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Abstract: 

This article describes the New Markets Tax Credit (NMTC) and the general structure used by investors to obtain it. The NMTC can help finance commercial and mixed-use real estate developments, historic rehabilitations, and loans to small businesses in low-income communities. Many types of parties invest and participate in NMTC financing, including commercial banks and real estate lenders; Historic Tax Credit (HTC) developers; investors and syndicators intending to combine NMTCs with HTCs; Fortune 100 corporations, in connection with direct and secondary investments generating tax credits; nonprofit organizations, cities, and states seeking to expand existing community revitalization and business development initiatives; parties seeking to leverage NMTC and public foundation sources; and for-profit and nonprofit developers and business owners/operators seeking to negotiate NMTC advantaged financing.

Keywords: Community Renewal Tax Relief Act of 2000; community development entities; qualified equity investments; qualified businesses; eligible investors; leveraged equity investment; recapture rules

Affiliations:  1: Nixon Peabody.