NMTCs and HUD Financing Deals Becoming More Common

WASHINGTON, DC—Holland & Knight attorneys Douglas Banghart and La Fonte Nesbitt are helping structure several deals in which a Housing and Urban Development-insured multifamily loan is leveraged to generate New Market Tax Credits (NMTCs). It would be the next iteration of deals that have combined these forms of financing, which has become more inventive in the past few years.

“HUD has gotten more innovative or flexible in trying to make sure that its financing programs work better with a variety of finance programs, including low-income housing tax credit, historic rehabilitation credits and NMTCs,” Nesbitt tells GlobeSt.com.

That trend dovetails a similar one in which developers have begun focusing more on NMTCs to raise equity for apartment projects that also have a commercial component, Banghart says. These credits were never intended to drive production of apartments, he explains, which has made combining NMTCs with other forms of finance in multifamily deals tricky—but not impossible.