According to the U.S. Department of Housing and Urban Development, approximately 12 million households spend more than 50% of their annual income on rent or mortgages. At 20% more than the widely recommended 30%, or approximately 1/3 of their gross annual salary, families can easily become over-leveraged making it difficult, or in some cases impossible, to afford necessities like clothing, food, transportation, education, and health care. The discrepancy between income for single-earner or minimum wage households, and local fair-market values for homes or rental properties can eliminate the ability to save money, force families to choose which basic needs they can afford to meet, and perpetuate the cycle of poverty that devastate Disadvantaged Communities and their residents.
In partnership with Habitat for Humanity International (HFHI) and its independent, locally run Habitat affiliates throughout the country, Smith NMTC Associates, LLC, has worked to use New Markets Tax Credits to bridge that gap. Smith NMTC has put together transactions using New Markets Tax Credits to build housing for Low Income Persons in highly distressed census tracts.
Beginning in 2007, Smith NMTC Associates partnered with HFHI in a CDE (Community Development Entity), HFHI-SA NMTC I, LLC, which received and deployed a total of $103 million in NMTC funding from 2008 to 2011. Smith NMTC also put together over $170 million of NMTC funded transactions for Habitat affiliates throughout the country in partnership with other third party CDEs.
To make NMTC funding accessible to smaller for-sale affordable housing developers and other smaller QALICBs (Qualified Active Low-Income Community Business), Smith NMTC Associates, LLC, used its highly effective “closed loop” model to deploy the over $270 million of NMTC funding it has distributed to date. Smith NMTC works with the Habitat affiliates and other QALICBs to make NMTC funding as user-friendly as possible. It provides accounting and compliance services and monitoring, workshops and educational materials and any other counseling or other services these smaller nonprofit QALICBs need to successfully navigate the complex and confusing world of NMTCs. These practices serve as the framework for providing additional capacity to build affordable for sale housing, and successfully creates communities.