Clocktower Tax Credits President Jeff Jacobson hosted an informative online discussion on “Tax Credit Basics” at the 30^th Woods Hole Film Festival on August 7, 2021.  Jeff was joined by Audit Supervisor Michael Kasianchuk of Kevin P. Martin & Associates P.C. to discuss the process of both earning and then monetizing the state film tax credit.  The discussion focused on Massachusetts, but also addressed other state tax incentive programs.  The panel fielded questions from the audience to help filmmakers understand how they can maximize these generous government subsidies.

“The session was especially important now that Massachusetts finally made the state film credit permanent,” Jeff explained, “by eliminating the 2022 Sunset provision in the state statute.”  Nearly 200 filmmakers were invited to attend and represented states including Rhode Island, Connecticut, New York, and Pennsylvania.  When asked where the best location to film was, from the tax credit perspective, Mike concluded that Massachusetts had the best combination of credit rate, credit availability, low budget threshold, and helpful State Film Office.

Mike explained the difference between transferable tax credits and rebates or refundable credits.  While rebates might return a filmmaker 100 cents on the dollar, the filmmaker has to complete the film, wait until year-end to file his or her tax return, and then wait for the state to issue the reimbursement.  This process may take months or even a year or more.  By selling the credit, for 90 cents on the dollar, for example, the funds are immediately available to the filmmaker upon completion.  As an alternative, the producer may be able to borrow against the value of the expected tax credit, and thus have funds with which to complete the production.

Mike went on to describe the accounting aspects that producers should consider in anticipating earning a tax credit.  Mike certainly recommends engaging or at least early on consulting with a production accountant and/or auditor experienced with Film tax credits in the chosen state.

The Woods Hole Film Festival is dedicated to presenting the best independent film from emerging filmmakers internationally.  Over the past 30 years, the Woods Hole Film Festival has presented thousands of films to Woods Hole audiences, adapting and growing each year. This year’s film program included 150 films selected from around the world: 22 feature narratives and 30 feature documentaries and 51 short drama, 16 comedies, 23 documentaries, and 8 animations.  Clocktower sponsored Last Night in Rozzie, a Massachusetts-made film with the highest in-person attendance at the festival.

Transferable tax credits can be earned in Massachusetts, Connecticut, Rhode Island, Illinois, Ohio, Pennsylvania, New Jersey, Georgia, and New Mexico, among others.  For more information on how you as a Producer can benefit from state tax credits, please call Jeff Jacobson at (978) 823-0200, or email him at JJacobson@ClocktowerTC.com.

States often use tax credits as one of their tools to promote economic development.  We see many state governments use their tax system to partner with the private sector on certain tax credit programs to promote areas that need the help of both. These incentives target areas that the legislature would like to enhance to diversify their economies, and without the private sector to buy or invest in the credits, many of these programs would languish.  The most common tax credit programs target job creation as part of the program being offered, however, others simply offer the tax credit program to build on a specific area needing help within the state.  Here at Clocktower Tax Credits, we see all types of economic development programs geared to agriculture, affordable housing, historic redevelopment, renewable energy, and even film and media production.

The most common tax credit programs in which we participate are in the Real Estate sector, with a focus on historic rehabilitation and affordable housing.  Clocktower covers all 50 states, however not all states have both of these programs.  In fact, in 2021, there are at least six new state tax credit programs (Michigan, New Jersey, Mississippi, Ohio, Pennsylvania, and Virginia) that have been announced to support the states’ mission to provide more affordable housing or save historic housing stock.  Here are links to three of the new programs: (Pennsylvania), https://www.housingfinance.com/finance/pennsylvania-awards-41-6-million-in-housing-tax-credits_o , (Virginia) https://www.jdsupra.com/legalnews/new-virginia-opportunity-tax-credit-9623372/, (and Michigan), https://www.miplace.org/historic-preservation/programs-and-services/historic-preservation-tax-credits/.  And this year, many of the established programs have increased their annual dollar caps or extended their sunset dates; for example, Nevada has extended its program to provide the ability to transfer their state LIHTC after 2030.

Not every state has every tax credit program, and even if a state seems to have a program comparable to another state’s, each program will have varying eligibility requirements and restrictions.  For a complete overview of state historic tax credit programs, see the National Trust’s website for Historic Preservation: https://forum.savingplaces.org/learn/fundamentals/economics/tax-credits/state-htc.

And for an overview of state credits for affordable housing; https://www.localhousingsolutions.org/act/housing-policy-library/state-tax-credits-for-affordable-housing-overview/state-tax-credits-for-affordable-housing/.

At Clocktower Tax Credits, LLC, we work with every transferable state tax credit program and have the expertise to understand the nuances within each program and to facilitate transfers to institutional buyers.  We work with developers with prospective Historic Rehabilitation or Low-Income Housing tax credit projects seeking Federal and/or State tax credit equity, and other unique state incentives such as the Pennsylvania Resource Enhancement and Protection (REAP) credits and Florida Voluntary Cleanup Tax Credits (VCTCs).  Let our expertise help you with your next tax credit project.

For inquiries, please contact Sue Ellyn Idelson at (978) 793-9574 or SIdelson@ClocktowerTC.com.

Award-winning Nollywood filmmaker Ema Edosio Deelen has begun production on her second original feature, titled Umuemu Oseme (“The Sins of My Father”).  Umuemu Oseme follows a seamstress (played by Ghanaian actor Gina Castel) with commitment issues who takes care of the ailing father who had abandoned her as a child, while her half-brothers position themselves to take over his property.

As well as Castel, the cast includes Charles Etubiebi, Tunde Daniels, Obi Maduegbuna, Chinezie Imo, Toritseju Ejoh and Nigerian entertainer Yinka Davies.  Filming has begun in Lagos, Nigeria, and the film is scheduled to premiere in 2022.

The film was written and directed by Edosio Deelen and the screenplay was by Chijioke Onuniwe.  The film hails from Bliss Productions with Edosio Deleen and NuNu Deng producing and Clocktower Tax Credits with Jeff Jacobson executive producing.  “Clocktower was presented the opportunity to invest with a rising star in Ema Deelen, and we went all in,” said Jacobson.  “The passion with which she approached this project was the clincher.  We are thrilled to be able to work with Ema.”

Umuemu Oseme will be distributed by Nigerian company SeeFeem, while Edosio Deelen is represented by My Management Company.  Edosio Deelen directed 2018 Nigerian comedy-drama film Kasala, which was screened in 30 international film festivals worldwide and won nine international awards.

Clocktower Tax Credits, LLC, based in Massachusetts, finances films across the United States and internationally.  The firm brokers the sale of domestic tax credits, and provides debt financing against tax credits, rebates, and other film assets.  We work on projects ranging from microbudget independent films up to major studio productions, and work with a range of investors from individuals to Fortune 500 corporations.  For more information on how Clocktower can help with film or digital media finance, please call Jeff Jacobson at (978) 823-0200, or email him at JJacobson@ClocktowerTC.com, to start a conversation.

Indiana has revamped its state tax credit programs across the board in 2021 to improve the benefits to prospective developers in the state, ushering in a new wave of interest in the usage of the programs.  Most notably for the real estate community, the IN DINO program expired and was replaced with the Indiana Redevelopment Tax Credit (the “RTC”).

Under the previous Indiana DINO tax credit program, developers could apply for tax credits based on the rehabilitation of buildings over a certain age, without special consideration to particular kinds of real estate.  However, the credits were non-transferable, meaning that a developer had to use the credits themselves, or monetize them by bringing a state tax credit partner into the project through a complicated master-lease structure, requiring multiple ownership entities and a commitment between the tax credit investor and the project owner.  This resulted in higher levels of third-party legal and accounting costs, and lower overall net pricing to account for the time required for the tax credits to be generated and ultimately used.

The new RTC program expands the focus on redevelopment in the state to make the credits easier to use, making them transferrable to a third party and also allowing the eligibility of Brownfields and hazardous redevelopment sites, making more projects eligible to receive tax credits in the Hoosier state.  Moreover, the simpler monetization process allows for increased equity to the developer by using differing pricing levels and less money and time spent on third-party costs to accommodate the structure under the old program.  It also ushers in a new class of investors to purchase the Credits, who at first were unable to due to the narrower investment process.

Clocktower continues to have very high levels of investor interest in purchasing Indiana Tax Credits, and an understanding of the process needed to monetize Credits for projects of all sizes across the Hoosier state.  For more information on the program changes, or if you are looking to monetize your new incentives, please call associate David Curtis at (978) 440-0742, or email him at DCurtis@ClocktowerTC.com.

The Massachusetts Certified Housing Development Incentive Program (MA HDIP) Tax Credit program was intended to promote increased residential growth of market-rate housing within certified housing development zones in Massachusetts gateway cities.  There are 26 named Gateway Cities; see the list below.  Clocktower Tax Credits has helped a good number of Developers sell their HDIP tax credits.

An HDIP housing development project is defined as a multi-unit residential rehabilitation or new construction project that contains at least 80 percent market-rate units that are sold or leased upon completion.   It can also contain two or more residential units as part of a mixed-use development that includes commercial uses in addition to the residential units.  In addition to HDIP credits, the Developer is also offered a property tax exemption from the municipality where the project is located, which exemption must be approved by the program administrator.

The Department of Housing & Community Development (DHCD) administers the MA HDIP program and may award tax credits of not more than 25% of the cost of qualified project expenditures allocable to the market-rate units in a project, with a maximum of $2 million per project.  The annual program cap is currently $10 million per year.  A successful Developer receives a Conditional Certification when approved to move forward with the HDIP project development.  Upon completion and final approval of all requested documents required by DHCD, the HDIP Tax Credit will be issued as a Final Certification letter to the Developer with a notification sent to the MA Department of Revenue.  Once the Final Certification is issued, the MA HDIP Tax Credits can be sold or transferred to a buyer who has a tax liability in Massachusetts.

26 Gateway Cities:

The MA Legislature defines 26 Gateway Cities in the Commonwealth, which are Attleboro, Barnstable, Brockton, Chelsea, Chicopee, Everett, Fall River, Fitchburg, Haverhill, Holyoke, Lawrence, Leominster, Lowell, Lynn, Malden, Methuen, New Bedford, Peabody, Pittsfield, Quincy, Revere, Salem, Springfield, Taunton, Westfield, and Worcester.

Clocktower is the leader in MA HDIP financing.  But if you have a project anywhere in the country that needs investor tax credit equity, don’t hesitate to call us.  We work with developers with prospective HDIP, Historic Rehabilitation, or Low-Income Housing tax credit projects seeking Federal and/or State tax credit equity, and other unique state incentives such as the Pennsylvania REAP credits.  For inquiries, please contact Sue Ellyn Idelson at (978) 793-9574 or SIdelson@ClocktowerTC.com.