Economic Development, Tax Credits and Business Incentives

The financial success of many major economic development projects often hinges on the availability of tax credits and other business incentives, but navigating the complexities of such programs, complying with their highly specific requirements, and actually securing the incentives can be a daunting process. The ability to combine some of these incentives increases the benefit for the project, but often exponentially increases the complexity of the financing. Having a legal team with specialized experience in this area gives the project an advantage and leads to a smoother closing.

McAfee & Taft has assisted business owners, investors, developers, local governments, certified community development entities (CDEs) and other non-for-profit agencies in more than 50 economic development projects involving public and private funding with a total project value in excess of $1 billion. We have unmatched experience and expertise representing clients in Oklahoma transactions structured to take advantage of various state and federal incentives, including:

• New Markets Tax Credits
• Tax Increment Financing (TIF)
• Federal Historic Rehabilitation Tax Credits
• State Historic Rehabilitation Tax Credits
• Opportunity Zone Incentives
• Affordable Housing Tax Credits (Low Income Housing Tax Credits)
• USDA and HUD-backed Loans
• Rural Housing Tax Increment Finance
• Quality Jobs Programs
• Oklahoma Community Economic Development Pooled Financing
• Section 108 and Community Development Block Grants
• Former Indian Lands Tax Incentive
• Production Tax Credits (Sale of electricity generated by zero-emission facilities)
• Other local development and incentive packages

Not only are our lawyers well-versed in the ins and outs of such programs, but they are particularly skilled in helping clients bundle applicable incentives for maximum bottom-line benefit.

McAfee & Taft also holds the distinction of being the only law firm to represent three of the four active Oklahoma Community Development Entities (CDEs) to have received allocations of federal new markets tax credits — Durant-based REI Oklahoma, Oklahoma City-based New Markets Redevelopment LLC, and Oklahoma City-based MetaFund.

Overview of key programs

• New Markets Tax Credits
  This federal program provides tax credit incentives to investors who make equity investments in a certified Community Development Entity (CDE), which then invests or makes loans to businesses located in low-income communities.

• Tax Increment Financing (TIF)
  TIFs are state-authorized public funding tools used by local governments to capture incremental taxes within a specified area and then dedicate such funds to a specific use, such as infrastructure improvements and assistance in development financing.

• Federal Historic Rehabilitation Tax Credits
  This federal program provides financial incentives to taxpayers to rehabilitate historical properties. Tax credits are governed by the IRS as part of the Internal Revenue Code, and rehabilitation efforts are governed by the National Park System and administered by the State Historical Preservation Office.

• State Historic Rehabilitation Tax Credits
  This state program piggybacks on the Federal Historic Rehabilitation Tax Credit program by offering matching credits to taxpayers who rehabilitate historical properties. The program is freely transferable and requires filings with the Oklahoma Tax Commission.

• Quality Jobs Program
  This state program provides qualifying employers with cash rebates of up to 5% of new payroll for up to 10 years. To qualify, employers must make new payroll investments of at least $2.5 million and meet certain payroll thresholds. Targeted sectors include manufacturing and certain service industries.

• Small Employer Quality Jobs Program
  This state program provides qualifying small businesses with quarterly cash rebates of up to 5% of new payroll for up to seven years. To qualify, small businesses must employ 90 or less people and meet specific salary and out-of-state sales requirements.

• 21st Century Quality Jobs Program
  This state program provides cash rebates of up to 10% of new payroll for up to 10 years for employers with a highly skilled, knowledge-based workforce. Targeted industries include professional, scientific and technical services; music, film and performing arts; and specialty hospitals.

• Investment/New Jobs Tax Credits
  This state program provides growing manufacturers a significant tax credit based on either an investment in depreciable property or on the addition of full-time-equivalent employees engaged in manufacturing, processing or aircraft maintenance.

• Former Indian Lands Tax Incentives
  This federal program provides tax incentives in the form of accelerated depreciation and employment tax credits for new and established businesses. More than two-thirds of the lands in Oklahoma qualify as “former Indian lands” according to the Internal Revenue Service.

• Oklahoma Community Economic Development Pooled Financing
  This state program provides funding – either through a company-purchased debt option or a public finance option – in the form of cash payments to qualifying business expansion projects that include job creation and the significant investment in facilities, machinery and equipment.

• Production Tax Credits (Sale of Electricity Generated by Zero-Emission Facilities)
  This state program provides a credit equal to $0.0050 per kilowatt-hour of electricity generated and sold to third parties by qualified zero-emission facilities using renewable energy resources. Eligible renewable energy resources include wind, moving water, sun, or geothermal energy. The credit is available to qualifying projects for a 10-year period following the date the facility is placed in operation.

Representative Work Highlights

• ASCO Aerospace Manufacturing Facility – Stillwater, OK
  McAfee & Taft represented ASCO Aerospace USA, LLC, a subsidiary of Belgium-based ASCO Industries, N.V., in the negotiation and consummation of multi-layered incentive and financing package for the acquisition, renovation and equipping of ASCO’s manufacturing facility in Stillwater, Oklahoma. The firm also represented certified CDEs MetaFund and REI Oklahoma in the financing as the NMTC financing lenders.

• Expansion of Koch Nitrogen Facility – Enid, OK
  McAfee & Taft represented Koch Nitrogen in the creation of a tax increment financing (TIF) district in Garfield County, Oklahoma, in connection with a $1.2 billion expansion of the company’s Enid facility. Approved by the Board of Garfield County Commissioners in June 2014, the TIF district is currently the largest in Oklahoma history.

• 21c Museum Hotel – Oklahoma City, OK
  The firm represented a local investment and development group in the redevelopment and financing of the historic Fred Jones Manufacturing Company complex, originally a Model T Ford assembly plant, into a 134-room boutique 21c Museum Hotel. The firm also represented certified CDEs REI Oklahoma and New Markets Redevelopment, LLC as the NMTC financing lenders.

• University North Park – Norman, OK
  McAfee & Taft represented the University of Oklahoma Foundation, Inc. and University North Park LLC in connection with the development of University North Park, a 585-acre planned unit development in Norman, Oklahoma. A tax increment financing (TIF) district was established, and funds generated from the TIF district were used for construction of public improvements and infrastructure, including enhanced highway access and other traffic improvements.

• Devon Energy Corporation Corporate Headquarters – Oklahoma City, OK
  McAfee & Taft represented Devon Energy Corporation in its site acquisition and development of a 50-story office tower and complex in downtown Oklahoma City. The transaction involved working with city leaders to facilitate state and local government incentives, including tax increment financing and other financing arrangements for public improvements related to Devon’s world headquarters project.

• Oklahoma City University School of Law – Oklahoma City, OK
  The firm represented Oklahoma City University in the redevelopment and financing of the historic Central High School in downtown Oklahoma City into the new home of the Oklahoma City University School of Law. The firm also represented certified CDE MetaFund Corporation as the NMTC financing lender.

• Presbyterian Health Foundation Research Park – Oklahoma City, OK
  McAfee & Taft represented Presbyterian Health Foundation in matters related the development of its research park in Oklahoma City. The development was structured to take advantage of New Markets Tax Credits, tax increment financing, and certain state tax credits. The firm also represented certified CDE REI New Markets Investment, LLC as the NMTC financing lender.

• Affordable Housing Developments – Southern and Eastern Oklahoma
  McAfee & Taft has represented for-profit and not-for-profit entities in both the construction and redevelopment of dozens of affordable single and multi-family rental and rent-to-own housing located in metropolitan and rural communities across southern and eastern Oklahoma utilizing Low Income Housing Tax Credits, HUD-backed loans, and other affordable housing government programs.

• Valir Rehabilitation Hospital – Oklahoma City, OK
  McAfee & Taft represented Valir Real Estate, LLC and its affiliates in the negotiation and implementation of a multi-faceted financing structure, including a New Markets Tax Credit financing and traditional financing, for the renovation of the Valir Rehabilitation Hospital campus in downtown Oklahoma City, and the expansion of services provided at the campus. The firm also represented certified CDE REI Oklahoma as the NMTC financing lender.

• Downtown Mixed-Use Development – Oklahoma City, OK
  The firm represented developer Judy Hatfield of Carnegie Centre, LLC in the multi-layered financing of the rehabilitation and renovation of the former downtown library building located in downtown Oklahoma City into a mixed-use commercial and residential development. The firm also represented certified CDE REI Oklahoma as the NMTC financing lender.

• Historic Journal Record Building – Oklahoma City, OK
  McAfee & Taft represented a local developer in its acquisition, redevelopment and expansion of a portion of the historic Journal Record Building in downtown Oklahoma City as Class A office space using TIF financing. Built in 1923 and listed on the National Register of Historic Places, the building sustained extensive damage in 1995 as a result of the bombing of the Alfred P. Murrah Federal Building.

• Mayo Building – Tulsa, OK
  McAfee & Taft represented Mayo 420, LLC in the redevelopment and financing of the Mayo Building in Tulsa, Oklahoma, using a combination of local, state and federal incentives.

• CDE Financing of the Skirvin Hilton Hotel – Oklahoma City, OK
  McAfee & Taft represented certified CDEs REI Oklahoma and New Markets Redevelopment, LLC in the financing of the rehabilitation and renovation of the historic Skirvin Hotel in downtown Oklahoma City.

• CDE Financing of The Tile Shop Distribution Center – Durant, OK
  The firm represented certified CDEs MetaFund Corporation and REI Oklahoma in financing the acquisition and renovation of a new distribution center facility, as well as the acquisition of inventory and other business assets, for The Tile Shop of Oklahoma. A second phase of NMTC financing is currently ongoing with REI Oklahoma.

• CDE Financing of Hilton Garden Inn Hotel – Lawton, OK
  The firm represented certified CDE MetaFund Corporation in the NMTC financing of the new Hilton Garden Inn Hotel in Lawton, Oklahoma.

• CDE Financing of Variety Care Administration Building and Patient Facility – Oklahoma City, OK
  McAfee & Taft represented certified CDE New Markets Redevelopment, LLC in the financing of a new administration building and a remodeled and expanded patient facility for Variety Care, a federally qualified health care facility, in Oklahoma City.

• CDE Financing of Variety Care Health Campus – Oklahoma City, OK
  McAfee & Taft represented certified CDEs New Markets Redevelopment, LLC and REI Oklahoma in the financing of a new Variety Care health campus in northwest Oklahoma City that specializes in women’s health and pediatrics.