New Markets Tax Credits Adds Housing to New Orleans Early Learning Center

There may still be some lingering misperception that the New Markets Tax Credit (NMTC) can not be used for housing. While the NMTC is primarily used for economic development, there are cases where it can support affordable housing. One of these is if the commercial and housing components of a project are segregated into separate legal condominiums. Another is if Low Income Housing Tax Credits are not used and if the residential rents do not exceed 80 percent of revenue in the project. (There are also other ways to develop housing using NMTC, such as investing in a housing developer like Habitat.)

The Wilcox Academy Central City project in New Orleans exemplifies this second approach. The four units of housing are such a small portion of the project that they could be built along with the 13-classroom educational structure, with the potential for providers at the school to live on-site.

Cady Seabaugh, senior vice president and director of NMTCs and strategic initiatives at St. Louis-based McCormack Baron Salazar, Inc., the NMTC allocatee through its affiliate MBS Urban Initiatives CDE, describes her involvement in the Wilcox Academy as “a personal story for me.”

Seabaugh remembers, “My first role at McCormack Baron Salazar 18 years ago was as the associate project manager on the redevelopment of New Orleans’ C.J. Peete public housing, which is directly across the street from where this early childhood education center is going to be.”

She continues, “All those years ago as part of the community engagement process the residents expressed their desire to have better educational opportunities from cradle to career in the neighborhood.”

Over the years the redevelopment of the neighborhood has proceeded, but the early childhood educational piece has been missing until now.

Now, Seabaugh is working to make that long-ago wish a reality through Wilcox Academy Central City, an early learning establishment founded by Rochelle Wilcox in 2006, which now has three locations in New Orleans.

Seabaugh describes how two years ago Bill Carson of U.S. Bank first informed her that an educational venture wanted to build in the area.

Building on HOPE VI
“This was an exciting opportunity to fulfill a need the community had expressed all those years ago,” she says. The new development is adjacent to Harmony Oaks, a HOPE VI community developed by McCormack Baron Salazar as part of a broad New Orleans redevelopment after Hurricane Katrina, and the KIPP Central City Academy school.

MBS Urban Initiatives CDE (the CDE stands for Community Development Entity, a designation necessary to get NMTC allocations) has provided an $8.5 million NMTC allocation investment in the new Wilcox Academy Central City.

The CDE has received a total of 11 NMTC allocations in its history, for a total of $575 million.

A groundbreaking at Wilcox Academy was held in November 2024 and Seabaugh anticipates completion in December 2025. It will comprise a two-story early learning center and an outdoor activity space.

At the groundbreaking, Seabaugh said, “We believe Wilcox Academy Central City will be transformative for the children and families of Central City.”

As for the housing, Seabaugh says, “Just north of the center will be a four-unit apartment building that will provide affordable housing, ideally to childcare providers.”

“You can do housing with NMTCs,” she says. “But you can’t have more than 80 percent of rent receipts from housing. And you do have to have an affordability component when you’re doing housing.” No LIHTCs are involved in the deal, and the housing is not going to exceed that limitation.

“The housing is less than ten percent of the total costs,” she says. Seabaugh gives the total development cost as around $9 million.

MBS Urban Initiatives describes a state-of-the-art 9,900-plus square-foot facility, which “will include 13 classrooms serving up to 150 children, from birth to age four, focusing on supporting low-income families. The Academy will operate as a Type III center, allowing it to receive public funds to serve needy families.”

New Jobs Created
In addition, the project will create 21 new jobs, retain nine existing jobs and develop four affordable housing units targeted at educators, providing housing for families earning up to 80 percent of the area median income.

Other sources of funding include equity from a $5 million Louisiana state NMTC allocation provided by Enhanced Community Development, loans from the Low-Income Investment Fund, New Corp., Inc. and Credit Human Federal Credit Union and equity from Wilcox Academy. U.S. Bank Impact Finance is the investor, while Alembic Community Development is the developer consultant. CDW Services is the general contractor and Manning Architects is the project architect. 

Wilcox Academy is the overall developer of the project.

Seabaugh’s final verdict on the development? “Fantastic! All the lenders were able to figure out a way to get this project done.”

Her CDE has a focus on “transformative urban investments, ideally investment attached to a comprehensive master plan for large mixed-income communities.”

She says, “We focus on things residents say they are missing in their neighborhoods and that have the most impact on their economic trajectory.”

That narrows it down “to jobs that are accessible in that community, both physically and capacity-wise, education cradle through career, and healthy foods.”