New Markets Tax Credit

The New Markets Tax Credit (NMTC) Program attracts private businesses and development by offering tax credits worth 39% of the value of the investment in low income communities, claimable over seven years. Invest Detroit CDE has received three NMTC allocations totaling $98 million.

The purpose of the New Markets Tax Credit is to support the development of commercial and mixed-use real estate projects in Detroit by expanding the availability, affordability, and access to commercial capital. Capital will be made available for real estate development, building improvements and new commercial activity. To be considered for an allocation, projects must be located in an eligible area and applicants must have relevant project experience and be able to contribute meaningful owners’ equity in their projects.

Project Budget

Minimum of $5 million

Term

The investment must stay in the project for seven years.

Fees

Fees will include upfront fee received at closing, an annual administrative fee and a backend fee at maturity. Other third party closing costs including legal fees, title work, and other professional fees to be paid by borrower.

Interest Rates

Interest rates will be determined based on the source of leveraged funds.

Target Area

The City of Detroit

Eligible Projects

To be considered, projects must be located in the City of Detroit in qualified low income communities and highly distressed census tracts as defined by the CDFI Fund. Projects can be commercial projects or mixed-use real estate including housing units provided the residential component does not exceed 80% of the total project annual project revenue.

Excluded Project / Business Types

Certain business types are excluded by the CDFI Fund, including:

  • For-Sale Residential Projects
  • Golf Courses
  • Country Clubs
  • Massage Parlors
  • Hot Tub Facilities
  • Suntan Facilities
  • Racetracks or Other Facilities Used for Gambling
  • Stores for which the principal business is the sale of alcoholic beverages for consumption off premises

Collateral Requirements

Security interest in the real estate and guarantees of the key owners is required.

Application Process

Required application materials include but are not limited to project budget, project sources and uses, source and timing of repayment, biographies of the owners and key project members, and detailed project plans.

Contact Information

Interested applicants are encouraged to contact Mary Seaberg King to determine eligibility prior to submitting materials.

Mary Seaberg King
Invest Detroit
600 Renaissance Center, Suite 1710
Detroit, MI 48243-1802
mary.king@investdetroit.com
p: 313-259-6368
f: 313-259-6393