“Why pay someone to do what I can do myself?” It’s a question many developers and investors ask when considering a New Market Tax Credit (NMTC) consultant for their next project. However, much like you would hire an attorney to handle your legal work, hiring a consultant will give your project the professional representation it deserves. And in all likelihood, a consultant will save you time and money in the long run. Let’s explain why.
The claim: Consultants are overpriced and underused.
Many developers decide against hiring a NMTC consultant for two reasons: cost and competency. Although fee structures vary in consulting, developers often view consulting fees as an out-of-pocket expense that could be lost in the event that the project does not qualify for tax credits.
We’ve also seen development teams choose to navigate the NMTC program themselves. After reviewing the wealth of information available online, it’s not uncommon for project sponsors to believe they can structure a deal that’s competitive for the credit, especially if they are experienced developers.
The truth: You don’t know what you don’t know.
When you’re assembling a multimillion-dollar NMTC deal, there are countless opportunities for errors, and even the smallest one could cost your project thousands of dollars in lost time or revenue. Although the program has plenty of literature available online, a NMTC consultant will be able to navigate the unspoken intricacies of the program and guide your project to success.
Here are three reasons to hire a New Market Tax Credit consultant.
1. Consultants Save Time
An experienced NMTC consultant will be able to evaluate your project and quickly gauge its NMTC eligibility. When you engage a tax credit professional early enough in the process, this evaluation could save your team months of time spent restructuring a deal in the event it doesn’t meet the NMTC qualification criteria.
2. Consultants Save Money
Sunflower structures our consulting work on a contingency basis. That means we take an upfront retainer and only get paid our fee when the project closes financing using a NMTC allocation. Along the way, we look at ways to save our clients money by providing practical advice throughout the closing process always keeping an eye on what’s best for the bottom line of the project. For example, sourcing the investor that will drive the most equity to a project or understanding the most advantageous fee structures of various CDEs/CDFIs.
3. Consultants Help Market the Project
The best NMTC consultants will act as a marketer for the project, meaning they help clients consider the challenges of a project and develop creative strategies to overcome them. NMTC professionals will look at the project’s potential community benefits and develop marketing materials that convey the information to CDFIs/CDEs, investors and other relevant parties.
Hiring a consultant for your NMTC project may seem like an additional step in what is already a complex deal, but it’s one that could save your team significant time and resources. A consultant’s expertise will only benefit your project as it gets closer to becoming a reality. Let our New Market Tax Credit consultants review your project and provide strategic recommendations for next steps.Reach Out