New Markets Tax Credits
The New Markets Tax Credits (NMTC) program is a powerful tool NCCLF uses to help nonprofits and community-serving businesses invest in their local communities. Established by Congress in 2000, the NMTC program was created to provide an opportunity for individual and corporate taxpayers to make investments that stimulate economic development and create jobs in low-income communities.
Since the program’s inception, $35.3 billion in NMTCs have been invested in low-income communities. NMTC financing provides borrowers with low-cost, interest-only loans for seven years, typically to build or rehab major Community Facilities and commercial real estate projects serving low-income communities. At the end of the seven year period, the NMTC investor will frequently “put” its interest in the project to the borrower. This can result in reducing the borrower’s project debt by about 25%-30% of the total NMTC financing amount, helping it to build its long-term net-asset base. NCCLF works with clients interested in the NMTC program in three ways: as a Community Development Entity (CDE) which deploys the NMTCs, as a leverage lender, and as a expert adviser structuring NMTC financing. Clients do not need to work with NCCLF as a consultant to take advantage of our NMTC financing, or vice versa.
Lending NMTC Services
NCCLF has received allocations of NMTC totaling $158 million since 2008 using them to finance community facilities and other projects that make a significant impact on low-income communities in California. Past projects include the Ed Roberts Campus in Berkeley, SFJAZZ in San Francisco, and the West Hills College Farm of the Future in Coalinga, the East Oakland Youth Development Center in Oakland, and Salud Para La Gente, a healthcare clinic in Watsonville. . In addition to deploying NMTCs in its role as CDE, NCCLF offers leverage loans for NMTC projects. These loans provide leverage to maximize the size of the NMTC equity investment to complete a total financing package. Our lenders work in partnership with our borrowers to structure leverage loans uniquely suited to each project. We regularly provide leverage loans to projects for which we are not providing the NMTC allocation.
Consulting NMTC Services
NCCLF’s Real Estate consulting team is well known for its expertise in project planning and structured finance. Our consultants work from early planning through loan closing to devise projects that best meet the program and financial needs of our clients. We help clients understand what they want from a real estate project and how it will impact their financial health. Then, we call on our years of experience to structure NMTC financing that provides the greatest financial benefit to meet their needs. We partner with our clients through all phases of the financing process, from feasibility analysis through closing, to ensure the best possible outcomes. If your nonprofit is considering a large real estate project, please get in touch with us to see how NCCLF’s consulting team can work with you as a trusted adviser.