Funding for projects has become increasingly more complex in the past decade. As construction, infrastructure and personnel costs continue to rise, projects find themselves with ever increasing funding gaps. On average we see a 3:1 gap – projects cost approximately $300 per square foot to complete and they appraise at $100 per square foot.
How do we manage this gap?
Our concentration is on projects in census tracts eligible for New Markets Tax Credits (NMTC). NMTC can provide approximately 30% of a project’s total funding. Click HERE to view the NMTC White Paper.
If possible, we incorporate Federal Historic Tax Credits (HTC) into the funding stack. HTC typically cover about 15% of the hard and soft costs associated with renovating a historic building for revenue-generating activity. Click HERE to view the HTC White Paper.
Many states also have historic tax credit programs that often piggyback on many of the requirements of the HTC program.
In order to monetize these tax credits, we directly solicit investment and work with capital syndicators.
In addition to private lenders, we also utilize government grants and below-market rate loans when a project needs deep capital subsidies. Funding from a HUD Community Development Block Grant or an EPA Brownfields Grant can further galvanize community support.
Tax Incremental Financing (TIF), whereby a municipality bonds for and provides funding for infrastructure costs up front to a project in exchange for future property tax payments, is another source of funding.
Most critical to the mix is equity investment from the community. Community equity investment is essential to jump-starting and sustaining a project through its early stages. In so doing, it positions the project to leverage additional investment, and assures lenders and investors that the project does indeed have community support.