Crescent Growth Capital, LLC

Structuring project financing to incorporate tax credit equity.

Crescent Growth Capital

Crescent Growth Capital closes books on first calendar year; over $180 million in tax credit financings during the course of 2009

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Capping off its first calendar year of operations, Crescent Growth Capital closed seven transactions in December 2009, representing $95 million of New Markets Tax Credits financings. These end-of-year transactions, executed on behalf of entities in both Texas and Louisiana, brought CGC’s full-year total to over $180 million of tax credit financings.

“We feel fortunate to have had the opportunity to execute tax credit equity transactions on behalf of so many worthy entities this past year,” remarked Managing Director Eric Finley. “That we’ve been able to decisively contribute to helping realize better health outcomes, improved educational opportunities, and more effective social service delivery says a lot for the skills deployed by my colleagues, our consultants and the other parties to these complicated transactions.”

“Closing New Markets financings requires long-term collaboration across disciplines, and the flexibility to bend first one way, then another in the interests of getting across the finish line,” added Director Ryan Kenter. “Make no mistake, it’s a challenging business – but it’s truly fulfilling work.”

For more information, visit www.crescentgrowthcapital.com

Amidst severe national credit crunch, Crescent Growth Capital closes over $35 million in financings in first six months

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With the successful closing in late March of a New Markets Tax Credit financing to establish St. Luke’s Medical Center within the former Little Sisters of the Poor facility on New Orleans’ West Bank, Crescent Growth Capital ends the first quarter of 2009 having structured $35 million of transactions incorporating tax credit equity in the six months since its founding.

“We are pleased to have received such a positive response from our colleagues in the industry in the months since we opened our doors, but we are still more satisfied with the assistance we have provided to Goodwill Industries and St. Luke’s in New Orleans, and to Neighborhood Centers, Inc. in Houston,” stated Managing Director Troy Villafarra. “Our helping to finance a new regional headquarters for Goodwill, a venue for additional medical services in Algiers for St. Luke’s, and a significant expansion of social services in Houston for Neighborhood Centers – all in the midst of severe uncertainty afflicting financial markets – speaks to the potency of the NMTC program.”

For more information, visit www.crescentgrowthcapital.com

A Program that Works: New Markets Tax Credits

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Gambit, February 9, 2009

Of all the government programs helping south Louisiana recover from Hurricane Katrina, one of the most effective has to be New Markets Tax Credits (NMTCs).  Originally designed to spur private investment in economically distressed areas, the NMTC program was expanded under GO Zone legislation to include hurricane-damaged areas.

Since then, dozens of private projects representing more than $1 billion in investments have gone forward in the New Orleans area — thanks to state and federal NMTCs and participation by area banks and qualified nonprofits.  In fact, NMTCs represent one of the few areas in which Louisiana outpaced Mississippi in post-K recovery programs.

The only thing “wrong” with NMTCs is that more state and federal dollars aren’t dedicated to them.  Hopefully, that will change.

Even in these difficult economic times, NMTCs continue to generate private equity investments — more than $1 billion nationally in the past six months alone.  Since the program’s inception, NMTCs have spurred more than $12 billion in equity investments nationally.

The list of local projects made possible by NMTCs is impressive — and this is just a partial list:

– Expansion of the National World War II Museum to include a theater, a $60 million total project.

– Permanent funding for the Convention Center Marriott Hotel, which kept the hotel open after Katrina and saved more than 140 jobs.

– Ochsner/Baptist Medical Center, which reopened after Katrina and brought back more than 1,350 permanent jobs.

NMTCs work and are popular among conservatives because they are not a government giveaway.  Typically, NMTCs represent the “last dollar” in a private deal, not the first.  The tax credits thus help “close” a lot of quality projects that otherwise might not go forward.  In fact, every $1 of federal tax revenue foregone via NMTCs induces, on average, more than $14 in private investment in low-income or storm-damaged communities.

Not all projects qualify, and less than 25 percent of all community development entity (CDE) applicants receive allocations of tax credits. Allocation of NMTCs by CDEs is competitive, and CDEs look for projects with the highest likelihood of success.

Here’s how the program works:

When a for-profit or nonprofit CDE makes an equity investment in a qualified private business endeavor, that equity investment gets favorable tax treatment in the form of tax credits granted over a multi-year “compliance” period.  The credits are then sold to provide “up front” equity in the chosen project.  During the compliance period, the federal and state governments make sure the program’s standards are met, including the mission of serving an economically distressed area.  CDEs that participate in the tax credit program can go back for more credits each year — but only if they can show their past investments are working.  Thus, the program rewards the private sector for doing what it knows best how to do, and it gets government out of the business of trying to do something it knows nothing about (i.e., deciding which businesses are good investments).

When he first came into office last year, Gov. Bobby Jindal recognized the value of state NMTCs and got lawmakers to put $25 million into the program for 2008.  Unfortunately, only $12.5 million was dedicated to state NMTCs in 2009 and again in 2010.  The program is so successful that all $12.5 million of this year’s credits were allocated in less than a week.  Clearly, this program needs more funding — and soon.

On a national level, the post-Katrina template needs to be expanded so that all federal disaster areas qualify for NMTCs for at least six years after disasters are declared.  It often takes that long for good projects to get going after a disaster.

Hopefully, it won’t take that long for the governor and the new president to recognize a government program that works — and to pump more resources into it.

Landrieu unveils cultural districts in New Orleans, Tammany

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The Times-Picayune, December 5, 2008

There currently aren’t enough businesses along the St. Claude Avenue corridor to attract the new residents needed for the area recover and thrive.  But Robyn Blanpied hopes a new tax credit program will help to change that.

Lt. Gov. Mitch Landrieu unveiled the Louisiana Cultural Districts Initiative on Thursday, a program that provides tax breaks to art gallery operators and owners of historic buildings in 17 New Orleans neighborhoods and five sections of St. Tammany Parish, among other parts of the state.

Blanpied sees the program as a catalyst for the redevelopment of abandoned buildings in the Bywater and Marigny neighborhoods.

“It will give us the critical mass to make St. Claude a success,” said Blanpied, who is manager of St. Claude Avenue Main Street, a revitalization program.  “Things like this will encourage people to at least come down here and give us a look.”

That is also what Landrieu had in mind when he backed the bill establishing the tax breaks in 2007.  The Cultural Districts program is run by the state Department of Culture Recreation and Tourism, which Landrieu oversees. The initiative fits with his office’s push to use Louisiana’s culture to generate economic development.

“We’ve been trying to get policymakers in New Orleans to see that they have to treat culture like any other business in the state,” Landrieu said.  “Culture means jobs.  Jobs make Louisiana not only a great place to visit, but to live.”

Property owners in the cultural districts are eligible for state income tax credits for rehabilitating historic residential and commercial buildings, defined as those more than 50 years old.  Galleries in the districts do not have to charge state sales tax on original works of art.

In New Orleans, the districts include Oak Street, Oretha Castle Haley Boulevard and the Rampart-Basin Street corridor.  Four areas, the Lower 9th Ward, Gentilly-Pontchartrain Park, Lincoln Beach and Viet Village, were added after City Council members Cynthia Willard-Lewis and Cynthia Hedge-Morrell complained that the 13 original districts included none in eastern New Orleans and just one in Gentilly.

In St. Tammany, the districts include Olde Town Cultural District in Slidell. A list of additional cultural districts will be announced in March.

“It doesn’t save the neighborhood overnight, but it will attract residents and investors,” said Greg Ensslen, president of the Freret Business and Property Owners Association and director of the Freret Market.  “It’s simply a tool to get more money for your projects.”

Ensslen said he hopes more local investors than outside developers will take advantage of the development opportunities.

Lynnette Colin of the Oretha Castle Haley Merchants and Business Association is looking forward not only to what property development could mean for the corridor, which is recovering in fits and starts, but also to venues like the Ashe Cultural Arts Center that sell original artwork.

“This helps bring people into our areas,” Colin said.  “And it will help the artists to sell many of their original works.”

Eventually, Landrieu said, he envisions that the Cultural Districts will redevelop in the same way that Julia Street in the Warehouse District and Magazine Street have.

“Those streets reinvented themselves,” Landrieu said.  “As you’re building neighborhoods, they have to have an anchor.  This is it.”

Crescent Growth Capital opens its doors with New Orleans, Dallas locations

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Crescent Growth Capital, LLC is pleased to announce its debut last month as a skilled provider of financial advisory services for tax credit financing. Its four principals, Eric Finley, Ryan Kenter, Ray Rabalais and Troy Villafarra, possess a combined total of more than sixty years of banking experience coupled with a particular expertise in structuring transactions involving the use of New Markets Tax Credits.

“Since 2005, my colleagues and I have collaborated to close over $380 million of New Markets Tax Credit financings. We anticipate our new venture helping to further broaden the successful application of this comparatively recently-established federal government tax credit program, which has already generated several billion dollars of investment in America’s most severely disadvantaged communities,” stated Managing Director Ray Rabalais.

Crescent Growth Capital encourages project sponsors, community development entities, banks, and potential tax credit investors to contact its principals to learn more about the benefit they may derive from tax credit equity.

For more information, visit www.crescentgrowthcapital.com

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