The St. Louis Development Corporation (SLDC) has received a $45 million New Markets Tax Credit (NMTC) Allocation in the Sixth NMTC allocation round announced October 20, 2008. SLDC previously was awarded $52 million in allocation authority in 2004 in the Round 2 cycle. The purpose of the NMTC program is to stimulate economic and community development and job creation in the nation’s low-income communities by attracting investment capital from the private sector.

The NMTC Program provides tax credits to investors who make “qualified equity investments” (QEIs) in investment vehicles called Community Development Entities (CDEs). CDEs are required to make investments into qualified projects or businesses in low-income communities. Low-income communities are generally defined as those census tracts with poverty rates of greater than 20% and/or median family incomes that are less than or equal to 80% of the area median family income.

The tax credits provided to the investor totals 39% of the investment in a CDE and are claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to 5% of the total amount paid for the capital interest at the time of investment. For the final four years, the value of the credit is 6% annually. Investors may not redeem their investment in the CDEs prior to the conclusion of the seven-year period.

The program is overseen by the Community Development Finance Institutions Fund, an arm of the US Treasury Department. Rules regarding the types of businesses that can be funded and the types of funding that can be provided are extensive and it is each CDE’s responsibility to make sure that the projects receiving sub-allocations are compliant with the program. Specific exclusions include land-banking, golf courses, massage parlors and tanning salons as well as farms and liquor stores. The resource is often used to help finance the gap on commercial real estate projects and to provide funding for business operations. Each CDE that receives an allocation has specific guidelines that it must meet in order to remain in compliance with its agreement to use the resource.

In order to identify the most catalytic projects that can best use the $45 million NMTC allocation that has been awarded to SLDC, we hereby issue this Request for Proposals which can be accessed through the following link: http:/ /stlouis.missouri.org/development.

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