The Phoenix Community Development and Investment Corp. approved a $34.3 million new markets tax credit bridge loan for RED Development’s construction of the Kimpton Palomar Hotel at CityScape in downtown Phoenix.

The loan program provides below-market-rate financing small businesses, developers and mission-focused nonprofits to encourage neighborhood revitalization and stabilization in qualified areas.

“Prior to the CityScape development, this area was occupied by an outdated park and an underutilized surface parking lot with no landscaping and was generating zero jobs and zero tax revenue for the city,” said Phoenix City Councilman Michael Johnson. “This public/private partnership enhances downtown Phoenix’s redevelopment and renaissance efforts, creates a sustainable tax revenue source and long-term jobs.”

The 250-room Hotel Palomar is planned for a 2012 opening in the downtown Phoenix area in a new mixed-use development called CityScape. Kimpton Hotels & Restaurants will operate the new luxury boutique hotel in a 34-story tower at One South Central that will also include approximately 200 luxury residential condominium units, plus lower-level retail. The new Palomar will anchor one end of CityScape, which includes the office tower, the Hotel Palomar and a retail plaza.