News, Analysis and Commentary On Affordable Housing, Community Development and Renewable Energy Tax Credits

October 2011, Volume II, Issue X Published by Novogradac & Company LLP

Making Chicago Healthier: A True New Markets Tax Credit Success Story

By Jon Kelly, NCB Capital Impact

awndale Christian Health Center (LCHC) on Chicagos other $3 million grant from the state of Illinois, which was West Side has big plans. Established in 1984 in an old announced by Gov. Pat Quinn while visiting Lawndale in Cadillac dealership by a group of residents who decid- late August. ed that something had to be done to address the communitys lack of affordable, quality health-care services, LCHC is now a Federally Qualied Health Center that employs a staff of 300 including 50 doctors and nurses and delivers quality primary care services regardless of a patients ability to pay. Nearly 50 percent of patients do not have insurance and almost 90 percent live beRendering: Courtesy of Lawndale Christian Health Center low the federal poverty level. In 2010, State and federal NMTCs will help LCHC build a new, $24 million facility to serve more people the health center handled more than and deliver more services on Chicagos West Side. 140,000 patient encounters. But the grants alone were insufcient to nance the new building. Fortunately, the new project site was eligible for new markets tax credits (NMTCs). All told, $24.4 million in federal NMTCs and $10 million in state NMTCs were allocated for the project. The federal tax credits were allocated by NCB Capital Impact ($11.6 million) and Park National Bank ($12.8 million). The $10 million in state tax credits was allocated by Stonehenge Community Development and leveraged in the federal NMTC structure, providing $1.95 million additional capital contribution for the project. US Bank Community Development Corporation was the federal NMTC investor, providing a $6.9 million capital contribution. IFF acted as LCHCs consultant for the project. continued on page 2

The Project
Despite the health centers growth over the last 27 years, there was an opportunity to do more. LCHCs growth rate had exceeded 10 percent annually for the past 10 years, but the center was constrained by a lack of physical space. Wait time for appointments has been increasing, and so a plan was devised to build a new, $24 million facility that would serve more people, deliver more services and, consequently, help eliminate disparity in health-care access in the community. To make this a reality, Lawndale soughtand was awardeda $10 million grant from the U.S. Department of Health and Human Services Facility Investment Program, and an-

continued from page 1 These qualied low-income community investment (QLICI) proceeds are being used to nance the ground-up construction of a new 60,000-square-foot health and wellness center that will include a large tness center complete with an indoor running track; a learning kitchen where healthful cooking will be taught; and a medical clinic with pediatrics, obstetrics and dental ofces. In addition, a conference area on the fourth oor opens onto a green roof deck. Committed to sustainability, the project is seeking LEED Gold certication and incorporates geothermal wells, low-e glass, highly insulated walls and locally sourced materials where practicable. The site is located within a qualied census tract for the CDFI Funds NMTC program and meets the highly distressed qualication; its poverty rate is 32.1 percent, median family income is 37.5 percent and unemployment is 3.83 times greater than the national average.

NOVOGRADAC JOURNAL OF TAX CREDITS www.novoco.com ! October 2011

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Novogradac Journal of Tax Credits Editorial Board

PUBLISHER

Michael J. Novogradac, CPA

MANAGING EDITOR

Alex Ruiz
EDITOR

Jane Bowar Zastrow

TECHNICAL EDITORS

Robert S. Thesman, CPA James R. Kroger, CPA Owen P. Gray, CPA Thomas Boccia, CPA Daniel J. Smith, CPA
ASSIGNMENT EDITOR

Jennifer Dockery
STAFF WRITER

Jennifer Hill
CONTRIBUTING WRITERS

Brandi Day Brad Elphick Jon Kelly Michael Kotin Peter Lawrence Forrest David Milder
PRODUCTION

Brent Rudy Parker Charles A. Rhuda III Robert E. Richards John Tess Karen Thigpen

Jesse Barredo James Matuszak

Novogradac Journal of Tax Credits Information

Address all correspondence and editorial submissions to: Alex Ruiz/ 415.356.8088 Address inquiries regarding advertising opportunities to: Emil Bagalso / 415.356.8037 Editorial material in this publication is for informational purposes only and should not be construed otherwise. Advice and interpretation regarding the low-income housing tax credit or any other material covered in this publication can only be obtained from your tax advisor.

Novogradac & Company LLP 2011 All rights reserved. ISSN 2152-646X Reproduction of this publication in whole or in part in any form without written permission from the publisher is prohibited by law.

Rendering: Courtesy of Lawndale Christian Health Center State and federal NMTCs will help LCHC build a new, $24 million dollar facility to serve more people and deliver more services on Chicagos West Side.

continued on page 3

Novogradac Journal of Tax Credits Advisory Board

LOW-INCOME HOUSING TAX CREDITS Bud Clarke Jana Cohen Barbe Tom Dixon Valerie White Rick Edson Richard Gerwitz Rochelle Lento John Lisella Phillip Melton Thomas Morton Stephen Ryan Arnold Schuster Mary Tingerthal Rob Wasserman
BOSTON FINANCIAL INVESTMENT MANAGEMENT SNR DENTON BOSTON CAPITAL STANDARD & POORS CORPORATION HOUSING CAPITAL ADVISORS INC. CITI COMMUNITY CAPITAL DYKEMA GOSSETT PLLC U.S. BANCORP COMMUNITY DEV. CORP. CENTERLINE CAPITAL GROUP PILLSBURY WINTHROP SHAW PITTMAN LLP COX, CASTLE & NICHOLSON LLP SNR DENTON MINNESOTA HOUSING FINANCE AGENCY U.S. BANCORP COMMUNITY DEV. CORP.

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NOVOGRADAC JOURNAL OF TAX CREDITS

Community Impact
LCHCs new health and wellness center will represent a major step forward in its goal to create a culture of wellness in Chicagos North Lawndale Community. Once at full capacity, this expansion will allow LCHC to receive an additional 56,000 medical visits, 20,200 dental visits, 6,000 behavioral health visits, and 120,000 tness visits. The project will create 300 permanent jobs and 360 construction jobs in the surrounding community. This work is an extension of the mission of Lawndales parent organization, the Lawndale Christian Development Corporation (LCDC), which strives to implement broader community development efforts. Its initiatives include working to stimulate commercial development, as well as establishing a partnership with other community stakeholders to explore the creation of a training and manufacturing center. LCDC also offers technologybased job training and placement programs in partnership with One Economy and the Neighborhood Technology Resource Center. Further, it hosts youth apprenticeship programs that focus on generating opportunities for teens and young adults to learn life skills in a positive mentoring environment. From top to bottom, Lawndales commitment to its community runs deep. And new markets tax credits will help expand that commitment and serve more patients like Valerie, who wrote of Lawndale on the website Yelp, The people that work there from the nurses to the doctors are very kind and helpful ... I ... have an amazing doctor who addresses all of my concerns. You cant really beat that for 15 dollars (depending on your income) a visit. Jon Kelly is director of lending for NCB Capital Impact. He can be reached at (703) 647-2347. This article rst appeared in the October 2011 issue of the Novogradac Journal of Tax Credits. Novogradac & Company LLP 2011 - All Rights Reserved Notice pursuant to IRS regulations: Any U.S. federal tax advice contained in this article is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties under the Internal Revenue Code; nor is any such advice intended to be used to support the promotion or marketing of a transaction. Any advice expressed in this article is limited to the federal tax issues addressed in it. Additional issues may exist outside the limited scope of any advice provided any such advice does not consider or provide a conclusion with respect to any additional issues. Taxpayers contemplating undertaking a transaction should seek advice based on their particular circumstances. This editorial material is for informational purposes only and should not be construed otherwise. Advice and interpretation regarding property compliance or any other material covered in this article can only be obtained from your tax advisor. For further information visit www.novoco.com.

PROPERTY COMPLIANCE Rose Guerrero Sharon Jackman Michael Kotin Michael Snowdon Gianna Solari Ruth Theobald Probst Kimberly Taylor
CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE SIG SERVICES LLC KAY KAY REALTY MCA HOUSING PARTNERS SOLARI ENTERPRISES THEOPRO COMPLIANCE & CONSULT. INC. HOUSING DEVELOPMENT CENTER

HOUSING AND URBAN DEVELOPMENT Sheldon Schreiberg Monica Sussman

PEPPER HAMILTON LLP NIXON PEABODY LLP

NEW MARKETS TAX CREDITS Frank Altman Bruce Bonjour Neil Kimmeleld Marc Hirshman Scott Lindquist Ruth Sparrow Herb Stevens Tom Tracy Joseph Wesolowski
COMMUNITY REINVESTMENT FUND PERKINS COIE LLC LANE POWELL U.S. BANCORP COMMUNITY DEV. CORP. SNR DENTON FUTURES UNLIMITED LAW PC NIXON PEABODY LLP HUNTER CHASE & COMPANY ENTERPRISE COMMUNITY INVESTMENT INC.

www.novoco.com !

HISTORIC TAX CREDITS Don Holm John Leith-Tetrault Bill MacRostie Donna Rodney John Tess
FARRIS BOBANGO BRANAN PLC NATIONAL TRUST COMM. INVESTMENT CORP. MACROSTIE HISTORIC ADVISORS LLC BRYAN CAVE LLP HERITAGE CONSULTING GROUP

October 2011

RENEWABLE ENERGY TAX CREDITS Ed Feo Michael Hall Jim Howard Forrest Milder Darren Vant Hof
USRG RENEWABLE FINANCE BORREGO SOLAR SYSTEMS DUDLEY VENTURES NIXON PEABODY LLP U.S. BANCORP COMMUNITY DEV. CORP.