Originally published in The Practical Real Estate Lawyer, March 2012

Investors are skittish. Capital is scarce. How, then, are development projects being undertaken? In many cases, the answer lies in the availability of tax credits and government grants. These sources of “real money” can help bridge the gap between available equity capital on the one hand and borrowed money on the other. Myriad tax credits and grants are available from all levels of government, based upon a variety of rationales. This article focuses on the more popular federal programs, but notes the existence of programs available in many states.

NEW MARKETS TAX CREDITS • An increasingly popular, and certainly the most complicated, source of benefits is the federal New Markets Tax Credit Program (hereinafter the “NMTC Program”). Its requirements are set forth in section 45D of the Internal Revenue Code (“Code”) (all section references are to the Code unless otherwise specified). This article summarizes in general terms the process of obtaining benefits under the NMTC Program for a project.

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