Tax Credit Finance Resource Center
Tax credit programs allow businesses and investors to claim a dollar for dollar tax credit for committing resources to a project or business. Tax credits reduce a taxpayer’s tax liability. They are not a deduction. Rather they come off of the taxpayer’s total tax liability. In order to receive a tax credit, an investor must demonstrate that their investment has been made. Such a resource commitment could be an investment in a bricks and mortar real estate project or a cash investment in a business. The distributor of the tax credit is authorized to issue credit based on the actual outlay of resources as evidenced by the investor. Tax credits can be used for several purposes in development projects: to provide an increased internal rate of return for investors, to reduce the interest rates on a particular financing package, and perhaps most importantly, to provide a repayment method for investors in place of cash. In the latter case, the credits can often be sold on the secondary market to generate income.
Tax credits are also flexible. They can be used in urban, rural and suburban communities, and in some cases on a regional basis. They can also provide a targeted impact by addressing many different community sectors, such as low-income neighborhoods, historic districts and underserved markets that present opportunities for new investment. There are three main federal tax credit programs – New Markets Tax Credits, Historic Rehabilitation Tax Credits and Low-Income Housing Tax Credits. There are also dozens of state tax credit programs.
Want regular updates on tax credits? Subscribe to CDFA's
Tax Credit Finance Update newsletter.
Subscribe
+Understanding Tax Credits
Tax Credits are a useful tool for development finance professionals. CDFA has collected many resources to help you understand this important tool.
SC Legislative Update
Sara Hazzard with SCEDA and Tushar Chikhliker with Nexsen Pruet discuss the latest legislative updates in South Carolina. What development finance topics are being discussed in the statehouse? Is there recent legislation that will have an impact on the economic development industry?
2017 CDFA Michigan Financing Roundtable Webinar
The 2017 CDFA Michigan Financing Roundtable Webinar discusses the latest and greatest in Development Finance across the state. The webinar includes two sessions: Development Finance Current Events Review and The Michigan Bond Market. Experts, Craig Hammond with Dickinson Wright PLLC, Joshua Hundt with Michigan Economic Development Corporation, and Todd Parker with Michigan Saves begin the webinar by presenting exciting developments in the state, then Ian Koffler and Steve Mann with Miller, Canfield, Paddock and Stone, P.L.C. and Bill Roche with Hutchinson, Shockey, Erley & Co. end with walking us through the bond financing process while exploring strategies for maximizing this financing tool in Michigan.
Community Development and Redevelopment in Minnesota
League of Minnesota Cities provides a guide on the requirements for a city to establish criteria for awarding business subsidies and various development agencies cities may create. An overview of state and federally sponsored programs for encouraging development and redevelopment.
More Resources
+New Markets Tax Credit Resources
The NMTC Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs).
Economic Impact of NMTC
The New Markets Tax Credit Coalition released this report on a decade of economic activity catalyzed by the NMTC program. Analyses cover projects, jobs, tax revenue, and return on investment for projects between 2003 and 2012.
Utilizing a Diverse Capital Stack - An Overview
Combining multiple incentives successfully requires attention to detail and often some creative structuring. Identifying program requirements and balancing the applicable incentives are steps that must be established early on for any potential project. Ken Holub with MB Financial Bank explores projects in Illinois that have successfully navigated these programs and applied creative capital stacks.
Combining Financing Tools for Missouri Development - St. Louis Development Corporation
Combining multiple incentives successfully requires attention to detail and often some creative structuring. Identifying program requirements and balancing the applicable incentives are steps that must be established early on for any potential project. Otis Williams with St. Louis Development Corporation explores projects in Missouri that have successfully navigated these programs and applied creative capital stacks.
CDFA // BNY Mellon Webcast Series: Making the Most of $7B in NMTC Allocation
The latest round of New Markets Tax Credit awards from the CDFI Fund included $7B in new allocation, which presents a significant opportunity for financing projects. While the industry believes that the allocation will be invested, there remains challenges when connecting projects with funding, particularly in rural communities and states that did not receive significant allocation.
More New Markets Tax Credit Resources
+Historic Tax Credit Resources
The Federal Historic Preservation Tax Incentives program encourages private sector investment in the rehabilitation and re-use of historic buildings.
CDFA // BNY Mellon Webcast Series: Financing Historic Theater Redevelopment
Historic theaters are key structures for creating a sense of place and often have a rich history of being a community's economic driver. For theaters that have fallen into disrepair, changing their fate requires vision, planning, and a commitment to financing. During this installment of the CDFA // BNY Mellon Development Finance Webcast Series, CDFA has partnered with Heritage Ohio to explore the wealth of financing tools available to redevelop historic theaters, including 501(c)(3) bonds, TIF, tax credits, and other creative programs.
Intro to Tax Credit Finance
An introduction into the various types and implications of tax credits is given by Richard Davies of CohnReznick LLP.
21c Museum Hotel
Phillip Allen of 21c Hotels details the work they do in restoring iconic historic buildings, partnering with cities, and creating a successful capital stack for unique redevelopment projects.
View More Federal Historic Tax Credit Resources
+Low Income Housing Tax Credit Resources
The Low-Income Housing Tax Credit (LIHTC) is the most important resource for creating affordable housing in the United States today.
Financing Solutions for the Georgia Housing Market
The changes and trends in the affordable housing industry have a large impact on Georgia communities. Continuing to provide an adequate number of homes affordable to low and moderate income households is increasingly difficult. Luckily, there are a number of financing strategies for these developments. Catherine Buell from the Atlanta Housing Authority discusses the latest in the Georgia housing market, and how agencies are responding to low income housing tax credit market changes. Of particular focus is AHA's 5 year plan.
Financing Solutions for the Illinois Housing Market
The changes and trends in the affordable housing industry have a large impact on Illinois communities. Continuing to provide an adequate number of homes affordable to low and moderate income households is increasingly difficult. Luckily, there are a number of financing strategies for these developments. Jim Snyder with Ice Miller LLP, Andrew DeCoux with the Illinois Housing Development Authority, Don Bernards with Baker Tilly Virchow Krause, LLP, and Anne McKenziewith the Chicago Housing Authority discuss the latest in the Illinois housing market, and how agencies are responding to low income housing tax credit market changes.
SC Financing for Workforce/Affordable Housing
Ivory Mathews discusses how important contributor's to a community's workforce are in need of affordable housing close to their jobs. Workforce housing produces a more sustainable local economy which allows workers to afford to live near their place of employment. Learn how this movement is building in South Carolina and learn about the different financing tools that can be assembled to address the gap needed to make workforce housing available.
Combining Financing Tools for Missouri Development - St. Louis Development Corporation
Combining multiple incentives successfully requires attention to detail and often some creative structuring. Identifying program requirements and balancing the applicable incentives are steps that must be established early on for any potential project. Otis Williams with St. Louis Development Corporation explores projects in Missouri that have successfully navigated these programs and applied creative capital stacks.
View More Low Income Housing Tax Credit Resources
+State Tax Credit Resources
+Case Studies
Tax credits are flexible and can be used at many different levels. CDFA has collected over one hundred case study examples.
Financing the Warehouse District
Christine Mackay with the City of Phoenix discusses the Phoenix Warehouse District and CDFA financing options for adaptive reuse.
Creative Tax Credit Financing in Wisconsin
Tax Credits have been widely used in Wisconsin as a method to influence businesses to take certain actions, such as locating to specific underserved areas, rehabilitating historic properties, expanding business’ research and development, investing in new technologies, and increasing the supply of affordable housing. They are a flexible tool which often pushes a project’s viability. Dave Misky (City of Milwaukee), John Hoffman (Baker Tilly Virchow Krause, LLP), and Mike Kwiatkowski (PNC Bank) discuss how a variety of tax credits are being used to help finance successful community development projects in the state of Wisconsin.
SC Financing for Workforce/Affordable Housing
Ivory Mathews discusses how important contributor's to a community's workforce are in need of affordable housing close to their jobs. Workforce housing produces a more sustainable local economy which allows workers to afford to live near their place of employment. Learn how this movement is building in South Carolina and learn about the different financing tools that can be assembled to address the gap needed to make workforce housing available.
View More Case Studies
+Headlines
Communities throughout the country use tax credits every day and CDFA collects headlines on projects and news daily.
View More Headlines
+Publications
CDFA publishes several guides that discuss tax credit finance. Purchase them today in the CDFA Bookstore.
DFCP Study Pack
The DFCP Complete Book Package contains all of the reference guides to study for the DFCP final exam at a 10% discount.
Tax Credit Finance Reference Guide
The Tax Credit Finance Reference Guide provides an exploratory overview of how communities can use tax credit finance programs to support economic growth. This guide examines how to effectively apply tax credits to development opportunities, and explains the basics of tax credits and the fundamentals of using these tools.
View More Publications
+Training Courses
CDFA Offers two tax credit courses on an annual basis.
The
Intro Tax Credit Finance WebCourse examines the application of tax credit programs in greater economic development finance efforts. This course will discuss the practical application of tax credit programs including brownfields, new markets, low income housing, historic preservation, and state-specific programs.
The
Fundamentals Course will help you understand the variety of development finance tools available, from bonds, tax credits and TIF, to federal financing programs, RLFs, and access to capital lending resources.
+Webcasts
CDFA Brownfields Financing Webinar Series: New Investments with NMTC
As part of the CDFA Brownfields Technical Assistance Program, this third installment of the Brownfields Financing Webinar Series focuses on the recent allocation of $3.5 billion in New Markets Tax Credit awards by the U.S. Treasury Department’s CDFI fund and the significant potential this tool has to support the financing of brownfields cleanup and redevelopment.
CDFA-Stifel Webcast: Downtown Revitalization Finance Strategies
In the second installment of the CDFA-Stifel Small, Medium and Rural Community Development Finance Webcast Series, speakers focus on small town and rural community downtowns, and how to successfully revitalize them through creative financing structures.
View More Webcasts