Capital One Wins Hurricane Tax Credits

Capital One Financial Corp. was among 13 organizations to receive $600 million in tax credits to support loans for businesses setting up operations in areas of the Gulf Coast devastated last year by hurricanes Katrina and Rita.

The McLean credit card lender qualified for up to $100 million in federal tax credits because of its purchase last November of Hibernia Bank, which has 300 branches in Louisiana and Texas.

Through its Hibernia Community Renewal Fund LLC, Capital One will receive dollar-for-dollar matching tax credits for business loans that it plans to offer to a wide array of firms in low-income areas of Louisiana at interest rates three to four percentage points below market.

The tax credits are part of a program approved by Congress in December 2005 to provide incentives for financial institutions and private investors to spur business development in the Hurricane Katrina Gulf Opportunity Zone. The Treasury Department, which administers the program, announced the first round of awards last week. The agency plans to allocate an additional $400 million in credits next year.

"This allocation will enable Capital One to continue to provide capital to underserved areas and pass along greater economic benefits to the borrower," said Rob Stuart, Capital One's commercial banking arena manager.

Greystone CDE LLC of Warrenton will receive tax credits for up to $35 million for its loans to real estate developers and builders, which may be at four percentage points below market.

The groups receiving the tax credits include nonprofit organizations, banks, and businesses that will invest in or make loans for retail centers, health-care clinics, housing developments, charter schools, and other projects, according to Bill Luecht, who works for the Treasury Department's Community Development Financial Institutions Fund.

J.P. Morgan Chase & Co.'s Chase New Markets Corp. was allocated $50 million in tax credits for real estate and retail funds, which it said it will launch today in a news conference in New Orleans.

The fund will allow the company to offer more flexible and nontraditional loan terms, as well as longer interest-only periods and amortizations, according to J.P. Morgan.

Among the other tax credit recipients, the National Tribal Development Association will receive up to $30 million in tax credits for economic support it provides to Louisiana's Houma Nation and Mississippi's Choctaw communities.