States often use tax credits as one of their tools to promote economic development.  We see many state governments use their tax system to partner with the private sector on certain tax credit programs to promote areas that need the help of both. These incentives target areas that the legislature would like to enhance to diversify their economies, and without the private sector to buy or invest in the credits, many of these programs would languish.  The most common tax credit programs target job creation as part of the program being offered, however, others simply offer the tax credit program to build on a specific area needing help within the state.  Here at Clocktower Tax Credits, we see all types of economic development programs geared to agriculture, affordable housing, historic redevelopment, renewable energy, and even film and media production.

The most common tax credit programs in which we participate are in the Real Estate sector, with a focus on historic rehabilitation and affordable housing.  Clocktower covers all 50 states, however not all states have both of these programs.  In fact, in 2021, there are at least six new state tax credit programs (Michigan, New Jersey, Mississippi, Ohio, Pennsylvania, and Virginia) that have been announced to support the states’ mission to provide more affordable housing or save historic housing stock.  Here are links to three of the new programs: (Pennsylvania), https://www.housingfinance.com/finance/pennsylvania-awards-41-6-million-in-housing-tax-credits_o , (Virginia) https://www.jdsupra.com/legalnews/new-virginia-opportunity-tax-credit-9623372/, (and Michigan), https://www.miplace.org/historic-preservation/programs-and-services/historic-preservation-tax-credits/.  And this year, many of the established programs have increased their annual dollar caps or extended their sunset dates; for example, Nevada has extended its program to provide the ability to transfer their state LIHTC after 2030.

Not every state has every tax credit program, and even if a state seems to have a program comparable to another state’s, each program will have varying eligibility requirements and restrictions.  For a complete overview of state historic tax credit programs, see the National Trust’s website for Historic Preservation: https://forum.savingplaces.org/learn/fundamentals/economics/tax-credits/state-htc.

And for an overview of state credits for affordable housing; https://www.localhousingsolutions.org/act/housing-policy-library/state-tax-credits-for-affordable-housing-overview/state-tax-credits-for-affordable-housing/.

At Clocktower Tax Credits, LLC, we work with every transferable state tax credit program and have the expertise to understand the nuances within each program and to facilitate transfers to institutional buyers.  We work with developers with prospective Historic Rehabilitation or Low-Income Housing tax credit projects seeking Federal and/or State tax credit equity, and other unique state incentives such as the Pennsylvania Resource Enhancement and Protection (REAP) credits and Florida Voluntary Cleanup Tax Credits (VCTCs).  Let our expertise help you with your next tax credit project.

For inquiries, please contact Sue Ellyn Idelson at (978) 793-9574 or SIdelson@ClocktowerTC.com.

Award-winning Nollywood filmmaker Ema Edosio Deelen has begun production on her second original feature, titled Umuemu Oseme (“The Sins of My Father”).  Umuemu Oseme follows a seamstress (played by Ghanaian actor Gina Castel) with commitment issues who takes care of the ailing father who had abandoned her as a child, while her half-brothers position themselves to take over his property.

As well as Castel, the cast includes Charles Etubiebi, Tunde Daniels, Obi Maduegbuna, Chinezie Imo, Toritseju Ejoh and Nigerian entertainer Yinka Davies.  Filming has begun in Lagos, Nigeria, and the film is scheduled to premiere in 2022.

The film was written and directed by Edosio Deelen and the screenplay was by Chijioke Onuniwe.  The film hails from Bliss Productions with Edosio Deleen and NuNu Deng producing and Clocktower Tax Credits with Jeff Jacobson executive producing.  “Clocktower was presented the opportunity to invest with a rising star in Ema Deelen, and we went all in,” said Jacobson.  “The passion with which she approached this project was the clincher.  We are thrilled to be able to work with Ema.”

Umuemu Oseme will be distributed by Nigerian company SeeFeem, while Edosio Deelen is represented by My Management Company.  Edosio Deelen directed 2018 Nigerian comedy-drama film Kasala, which was screened in 30 international film festivals worldwide and won nine international awards.

Clocktower Tax Credits, LLC, based in Massachusetts, finances films across the United States and internationally.  The firm brokers the sale of domestic tax credits, and provides debt financing against tax credits, rebates, and other film assets.  We work on projects ranging from microbudget independent films up to major studio productions, and work with a range of investors from individuals to Fortune 500 corporations.  For more information on how Clocktower can help with film or digital media finance, please call Jeff Jacobson at (978) 823-0200, or email him at JJacobson@ClocktowerTC.com, to start a conversation.

Indiana has revamped its state tax credit programs across the board in 2021 to improve the benefits to prospective developers in the state, ushering in a new wave of interest in the usage of the programs.  Most notably for the real estate community, the IN DINO program expired and was replaced with the Indiana Redevelopment Tax Credit (the “RTC”).

Under the previous Indiana DINO tax credit program, developers could apply for tax credits based on the rehabilitation of buildings over a certain age, without special consideration to particular kinds of real estate.  However, the credits were non-transferable, meaning that a developer had to use the credits themselves, or monetize them by bringing a state tax credit partner into the project through a complicated master-lease structure, requiring multiple ownership entities and a commitment between the tax credit investor and the project owner.  This resulted in higher levels of third-party legal and accounting costs, and lower overall net pricing to account for the time required for the tax credits to be generated and ultimately used.

The new RTC program expands the focus on redevelopment in the state to make the credits easier to use, making them transferrable to a third party and also allowing the eligibility of Brownfields and hazardous redevelopment sites, making more projects eligible to receive tax credits in the Hoosier state.  Moreover, the simpler monetization process allows for increased equity to the developer by using differing pricing levels and less money and time spent on third-party costs to accommodate the structure under the old program.  It also ushers in a new class of investors to purchase the Credits, who at first were unable to due to the narrower investment process.

Clocktower continues to have very high levels of investor interest in purchasing Indiana Tax Credits, and an understanding of the process needed to monetize Credits for projects of all sizes across the Hoosier state.  For more information on the program changes, or if you are looking to monetize your new incentives, please call associate David Curtis at (978) 440-0742, or email him at DCurtis@ClocktowerTC.com.

The Massachusetts Certified Housing Development Incentive Program (MA HDIP) Tax Credit program was intended to promote increased residential growth of market-rate housing within certified housing development zones in Massachusetts gateway cities.  There are 26 named Gateway Cities; see the list below.  Clocktower Tax Credits has helped a good number of Developers sell their HDIP tax credits.

An HDIP housing development project is defined as a multi-unit residential rehabilitation or new construction project that contains at least 80 percent market-rate units that are sold or leased upon completion.   It can also contain two or more residential units as part of a mixed-use development that includes commercial uses in addition to the residential units.  In addition to HDIP credits, the Developer is also offered a property tax exemption from the municipality where the project is located, which exemption must be approved by the program administrator.

The Department of Housing & Community Development (DHCD) administers the MA HDIP program and may award tax credits of not more than 25% of the cost of qualified project expenditures allocable to the market-rate units in a project, with a maximum of $2 million per project.  The annual program cap is currently $10 million per year.  A successful Developer receives a Conditional Certification when approved to move forward with the HDIP project development.  Upon completion and final approval of all requested documents required by DHCD, the HDIP Tax Credit will be issued as a Final Certification letter to the Developer with a notification sent to the MA Department of Revenue.  Once the Final Certification is issued, the MA HDIP Tax Credits can be sold or transferred to a buyer who has a tax liability in Massachusetts.

26 Gateway Cities:

The MA Legislature defines 26 Gateway Cities in the Commonwealth, which are Attleboro, Barnstable, Brockton, Chelsea, Chicopee, Everett, Fall River, Fitchburg, Haverhill, Holyoke, Lawrence, Leominster, Lowell, Lynn, Malden, Methuen, New Bedford, Peabody, Pittsfield, Quincy, Revere, Salem, Springfield, Taunton, Westfield, and Worcester.

Clocktower is the leader in MA HDIP financing.  But if you have a project anywhere in the country that needs investor tax credit equity, don’t hesitate to call us.  We work with developers with prospective HDIP, Historic Rehabilitation, or Low-Income Housing tax credit projects seeking Federal and/or State tax credit equity, and other unique state incentives such as the Pennsylvania REAP credits.  For inquiries, please contact Sue Ellyn Idelson at (978) 793-9574 or SIdelson@ClocktowerTC.com.

It’s been a while since we used this forum to explain in the most basic terms what we do here at Clocktower Tax Credits.  We get a lot of phone calls and emails, especially around tax filing time, from individuals looking to reduce their tax bills.  Or calls from individuals who think they own something that they can sell to help someone else reduce their tax bill.  Sometimes we can help; other times we cannot.

Most of our work is in helping individuals or small companies raise money for their projects or companies by “selling” or otherwise monetizing certain tax attributes that they earned.  Some of our callers don’t really know what “credits” they have.  In those cases, we probe enough to discover that they are referring to operating losses that have been carried on the books of their firm.  These are not tax credits, and they cannot be transferred except through the acquisition of such losses by a company acquiring the subject firm.  This acquisition needs to have a legitimate business purpose and is not being done solely to monetize these losses.   This category of calls also includes those situations involving charitable donation deductions.  Similarly, the IRS does not allow the sale of interests in an entity solely to benefit from a charitable donation.  The history of such transactions is littered with abusive investments involving inflated appraised values of the donated property.  Clocktower will not participate in such transactions.

Individuals or groups looking to offset federal tax liabilities in the range of $25,000 to $250,000 cannot ordinarily benefit from tax credits for two reasons.  First, all Federal Tax Credit monetizations entail the use of a structured partnership to properly allocate the cash and tax attributes of a project, and the legal and accounting work required for such a transaction precludes these small investments.  Second, most individuals, LLCs or S-corporations are restricted in their ability to use the tax benefits by passive loss limitations.  Thus, we cannot help most individuals seeking tax relief in this financial range.

Finally, we have much more flexibility in the world of State Tax Credits, which are authorized and issued under unique State rules which do allow for transfers from owners of credits to other state taxpayers.  Here, the minimum amount of credits usually sold starts at $10,000 and can rise into the millions.  Again, project owners must know that they own these specific tax credits because they applied for them; they are not typically discovered by an owner after the fact.

The experts here at Clocktower Tax Credits can help you determine whether you have something to sell, or whether the government allows you to find someone who has some tax savings to convey to you.  Please call President Jeff Jacobson at (978) 823-0200, or email him at JJacobson@ClocktowerTC.com, to start a conversation.