Session 29 - New Markets Tax Credits 29...Session 29 - New Markets Tax Credits Author Martens -...
Transcript of Session 29 - New Markets Tax Credits 29...Session 29 - New Markets Tax Credits Author Martens -...
ZAMAGIAS PROPERTIES
NMTC Experiences
WHY NMTC ARE IMPORTANT
• Rents don’t create enough value to support development, particularly in distressed areas.
CompletedValue
Tax Credits
Cost
KEPPEL BUILDING
Completed Value $4.8MM
NMTC $2.4MM Cost
$8.5MM
HTC $1.3MM
ACTIONS TO TAKE
• Get to know the CDE’s that cover your geography
• Understand what their objectives are
• Get the project in position – more projects than available tax credits
• Seek community support
• Stay in front of the CDE’s through the allocation process
• Give yourself time to accomplish – 2-3 years.
CHALLENGES
• Requires $$$ up front to get to closing table
• Property control – extended purchase agreement or acquisition
• Plans, permits, contractor, all City approvals,
• All funding sources in place – equity, leveraged loan, bridge loan
• How the tax credit structure gets unwound
• Loan forgiveness
• Refinance
CLOSING PROCESS
• Very complex – put the right team together who understand NMTC – CDE’s want to know the closing process will run smoothly.
• Leveraged Lender
• Tax Credit Investor
• Counsel – everyone has their own representation
• Understand it is expensive
• All monies are funded day one
• Net about 18% of total award
ZAMAGIAS PROPERTIES
NMTC Experiences