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