With federal and state government funds drying up and private donations stalled, Caterpillar Inc. and Peoria Riverfront Museum developers faced a stark choice in 2006.

Find new ways to raise a lot of money or watch the project begin to wither.

On Friday, they officially introduced and explained a complicated new strategy they hope will re-energize the moribund fundraising campaign for the proposed $65 million museum.

Called the New Markets Tax Credit program, it's a federal program run by the U.S. Treasury Department that could generate $20 million to $25 million for the museum and narrow the money gap between what's been raised and what's still needed.

Started in 2000, the program was designed to spur $15 billion of private investment in community enhancing projects located in low-income areas. The Museum Square site, located at the old Downtown Sears block, qualifies as a low-income area, museum officials said.

Jim Vergon, chairman of Lakeview Museum's board of directors, called the Peoria Riverfront Museum the "poster child" of projects eligible for this tax credit program.

"It's just the kind of project they are looking for," he said.

Examples of New Markets projects include a commercial and cultural center on an abandoned aerospace factory in San Diego and the rehabbing of a National Guard Armory into a performing arts center in Portland, Ore.

The program makes available a 39 percent credit against federal income taxes spread over a seven-year investment.

To date, after nearly four years of asking for money, the Peoria Riverfront Museum Collaborative Group has raised $24 million, about 37 percent of the overall total, which includes public and private dollars.

The group had hoped to hit up local, state and federal government sources for $30 million, but so far have raised just $6 million, with another $6 million in sight. Private donations total $18 million, or 51 percent of the $35 million being sought.

Something had to be done.

"Projects like this don't happen overnight," said Mark Johnson, project manager for the Caterpillar Visitors Center proposed to be located adjacent to the museum on Downtown's Museum Square. "We're at halftime, and it was time to assess what went right and make appropriate adjustments to the game plan."

Lakeview Museum director Jim Richerson learned of the New Markets Tax Credit program six months ago. Here's how it works, briefly:

By the end of this month, banks or other investors interested in participating in the program as something called a Community Development Entity (CDE) must apply to the Treasury Department. A CDE is basically a subsidiary business of the investing company. The application would include an amount of money the CED intends to invest in whatever eligible project it chooses. It would receive a corresponding credit against federal income taxes.

The Treasury Department will respond to the applications by late summer, informing each CDE of the amount of tax credits allocated. The CDE's then look for projects to help finance. Project officials, such as the Museum Collaborative Group, become suitors in the process as they try to sell their proposals and make them attractive to the people with the money.

That's where Caterpillar's connection to the Peoria Riverfront Museum comes in handy, Mark Johnson said. The company already is comfortable and knowledgeable inside the world of the kind of financial institutions that would be interested in participating in the tax credit program. Caterpillar corporate tax and treasury staff are involved in the development of the financing plan for the Riverfront Museum. Caterpillar has said it won't build its $35 million visitors center if the Riverfront Museum is not built.

"The Caterpillar name behind the project means something," Johnson said. "We've got instant credibility when we walk through the door."

Caterpillar corporate treasurer Kevin Colgan, who is also treasurer of the Lakeview board of directors, said the tax credit money could make the museum project economically viable. Money raised so far plus the amount possible from the tax credit program totals $46 million. Add $19 million in targeted private and public money and the $65 million goal is reached.

Changing fundraising plans in the middle of the process has moved back deadlines. Officials hope to finish the New Markets financing plan by late summer and start construction of the underground parking deck by September 2008.

Construction would begin on the visitor's center and museum by January 2009. Exhibit installation would begin in March 2010 with a grand opening scheduled fro November 2010, about a year behind original projections.