Shopping Cart
Your Cart is Empty
There was an error with PayPalClick here to try again
CelebrateThank you for your business!You should be receiving an order confirmation from Paypal shortly.Exit Shopping Cart

California School Fiscal Services

Providing comprehensive business office and consulting services to K-12 traditional schools and charters



New Market Tax Credit: Author: Matt Tinsley

Posted on June 22, 2014 at 9:40 AM

If you ever hear the words “New Markets Tax Credit” (NMTC) you should run; this from the guy who thought that the CBO boot camp could have been a little longer and more intense. The good news is that because it is restricted to non-public entities you will most likely never have to deal with it. I am going to try and describe it, and where you might run across it, but this might be all you need to know: during this process I was on a conference call with lawyers from six different firms discussing whether we needed to hire another firm. Yeah. Let that sink in.


The NMTC process is a Federal Treasury Department program that provides investors with tax credits in return for them investing in capital projects with non-public entities in high need areas. Each qualifying project needs three main players: the “investor” - someone with a big enough tax bill that they are interested in the tax credits (this is usually a bank); the “allocatee” – this is an organization that has been granted authorization by the Treasury Department to broker this process and has a pool of potential credits to spread around various projects; and the “project sponsor” – the organization with the capital project they are trying to raise funds for. This capital project can be almost anything, so long as it is non-public, and has an economic benefit to the high need area. A supermarket, a hotel, a forest, in my case it was a preschool.


The investor and the sponsor pool their funds into an investment fund, the investment fund creates (“purchases”) a development entity, the development entity makes a loan to a subsidiary of the sponsor, who uses the loan to build the capital project. The project sponsor makes rent payments to its subsidiary for its use of the capital project, which uses them to make loan payments to the development entity, which is mostly owned by the sponsor. The act of making the loan to the investment vehicle creates tax credits for the investor, which - provided the capital project fulfills NMTC compliance criteria – can use those tax credits for the next seven years to offset their tax liability. At the end of the seven year compliance period the sponsor buys the investor’s stake in the investment fund, closes the development entity and cancels the loan, leaving the facility clear of obligations. Simple*. (* Not simple. This takes an army of lawyers, requires creating several new legal entities from scratch, costs hundreds of thousands of dollar in legal and other fees, and winds up costing the Federal Government far more in foregone taxes than it provides to the community in subsidized capital projects in high need areas).


Why am I telling you this (apart from a need to share my pain)? You work for public agencies that are ineligible for this source of funds. It is, however, a growing source of capital funds for charter schools and charter management organizations that need facilities, often in high need areas, and who are eligible to participate in this process. These transactions will show up on their books, they will create strange looking obligations, and will you cause you to wonder about the relationship between the charter management organization and property developer that they always seem to work with. This may turn into an oversight question for some of you and there are already articles on the Internet describing charter schools use of NMTC funds in unflattering terms. I should also say it was an absolute godsend for my preschool project – providing more than $3 million dollars in funds and making it possible to build a place that will changes the lives of the children and families that enroll there. But I will never do it again.


Categories: New Market Tax Credits

Post a Comment


Oops, you forgot something.


The words you entered did not match the given text. Please try again.


Reply Geraldvox
10:39 PM on December 5, 2022 
?????? webmoney ??????
Reply Geraldvox
5:09 PM on December 5, 2022 
???????? ????? ?????. wmz ?????? ???? ?????? ?????.
Reply Baaknini
4:04 AM on December 2, 2022 
dark market tor market
Reply JamesNem
9:52 PM on October 24, 2022 
????? ? ???????? ???????????? ? ?????? ???? ??????? ?????? ????????? ??????? ?????? 96 ?????
Reply JamesNem
4:58 PM on October 24, 2022 
c???? ??? ?????? ?????? ???????. ??????? ???? ??????? ??????? ?????? ???????? ? ??????
Reply moncler coat
2:47 PM on August 23, 2022 
I would like to show some appreciation to you for rescuing me from this issue. Because of surfing around through the world wide web and finding strategies that were not helpful, I was thinking my life was over. Existing minus the strategies to the difficulties you have resolved by means of the short article is a crucial case, and those which might have negatively damaged my entire career if I hadn't encountered your website. That mastery and kindness in controlling all the pieces was valuable. I am not sure what I would have done if I hadn't come upon such a thing like this. I'm able to at this time look ahead to my future. Thanks a lot very much for the skilled and amazing help. I won't think twice to recommend your web sites to any person who would like guidance about this area.
moncler coat
Reply kyrie irving shoes
2:47 PM on August 23, 2022 
I simply wanted to compose a small remark to appreciate you for all of the great tricks you are writing at this website. My prolonged internet research has now been rewarded with reputable facts to go over with my best friends. I 'd state that that we visitors actually are unequivocally lucky to exist in a fabulous place with many marvellous individuals with beneficial plans. I feel quite grateful to have discovered your website page and look forward to many more fun moments reading here. Thank you once again for a lot of things.
kyrie irving shoes
Reply bape clothing
2:46 PM on August 23, 2022 
I simply desired to thank you very much once again. I do not know the things I could possibly have sorted out in the absence of the entire suggestions documented by you regarding this area. It became an absolute depressing problem in my circumstances, but considering this well-written way you dealt with it took me to jump over fulfillment. I'm happier for your support and hope that you really know what a powerful job you were doing instructing most people via your website. I am sure you haven't encountered any of us.
bape clothing
Reply cheap kyrie 5
2:46 PM on August 23, 2022 
I not to mention my buddies ended up studying the good recommendations on your web blog then the sudden got a terrible feeling I never thanked the blog owner for those techniques. These boys became stimulated to read all of them and have in effect really been having fun with those things. I appreciate you for genuinely really accommodating and then for picking this form of notable resources millions of individuals are really wanting to understand about. My sincere apologies for not saying thanks to earlier.
cheap kyrie 5
Reply hermes handbags
2:44 PM on August 23, 2022 
I intended to write you the bit of observation to be able to thank you very much the moment again on the breathtaking pointers you've discussed in this case. This is so incredibly generous of you to offer unhampered just what many people would have made available as an electronic book in order to make some profit for their own end, principally considering that you could possibly have done it if you ever desired. Those strategies in addition worked as a fantastic way to fully grasp that the rest have similar passion the same as mine to grasp much more concerning this problem. I'm certain there are lots of more pleasurable times ahead for individuals who read your site.
hermes handbags
Reply cheap kd 13
2:43 PM on August 23, 2022 
Thank you so much for providing individuals with an extraordinarily breathtaking opportunity to read articles and blog posts from here. It's usually so terrific and full of a lot of fun for me personally and my office acquaintances to search your web site at a minimum three times in a week to learn the new guidance you will have. Of course, I am usually fascinated for the unique concepts you serve. Certain 2 facts in this post are undoubtedly the most beneficial we've had.
cheap kd 13
Reply yeezy boost 350
4:52 PM on August 17, 2022 
I'm writing to let you understand what a awesome discovery my princess gained viewing your web site. She discovered a good number of issues, most notably what it is like to possess an ideal coaching mood to let many others very easily grasp chosen advanced matters. You really exceeded readers' desires. I appreciate you for coming up with such effective, trustworthy, revealing and even fun tips about your topic to Evelyn.
yeezy boost 350
Reply off-white
4:51 PM on August 17, 2022 
I would like to show my affection for your kind-heartedness for persons who require help on the matter. Your special commitment to getting the solution around turned out to be unbelievably useful and has in most cases made ladies much like me to attain their objectives. This informative tutorial means so much to me and especially to my fellow workers. Warm regards; from all of us.
Reply longchamp handbags
4:50 PM on August 17, 2022 
A lot of thanks for all of your effort on this web page. Gloria really loves participating in investigation and it's obvious why. A number of us notice all about the powerful means you give important things through this website and as well invigorate response from some others on this situation while our favorite child has been learning a whole lot. Take advantage of the remaining portion of the year. You have been doing a powerful job.
longchamp handbags
Reply cheap kobes
4:50 PM on August 17, 2022 
I intended to post you one tiny word so as to thank you yet again regarding the magnificent solutions you have documented in this case. It's quite pretty open-handed of you to provide without restraint what exactly a few individuals might have offered as an e book to help with making some bucks on their own, precisely considering the fact that you might have tried it if you decided. The tricks also acted like the good way to fully grasp that other people online have the identical dreams similar to my personal own to figure out whole lot more with respect to this issue. I know there are numerous more pleasurable periods in the future for individuals who discover your blog.
cheap kobes
Reply michael jordan shoes
4:49 PM on August 17, 2022 
I precisely wished to thank you very much again. I do not know what I would have followed in the absence of those methods revealed by you over my subject matter. It became the distressing difficulty in my position, but observing this specialised avenue you resolved that took me to cry with fulfillment. Now i am happy for the work and then pray you comprehend what a powerful job you are always providing instructing men and women through your websites. More than likely you have never got to know all of us.
michael jordan shoes
Reply golden goose sneakers
7:01 AM on August 16, 2022 
I enjoy you because of all your labor on this web site. My niece take interest in working on investigations and it is obvious why. Almost all know all of the dynamic form you produce advantageous suggestions on your blog and therefore inspire participation from website visitors on this area of interest while my child is certainly becoming educated a lot. Take pleasure in the remaining portion of the new year. You're doing a pretty cool job.
golden goose sneakers
Reply golden goose
7:00 AM on August 16, 2022 
I have to express my love for your kindness giving support to persons that actually need help on this issue. Your personal dedication to getting the solution throughout had been exceedingly helpful and has frequently made others like me to achieve their ambitions. The important suggestions signifies so much to me and even further to my fellow workers. Thanks a lot; from all of us.
golden goose
Reply cheap russell westbrook shoes
7:00 AM on August 16, 2022 
I would like to point out my respect for your kindness giving support to those individuals that absolutely need assistance with in this niche. Your personal commitment to getting the message around had become incredibly functional and have all the time allowed men and women just like me to attain their desired goals. The warm and friendly report can mean so much to me and especially to my colleagues. Best wishes; from all of us.
cheap russell westbrook shoes
Reply curry 8
6:58 AM on August 16, 2022 
I precisely wished to appreciate you once again. I'm not certain the things I could possibly have taken care of in the absence of the type of advice discussed by you concerning my question. It became the frustrating circumstance in my view, nevertheless witnessing the skilled approach you processed the issue forced me to weep for gladness. I am thankful for the assistance and as well , pray you realize what a great job you have been accomplishing instructing the others by way of your web page. I know that you haven't come across any of us.
curry 8