Adaptive reuse Logging Energy Agriculture Natural Capital Investment Fund Advancing Sustainable Economic Development About Natural Capital Investment Fund • • • • • Founded in 2001 by The Conservation Fund $15 Million Loan Fund Certified Community Development Financial Institution (CDFI) Lends to small businesses, nonprofits, and local governments Focuses on projects that support: – Environmental stewardship – Job creation – Economic growth Serving Appalachia and Beyond Not Quite Traditional Financing Flexible Funds Our diverse sources of capital provide flexible non-federal funds to blend with other Revolving Loan Funds (RLFs) and lenders. Funding Options • Up to $500,000 in house • Up to $2.5MM with guaranteed loan • ShadeFund microloans • USDA guaranteed loans • Market rate, based on risk (4-7%) • Terms depend on use, up to 15 years for real estate • Senior and subordinated debt Energy Initiative Find: Educate small business owners on the benefits of EE Facilitate: – Subsidize energy audits; – identify & coordinate resources Fund: Provide financing & technical assistance Feedback: Track energy & cost savings USDA Rural Energy for America Program (REAP) • Small, rural businesses OR agricultural producer • 25% cost-share (for eligible project costs) • Maximum awards – Energy efficiency: $250,000 – Renewable energy: $500,000 • Simplified applications for projects < $200K Funds to Leverage • USDA REAP & B&I Guaranteed Loan Programs • Community Reinvestment Act loans • Economic Development Authority loans • Historic Rehabilitation Tax Credit • Energy Investment Tax Credit (solar) New Markets Tax Credits • 39% credit for qualifying equity investments • 7 year compliance period/payback period • Eligibility by census tract – High Out-Migration Rural County Census Tracts – Low-Population /Empowerment Zone (EZ) Census Tracts – Targeted Populations • Below market interest rate and/or equity features • Partial-full principal forgiveness Simple $1MM Example • CDFI Fund awards a tax credit allocation of $1MM to a CDE • The CDE offers the tax credit to a single investor in exchange for a $1MM equity investment – Generates a $50,000 credit/yr for the first three years – Generates a $60,000 credit/yr for the final four years • Total credit value over 7 years is $390,000 Unleveraged Structure Leveraged Structure (typical) NMTC Eligible Areas NMTC Eligible Projects/Impacts • • • • • • • • • • • New construction or substantial rehab Commercial or mixed-use development Brownfield sites Food Deserts Low-rent areas Job creation/retention Health care Educational benefits Local support Shovel ready Funding gaps Advantages & Challenges/Risks Pros Cons • “But for” projects are completed • Focus on creating substantial community benefits • Efficient use of taxpayer dollars • • • • Limited access to credits Strict compliance issues Demand far exceeds supply Complex & costly transaction structures • Recapture risk not prorated • Renewal of program Sponsor Role • Determine eligibility • Articulate community impact • Specify level of commitment of all funding sources • Develop pro-forma that articulates need • Begin conversation with NMTC allocatees/CDEs Get In Touch Visit us on the web: ncifund.org Contact me: Hannah Vargason 304-870-2238 hvargason@conservationfund.org