On November 17th the CDFI Fund awarded a record $7 billion in New Markets Tax Credit allocation to 120 community development entities throughout the Country. Based on the conditions of the awards it is anticipated that approximately $5 billion of allocation will be deployed to support businesses in low income communities and $2 billion will be deployed for the development of real estate projects in low income communities. Also a priority is the deployment of New Markets Tax Credit authority in underserved states which in this round include Arkansas, Florida, Georgia, Idaho, Kansas, Nevada, Tennessee, Texas, West Virginia, Wyoming, Puerto Rico, American Samoa, Guam, Northern Mariana Islands, and U.S. Virgin Islands.
Art Momjian, Chair of the Duane Morris Affordable Housing, Community Development, and Syndication Practice Group and Victor Brown Managing Partner at 5 Stone Green Capital, a social impact private equity firm will lead a discussion on the opportunities to combine private equity with the Federal New Markets and Federal Historic Tax Credit programs. The presentation is timely with the historic $7 billion of New Markets Tax Credit allocation to be awarded by the Treasury in November. This presentation will be at the Philadelphia Office of Duane Morris from noon to 1 pm on Wednesday November 9, 2016. For further information and to register please contact Art Momjian at firstname.lastname@example.org.
The CDFI Fund has released a draft of the proposed allocation agreement for the 2015-2016 New Markets Tax Credit allocation round. A new section added to the allocation agreement provides a limitation on QLICI proceeds which are used to repay or refinance documented reasonable expenditures. This section ties into the guidance provided in the December 2015 FAQs which imposes on CDEs in the next round of allocation the responsibility to include covenants in financing documents imposing the restriction, confirm the reasonableness of expenses, trace the use of QLICI proceeds both and after closing and maintain documentation to trace the use of QLICI proceeds for inspection by the CDFI Fund.
Duane Morris Partner Art Momjian will be a speaker at the New Markets Tax Credit Forum sponsored by the Community First Fund on Tuesday September 13, 2016 from 7:30 am to 11:30 am at The Double Tree Hotel in Reading, PA. The program is designed for community leaders, developers, commercial realtors, commercial lenders, attorneys, CPAs and economic and community development professionals. Speakers will discuss the impact of the Federal New Markets Tax Credit program on commercial development in low income communities.
The CDFI Fund will award $7 billion of New Markets Tax Credit allocation in the next round to be announced by the end of 2016. As a result of the 5 year extension of the New Markets Tax Credit the CDFI Fund has elected to combine two $3.5 billion allocation rounds to create a historic $7 billion allocation of New Markets Tax Credit allocation. The round of awards to be announced by the CDFI Fund later this year will be effected by the December 2015 Certification, Compliance, Monitoring and Evaluation Frequently asked Questions issued by the CDFI Fund last year. Frequently Asked Question 44 eliminates the commonly used “one day loan” for this and future rounds of New Markets Tax Credit allocation awards.
In December the President signed into law the Tax Increase Prevention Act of 2014. One of the provisions of the Act is to extend the Federal New Markets Tax Credit program one additional year at the current authorization of $3.5 billion.
A Duane Morris team of lawyers including Art Momjian, Chris Winter, and Chris Bender represented South Jersey based Parke Bank in its investment in the Federal historic tax credits to be generated by the historic rehabilitation of 1831-1833 Chestnut Street in Philadelphia Pennsyvania. The property is formerly an office building being converted into residential rental apartments. The City of Philadelphia is replete with historic properties which are undergoing adaptive reuse and the Federal historic tax credit program is an important component of the capital stack to fund development costs.
Today the CDFI Fund announced the opening of the next round (2014) of New Markets Tax Credit allocations. Subject to Congressional authorization, the CDFI Fund intends to award $5 billion of New Markets Tax Credit allocation in the next round. Pursuant to the announcement today by the CDFI Fund, CDE applications must be submitted by August 22, 2014, applications for New Markets Tax Credit allocation must be submitted by October 1, 2014, and prior allocates must satisfy their required issuance of qualified equity investments by January 30, 2015.
The Pennsylvania Department of Community and Economic Development has awarded 15 projects in 10 counties in Pennsylvania the first $3,000,000 of Pennsylvania Historic Preservation Tax Credits. The projects receiving awards include buildings ranging from a church, schools, apartment complexes to a shore factory. The largest award was $369,015 and the smallest $13,895. The Pennsylvania Historic Preservation Tax Credit may be bifurcated from the Federal Historic Tax Credit and may be sold by an assignment of a certificate which enable developers to have separate investors for the state and the federal historic tax credits.
The Pennsylvania Department of Community and Economic Development is accepting applications for the Commonwealth’s new historic preservation state tax credit. The Commonwealth will issue no more than $3,000,000 of tax credits each year with no more than $500,000 to a qualified taxpayer in any year. The state historic tax credit may not exceed 25% of the qualified rehabilitation expenditures incurred in connection with the qualified historic rehabiliation of a building. The credit may be used to offset the tax liabilty of the Commonwealth of Pennsyvlania imposed on a taxpayer including Personal Income Tax, Corporate Net Income Tax, Capital Stock-Franchise Tax, Bank and Trust Company Shares Tax, Title Insurance CompaniesShares Tax, Insurance Premiums Tax, Gross Receipts Tax or Mutual Thrift Institution Tax. The tax credit provided may be carried over and applied to succeeding taxable years for not more than seven taxable years following the first taxable year for which the qualified taxpayer was entitled to claim the credit. A qualified taxpayer, upon application to and approval by DCED may sell or assign, in whole or in part, unused credits granted to another qualified taxpayer.