New Markets Tax Credit - StructureN

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MA

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LEVERAGE MODEL STRUCTURE

Investment Fund

QALICB/Borrower

CDE

NMTC Equity Investor

Project Sponsor

Leverage Lender

Provides leverage into NMTC structure. Leverage loan sources include traditional providers like banks, capital campaign funds, or monies from state or federal grant programs.

Purchases tax credits from CDE Allocatees. Borrower receives “equity-like” financing benefits from investor’s equity.

CDE Allocatee

Receive NMTC allocation or authority from Treasury. Sell tax credits to the equity investor, and make loans (QLICIs) to borrower.

Typically a single purpose entity (SPE) created to act as the borrower for the NMTC funding as a Qualified Active Low-Income Community Business, per Treasury regulation.

The parent entity of the QALICB.

Loan

Investment

Loan

Obtaining NMTC Financing

• Eligible based on geography

• Demonstration of Low-income benefit – tell your story

• Conducive financing structure

Diamond Place – Grand Rapids, MI

• Development of a four story mixed use building, including three stories of mixed income apartment units totaling 165 units

• The affordable housing component for the development secured a 9% Low Income Housing Tax Credit (LIHTC) Reservation

• The affordable housing property will has ownership separated from the NMTC property by way of a condominium agreement.

• The affordable housing condo will contain 123 apartment units. The NMTC condo will own the parking structure, the commercial units, and 42 market rate / 80% NMTC rental units

• The proposed site is located in a USDA designated food desert and the surrounding community is severely distressed. The project will include 21k sq. ft. of retail space anchored by a 15.2k sq. ft. fresh food grocer

Diamond Place – Grand Rapids, MI

NMTC Borrower Sources and UsesSources Uses

NMTC Loans $ 9,000,000 Acquisition $ 3,015,000 Bank Perm Loan $ 7,500,000 Hard Costs $ 13,515,137 Preferred Equity $ 500,000 Soft Costs $ 1,153,600 Developer Equity $ 2,002,905 Closing Costs $ 1,232,201 Fee Reserve $ 467,173 Interest and Fees $ 554,140

Total $ 19,470,078 Total $ 19,470,078

Investment Fund Sources and UsesSources Uses

CDFI Loan $ 3,645,600 NMTC Equity Investment $ 9,000,000 State of Michigan Loan $ 2,826,000 NMTC Fees $ 280,000 NMTC Equity $ 2,948,400 Loan Fees $ 140,000

Total $ 9,420,000 Total $ 9,420,000

Cinnaire New Markets

• Cinnaire New Markets, a subsidiary of Cinnaire Corp., is a five-time NMTC allocate

• Cinnaire New Markets has already deployed $171 million in NMTCs into 21 projects in low-income communities throughout our historical four-state service area of Michigan, Illinois, Indiana and Wisconsin

• In February 2017 we expanded our service area to also include Delaware, New Jersey, Pennsylvania and Maryland

• Cinnaire New Markets’ primary mission is to facilitate the financing of high-impact projects that provide access to high-quality jobs, supportive services and economic opportunities for low-income persons

• Our allocation is used to advance projects that address basic needs such as:

• shelter and health care• provide resources and training to establish a pathway toward a

more stable future• projects that support revitalizing community development efforts

that spark growth and investment