Why did the Housing Authority form Fort Smith Regional NMTC Facilitators?
The Fort Smith Housing Authority (FSHA) has embarked on a new initiative to expand economic development opportunities for our city and region. These efforts are focused on improving the community by stimulating the economy and increasing the number of jobs.
In order to obtain the financing needed for potential projects, we created Fort Smith Regional New Markets Tax Credit Facilitators (Facilitators), a for-profit limited liability corporation. The US Treasury’s Community Development Financial Institutions Fund (CDFI Fund) has certified Facilitators as a Community Development Entity (CDE). We will be applying to the CDFI Fund for a New Markets Tax Credits (NMTCs) allocation during the 2011 funding cycle.
How is Facilitators Organized?
The Fort Smith Housing Authority Board of Commissioners is the controlling entity of the CDE and approves all projects receiving a NMTC investment. An Advisory Board has been created to represent the interests of low-income residents within our service areas. A project cannot be sent to the controlling entity’s board without a recommendation from a majority of the Advisory Board members.
What is the New Markets Tax Credits (NMTCs) Program?
Taxpayers make Qualifying Equity Investments in a CDE. The CDE will in turn make qualified low-income community investments (QLICI) in/to qualified active low-income businesses (QALICBs) located in low-income communities. The taxpayer will be eligible to claim a tax credit equal to 5 percent of its equity investment in the CDE for each of the first three years and a 6 percent credit for each of the next four years (39 percent total).
For more information on the program we encourage you to visit the following websites:
CDFI Fund NMTC Program Overview
Novogradac NMTC Resource Center
What Areas will Facilitators Serve?
CDEs must claim a territory where they can deploy their NMTCs allocation in a timely manner (generally 3-5 years). Facilitators has chosen to serve the entire states of Arkansas and Oklahoma. While we are claiming both states, our focus is on Fort Smith Metro area projects that benefit our region.
What is an Eligible Area?
Eligibility is based on US Census data. Generally a census tract is eligible if the following criteria are met:
Poverty rate greater than 30%, OR
IF located in a non-Metropolitan Area, median family income does not exceed 60% of the statewide median family income, OR
IF located in a Metropolitan Area, median family income does not exceed 60% of the greater of the statewide median family income or the Metropolitan Area median family income, OR
Unemployment rates at least 1.5 times the national average
Is there an easy way to tell if an area is eligible?
To determine if an area may qualify for NMTCs, you can use this online mapping tool provided by Novogradac & Company. Using this mapping tool you can enter a specific address or a city and state and view the eligible areas. If an area is shaded in either red or yellow, then the site may qualify for NMTCs financing. If the area is not shaded in either of the above colors, your location is most likely not within an eligible area.
How are projects selected for NMTCs funding?
Facilitators will have an application process through which prospective projects will be evaluated. There are four basic levels of review/approval during the application process:
Underwriting Committee Approval
Advisory Board Recommendation
Controlling Entity’s Board Approval