UPDATED: April 19, 2016 9:42 PM — A real estate technology business based in Orlando is opening a new world of comparative analysis on public and private financing options to commercial brokers, developers, land sellers and buyers.
Launched in late 2015, ReinID.com began garnering national attention in February, and again in mid-April, when research maps from the website were used in a paper by professors Gary Friedland and Jeanne Calderon of NYU's School of Business, which was presented to the U.S. Senate and House of Representatives for hearings about the EB-5 program's targeted employment areas.
ReinID's maps showed where preferential EB-5 financing ($500,000 investors) could be applied across the country if new, tighter requirements for the foreign investor visa program were enacted by Congress.
EB-5 has drawn much of the spotlight in recent years as a leading development incentive for property in low-income areas. But because it's capped at $5 billion annually, EB-5 is a limited pool overflowing with competition from mega-development projects trying to lure foreign investors to sign up.
A far larger pool of low-interest or free capital can be had through New Markets Tax Credit, local CRA incentives, Low-Income Housing Tax Credits (LIHTC) and more, all of which ReinID maps in intricate detail.
"Today EB-5 has become mainstream, and sometimes project owners forget that there are other incentives out there that the government and banks want them to take advantage of," said Roman Petra, CEO and co-founder of ReinID.com, and an attorney with Broad and Cassel.
The website currently identifies more than $44 billion in real estate incentives, and more are being incorporated into its visual database.
"These incentives being overlooked are tied to specific locations and intended uses. Our intent is to quantify and qualify those incentives so people can understand what a property has to offer, and how to act on it. If I'm a land seller with a commercial property in an incentive area, I'd want to market that. And as a buyer I'd want to know about it."
The New Markets Tax Credit (NMTC) Program was established in 2000 to spur revitalization of low-income and impoverished communities. It provides tax credit incentives to investors for equity investments in certified community development entities, with a credit equal to 39 percent of the investment paid out over seven years (at 5-6 percent each year).
Antonio Romano, president of Atlantic Express Real Estate Development, has been mulling commercial or multi-family options for an orphaned 0.15-acre parcel on Downtown Orlando's Palmetto Avenue that he bought in early March.
He's trying to form a capital stack for multiple development options, and get interested commercial tenants to commit to lease. He was unaware that the land qualifies for a slew of incentives, since it falls within the low-income and high-unemployment U.S. Census Tract 189 of downtown.
Eligible for NMTC financing and CRA funding, Romano could potentially shave millions off his development costs. He could offer to pass that savings on to commercial tenants as a way to draw them to a lease.
"I never imagined my property would qualify for tax credits like that, I never knew where to look," Romano said.
NMTC financing is specifically focused on commercial projects, which could prompt Romano to favor retail/office for the property instead of a residential tower. But market-rate apartments at the address qualify for preferential EB-5, and the census tract also qualifies for additional tax credit bonus under the LIHTC program.
This week, ReinID released a beta version of its new CRA map, which shows CRA-eligible areas throughout the nation. In addition, ReinID shows banks that service such areas.
"This is an important tool for real estate transactions, as we map the locations where banks look to provide financing to meet their CRA obligations," Petra said. "This should interest real estate sellers and buyers, brokers, developers, banks, businesses, and community development entities. When paired with our bank data this becomes an extremely powerful tool."
Banc of America Community Development Corporation (BACDC), a partner with Orlando's Ustler Development for master developer Creative Village Development that's steering the buildout of Creative Village, expects NMTCs to be pursued by developers of future projects in the downtown campus.
"They cannot be used to support affordable housing but, if the development was mixed-use and had a significant amount of ground floor retail in it, there are ways to structure the financing so that the retail component can be partially financed with NMTCs," a BACDC spokesman said Tuesday. "Typically, developers of specific projects work directly with the banks that received NMTC allocations from the CDFI Fund to receive an allocation of the tax credits."