The challenges faced by healthcare facilities in low-income and rural communities are significant, and they are only increasing. Aging, or an absence of, facilities, provider shortages, non-existent access to public transportation, rising construction costs, declining populations and higher interest rates are only a few of the challenges faced by such healthcare developers. Seeking financing through conventional means is often not sufficient, leaving substantial funding gaps- which is where the New Markets Tax Credit (“NMTC”) can be of assistance. NMTC financing can help bridge those financial gaps by providing below-market rate financing that enables projects to come to fruition that otherwise may not be financially feasible.
Healthcare has long been one of the most successful applications of NMTC financing, and that trend shows no signs of slowing. The NMTC program has supported the development and expansion of replacement hospitals, outpatient medical campuses, addiction treatment facilities, behavioral health facilities, rural hospitals, federally qualified and community health centers, medical office buildings, medical research facilities, and medical education and workforce training facilities across the nation. These investments not only improve access to healthcare but also create quality jobs and generate long-term economic benefits for the communities they serve.
The current policy environment further reinforces healthcare’s importance. The Treasury has identified rural hospitals and essential community health infrastructure as priority investment areas, alongside broader efforts to increase investment in underserved and rural communities. With an aging population and Medicaid and Medicare cuts looming, the NMTC subsidy may be especially relevant.
NMTC financing can significantly improve a project’s overall capital structure as well as complementing – rather than replacing – other federal, state and local incentives. With the help of experienced counsel, projects may be able to utilize tax-exempt bonds, state incentive programs, federally guaranteed loans, philanthropic funding and other public financing tools, increasing the benefit to the project. The legal structuring of these layered transactions has become increasingly sophisticated. Successful projects often require careful coordination among multiple financing sources, lenders, investors and, sometimes, governmental entities, to maximize available incentives while satisfying complex compliance requirements.
Turning a healthcare vision into a viable project often starts with the right financing strategy. Butler Snow attorneys Thane Hodson, Julia Fendler and Ann Hered have extensive experience closing NMTC financings for healthcare facilities nationwide, helping clients navigate complex transactions and put critical projects on a path toward reality.
