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Using innovative financing to expand a Lakota Pine Ridge school.

June 24, 2011
Citi, Citi

Citi Community Capital, the community development lending and investing arm of Citi, in partnership with Dakotas America LLC, the primary recipient of new markets tax credits in the state of South Dakota, recently closed on a combined $24 million New Markets Tax Credit ("NMTC") transaction that will finance the major rehabilitation and expansion of a facility used by the Shannon County School District as a K-8 public school.

Located near Rockyford, South Dakota, the school district encompasses the Lakota Pine Ridge Indian Reservation. The new facility will increase the capacity of the school to accommodate a growing population and improve the quality of what is offered to students. Pine Ridge has historically ranked as one of America's most impoverished communities.

The transaction could not have been accomplished without the involvement and support of GROW South Dakota, a non-profit corporation focused on creating sustainable communities through investments for housing, educational and economic opportunities for the region. GROW established a subsidiary entity that will use the funds from the transaction to construct and own the new facility, and lease it to the school district for ongoing operating use.

"There is a great need in the United States to improve the quality of the education of our students. By leveraging Citi's capacity to provide both debt financing and investor equity totaling $ 17.6 million, along with a New Markets Tax Credit allocation of $15 million, Citi is honored to be a part of this vital project in Shannon County, South Dakota that provides for both job creation today along with better preparation for the labor force of tomorrow," said Andrew Ditton, co-head of Citi Community Capital, in announcing the deal.

The new facility will provide space for an array of outreach programs such as sports, art, music, theatre, language education, and summer camps with the goal of improving the overall quality of education and reducing drop-out rates. A longer term goal is to reduce exceedingly high unemployment rates. The project helps maintain approximately 356 permanent full-time jobs in the school district, and also creates about 30 new construction jobs. The new facility will provide space to accommodate up to 20 additional teachers.

In addition to the Rockyford School project, plans are also underway to allocate up to an additional $20 million for the renovation and construction of the Batesland School in nearby Batesland, South Dakota.

Since the U.S Treasury Department New Markets Tax Credit program's inception in 2000, Citi has helped numerous Qualified Community Development Entities (CDEs) successfully compete for tax credit allocations. The $29.5 billion in equity raised through tax credit during this time is stimulating growth and supporting job creation in low-income communities across the U.S.

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