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New Market Tax Credit News Briefs - August 2023

Budget legislation in Illinois that took effect in June makes changes to the state new markets tax credit (NMTC), historic tax credit (HTC), River Edge Redevelopment Act and other issues. S.B. 1963 includes provisions that change the sunset date for the state NMTC to the end of fiscal year 2031 and retain the annual statewide allocation amount of $20 million for fiscal years beginning before July 1, 2023, going to $25 million thereafter. The bill also extends the sunset date for the state HTC five years, to Dec. 31, 2028, while increasing the annual allocation amount for the state HTC from $15 million to $25 million beginning Jan. 1, 2024. The legislation declares two additional cities–Joliet and Kankakee–as eligible as River Edge Redevelopment Zones, another state community development incentive.

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Nevada Gov. Joe Lombardo signed legislation in June that increases the overall amount of qualified equity investments (QEIs) allowed under the state’s NMTC incentive and adds a new “impact QEI” with a higher credit amount. S.B. 240 adds $170 million in QEIs for the period of July 1, 2024, through July 1, 2026, to the total allocation amount. Impact QEIs include those made by community development entities (CDEs) in certain types of manufacturing businesses or businesses in which the majority of owners are from certain historically disadvantaged groups. While the state NMTC is worth 58% over seven years, an impact QEI creates NMTCs that are worth 75% over seven years. The bill also precludes QEIs made July 1, 2024, through July 1, 2026, from being used as tax credits against insurance premium tax.

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Legislation signed into law in June by Louisiana Gov. John Bel Edwards provides $150 million in QEI authority for the state NMTC and makes other changes to the incentive. S.B. 151 provides the additional QEI authority beginning Aug. 1 and requires tax credit recapture if all investment isn’t made within 12 months. The Louisiana NMTC is for 45% of QEIs, taken 14% in Years 1 and 2 and 8.5% in Years 3 and 4.

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Grassland Dairy Products closed on $10 million in NMTC financing from CEI Capital Management LLC (CCML) to grow operations at its Greenwood, Wisconsin, facility. Grassland Dairy Products looks to acquire equipment as well as expand its raw milk production capacity by nearly 30% while creating 34 new full-time positions. U.S. Bancorp Impact Finance provided NMTC equity. CCML, Waveland Community Development LLC and ImpactSeven Inc. allocated NMTCs.

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The three agencies that oversee Community Reinvest Act (CRA) regulation–the Federal Reserve, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (OCC)–June 23 made available their 2023 list of distressed or underserved nonmetropolitan middle-income geographies. The designations reflect local economic conditions, including unemployment, poverty and population changes. Revitalization or stabilization activities in those areas are eligible to receive CRA consideration under the community development definition for 12 months after the publication of the list. There is a one-year lag period for geographies included in last year’s list that are no longer designated as distressed or underserved.

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The Community Development Financial Institutions (CDFI) Fund July 5 released fiscal year 2021 data for active recipients in its CDFI program and Native American Community Assistance (NACA) program. Award recipients reported that approximately 67% of their lending portfolio was targeted in distressed areas and to underserved populations, more than 20% of lending was in nonmetropolitan areas, and more than 31% of lending went to high-poverty areas. More than 400 institutions reported data. The CDFI program uses financial awards and training opportunities to invest in and build the capacity of CDFIs, while the NACA program provides financial assistance awards to Native CDFIs through loans, grants, equity investments, deposits and credit union shares.

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The CDFI Fund published a notice in the July 7 Federal Register seeking comments on the Capital Magnet Fund (CMF). The notice seeks feedback on how the CDFI Fund can enhance and improve the CMF, streamline or minimize the administrative burden on applicants, and safeguard public funds. Comments must be received on or before Sept. 5. CMF awards go to CDFIs and nonprofit organizations for the development, preservation, rehabilitation and purchase of affordable housing for extremely low, very low and low-income families or for economic development activities in conjunction with affordable housing activities that implement a strategy to stabilize or revitalize a low-income or underserved rural area.

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Rocky Boy Tribal Health Center in Elder, Montana, received $11.3 million for an administrative office building, including NMTCs. The financing will help the center improve and expand its behavioral health and substance abuse services. The endeavor received an NMTC allocation from MoFi and a tax credit investment from U.S. Bank.

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Adjacent sites in Olean, New York, were part of a restoration and redevelopment into First National, a 21-apartment site with commercial, event and art spaces. The former First National Bank building and neighbor Siegel’s Shoe Store are part of a $12.5 million revitalization effort. NMTCs as well as HTCs were used as part of the redevelopment.

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The OCC released a list of 19 CRA performance evaluations made public in June. Fourteen were satisfactory, four were outstanding and one was evaluated as needs to improve. The list includes national banks, federal savings associations and insured federal branches of foreign banks.

Journal Category:

Low-Income Housing Tax Credits

Authors:

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