Tax credits are essentially free money. But you come to find out that while they may be free, if you qualify, they are a lot of work. Be prepared to spend money to get money. Reading the guidelines, doing your research and eventually filling out the forms takes a lot of time. And if you are not in the money or legal business, you will probably need to retain professionals with that expertise to get you through it all.
There is no doubt that when it comes to money a lot of advice can come be gained from the lyrics of music.
In “Money,Money,Money,” ABBA sings that the solution to money is to get a wealth partner; how many times have we seen this alignment in the donor world. In Barrett Strong’s “Money, That’s What I Want” (sung by any number of artists), the message is that although money doesn’t get everything, that thrills don’t pay the bills and even though the best things in life are free, money is what we want.
And how many other pieces of advice can we garner from “Money Changes Everything” by Cindy Lauper, or “Money” by Pink Floyd, or “Money Honey” by Lady Gaga, or “Money for Nothing” by Dire Straights, or “The Money Will Roll Right In” by Nirvana.
Well the money we want for the OCU School of Law is “New Market Tax Credits.” Basically free money if you qualify and can properly orchestrate a team of CDE’s, in concert with QEI’s who can make QLICI’s assuming your project is in a LCI. That’s Fed talk for the fact that you need a qualified development entity that can entice qualified investors for qualified investments within qualified low-income communities.
It’s actually not a bad program once you wade through the acronyms and kind of grasp the process involved. In 2000, the Federal Government established the New Markets Tax Credit program. The objective being to revitalize qualifying low-income districts and communities in the US. The credit is 39% of the qualified investment. In our case the investment is the renovation of a building. And you realize the savings 6 years and one day after completing your project. It is essentially like a loan that is forgiven in 6 years.
While there may be a lot of paperwork to qualify and a lot more paperwork in the aligning the appropriate development entities and investors, that’s a lot of money! The Feds have extended and funded the program sometimes in multiple year spurts now for 13 years. Each spring communities hold their breath to see if it will be funded and extended for another year or more.
The OCU School of Law was fortunate to get in on the tax credit this past fiscal year. In our case, the tax credit amounts to between $3-4 million. The Feds allocate money for distribution through Community Development Entities. If you think you have a qualifying project then one of your first stops is to talk to a CDE. You can find a list of all CDE’s by clicking “here.”
To help decipher all the acronyms you can explore Wiki. And to hear it straight from the Feds go “here.” Do your research and then find money and legal professionals to help you. It’s worth it if you quality.