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October 20, 2008
Contact:
Dave Glaser, Business Consulting Manager
MCDC (Montana Community Development Corporation)
Phone: 406-728-9234 #211
Fax: 406-542-6671
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www.mtcdc.org
Heidi DeArment
Operations Manager, MCDC
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c 406.544.9755
ph 406.728.9234 x 213
$40 Million tax credit allocation awarded to MCDC
U.S. Treasury Department showcases Montana recipient of $40 million in New Markets Tax Credits
Washington DC—The U.S. Treasury Department awarded $40 million in New Markets Tax Credits to the Montana Community Development Corporation (MCDC) of Missoula at a ceremony today in Washington, D.C. MCDC will use the credits to provide innovative business and real estate financing in low-income census tracts throughout the state.
The award is the first for a Montana organization, and the only Montana award out of $3.5 billion awarded on Monday. The Treasury Department highlighted this milestone by designating MCDC to attend the ceremony as the sole representative of all U.S. rural organizations receiving awards this year.
“We are thrilled to bring this large allocation of tax credits to Montana. And we are honored to be chosen to represent rural organizations. The Montana projects that use this tax credit program are great examples that local businesses can boost opportunity for low income people and places,” said Rosalie Sheehy Cates, executive director at MCDC.
Cates accepted the award from Donna Gambrell, head of the Treasury Department’s Community Development Financial Institution (CDFI) Division and newly appointed to the Treasury’s Financial Stability Unit. Heidi DeArment, MCDC Operations Manger, also attended the ceremony.
The allocation allows MCDC to sell federal tax credits as part of financing provided to eligible projects in low income census tracts. The proceeds bring down the total financing costs. “Tax credits are often the final puzzle piece that allows the project to go forward,” said Steve Grover, business development manager at MCDC. “They bring new private money in to make the cash flow work. That attracts investment into projects that might be a little harder to do because of where they are located, or because of the extraordinary social or environmental impact they are attempting to provide.”
“Montana will basically be doing $40 million in new projects that could not be done last year,” Grover added. “And these projects are for the people in Montana who need it most, especially with recent financial turmoil.”
The NMTC program was created in 2000 and has been utilized around the country to bring economic vitality to low-income and economically distressed communities. To date, the US Treasury Department has made364 awards totaling $19.5 billion in allocation authority.
The tax credit program has been hugely successful at spurring economic development in other low-income communities and is expected to continue to play a significant role in bringing economic development to distressed areas nationwide.
Cates said that MCDC’s experience in putting together financing for rural enterprise projects, such as a small-log saw mill in Hall, Montana and an innovative farming project in Corvallis, Montana made it a serious contender to receive a large chunk of the tax credit allocation. MCDC’s ability to identify and encourage rural business projects, along with other economic development projects in low-income places, gets the federal tax credit money out to the places and people who this program is designed to help.
For information related to eligible New Markets Tax deals contact Heidi DeArment at (406) 728 9234 x 213.
New Markets Tax Credit Background
The tax credits can be used towards a variety of community revitalization efforts in designated low income areas. Financing can be applied towards construction costs, working capital, machinery and equipment, fixed assets and certain development of commercial, industrial and retail real estate.
The NMTC program works by allowing equity investors in local business development projects to receive credits against Federal income taxes for their investments into qualified community development projects. Entities such as MCDC help organize and manage the financing aspects of the project by matching the equity investors with local banks to provide additional project funds. While investors receive a 39% tax credit on their funds, realized over seven years, the overall impact to the financing package is that the project is infused with investment capital that would not be in play without the tax credits.
The tax credits are attractive to investors looking for new business opportunities with enhanced returns and are attractive to debt providers, such as local banks, which earn traditional returns while broadening their market. The end result for communities is infusion of capital for worthwhile projects that create economic opportunities for people and places that need it most.
Download the press release from the US Treasury Department (PDF, 40kb)
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