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Banks and CDEs express interest in New Markets Tax Credit financing for Decatur early‑learning project
Summary
District staff and outside advisors told the board there is active interest from New Markets Tax Credit investors (Carver State Bank, City First) for the proposed ECLC; NMTC could provide up to ~20% net project subsidy, but uses a private‑entity ownership structure and seven‑year compliance period.
City Schools of Decatur staff briefed the board June 11 on how the federal New Markets Tax Credit (NMTC) program could reduce the capital cost of the proposed Early Childhood Learning Center (ECLC).
Dr. Lonita Brun, the district’s chief financial officer, introduced outside advisors and potential investors. Sherman Golden, an attorney experienced in NMTC transactions, and Chris Ludinger of Truist Community Capital outlined the mechanics: a certified Community Development Entity (CDE) must be awarded tax credit allocation by the federal CDFI Fund; 39% of allocation converts to federal tax credits that are sold to investors (investor pricing varies), and after transaction costs the project often realizes a net subsidy near 15–20% of total capital costs.
Speakers emphasized that NMTC is gap financing — it rarely pays the whole cost — and requires the borrower to be a private nonprofit or similar entity that owns the project and leases it to the district for the seven‑year compliance window. At the end of the compliance period the loan can be sold to the borrower for a nominal amount (a commonly used structure) and NMTC investors generally expect no loan losses in practice.
Vita Sis (IBS Advisor) said early interest exists from Carver State Bank and City First Enterprises with a combined allocation commitment discussed in the meeting of about $15 million in allocation authority; Chris Ludinger described how those commitments translate to net project capital after credit pricing and fees (example: $10M project -> ~$2M net benefit in the illustrative math shown). Board members asked detailed questions about eligibility (low‑income census tract designation), how many low‑income children must be served, reporting requirements during the compliance period, and contingency plans if poverty rates shift.
Advisors warned the board that NMTC transactions are complex, take months to structure, involve sizable transaction fees, and require a private‑entity ownership and lease arrangement in the NMTC model. They also said the district could pursue multiple financing paths in parallel and that NMTC interest may be time‑sensitive because CDE allocation authority is limited.
The board asked staff to continue negotiations and to return with more concrete term sheets and clarifications on the legal/ownership structure before committing to any NMTC‑dependent plan.
Ending: Trustees acknowledged early investor interest but did not commit to a final financing package; staff will provide additional term sheets and legal options to the board before any final decisions.
