New Markets Tax Credits

The New Markets Tax Credit program subsidizes long-term capital investment in order to foster job creation and community development in Low-Income Communities throughout New York State. Empire State Development (ESD) has available interest-only loans at below-market rates, a portion of which may be forgiven upon maturity. In May 2009, ESD received a $30 million allocation of federal New Markets Tax Credits (NMTCs) under the American Recovery and Reinvestment Act.  With this allocation, ESD expects to originate three or four loans by the end of 2011.

 

Program Eligibility

Low-Income Community
Borrowers must be located in a census tract with the following indicia relative to the statewide metropolitan medians:

  • Poverty rate at least 20% or median family income at below 80%.
  • Additionally, preference will be given to borrowers in non-metropolitan counties and or in census tracts with unemployment at above 1.5x national average.

 

Project Types

  • Capital expenditures for operating companies (real estate loans for acquisition new construction substantial rehabilitation; or machinery and equipment loans).
  • Real estate developments: industrial; commercial, including office and retail; mixed-use including residential component in limited circumstances (see below).

 

Not Eligible
Funding is not available for real estate developments containing residential development that is for-sale; in which residential rental income may exceed 80% of gross rental income; or in which Low-Income Housing Tax Credits are used.

Funding Criteria & Selection Process

Funding preferences
Funding preference will be given to projects meeting the following criteria:

  • Total development costs between $5 million and $25 million (no more than $10 million of allocation will be devoted to a single borrower).
  • Projects that are likely to create new jobs and or retained jobs at risk of being lost, with preferences as follows:
        Operating companies: at least 1 permanent job per $38,000 of total investment.
        Real estate developments: at least 1 permanent job per 350 square feet developed.
  • Project Readiness
        75% of project financing has been identified. 
        If bank debt is involved, the prospective lender has prior experience with NMTC financing.
        Construction loan closing is likely to occur within 9 months.
  • Other New York State Involvement
        NY State is providing other forms of assistance that may be used to leverage the NMTC financing.

 

Application Process
Determine whether the project is located in a Low-Income Community by visiting the Address Qualification Site.
 
If the project is located in a low-income community, your ESD Regional Offices will then screen potential projects for suitability.

 

Contact Information
For more information on New York State’s allocation of the federal New Markets Tax Credits, please contact your ESD Regional Office.

Additional Resources
New Markets Tax Credits Quick Sheet