Our Experience

Hookupaa consultants and strategic partners are industry leaders in socioeconomic development who have successfully guided and assisted community-based organizations and mission-driven entities secure financing to successfully complete their capital improvement projects. These projects have improved the social economic well being of their communities by providing essential services and creating new employment opportunities.


 

Pacific Growth Associates Capital Improvement Projects

Pacific Growth Associates secured a $7.2 million qualified equity investment (QEI) for Phase IV of the Waimanalo Hawaiian Homes Association (“WHHA”) Community Center. The Community Technology, Education and Employment Center (“CTEEC”) facilities include classrooms, recording studio, business center, restrooms and an additional parking lot at a cost of $2.3 million. Funding for the new facility derived from a New Markets Tax Credit investment and grants. Travois New Markets provided the allocation. Wells Fargo Bank is the Tax Credit Investor.

CTEEC Facilities

The CTEEC facilities will provide access to high technology and information business incubation services in partnership with local schools, colleges, community health centers, other non-profit organizations and private businesses. It will also provide Internet access, distance learning and technology training to residents. The project is expected to create fifteen (15) construction jobs and four (4) permanent jobs provided by WHHA dba Na Kuhio Ike. (click)

Molokai Community Health Center (MCHC)

The Molokai Community Health Center (MCHC) project includes public and private financing sources. The center received a $1,750,000 loan from the U.S. Department of Agriculture (USDA) and a $1,000,000 loan from Pacific Rim Bank guaranteed by the USDA. It then used $7.6 million in NMTC financing to fill the financing gap. The NMTC investor committed $2.07 million of equity in support of the $8.6 million dollar project. Funding for the new facility derived from a New Markets Tax Credit investment facilitated by Pacific Growth Associates and grants. Travois New Markets provided the allocation. Indion is the Tax Credit Investor.

The project expands the MCHC multi-building health campus located on six acres. MCHC works to improve the quality of life for residents of Molokai, who are predominantly Native Hawaiians. The Native Hawaiian community lags behind other minority groups in the state in factors pertaining to economic success, and the community also suffers from poor health outcomes. The campus improvements will help MCHC blend Western and Native practices in a state-of-the art facility to help combat the troubling trends that are seen among its low-income residents: substance abuse, teen pregnancy, childhood obesity and heart disease. (click)

West Hawaii Community Health Center (WHCHC)

The West Hawaii Community Health Center (WHCHC), a federally qualified health center, in partnership with a native Hawaiian Home Lands community located on the island of Hawaii represented by La‘i‘Ōpua 2020 (L2020) were able to close the gap funding and move forward with construction of a new health care facility that includes infrastructure, because of NMTC financing facilitated by Pacific Growth Associates and Travois New Markets. WHCHC received a $5 million in a grant for vertical construction from the U.S. Department of Health and Human Services Health Resources and Services Administration. L2020 received a general lease and grant funds from the Department of Hawaiian Home Lands.

The facility will provide medical, dental, behavioral health, family planning, and health education services to the residents of the Kailua-Kona community, predominately native Hawaiians. With this clinic, West Hawaii residents will no longer need to travel long distances for preventative and maintenance health care. The health center will also have the ability to stabilize patients and call ambulatory transportation assistance when more specialized treatment is necessary. The health center and related infrastructure will create 159 construction jobs and 49 permanent jobs, and once complete, the facility is expected to serve 2,700 households annually.

Pacific Growth Associates and Travois New Markets acted as co-consultants. New Markets Tax Credit (NMTC) investments were provided by U.S. Bancorp Community Development Corporation ($2.75 million), Nonprofit Finance Fund ($10 million), and Punawai ‘O Pu‘uhonua ($9.7 million). Nonprofit Finance Fund provided a bridge loan. U.S. Bancorp Community Development Corporation was the Tax Credit Investor. (click)

Lanai Community Health Center (LCHC)

Pacific Growth Associates secured a QEI in the amount of $8 million for Lanai Community Health Center (LCHC). CEI Capital Management LLC allocated $8 million in New Markets Tax Credits (NMTC) toward the construction of the LCHC. The project will provide greater access to basic healthcare so that all residents, including the uninsured and underinsured, have a high quality, culturally sensitive alternative to the high cost of leaving the island to receive care.

The new 6,800-square-foot facility will permit LCHC to expand its services that include primary care, behavioral health, dental, cardiology and OBGYN. In keeping with its status as a federally qualified health center, all individuals will have access to care regardless of their ability to pay. It will increase the patient service capacity to nearly 6,000 patient visits a year.

In addition to enhancing the healthcare services on Lanai, LCHC will continue to increase its workforce, creating an additional 12 full-time equivalent jobs, as well as providing training and development opportunities through a secondary healthcare curriculum-based internship/mentoring program to encourage the island’s youth to choose a healthcare career. This is notable in a community with an extremely high per-capita cost of living, where a regular gallon of gas can cost just under $5 per gallon on average and a gallon of milk usually costs more than $7 on average.

U.S. Bank’s subsidiary U.S. Bancorp Community Development Corporation (USBCDC) invested $2.6 million in equity in the project raised from the NMTC allocation. (click)

New Markets Tax Credit Program

The federal New Markets Tax Credit (NMTC) program is currently the largest federal economic development incentive program. The program was enacted as part of the Community Renewal Tax Relief Act of 2000 to encourage investment in low-income urban neighborhoods and rural communities that lack access to the capital needed to support and grow businesses, create jobs, and sustain healthy local economies.

The original authorizing legislation provided $15 billion in NMTC authority between 2000 and 2007. With extensions of the program, to date, the Community Development Financial Institutions (CDFI) Fund has awarded a total of $45.5 billion in New Markets Tax Credit allocation authority. Since its inception, the NMTC Program has created or retained an estimated 358,800 jobs, supported the construction of 17.1 million square feet of manufacturing space, 49.4 million square fee of office space, and 42.7 million square feet of retail space.

According to Treasury Department data, between 2003 and 2010, the NMTC generated over $20 billion in private investment in communities with high poverty rates, low incomes and high unemployment rates. This $20 billion leveraged an additional $25 billion in capital from other public and private sources, financing almost 3,000 projects ranging from urban health care centers to rural factories and small business loan funds.

On January 3, 2013 President Obama signed the American Taxpayer Relief Act of 2012 that included an extension of the New Markets Tax Credit Program for 2012 and 2013. The tax credit allocation authority is $3.5 billion for each year. If history is any guide, this $1.8 billion in federal investment will leverage more than $14 billion in total investment in rural and urban areas struggling with high rates of unemployment and poverty, creating over 100,000 jobs.

NMTCs are a tax credit, not a tax deduction. A tax credit can be given to the IRS instead of making a cash payment for taxes owed by the investor. The investor is typically a bank or insurance company.

NMTC is very flexible and can be used for a wide range of purposes. Most types of businesses, including not-for-profit businesses are eligible for NMTC subsidy. The program has supported a wide variety of community and economic development initiatives including restaurants, childcare facilities, community centers, charter schools, supermarkets, shopping centers, manufacturing and industrial facilities, health care centers, and mixed-use buildings with affordable housing. For the many communities that could benefit from the NMTC, the first step is to understand how it works.

In brief, the Community Development Financial Institutions (CDFI) Fund, part of the U.S. Treasury Department, certifies qualified community development entities (CDEs) and conducts competitions for the allocation of NMTCs to CDEs. An “allocation” allows the CDE to select a project and coordinate funding, including by receiving the tax credit investor’s capital and directing the tax benefits to the investor.

The size of the NMTC is 39% of the capital assembled by the CDE, taken over seven years. The capital is typically approximately the project budget amount. At closing, investors pay a percentage of the total benefits they receive over time. This means the tax credits result in a subsidy for projects typically in the range of 17 – 22% of the total capital raised by the CDE. The capital must be used for qualifying projects, usually required to be located in low-income census tracts or projects that serve or employ low-income persons.

Business owners, financial institutions and community economic development leaders are now realizing the various ways the New Markets Tax Credit program can help finance projects and stimulate economic growth.


 

1 “NMTC Qualified Equity Investment Report.” United States Department of the Treasury, Community Development Financial Institutions Fund New Markets Tax Credit Program. Published on November 2, 2015. Viewed on November 9, 2015. https://www.cdfifund.gov/Documents/Nov.%202015%20QEI%20Issuance.pdf.
2 “NMTC Program Fact Sheet.” United States Department of the Treasury, Community Development Financial Institutions Fund New Markets Tax Credit Program. Viewed November 9, 2015. https://www.cdfifund.gov/Documents/CDFI_NMTC.pdf.
3 Ibid.
4 Ibid.
5 “New Markets Tax Credit Program Update.” United States Department of the Treasury, Community Development Financial Institutions Fund. Last updated/reviewed: 01/03.2013. Viewed March 11, 2013. http://cdfifund.gov/news_events/CDFI-2013-01-New-Markets-Tax-Credit-Program-Update.asp.
6 “New Markets Tax Credit Coalition Commends Extension of New Markets Tax Credit in American Taxpayer Relief Act. Fiscal Cliff Legislation Provides Two-Year Extension to Federal Tax Credit Program Proven to Fuel Private Investment in Economically Distressed Communities.” NMTC Coalition. Posted on January 4, 2013. Viewed March 11, 2013. http://nmtccoalition.org/2013/01/new-markets-tax-credit-coalition-commends-extension-of-new-markets-tax-credit-in-american-taxpayer-relief-act/.