The United States Department of the Treasury’s Community Development Financial Institutions Fund (CDFI) has last week announced $7 billion in New Markets Tax Credit (NMTC) awards with the goal of economically revitalizing low-income communities across the country.  Particular outcomes that the CDFI hopes to achieve with this round of awards include investment in nonmetropolitan areas, job creation, expansion of minority-owned businesses, provision of healthcare to underserved communities, and extension of access to healthy foods within current food deserts.  A total of 120 organizations nationwide received tax credit allocation authority under this round of the NMTC Program, the largest amount in its history.

The NMTC can serve as a valuable means of reducing the debt or equity necessary to undertake a project.  In a typical NMTC transaction, a project sponsor can expect to receive a net benefit of 20 to 25 percent of project costs.  For example, a project with eligible costs of $10,000,000 can generate up to $2,500,000 of capital for the project thereby reducing the need for capital from traditional debt and equity sources to only $7,500,000.  This substantial benefit created by the NMTC Program allows it to function as a powerful mechanism for economic development.

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Photo of James O. Lang James O. Lang

James O. Lang focuses his tax and corporate project finance practice on tax incentive programs, Qualified Opportunity Zone and Qualified Opportunity Fund financing, tax credits, and related state and federal incentive programs.  Jim is closing over $8 billion of Qualified Opportunity Funds and…

James O. Lang focuses his tax and corporate project finance practice on tax incentive programs, Qualified Opportunity Zone and Qualified Opportunity Fund financing, tax credits, and related state and federal incentive programs.  Jim is closing over $8 billion of Qualified Opportunity Funds and ancillary Qualified Opportunity Zone deployment of funds and has closed or is structuring several billion dollars in tax credit incentivized transactions.  Jim represents funds, investors, lenders, community development entities, and for-profit and not-for-profit project sponsors in complex transactions where capital stacks require enhancement through incentive financing, including Qualified Opportunity Zone incentives, state and federal new markets tax credits, affordable housing and low-income housing tax credits, historic rehabilitation tax credits, and renewable energy tax credits. He works with funds, investors, lenders, project sponsors, and qualifying businesses to structure these tax incentive programs along with ancillary governmental and non-governmental financing programs, including inbound immigration and Visa investment programs, grants, and taxable and tax-exempt bonds. Jim works with clients on developing creative structures designed to increase benefits and ameliorate risks.