$30M in New Markets Tax Credits for HPN members in 2018
For the second year running, HPN has been awarded a significant New Markets Tax Credit allocation to support our innovative work in affordable for-sale housing. HPN received $30 Million from the highly competitive program to invest in revitalizing distressed neighborhoods. The 2017 award was $40 Million dollars and was allocated across 7 nonprofit member developers.
The application process is now open for HPN members for the 2018 award. If you're interested in growing or starting your for-sale housing business, the NMTC program allows HPN to offer a loan product to participating members which has better than market rates and flexibility. This capital allows developers to take on larger, more impactful projects and lenders to offer more accessible mortgages and homeownership support services to low-income home buyers.
Application information is below.
2017 Recipient Examples
Homewise was able to use $5M in NMTCs to implement Phase I of its transformation of a vacant parcel in a disinvested neighborhood in Santa Fe into 20 new homes. Providing affordable housing will have a huge impact on an area where the median family income is only $25,704 or 39.79% of the MSA's median family income, more than 40% of residents live under the federal poverty line, and unemployment is more than 1.7 times the national average.
- Total Project Costs (Phase I): $5,000,000
- Total Subsidy: $926,874
- Total subsidy per home: $46,343
John O’Callaghan, CEO of Atlanta Neighborhood Development Partnership, saw the opportunity to leverage NMTC dollars as a path to providing a new way of revitalizing communities. “Now that the doors have been opened with New Markets, the plan is to transform neighborhoods through single family homeownership and prove it can be done at increased scale. Success will help ANDP, HPN members and other effective nonprofits to leverage and expand capital to transform more neighborhoods and help more families succeed.”
How it works
Using the New Markets Tax Credits – sold to investors in exchange for equity – HPN will leverage additional debt to provide flexible, low-cost capital for the development of affordable for-sale housing, either single family or multi-family, such as condos. As a participant in the program, members are expected to bring leverage to the project in the form of cash, previously incurred expenses on an existing project from the past 2 years, or a leverage loan.
Let us know! We'll schedule a time to walk you through the application process to make sure it suits your business needs and our New Markets Tax Credit program strategy. Contact Katie to get started.
After an initial consultation, applicants are expected to fill out a project intake form. If you are familiar with the program, feel free to go ahead and jump right to the intake form.
All interested members should submit a project intake form by Thursday March 15, 2018.
Project Selection Process
Each project will be reviewed and scored on how it aligns with both the CDFI Fund New Markets program priorities as well as HPN’s New Markets program strategy. The prioritized pipeline of projects are then reviewed by HPN’s IAM committee and final selection is approved by the HPN board.
Program priorities include:
- Projects in New Markets Tax Credit qualified census tracts
- Projects in a weak market/submarket in an underserved state and/or area of higher distress
- Project alignment with community plans and community stakeholder support
- Proximity of project to jobs and services
- New Markets Tax Credit Program “but for” analysis (i.e. without this funding the project could not go forward or would not go forward at same scale)
- The strength of member’s homebuyer education programs
- Overall strength of community outcomes from proposed project
HPN is able to offer this program thanks to our partnership with Smith NMTC Associates who have structured and facilitated dozens of transactions utilizing more than $445 million in New Markets Tax Credits and other financing tools for the benefit of low-income communities nationwide. They introduced their model for using the credits to build affordable for-sale housing to Habitat for Humanity in 2006, and since then have helped facilitate the development of nearly 3,500 affordable for-sale homes in 30 states.