Historic Tax Credits

Mercy Hospital New Orleans was founded in 1924 and relocated to the Mid-City neighborhood in 1953 (pictured above is the original main facade of the 1953 hospital building).  For over fifty years this facility was a principal institutional actor and employment center within both the Museum-City Park Cultural District and the Mid-City National Register Historic District.

Subsequent to the Katrina-induced levee failures in 2005, Tenet Healthcare – which had been operating the facility as Lindy Boggs Medical Center – opted not to reopen it.

In 2007, a demolition permit was secured by the hospital’s new owners; however, their plans for a mixed-use town center stalled.  Three years later, in May of 2010, Crescent Growth Capital arranged an NMTC financing on behalf of St. Margaret’s Daughters Home to purchase the entire blighted, abandoned facility.

The redevelopment of the former Mercy Hospital/Lindy Boggs Medical Center in New Orleans by St. Margaret’s Daughters Home is a multi-phase project whose first manifestation will be the adaptive re-use of the hospital’s medical office buildings to accommodate a new permanent nursing home facility for St. Margaret’s.

Crescent Growth Capital structured and closed a $21.3 million New Markets Tax Credit qualified equity investment to fund both St. Margaret’s acquisition of the entire former hospital and a portion of the construction cost of its new nursing home within the facility.  Subsequent phases will rehabilitate the remainder of the former Mercy facility for medical uses.

In addition to structuring the initial financial closing in 2010, Crescent Growth Capital, in conjunction with its consultants, secured Louisiana State Historic Tax Credit eligibility for the entire former Mercy/Lindy Boggs complex, garnering millions in historic tax credit equity for the project.  The first state historic tax credit financing for the project was accomplished in September of 2011, generating $4 million for St. Margaret’s and enabling the definitive start of construction on Phase I.

CGC, in conjunction with its consultants, also secured for St. Margaret’s $3 million in CDBG funding, in the wake of a successful application to the State of Louisiana’s Project-Based Recovery Opportunity Program (“PROP”).  Financial closing on these funds was achieved in July of 2011.

Restoring job growth to the nation’s economy is the primary objective of policymakers today, and most economists believe that the most significant opportunities for new employment will be found within the healthcare industry. The boomer generation is aging, and the percentage of the nation’s population that is over age 65 is anticipated to increase appreciably in the coming 50 years, generating steady growth in demand for healthcare. Furthermore, ever-increasing longevity on the part of the nation’s elderly, coupled with the geographical fragmentation of the extended family has meant that demand for assisted living services is growing at an even faster rate than demand for healthcare overall.

Like the nation as a whole, New Orleans is in need of additional assisted living capacity, and, in the wake of Katrina, there is an insufficient supply of entry-level job opportunities available to disadvantaged individuals. Crescent Growth Capital was able to help address both challenges by structuring and closing the financing to fund the construction of the new Belleville Assisted Living Facility. The Belleville ALF will provide 53 badly-needed assisted living units in a 55,000 square-foot facility, while simultaneously creating nearly 50 jobs and returning to commerce a historic but blighted school building in New Orleans’ Algiers Point National Register Historic District.

The Belleville ALF is located on New Orleans’ West Bank, across the Mississippi River from the city’s historic core. Extensive development on the West Bank did not begin until the late 1950s, with the completion of the Greater New Orleans Bridge linking downtown to Algiers. For the next thirty years, the West Bank offered middle-income families new, affordable housing, extensive employment opportunities, and plentiful shopping. Conditions began to sour, however, in the wake of the mid-1980s Oil Bust. In a matter of months, the West Bank suffered tens of thousands of job losses; in the succeeding twenty years, poverty, crime and disinvestment increasingly characterized what had been a stereotypically prosperous American suburb.

Belleville ALF constitutes a significant and visible investment on the West Bank. A former elementary school that had lain dormant for over thirty years will be rehabilitated and restored to commerce. The historic fabric extant on the property will be adaptively re-used, embodying the highest aspirations of the green building movement – as there is no greener building than a re-used building. The region’s shortage of assisted living capacity, acutely felt on the West Bank, will be meaningfully eased by Belleville’s 53-unit facility. Most significantly, nearly fifty new jobs will be created, over half of which will be entry-level positions ideal for the West Bank’s disadvantaged low-income population.

Despite demonstrable demand for additional assisted living units, the New Orleans West Bank is considered a challenging location for market rate investment; conventional lenders had been unwilling to underwrite the entire cost of the Belleville facility. In response, Crescent Growth Capital and the principals of the Belleville ALF project devised a capital stack that took advantage of the location’s existing historic fabric as well as the highly-distressed character of the contemplated investment to integrate federal and state historic tax credit equity with the New Markets Tax Credit financing structure.

The tax credit equity generated by this structure lowered the project’s borrowing requirements and enabled the successful underwriting of a smaller conventional loan. Without the use of tax credit equity, it would have been impossible to secure funding sufficient to complete the project.