New Markets Tax Credit
- Holland & Knight tax lawyers have been active counselors on New Markets Tax Credit (NMTC) transactions since the program's inception and represent all parties in NMTC transactions: community development entities, investors, lenders and qualified active low-income community businesses (QALICBs).
- Our attorneys are experienced in representing clients in a wide range of NMTC projects, including charter schools, mixed-use developments, health centers, grocery stores, community service facilities, arts centers and museums, public transit and many other sectors.
- Our support of clients in NMTC transactions isn't limited to tax advice. Our attorneys have the knowledge and resources to do everything necessary to get these deals done, including performing due diligence on real estate and environmental matters, and ensuring that projects are structured to be successful after they are funded.
- NMTCs frequently are used in tandem with state credits and other federal credits, such as those for low-income housing or historic preservation. Our NMTC lawyers are experienced in combining other tax credits used to encourage investment in distressed communities with the NMTC.
Our New Markets Tax Credit (NMTC) attorneys have represented clients in hundreds of projects since this program was authorized by the Community Renewal Tax Relief Act of 2000 as part of a package of incentives to encourage investment and job growth in economically distressed neighborhoods. As of the end of 2016, the NMTC program had resulted in leveraged investment of more than $42 billion in communities with high rates of poverty and had created more than 700,000 jobs.
We closely follow developments in Congress as lawmakers consider the extension of the NMTC program (scheduled to expire at the end of 2019) as well as related tax credits and possible changes that could be part of an overall reform of federal taxes. Complicating the picture for clients is compliance with a complex and evolving regulatory scheme involving tax regulations issued by the Internal Revenue Service (IRS) and policy rules issued by the Community Development Financial Institutions (CDFI) Fund, both branches of the U.S. Department of the Treasury. Vigilance is required to keep up with a shifting landscape in the compliance area.
Through active participation in industry groups, our attorneys stay abreast of tax and policy developments regarding the NMTC and related tax laws to give clients timely advice. We are advocates for the NMTC program and support its goal of encouraging private investment in these underserved urban communities.
Combining NMTC with Other Credits
Our New Markets Tax Credit Team takes a holistic approach and understands that tax credits frequently are used as a package. We often advise clients on transactions that combine NMTCs with credits for historic preservation, low-income housing (LIHTC), state credits for investment in economically distressed areas and various forms of government financing. Structuring transactions involving residential uses is particularly complex because the NMTC cannot be used for residential rental property or combined directly with the LIHTC. We also have assisted clients in combining NMTCs with Health Resources and Services Administration (HRSA) grants for community health centers, and have used other creative strategies, such as pairing these credits with the EB-5 immigrant investor program that grants visas for foreign nationals whose investments create jobs.
Leveraging NMTC for Diverse Projects
Our clients run the gamut of NMTC participants. We represent major banks, institutional investors, investment funds, community development entities (CDEs) and qualified active low-income community businesses (QALICBs).
Our Tax Credit Transactions Practice has more than 40 attorneys in offices across the U.S. We offer clients comprehensive advice on how the NMTC fits with their overall strategies in a variety of industries and contexts.
Our NMTC projects have included food banks, health centers, museums, grocery stores, community centers, transit systems, hotels, college and university facilities, telecommunication systems, solar facilities, brownfields cleanup, and manufacturing and production facilities. We also have assisted investors in using NMTCs to establish or expand charter schools throughout the country. We have used a variety of creative structures to combine NMTC community facility or commercial projects with related low-income housing projects, including side-by-side projects or integrated projects using a condominium structure.
Our extensive NMTC experience in such a wide range of sectors has made our attorneys sought-after speakers at educational and industry programs.