Who is Heartland Renaissance Fund?

Heartland Renaissance Fund, established in 2002, as an affiliate of Arkansas Capital Corporation.  The Department of Treasury designated Heartland Renaissance Fund as a Community Development Entity (CDE) in 2002.

Heartland Renaissance Fund is active in the New Market Tax Credit industry and has received three allocation awards from the Department of Treasury totaling $140 million for use within Arkansas.  The first allocation of $15 million was received in the 2004 round and was subsequently fully deployed.  The second allocation of $55 million was received during the 2008 New Markets Tax Credits Recovery Act Allocation. The third allocation of $70 million was received during the 2009 round.

Can banks invest into a CDE, such as Heartland,  for the New Market Tax Credit Program?

You will want to check with your legal department but banks have invested into CDE’s such as Heartland Renaissance Fund.  The OCC determined, in the 2003 revisions to 12 CFR 24 (Part 24), that a national bank investment in a new markets tax credit community development entity qualifies as a public welfare investment. For a summary of the OCC’s discussion on this authority click here and here.  For a Federal Reserve presentation on this issue click here

What is the New Market Tax Credit Program?

• The New Markets Tax Credit (NMTC) Program is a tax incentive for economic development purposes administered by the United States Department of Treasury’s Community Development Financial Institutions (CDFI) Fund.
• Since 2002, the New Market Tax Credit Program has allocated in excess of $21 billion to community development entities through a competitive application process.
• Qualified investments into designated community development entities (CDE), such as Heartland Renaissance Fund, provide investors a 39% federal tax credit and provides capital to further spur economic development within federally designated low income areas.  Additionally qualified bank investments into CDEs are a CRA eligible activity.

Why are the New Market Tax Credits of Interest to Banks?

• Competitive Investment Yields
• NMTC’s can be combined with other tax credits such as historic or energy
• Desirable community impacts
• Favorable Community Reinvestment Act (CRA) consideration

What types of projects are eligible?

Eligible:

• Commercial Businesses
• Office Buildings
• Retail Stores
• Theaters
• Museums
• Grocery Stores
• Hotels
• Manufacturing
• Industrial
• Non-profit companies
• Community Centers
• For Sale Housing
• Medical Facilities
• Educational facilities

Ineligible:

• Country Clubs
• Gambling facilities
• Golf courses
• Hot tub facilities
• Liquor stores
• Massage Parlors
• Race tracks
• Residential rental housing
• Suntan Facilities

How is the 39% tax credit earned?

The New Markets Tax Credit (”NMTC”) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (”CDEs”).   The credit provided to the investor totals 39 percent of the amount of the investment and is claimed over a seven-year credit allowance period.

The credit is taken over a 7-year period. The credit rate is:

• In each of the first three years, 5% of the original investment amount.
• In each of the final four year, 6% of the original investment amount.

Equals 39% of amount of original investment.

Where can I obtain additional information on the NMTC Program?

Please click here for a 2007 document prepared by the Department of Treasury discussing the NMTC Program.

Please click here for a 2005 HUD broadcast discussing the New Market Tax Credit Program.

Please click here for a OCC Fact sheet on the New Market Tax Credit Program.

For additional information on Heartland Renaissance Fund please contact us.