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New Markets Tax Credits News Briefs - May 2011

Advantage Capital Partners invested $5.7 million in manufacturing company Barton Nelson through the federal new markets tax credit (NMTC) and Missouri New Markets Development programs. Advantage Capital said the operating and growth capital will enable the company to retain 72 jobs in Kansas City, Mo. and drive job creation in the state. Specialty advertising product manufacturer Barton Nelson is known for rebranding the original sticky note as a self-adhesive marketing tool.

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The New York Legislature and Gov. Andrew Cuomo passed a 2011-2012 state budget in March. The $132.5 billion budget includes several tax credit provisions. Among other things, New York's budget bill authorizes the Empire State Development Corporation to finance as much as $30 million in federal new markets tax credits to support job creation and development efforts in low-income communities through the state. Find a copy of the enacted budget bill at www.newmarketscredits.com.

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The East St. Louis Housing Authority closed financing on the Jazz @ Walter Circle development, the first NMTC transaction to use public housing development funds in a NMTC-leveraged financing structure. When completed in 2012, the East St. Louis, Ill. development will offer 74 affordable senior rental units, a community center, several offices, a health and wellness facility, retail space and a grocery store. It will also be built to LEED Gold certification standards and feature solar panels, community gardens and a rooftop terrace. In addition to U.S. Department of Housing and Urban Development Section 8 funds, Jazz @ Walter Circle will be financed with city tax increment financing and state energy funds. People's Ventures LLC allocated $17 million in NMTCs to the project and Valley National Bank served as the tax credits investor.

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IFF established an $8 million loan pool to provide low-cost financing access for Missouri not-for-profits that are eligible for the NMTC program. Central Bank of Kansas City Community Development Entity provided the NMTCs, U.S. Bancorp Community Development Corporation (USBCDC) purchased the credits to provide capital for the loan pool, and IFF provided additional capital and will underwrite and manage all loans. IFF said the new loan pool will bring NMTC benefits to projects that, typically, are too small to take advantage of the program. Eligible borrowers include not-for-profits considering capital improvement projects of as much as $1.5 million.

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Arkansas Gov. Mike Beebe is expected to sign Act 1166, the Development Investment Tax Credit, which is designed to promote the rehabilitation and development of structures within the state's central business districts and stimulate their local economies. The tax credit would equal 25 percent of the rehabilitation or development expenditures up to the first $500,000 for income-producing property or the first $200,000 for non-income-producing property. The credit program, which would be in effect for two years, would be allocated on a first-come, first-served basis and capped at $1 million per year. Allocatees would be permitted to sell, transfer or assign the credit only once.

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The Louisiana Department of Revenue issued a final rule on the application, transfer and claim process for the NMTC. Taxpayers must submit the NMTC application, form R-10609, to the Special Programs Division of the Louisiana Department of Revenue, according to Regs. Section 1911. Applications are processed in the order they are received. If the taxpayer is approved for the credit, the DOR will provide an NMTC summary sheet with a transfer section that must be updated each time the credit is transferred. The taxpayer is required to send an updated summary sheet to the department within 30 days of the sale. To claim the credit, the taxpayer must attach the summary sheet to their income or franchise tax return. The final rule took effect in March. Read the full text of Regs. Section 1191 in the March 20 Lousiana Register at www.doa.louisiana.gov.

Journal Category:

New Markets Tax Credit

Authors:

Novogradac

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