I came home from work the other day and my middle child had a kitten in her arms. A mangy, dirty, little dark scrawny kitten…gross. I’m not a cat person. OK, that’s not completely accurate. I friggin’ hate cats. The world has two kinds of people I guess. For me, my allergies say it all. Just looking at it my nose started running, my eyes got all itchy and I started sneezing. No sir, get it out of here now! After hours of arguing, tears, and desperate faces, I finally agreed that she could keep the cat on the condition that it remains (at all times) an outside cat. Her face lit up in joy and she thanked me over and over. She had successfully negotiated her first deal.
We all negotiate in life to get the things we want. We are often willing to give up time, money or some other tangible benefit to get the end result that best suits us. Successful developers are the same way. They are usually given two options: 1) pay a lot more, with relative speed and some degree of ease; or 2) pay less, with the sometimes burdensome task of completing the labyrinth of applicable economic incentives. Most intelligent developers know that choosing the second route (while maybe not the easiest) is worth it. In addition, these developers know that choosing the right law firm to partner with for leadership and guidance can make all the difference in the world. The choice of firms should be a choice about the people. Who do I trust? Who has the expertise? Who feels ownership in the project like I do? Who has the best relationships to afford me the best opportunities?
Here is an example. We recently met with a developer planning a major centralization of his distribution business in Texas. Amongst other incentives, did you know this type of project qualifies for certain tax credits? Did you know that one site you are considering qualifies and one site does not? Did you know that we can monetize those credits and thereby create a subsidy for your project to the tune of 25% of your project costs? Did you know that in the next several weeks, $7 Billion of allocation authority for these credits will hit the streets (which is more than ever before)? Did you know that Texas is one of ten states that are prioritized for these allocations? Blank stare. This was a seasoned developer with years of experience who was about to make decisions about his site location without considering that one choice or another could cost him the opportunity to subsidize his project by 25%. These are game changing numbers.
The New Markets Tax Credit is just one example of an economic incentive opportunity that many developers have never heard about. In the coming weeks, Community Development Entities (CDEs) will be awarded this $7 Billion in allocation authority from the CDFI Fund, the Department of Treasury which administers the program. These CDEs will be actively seeking projects that are commercial in nature (i.e. not fully residential rental); that are in qualified census tracts (meaning that they meet certain low income standards); and that create meaningful community impact within these low income areas through job creation or other means. The CDFI Fund has made an active push to deploy capital using these allocations in underserved states like Arkansas, Florida, Georgia, Idaho, Kansas, Nevada, Tennessee, Texas, West Virginia, and Wyoming.
The right relationships can afford you opportunities. Missing those opportunities can often mean the difference between success and failure.Jetson G. Hollingsworth