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 chrome hearts
10:53 PM on January 5, 2022 
I am also writing to make you understand of the impressive discovery my friend's girl encountered reading through yuor web blog. She picked up lots of things, most notably what it's like to possess a great giving spirit to get other individuals without difficulty fully understand chosen multifaceted matters. You really exceeded my expectations. Thanks for churning out these interesting, dependable, revealing and as well as cool thoughts on that topic to Lizeth.
chrome hearts
Reply jordan shoes
10:52 PM on January 5, 2022 
I intended to send you that little bit of observation in order to say thank you once again considering the exceptional thoughts you have contributed on this site. It's pretty open-handed of people like you to provide unreservedly all many people might have offered for an ebook to help with making some bucks for their own end, particularly considering the fact that you could have tried it if you desired. Those tips as well acted to be a fantastic way to understand that most people have similar dream just like my personal own to know the truth great deal more concerning this issue. I'm certain there are several more fun occasions up front for individuals that view your website.
jordan shoes
Reply off white
10:52 PM on January 5, 2022 
Thanks a lot for giving everyone remarkably remarkable opportunity to discover important secrets from here. It is always very pleasing and also stuffed with a lot of fun for me personally and my office peers to search your blog nearly three times every week to read the newest things you have got. Of course, I am also usually amazed concerning the cool methods served by you. Some 4 areas in this post are rather the finest we have all had.
off white
Reply off white jordan 1
2:04 PM on January 5, 2022 
I simply wanted to appreciate you again. I am not sure the things that I might have tried without the type of pointers provided by you about my field. Certainly was a fearsome setting in my position, but finding out a new expert approach you dealt with the issue forced me to jump over delight. Now i'm grateful for the service and expect you recognize what a great job you happen to be getting into educating people with the aid of your website. I am sure you've never met all of us.
off white jordan 1
Reply supreme hoodie
2:01 PM on January 5, 2022 
I want to show thanks to you for rescuing me from this scenario. After exploring through the world wide web and finding views which were not productive, I thought my entire life was over. Existing without the presence of answers to the issues you have solved by means of your good post is a crucial case, as well as those which may have adversely damaged my entire career if I hadn't noticed the website. Your own expertise and kindness in taking care of all things was vital. I'm not sure what I would've done if I had not encountered such a subject like this. I'm able to at this point look ahead to my future. Thanks for your time so much for this professional and sensible help. I won't think twice to recommend your blog post to any individual who should have care about this problem.
supreme hoodie
Reply yeezy shoes
2:00 PM on January 5, 2022 
I would like to get across my admiration for your kindness for individuals that should have assistance with in this area of interest. Your special dedication to getting the solution all through has been amazingly powerful and has continually enabled many people much like me to realize their desired goals. Your personal helpful help signifies a whole lot a person like me and far more to my mates. Regards; from all of us.
yeezy shoes
Reply kevin durant shoes
3:54 AM on January 5, 2022 
I needed to post you this little observation so as to say thanks a lot again for the pleasing solutions you've shared on this site. This has been simply tremendously open-handed of you to give easily precisely what a lot of folks would have made available as an e-book to get some profit for their own end, notably seeing that you might well have done it in case you decided. These suggestions additionally worked as a easy way to realize that some people have the same eagerness similar to my own to know the truth a little more regarding this condition. I am certain there are several more fun sessions ahead for individuals that look into your blog.
kevin durant shoes
Reply golden goose outlet
3:53 AM on January 5, 2022 
My spouse and i felt quite joyous when Michael managed to do his analysis by way of the precious recommendations he got out of your web site. It is now and again perplexing to simply continually be making a gift of techniques which a number of people have been trying to sell. And we acknowledge we now have the blog owner to thank for this. The main explanations you've made, the easy website navigation, the relationships you will assist to foster - it is everything astounding, and it's really leading our son in addition to us know that the situation is cool, which is certainly really pressing. Thanks for everything!
golden goose outlet
Reply golden goose
3:52 AM on January 5, 2022 
I simply wished to thank you so much all over again. I do not know the things I would have accomplished without the actual secrets documented by you over that situation. Entirely was the frightening concern in my circumstances, but seeing the very specialised technique you treated it forced me to jump over gladness. I'm just grateful for this service and in addition wish you find out what a powerful job you were doing educating people today thru your blog post. More than likely you haven't come across all of us.
golden goose
Reply golden goose shoes
3:52 AM on January 5, 2022 
I just wanted to post a simple word to say thanks to you for all the magnificent instructions you are sharing here. My time-consuming internet lookup has now been paid with really good insight to talk about with my great friends. I would tell you that many of us visitors actually are truly endowed to exist in a notable community with very many special individuals with useful techniques. I feel very grateful to have come across your web pages and look forward to some more brilliant moments reading here. Thanks a lot again for a lot of things.
golden goose shoes
Reply supreme clothing
3:51 AM on January 5, 2022 
I'm just writing to let you know of the cool experience my wife's princess enjoyed browsing yuor web blog. She realized many things, including how it is like to possess an awesome coaching nature to let men and women very easily gain knowledge of several impossible issues. You truly exceeded her expectations. Thanks for distributing such invaluable, safe, edifying and in addition fun guidance on the topic to Janet.
supreme clothing
Reply surpreme
3:47 AM on January 3, 2022 
My husband and i ended up being really lucky Louis could finish off his analysis using the precious recommendations he acquired in your blog. It's not at all simplistic just to find yourself giving out concepts that many some other people might have been making money from. Therefore we acknowledge we now have the writer to appreciate because of that. Those illustrations you have made, the simple web site navigation, the relationships you will make it easier to instill - it's got many spectacular, and it is helping our son and us understand that issue is awesome, which is certainly unbelievably indispensable. Thanks for the whole thing!
Reply moncler outlet
3:46 AM on January 3, 2022 
I would like to point out my love for your kind-heartedness supporting men and women that absolutely need assistance with this one content. Your real dedication to getting the solution all through ended up being unbelievably beneficial and has surely allowed associates just like me to realize their pursuits. Your new valuable tips and hints means so much to me and extremely more to my peers. Best wishes; from everyone of us.
moncler outlet
Reply curry 6 shoes
3:45 AM on January 3, 2022 
I would like to express my admiration for your generosity giving support to those who absolutely need guidance on this particular topic. Your special dedication to passing the solution throughout ended up being quite advantageous and has continuously helped many people much like me to achieve their dreams. Your new interesting hints and tips signifies a lot to me and a whole lot more to my mates. Thanks a lot; from all of us.
curry 6 shoes
Reply kyrie shoes
3:42 AM on January 3, 2022 
I really wanted to develop a quick comment to express gratitude to you for those nice guidelines you are posting at this website. My considerable internet lookup has finally been compensated with beneficial ideas to share with my close friends. I 'd say that most of us readers are definitely blessed to dwell in a good site with many perfect professionals with great guidelines. I feel rather happy to have encountered your entire website page and look forward to plenty of more exciting moments reading here. Thank you again for all the details.
kyrie shoes
Reply yeezys
6:18 PM on January 2, 2022 
Thanks for your whole hard work on this web page. My daughter loves managing internet research and it's really easy to see why. Most people hear all concerning the lively way you render very useful ideas via your blog and therefore inspire participation from other people on the matter so my girl is undoubtedly understanding a whole lot. Take pleasure in the remaining portion of the new year. Your conducting a glorious job.
Reply supreme outlet
6:17 PM on January 2, 2022 
My husband and i got absolutely cheerful that Jordan could do his homework through the entire precious recommendations he gained using your blog. It is now and again perplexing to just continually be giving for free concepts some other people have been selling. We really keep in mind we need the writer to appreciate for that. The specific explanations you've made, the simple site navigation, the relationships you will give support to create - it's everything wonderful, and it's really assisting our son in addition to the family do think this situation is awesome, and that is seriously vital. Many thanks for the whole lot!
supreme outlet
Reply paul george
8:51 AM on January 2, 2022 
My husband and i have been happy Michael managed to finish up his inquiry out of the ideas he acquired through your blog. It's not at all simplistic to simply happen to be giving away guides that others might have been making money from. And we keep in mind we've got the writer to give thanks to because of that. These explanations you've made, the simple site menu, the friendships you will give support to instill - it's got mostly wonderful, and it's facilitating our son and the family understand this situation is awesome, which is wonderfully serious. Thank you for the whole thing!
paul george
Reply russell westbrook shoes
8:50 AM on January 2, 2022 
I simply desired to thank you so much yet again. I'm not certain the things that I would have done in the absence of the type of aspects shown by you over such topic. It was before an absolute distressing circumstance in my opinion, however , observing a skilled fashion you solved that took me to jump for contentment. I am happy for the support as well as have high hopes you realize what a powerful job that you are getting into educating the others via your website. Most likely you've never met all of us.
russell westbrook shoes
Reply kyrie 5
8:49 AM on January 2, 2022 
Thanks for your own hard work on this web site. Debby take interest in doing investigation and it's easy to understand why. A lot of people learn all concerning the powerful means you provide precious steps via the web blog and as well as strongly encourage contribution from the others on the point while our favorite child is certainly understanding a whole lot. Have fun with the remaining portion of the year. You are always carrying out a great job.
kyrie 5