31, 2012, is the parent company of U.S. Bank National Association, the 5th largest commercial bank in the United States. The Company operates 3,084 banking offices in 25 states and 5,065 ATMs and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. U.S. Bancorp and its employees are dedicated to improving the communities they serve, for which the company earned the 2011 Spirit of America Award, the highest honor bestowed on a company by United Way. Visit U.S. Bancorp on the web at www.usbank.com.
Travois New Markets, a nationally certified Community Development Entity (CDE), is dedicated exclusively to meeting the economic development needs of American Indians, Alaska Natives and Native Hawaiians in low income communities. Travois New Markets has invested more than $160 million in New Markets Tax Credit allocation that it was awarded from the Community Development Financial Institutions Fund of the U.S. Department of the Treasury, and has now finished placing its latest $70 million allocation. The Travois family of companies raises capital for housing and economic development in Indian Country and provides educational, environmental, architectural and asset management services. For more information, visit www.travois.com.