Tax Credit Advisor Article Archives

The state of Vermont is on track to see its first New Markets Tax Credit (NMTC) deal that will finance homeownership-only units. And that first project, planned to be developed by a local community land trust, will target an unusual and specialized population: refugees who have been resettled into the state’s largest city, Burlington.

In response to the Covid-19 pandemic, both the CARES Act (Coronavirus Aid, Relief, and Economic Security) and a Centers for Disease Control and Prevention (CDC)order, imposed moratoriums on eviction from rental housing under most circumstances, at least until December 31, 2020. CDC’s guidance specifically states that preventing evictions “can be an effective public health measure utilized to prevent the spread of [Covid-19],” and that “housing stability helps protect public health because homelessness increases the likelihood of individuals moving into congregate settings, such as homeless shelters, which then puts individuals at higher risk [of] Covid-19.”

Originally authorized by Congress as a part of the Community Renewal Tax Relief Act of 2000, authorization for the New Markets Tax Credit (NMTC) once again runs out at the end of 2020. The program was initially authorized for five years and has been kept alive by several short-term renewals, which speaks more to Congress’s desire and ability to get anything done than it does to the effectiveness of the program. As we celebrate the program’s 20th anniversary and stare down the barrel of yet another nerve-wracking, year-end reauthorization, we thought it timely to examine the program through both retro- and prospective lenses.

Gregory Minott is an awarding-winning architect and co-founder of DREAM Collaborative, a black-owned design firm in the Boston metro area.

The COVID-19 pandemic has brought challenges to the entire economy, particularly to real estate genres that were already in a tenuous situation. New Markets Tax Credits (NMTC) cover a broad array of these asset classes, so one might think the credits, which are issued by the Department of the Treasury and meant to revive distressed areas, will be impacted. Whether or not that happens was the topic at a recent NH&RA panel discussion.

New Markets Tax Credits (NMTC) can be used for a variety of real estate types. They benefit developers building everything from grocery stores to clinics to manufacturing facilities, in areas deemed underserved. They’re bought by financial institutions, who become eligible for a five to six percent tax credit across a seven-year span. They’re syndicated through community development entities (CDEs), which can be either for-profit, nonprofit, or government-run. However, housing developers have somewhat restricted access to this financing tool. While NMTC has been used to build many a mixed-use residential project, the program can be inflexible, particularly regarding the “80/20 rule.”

When it comes to dealing with the looming or present expiration of judicial eviction moratoria, our industry should do what many of us have done whenever the economic times are out of joint: don’t litigate the past, negotiate the future.

“If you’re going through hell, keep going,” Winston Churchill is reputed to have advised during the early days of World War II. This advice is equally relevant for the current Covid-19 pandemic as it affects owners, staff and residents of affordable housing buildings and complexes, especially those dedicated to senior living, and truly, the entire population.

There’s no question our country is divided, as evidenced by the rancorous 2020 presidential campaign and heated down-ballot contests in many states. We’re all entitled to our political opinions, of course. And debating those opinions from the kitchen table to the town square is part of what makes America who we are. We are opinionated. We are strong-headed. And we are capable of getting anything done when we really need to.

With the conclusion of the 2020 elections, Washington is once again embracing a season of change which includes the transition process from the Trump Administration to the Biden Administration as well as from the 116th to the 117th Congress.