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Genesis LA is a regional recipient of one of the largest allocations of federal New Markets Tax Credits (NMTC), which encourage investment by individual and corporate taxpayers in underserved areas.
“What are the New Markets Tax Credits?”
The Community Renewal Tax Relief Act of 2000 was signed into law on December 21, 2000. Included in this milestone legislation is New Markets Tax Credits (NMTC), which will encourage the investment of $15 billion in new private capital into a range of privately managed investment vehicles that make loans and equity investments in New Markets businesses.
Individual and corporate investors can receive a NMTC worth more than thirty percent (30%) of the amount invested over the life of the credit, in present value terms, by making an equity investment in an eligible “community development entity” (CDE). Eligible CDEs could include for-profit community development financial institutions (CDFIs), for-profit subsidiaries of community development corporations, Small Business Administration (SBA), licensed New Markets Venture Capital companies, and Specialized Small Business Investment Companies. There are some pioneering community-based institutions that have demonstrated success in finding viable market opportunities in areas often overlooked by traditional investors. This tax credit will enable CDEs to lend and invest more, to attract additional outside capital, and to bring even more private sector engagement to their market-priming activities by increasing their capital base.
The US Treasury Department has allocated Genesis LA $130 million in New Markets Tax Credits (NMTC). Genesis LA is proud to have been awarded two allocations. The NMTC program will further Genesis LA's work in under served communities by allowing it to provide low cost financing to qualified projects. The price of this financing, the combined debt and tax credit equity that will make up the $130 million investment into qualified developments will be significantly below market rates. This lower cost capital may be the factor that will make a great project feasible.
Contact vsaldana@genesisla.org
New Markets Tax Credits Products
Genesis LA uses innovative market-driven real estate and financing strategies to stimulate catalytic, job-producing development projects that create economic opportunities within Los Angeles County's low-income communities. The Genesis LA Community Development Entity New Markets Tax Credits (NMTC) Fund provides below-market rate capital, critical to the success of socially beneficial, job-creating real estate projects in low-income neighborhoods of Los Angeles County.
| Debt Products: |
Senior debt and Mezzanine debt |
| Loan Range: |
$5 MM to $30 MM |
| Loan Rates: |
3%–5% interest only. Interest rate ultimately depends on project’s social benefits. |
| Property Type: |
Industrial/commercial/retail/for sale housing or mixed use. No low-income rental housing. |
| Qualified Projects: |
Real estate construction or substantial rehabilitation projects that create jobs and demonstrate significant positive social impact. |
| Qualified Applicants: |
Applicants must be organizations with strong development capacity or significant community standing. |
| Eligible geographic areas: |
Highly distressed areas in Los Angeles County. (See map – Adobe Acrobat ) |
| Deal Stage: |
Investments may be made from time of site control up to permanent financing. |
| Term: |
Minimum 3 years and maximum 10 years |
| Loan Processing Time: |
Minimum 2 months to close. |
| Prohibited Uses: |
Debt cannot be used to fund a project which will house “sin” businesses. |
| Developer Contribution: |
5–10% of project equity. |
Because of the complexity of the NMTC program, please contact Genesis LA to discuss how the program may be used to benefit a project.
Genesis LA Economic Growth Corporation
714 W. Olympic Blvd., Suite 640
Los Angeles, CA 90015
Telephone: (213) 746-8244
www.GenesisLA.org
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