Twin to Win Part II – Example project | Butler Snow LLP


In Part i, we have given you a high level overview of how New Market Tax Credits (“NMTC”) and Historic Rehabilitation Tax Credits (“HTC”) can be combined to generate capital major private projects for qualified historic projects located in low-income communities. Now let’s take a look at the success story of a project that used both NMTCs and HTCs, along with a few other state and federal grants, to complete its project.

Base Camp Coding Academy (“Base Camp”), located in scenic Water Valley, north Mississippi, is a non-profit vocational training program for underprivileged youth that trains students to become software developers in 12 months. The one-year program is free to students and aims to address the shortage of high-tech skilled labor in the private sector by training local youth for the positions. Founded in 2015, Base Camp has graduated five classes of software developers with an employment rate of 95%. Prior to 2020, Base Camp operated on top of a retail business owned by the organization’s co-founder, which limited Base Camp’s ability to scale the program.

In an effort to add significant square footage to expand the base camp program, the base camp team identified a dilapidated garment factory located in an NMTC-qualified low-income census tract for redevelopment. The building, once a thriving factory and one of the community’s largest employers, was in disrepair, had been vacant for 30 years, and is located in a registered historic district determined to contribute to the historic significance of the neighborhood. The project included the development, construction, rehabilitation and renovation of the plant into a state-of-the-art 64,000 square foot education and technological innovation center. Butler Snow represented Base Camp on the transaction using federal and state NMTC and HTC and certain other grants to fund the $ 7.3 million project. The project received $ 6.5 million in federal and state allocation from the NMTC, as well as an additional allocation from the state NMTC of approximately $ 600,000, all allocated to the project by Raza Development Fund, Inc. US Bancorp Community Development Corporation monetized Federal NMTCs while States NMTC were monetized by various high net worth individuals. Federal and state HTCs for qualifying rehabilitation costs were monetized by Enhanced Capital.

The completed project provides the base camp with much-needed expansion space, enabling it to serve students within a 50 mile radius and train 25 software developers each year. The project also includes offices, a business incubator / start-up space and a satellite campus for Northwest Mississippi Community College, which now offers a wide range of vocational and continuing education opportunities that were not available in the region. In addition to base camp technical training, Northwest Mississippi Community College will offer a variety of training programs including welding, electrical, nursing, manufacturing (production and leadership) and personalized workforce training designed by local businesses. An impact assessment provided by Northwest Mississippi Community College estimates that the project will create / train 877 full-time employees within the first three years of operation. The enumeration area where the base camp is located has a poverty rate of 26.4% and is considered severely distressed and non-metropolitan, factors which generally increase a project’s chances of obtaining an NMTC allowance.

In addition to the federal and state NMTC and HTC, the project was also funded by a combination of government grants and corporate donations, including grants from the Delta Regional Authority, the Appalachian Regional Commission, the US Department of the United States. ‘Agriculture, the Tennessee Valley Authority, and the US Department of Labor. , with private sponsorships from Morgan White Group, Core Logic and Renasant Bank.

In view of the various grants generated by the overlay of structured finance, various special purpose entities were required to comply with the various requirements of the program. In addition, to successfully structure this transaction, many structural and collateral considerations were required to underpin various tax opinions, and an experienced team of accountants, lawyers and consultants was essential to the process.

So there you have it – a real ‘match and win’ example. Ultimately, the funding created a net grant of over $ 3 million (or 45% of overall project costs) on the net result of the project.


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