How to obtain New Markets Tax Credits (#NMTC) for your MIXED-USE real estate project.
These can subsidize 15% to 20% of your project's cost.
Background thread:
These can subsidize 15% to 20% of your project's cost.
Background thread:
https://twitter.com/Adam_Tkaczuk/status/1447947614566162436
You'll need to check the following boxes:
1. Location
2. Community Benefit
3. Financing
4. Secure the Tax Credits
1. Location
2. Community Benefit
3. Financing
4. Secure the Tax Credits
Location:
Only economically distressed areas qualify. So, enter your project's address into the mapping tool below. If it's RED, it qualifies.
policymap.com/widget?sid=117…
Only economically distressed areas qualify. So, enter your project's address into the mapping tool below. If it's RED, it qualifies.
policymap.com/widget?sid=117…
Community Benefit (1/2):
Projects must provide a benefit to the community. These can be housing, healthcare, social services, education, job creation, food access etc.
Projects must provide a benefit to the community. These can be housing, healthcare, social services, education, job creation, food access etc.
Community Benefit (2/2):
For a mixed-use development, you'll have 25% of your apartments be "Affordable" (NOT = Low-Income). Then, you'll have a tenant on the first floor that provides another community benefit. Nonprofits work well here.
For a mixed-use development, you'll have 25% of your apartments be "Affordable" (NOT = Low-Income). Then, you'll have a tenant on the first floor that provides another community benefit. Nonprofits work well here.
Financing (1/2):
The CDE and the tax credit investor will take first position on your project's collateral for a period of 7 years. Your bank will have to take second position. This will be hard unless your bank has done these projects before.
The CDE and the tax credit investor will take first position on your project's collateral for a period of 7 years. Your bank will have to take second position. This will be hard unless your bank has done these projects before.
Financing (2/2):
New Markets Tax Credit funding is the last money into a deal. You'll have to get 80% of your project's funding first.
Tweeting "Funding Secured" won't do it. The CDEs will want to see commitment letters and evidence of financing.
New Markets Tax Credit funding is the last money into a deal. You'll have to get 80% of your project's funding first.
Tweeting "Funding Secured" won't do it. The CDEs will want to see commitment letters and evidence of financing.
Securing the Tax Credits (1/2):
You'll need to pitch your project to Community Development Entities (CDEs) that are active in your area and that invest in projects with your defined community benefit.
You'll need to pitch your project to Community Development Entities (CDEs) that are active in your area and that invest in projects with your defined community benefit.
Securing the Tax Credits (2/2):
You'll also need to identify CDEs that still have or will likely have tax credits available. Given the annual funding process, you may have to plan a year out.
This is the hardest part of the process and I'll devote several threads to this topic.
You'll also need to identify CDEs that still have or will likely have tax credits available. Given the annual funding process, you may have to plan a year out.
This is the hardest part of the process and I'll devote several threads to this topic.
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