The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments (QEIs) in designated Community Development Entities (CDEs). Substantially all of the QEIs must in turn be used by the CDE to provide investments in Low-Income Communities (LICs).
The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period. The NMTC program provides financing availability for projects in underserved geographic areas and with extremely favorable terms for businesses and real estate developers or owners. The result of these investments fulfills financing gaps for projects to be completed, and it allows projects to be enhanced with community-oriented components, which generate measurable community impacts.
The project, located on a 57-acre site, is the design, procurement, construction and startup of a new facility to produce a low-global-warming blowing agent and propellant (technical name – 1234ze) used in insulation and aerosols. The project’s environmental benefits include: ultra-low global warming potential, zero ozone depletion potential and a near drop-in replacement of R-134a. 1234ze has been accepted for use and sale in foam and aerosols by the U.S. Environmental Protection Agency. It is also currently used in Europe and Japan, with the majority of demand coming from Europe. As a significant quality job creation and retention project, it was greatly supported by state and local governments, receiving state and local commitments through the Industrial Tax Exemption, Retention and Modernization Program and Quality Jobs Program. Honeywell’s Baton Rouge facility was built in 1945 and continues to serve as one of its main manufacturing sites for its specialty materials business. Products made at the facility are shipped to customers around the world.
With a total project cost of $34.4 million, EBRCDE served as the lead CDE, providing the largest allocation of $17.5 million. Subsequent to EBRCDE’s first-in investment, the project was supported by Chase New Markets Corporation and Community Reinvestment Fund.
“One of the products the facility makes was becoming obsolete due to changes in environmental regulations. The funds will help Honeywell upgrade its facility to produce a new, more environmentally friendly product and retain jobs.”
– Mark Goodson, Executive Vice President of the East Baton Rouge
Redevelopment Authority
taxadvantagegroup (tag) is one of the country’s most successful consulting firms specializing in New Markets Tax Credits, a powerful financing tool for community development projects in the United States.
Since 2004 tag has helped revitalize low-income communities across the U.S. by securing low-cost, flexible financing for high impact projects and providing a full suite of NMTC management services.
Tammy C. Propst | 864.271.2737 | tpropst@taxadvantagegroup.com
