New Market Tax Credits

New Markets Tax Credits

Leverage Law Group has one of the most active New Markets Tax Credit (“NMTC”) practices in the country and is a recognized industry leader in this specialized area of the law.

NMTCs are a financial incentive created to assist in attracting capital investments to low-income communities. As provided by legislation, the Community Development Financial Institution Fund, a branch of the United States Treasury Department, makes available a block of credits for community development projects. Entities that receive certification as qualified community development entities apply for the credits in a competitive process. NMTCs attract investors to community development projects by providing those investors tax credits over a seven year period beginning upon their initial investment.

The attorneys at Leverage Law Group have developed a substantial NMTC practice through their representation of investors, leverage lenders, community development entities and qualified active low income community businesses. In addition to their client representation, lawyers at Leverage Law Group actively participate in industry efforts to resolve tax and structuring issues in the NMTC area, including through the submission of formal comments to the Community Development Financial Institutions Fund and the Treasury Department, and industry efforts to promote uniformity among practitioners.

The firm represents stakeholders throughout the country with respect to structuring the NMTC transactions at all levels, including varied sources of leverage financing, for-profit and non-profit qualified businesses and community development entities, and unique financing structures. In this regard, attorneys in the firm have participated in both leveraged, non-leveraged transactions and transactions combining NMTCs with Renewable Energy Tax Credits, and Historic Rehabilitation Tax Credits. In the scope of such representations, the attorneys in the firm have been actively involved in structuring and negotiating the leverage debt, investment fund and community development entity operating agreements, master tenant operating agreements, qualified low-income investment documentation, servicing and management agreements, guarantees and related ancillary documentation as well as the review of all necessary due diligence. The firm also delivers any necessary tax opinions required by the tax credit equity investors in these transactions.

The firm represents one of the most active tax equity investors in the NMTC industry on its NMTC transactions. In its role as its counsel, the firm is responsible for preparing all of the major documentation for each transaction, including investment fund and community development entity operating agreements, leverage loan documentation, project loan agreements, loan servicing agreements, fee agreements and various related documents. The firm also delivers the necessary tax opinions to the tax credit equity investor in these transactions.

The firm also represents dozens of community development entities that have received NMTC allocations and which are receiving qualified equity investments from investors and making loans to and/or equity investments in qualified businesses. Attorneys in the firm have also represented community development entities in connection with submission of applications for allocations of NMTCs and applications for certification as a qualified community development entity. The firm represents qualified businesses that are receiving qualified low-income community investments from community development entities. In connection with the representation of qualified businesses, the firm can assist in securing NMTC allocation from CDEs, structuring the transaction so as to maximize benefits to qualified businesses, preparing operating agreements for the qualified businesses, and reviewing and/or preparing all necessary loan and other investment documents, as well as preparing and delivering all customary tax opinions necessary to be delivered on behalf of the qualified business.

Through the participation of its attorneys in a broad range of NMTC transactions having varied structures, Leverage Law Group has obtained an extensive range of experience on a variety of structures and the often complicated tax and business issues associated with NMTC transactions. Leverage Law Group attorneys have developed innovative structures for their clients in NMTC transactions, including structures which provide the benefits of using tax-exempt financing and revolving loan structures within the framework of NMTC transactions.