New Markets Tax Credit
Holland & Knight has substantial experience with the New Markets Tax Credit (NMTC) Program. Since the program’s inception, we have worked with clients and industry groups to analyze and develop creative solutions to the tax and structuring issues arising under the NMTC program and to close NMTC transactions.
We also have represented community development entity (CDE) allocatees from each of the allocation rounds and syndicators in putting together leveraged NMTC investment funds and structuring individual investments in qualified active low-income community businesses (QALICBs). Our attorneys have spent considerable time assisting clients in addressing the concerns of lenders to leveraged NMTC investment funds, including analyzing collateral and control issues at the upper-tier investment fund, CDE and QALICB levels, addressing tax issues inherent in the leveraged fund structure, and working with clients to design structures that maximize the value of the NMTC. We have represented QALICB borrowers and equity recipients in NMTC financings and have rendered required tax opinions. Additionally, we have represented investors in NMTC transactions, especially transactions combining the NMTC with the historic tax credit (HTC).
Holland & Knight attorneys also have participated in groundbreaking transactions. For example, in the course of our representation of a large syndicator/leverage lender, we led the charge to convince its largest investor, and both their inside and outside counsel and accountants, to revise its FIN-46 analysis and to adopt a single member LLC structure, a change that had a substantial financial benefit to our client’s business. Likewise, representing the tax credit investors and others, we have participated in many transactions that have closed to date combining various forms of HUD financing (Section 221(d)(4) and Section 220 HUD-insured loans or Section 108 loans) and NMTC loans. In particular, we have closed transactions utilizing HUD's "master lease" structure under the so-called "Garvin Memo" issued in 2008 and HUD Notice H09-18/HUD Mortgagee Letter 2009-40 issued in 2009, which superseded the Garvin Memo. We were also involved in transactions that pre-dated those HUD issuances and helped to shape HUD's approach to NMTC deals.
In recent years, we have been engaged by several clients to advise them on workout strategies for distressed or failing NMTC investments. Our workout and management team has devised and implemented successful workout strategies on a number of NMTC and NMTC/HTC transactions.
Holland & Knight’s NMTC attorneys are active participants in various educational and industry programs, speaking and teaching at such programs throughout the year. For example, our attorneys regularly speak at Novogradac & Company, Reznick Group, American Bar Association, League of Historic American Theatres, and National Housing & Rehabilitation Association conferences. Our attorneys also hold leadership positions with many of these organizations.