Welcome back to the latest installment of “Get to Know a NMTC Housing Deal,” where we find ourselves in Baltimore, Maryland featuring the efforts of a local and national cast of participants to rehabilitate nearly 90 acres in east Baltimore.
Over the last several years, the east Baltimore development project has used the New Markets Tax Credit to receive $33.4 million dollars that it combined with money from traditional financing sources to demolish or rehabilitate blighted properties, create 1.7 million square feet of biotech, retail and office space, build or refurbish 2,100 units of mixed income housing, and construct a new public charter school. The development project is a model of successful urban planning and innovative and efficient project financing.
Enterprise Community Partners, Inc. and its affiliated entities served as the Community Development Entity and worked to bring New Markets Tax Credits into the financing options. Bank of America served as the Investor to provide $33.4 million dollars in capital to the project developers, including the East Baltimore Development, Inc., a 501(c)(3) developer overseeing the management and development of the east Baltimore project with other partners. Additionally, the Annie E. Casey Foundation provided additional credit enhancement to secure the financing from the Investor. Ballard Spahr represented East Baltimore Development, Inc. in the Phase I NMTC financing structure.
The NMTC indirectly subsidizes the cost of borrowing by providing a tax credit to the investor, which lowers the interest rate to the borrower or developer. Some states have developed their own NMTC programs to work in tandem with the federal one, and the Ballard Spahr housing tax credit group is working to expand the credit to other states.
If you’ve got a housing project in a low-income community and are looking for creative and cheaper sources of project financing, the NMTC might be a great fit for your project.
Join us next time for “Get to Know a NMTC Housing Deal.”