Category Archives:New Market Tax Credits

Joint IRS-HUD Administration for LIHTC Proposed

A report by the U.S. Government Accountability Office (GAO) says that Congress should consider designating the Department of Housing and Urban Development (HUD) as a joint administrator with the Internal Revenue Service (IRS) of the Low-Income Housing Tax Credit (LIHTC) program. The GAO suggests HUD should be given responsibility for regular monitoring of housing finance agencies and analyzing the effectiveness of the program. Joint administration with HUD could better align program responsibilities with each agency’s mission and more efficiently address existing oversight challenges.

The report, conducted at the request of Senate Judiciary Committee Chairman Charles Grassley, R-Iowa, cites “minimal” oversight by the IRS of the LIHTC and points out that the IRS already shares joint administration duties with other agencies both the New Markets Tax Credit (NMTC) program and the Historic Tax Credit (HTC) program.

What GAO Recommends

Congress should consider designating HUD as a joint administrator of the program. HUD’s role should include oversight responsibilities (such as regular monitoring of HFAs) to help address deficiencies GAO identified. Treasury agreed HUD could be responsible for analyzing the effectiveness of LIHTC, with IRS continuing to enforce tax law. HUD and IRS did not comment on the matter for congressional consideration. HUD supported consideration of a structure for enhanced interagency coordination. The association representing HFAs disagreed with the matter. GAO maintains that joint administration would strengthen program oversight.

CDFI Fund Announces New Market Tax Credit Winners

The U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund) today announced more than $3.5 billion in New Markets Tax Credit awards aimed at stimulating investment and economic growth in low-income urban neighborhoods and rural communities nationwide. A total of 76 organizations (Allocatees) across the country will receive tax credit allocation authority under the 2014 round of the New Markets Tax Credit Program.

“Every community deserves a chance to succeed, and the New Markets Tax Credit Program is an economic development tool that spurs growth and breathes new life into neglected, underserved low-income communities,” said U.S. Treasury Secretary Jacob J. Lew. “The tax credit allocation authorities announced today will go to community development organizations that will make much needed private sector investments in businesses and real estate projects located in the nation’s distressed urban and rural communities. Along with these investments come jobs, vital services, and opportunities where they are needed the most.”

“Over its fifteen year history, the New Markets Tax Credit program has successfully fostered competition for private sector investment into low-income communities that lack access to the capital needed to support and grow businesses, create jobs, and sustain healthy local economies,” said Annie Donovan, Director of the CDFI Fund. “The investments made possible by today’s awards will have significant impact nationwide.”

View the 2014 Winners

CDFI Fund Releases New Markets Tax Credits Data for 2003-2013

The Community Development Financial Institutions Fund (CDFI Fund) has released data collected on New Markets Tax Credit (NMTC) investments across the nation through fiscal year (FY) 2013. The CDFI Fund requires all Community Development Entities (CDEs) that have been awarded NMTC allocations to submit an annual report detailing how they invested Qualified Equity Investment (QEI) proceeds in low-income communities. These reports must be submitted to the CDFI Fund by the CDEs, along with their audited financial statements, within six months after the end of their fiscal year.

Through the first 11 application rounds of the NMTC Program, the CDFI Fund has made 836 awards, allocating a total of $40 billion in tax credit authority to CDEs through a competitive application process. This $40 billion includes $3 billion in Recovery Act allocations and $1 billion of special allocation authority to be used for the recovery and redevelopment of the Gulf Opportunity Zone.

CDEs are required to report their NMTC investments in the CDFI Fund’s Community Investment Impact System (CIIS) for a period of seven years. Due to a time lag in reporting, NMTC investments reported in CIIS are less than the total amount allocated for the NMTC Program.

Related Documents

Kennedy Sutherland to Present at Texas Rural Conference

The conference features engaging and accomplished leaders in business and government. The theme this year is “Rural Matters: Growing Our People, Resources, and Future.” The conference will highlight topics and best practices in business and economic development, community development, and rural statewide issues.

A large number of state and federal agencies, along with private sector partners, will host and participate in this event; the largest of its kind to focus on the challenges facing rural Texans. This is a statewide conference hosted by the Office of the Governor and UTSA’s Institute for Economic Development – SBDC Rural Business Program.

On Day 2 at 11:00 am come to hear Kennedy Sutherland attorney, Dub Sutherland, present on innovative financing with Nathan Roach from Mass Ventures, Scot Vidrine from Capital Farm Credit and Katherine Sims of the Council of Development Finance Agencies.

View the Agenda                   Register for the Conference

Kennedy Sutherland Presents at Historic Tax Credit Workshop

The new Texas Historic Preservation Tax Credit has the potential to make a major impact on economic revitalization throughout our community and across our state. It offers wide-ranging opportunities for a diverse group of stakeholders, including developers, architects, realtors, urban planners, preservation consultants, nonprofits, investment firms, and local and state leaders and officials. Knowing how to navigate the program is key, though. This four hour workshop will focus on the nuts and bolts of the new credit, including what projects will qualify, who can take the credit, how the credit can be sold, and more. Our expert speakers will address the Federal Historic Tax Credit, New Market Tax Credit and other companion credits to illustrate how they can be combined. They will also present various projects and discuss their expectations for how the new state tax credit will function in the coming years.

FRIDAY, MAY 15
8AM-NOON
THE NORTH DOOR, 502 BRUSHY STREET, AUSTIN 78702

$50 GENERAL ADMISSION, $10 STUDENT ADMISSION

Speakers Include:

Sharon Fleming, Director of the Division of Architecture and Deputy State Historic Preservation Officer for the Texas Historical Commission.

Valerie Magolan, Rehabilitation Tax Credit Specialist for the Texas Historical Commission.

Ben A. Dupuy, President of St. Charles Avenue Advisors in New Orleans and an expert in tax credit syndication.

Hal Fairbanks, Vice President of Acquisitions for HRI Propertiesin New Orleans and an expert in community development through adaptive reuse.

Scot E. Butcher, Principal of Tax Incentive Finance, LLC and Tax Incentives Consultants, LLC and an expert in business incentives and public finance.

Patrick J. Kennedy Jr., Managing Partner of Kennedy Sutherland LLP in San Antonio and an expert in New Market Tax Credits.

This workshop is presented in conjunction with the Texas Historical Commission.

Learn How New Markets Tax Credits Stimulate Growth

Nationwide, more than $38 billion of New Markets Tax Credit capital has been invested into thousands of businesses and real estate developments since 2002. Please join Baker Tilly, Chase Community Development Banking, Community Hospitality Healthcare Services, Raza Development Fund, Texas Mezzanine Fund, and TransPecos Development Corporation to learn how to access New Markets Tax Credits for your qualified business or real estate development. These unique tax credits have helped developers and business owners gain access to a low-cost source of capital to solve a portion of their capital needs while creating significant community and economic impact in distressed areas. Join them on Wednesday, March 25th from 8:30 to 10:30 am to learn more about the New Markets Tax Credit program and find out if your project or business qualifies.

To register, please contact Wendy Jones atwendy.j.jones@chase.com. There is no charge to attend.

Join Kennedy Sutherland at New Market Tax Credits Event

Nationwide, more than $38 billion of New Markets Tax Credit capital has been invested into thousands of businesses and real estate developments since 2002. Please join Baker Tilly, Chase Community Development Banking, Community Hospitality Healthcare Services, Raza Development Fund, Texas Mezzanine Fund, TransPecos Development Corporation, and Kennedy Sutherland LLP to learn how to access New Markets Tax Credits for your qualified business or real estate development. These unique tax credits have helped developers and business owners gain access to a low-cost source of capital to solve a portion of their capital needs while creating significant community and economic impact in distressed areas. Please join us to learn more about the New Markets Tax Credit program and find out if your project or business qualifies.

UPCOMING SESSION
Wednesday, March 25th
8:30 A.M. – 10:30 A.M.
Plaza Club
100 W. Houston, #2100
San Antonio, TX 78205

To register, contact Wendy Jones at: wendy.j.jones@chase.com

New Market Tax Credit Legislation Introduced

Yesterday, Congressmen Pat Tiberi (R-OH), Richard Neal (D-MA), and Tom Reed (R-NY) introduced a bill that would make permanent a tax credit proven to create jobs and encourage community investment. The New Markets Tax Credit, established in 2000, attracts capital by providing private investors with a 39 percent credit against federal income taxes for investments made in some of the most distressed areas in the country. This bill would extend and expand this program.

“Since its inception in 2000, the New Markets Tax Credit has shown that it is a federal program that works—spurring investment that that grows local economies and generates jobs in the most distressed communities across the nation.” Rep. Neal said. “In the last fourteen years, the New Markets Tax Credit has generated $63 billion in capital for projects in low income communities resulting and created over 744,000 jobs in traditionally overlooked communities.”

“However, barring Congressional action, this critical initiative will soon end. That is why I am proud to introduce legislation with Reps. Tiberi and Reed to make the New Markets Tax Credit permanent, and ensure another decade of key investments reach Western Massachusetts,” Rep. Neal added.

“The New Markets Tax Credit is a powerful tool to bring rebirth in our communities.” said Reed. “Making this tax credit permanent would ensure that successful projects will continue to remake our communities. It helps fulfill our commitment to erasing poverty and caring for communities.”

U.S. Senator Roy Blunt (R-MO) plans to introduce companion legislation in the Senate.

Reauthorizing NMTC Program

The Obama administration announced that it plans to continue to allocate funds to permanently reauthorize the New Markets Tax Credit (NMTC) program in 2016. In addition, it will requests $5 billion of allocation authority per year, as well as authority to offset alternative minimum tax (AMT) liability. The budget also proposes a new Manufacturing Communities Tax Credit (MCTC), with $2 billion in tax credit authority in each of three years through 2018. The proposal would also allow the Community Development Financial Institutions (CDFI) Bond Guarantee program to continue operating with a cap of $1 billion per year, but with no budgetary cost for new issuances.

New Market Tax Credits Questions Updated

The New Market Tax Credit’s Frequently Asked Questions document which is put out by the Community Development Financial Institutions Fund (CDFI Fund) has been updated. The update replaces the September 2011 version by adding, revising, or updating select questions from the earlier version. Updated guidance includes:

  • Dissolution of subsidiary;
  • Termination of Allocation Agreements;
  • Designating a “non-real estate qualified equity investment”;
  • Clarification of “real estate QALICB” versus a “non-real estate QALICB;”
  • Defining Material Events;
  • Restrictions on the use of bond proceeds;
  • Process for amending Allocations Agreements, adding subsidiary CDEs, and changing Service Areas;
  • Meeting the requirement of the Allocation Agreement on Targeted Distressed Communities for a QALICB with tangible property in several census tracts;
  • Defining “Affordable Housing” and measuring “Innovative Investments” for the purpose of meeting the Allocation Agreement;
  • Determining if a Qualified Low-Income Community Investment supports businesses that obtain HUB Zone certification.