ESG & Tax Credit Equity Opportunities

For Banks

Banks have historically recognized that the company’s long-term success depends on the vitality of the communities in which they do business. Banks continuously invest in activities that promote their local community development. Banks can receive Community Reinvestment Act (CRA) credit for those activities, making it easier to meet their CRA obligations and enhance their public CRA ratings. Those ratings impact a bank’s ability to receive regulatory approvals and engage in a number of industry activities. 

Yet banks are constantly being harangued, often unfairly, for not doing more to provide solutions for the nation’s economic and social woes. ESG investing is a significant way for banks to contribute to addressing environmental, social and governance at the forefront of days’ economic and political discourse. All of the larger banks recognize ESG investing as a core point of emphasis to achieve long-term success in the marketplace. Yet most insurance companies are very conscious of maintaining adequate cash flow reserves in the economic, social and climatic uncertainty of today’s world. By definition, the banking industry is a low margin business. Most banks simply cannot afford to make wild expenditures to support their ESG initiatives or their sustainability plans. Monarch Private Capital’s ESG funds allow banks to redeploy dollars earmarked for federal and state income taxes to be invested in funds addressing their ESG objectives, satisfying their tax obligations and providing positive financial returns.  Monarch’s ESG funds allow banks to derive ESG benefits and financial returns out of capital, which has historically been wasted in empty tax payments. In the future, banks will be criticized if their tax payments are simply wasted rather than used to narrow the affordable housing gap, create a more sustainable future, or preserve history and contribute to urban redevelopment. Simply using corporate cash to make mere tax payments is wasteful when Monarch’s ESG funds provide so many highly productive alternatives.

Whether your strategy is to narrow the affordable housing gap, create a more sustainable future, or preserve history and contribute to urban redevelopment, consider the many opportunities Monarch has to redirect your tax dollars to fuel those specific preferences and see the positive, quantifiable outcomes. Low Income Housing Tax Credit (LIHTC) and Historic Tax Credit (HTC) financed projects meeting CRA requirements are also eligible for CRA credit.  

Learn how to redeploy dollars earmarked for federal and state income taxes to address your CRA and ESG objectives.

Banking CRA and Other Opportunities

Monarch is an industry leader in ESG funds and tax equity investing. With sufficient notice, interest and commitment, our acquisitions team can secure credits in these areas.

Federal or StateTax Credit Programs% Tax
Liability Offset
Offsets Corporate
Income Tax
Offsets Financial
Institution Tax
Transfer ProcessSatisfies ESG
Criteria
FederalHistoric75%XAllocableYes
FederalLow Income Housing75%XAllocableYes
FederalEnergy Investment75%XAllocableYes
AlabamaHistoric100%XXAllocableYes
ArkansasHistoric100%XAllocable & TransferableYes
ArkansasLow Income Housing100%XXAllocableYes
CaliforniaEntertainment100%XTransferable
CaliforniaLow Income Housing100%XAllocable & TransferableYes
ColoradoHistoric100%XAllocable & TransferableYes
ColoradoLow Income Housing100%XAllocableYes
ConnecticutEntertainment50-55%XTransferable
ConnecticutHistoric100%XAllocable & TransferableYes
DelawareHistoric100%XTransferableYes
GeorgiaEntertainment100%XTransferable
GeorgiaHistoric100%XAllocable & TransferableYes
GeorgiaLow Income Housing100%XAllocableYes
HawaiiLow Income Housing100%XAllocableYes
IllinoisEntertainment100%XTransferable
IllinoisHistoric100%XAllocable & TransferableYes
IllinoisLow Income Housing100%XTransferableYes
IllinoisHospital100%XTransferableYes
IndianaDINO100%XXAllocableYes
IndianaRedevelopment100%XTransferableYes
IowaHistoric100%XAllocable & TransferableYes
KansasHistoric100%XAllocable & TransferableYes
LouisianaHistoric100%XAllocable & TransferableYes
MarylandHistoric100%XAllocableYes
MassachusettsEntertainment100%XXAllocable & Transferable
MassachusettsHistoric100%XTransferableYes
MassachusettsLow Income Housing100%XAllocable & TransferableYes
MinnesotaHistoric100%XAllocableYes
MississippiHistoric100%XAllocableYes
MissouriHistoric100%XXAllocable & TransferableYes
MissouriLow Income Housing100%XXAllocable & TransferableYes
MontanaEntertainment100%XTransferable
MontanaHistoric100%XAllocable & TransferableYes
NebraskaHistoric100%XXAllocable & TransferableYes
NebraskaLow Income Housing100%XXAllocableYes
NevadaEntertainment100%XXTransferable
New JerseyEntertainment100%XTransferable
New JerseyGrow NJ100%XTransferableYes
New JerseyERG100%XTransferableYes
New YorkHistoric100%XXAllocableYes
New YorkLow Income Housing100%XAllocableYes
North CarolinaHistoric100%XAllocableYes
North CarolinaEnergy Investment50%XAllocableYes
OhioHistoric100%XXTransferableYes
OklahomaHistoric100%XXAllocable & TransferableYes
OklahomaLow Income Housing100%XAllocable & TransferableYes
PennsylvaniaEntertainment50%XXTransferable
PennsylvaniaHistoric100%XXAllocable & TransferableYes
PennsylvaniaR&D75%XTransferableYes
Rhode IslandEntertainment100%XXTransferable
South CarolinaAbandoned100%XAllocableYes
South CarolinaHistoric100%XAllocableYes
South CarolinaLow Income Housing100%XAllocableYes
South CarolinaMill100%XXAllocableYes
TexasHistoric100%Allocable & TransferableYes
VirginiaHistoric100%XAllocableYes
West VirginiaHistoric100%XAllocableYes
WisconsinHistoric100%XTransferableYes
WisconsinLow Income Housing100%XAllocableYes

In addition to meeting their ESG needs, Monarch also offers numerous income opportunities for Banks:

Income Opportunities for Banks

  • Financing on construction and perm loans
  • Fees on construction loans and perm loans (if provided)
  • Interest income on the loans
  • Cash flow from the projects (generally not a large amount but varies from project to project)

Other Opportunities for Banks

  • Deposits
    • Projects have significant cash reserves (operating, marketing, replacement reserves, etc.)
    • Developers may move some or all of their money to the sponsor bank
  • New relationships with developers that often are involved in other ventures
  • Political and public relations opportunities as many local and state politicians support these types of deals and make appearances for groundbreaking ceremonies and grand openings
  • Advertising as banks receive promotion through project signage
  • Monarch will also maintain deposits with our partner banks

Contact us for more information about ESG Investing, state and federal tax credits.