New Market Tax Credits at Work

By Anna Simet | August 06, 2013


Thanks to a combination of federal and Alabama state New Market Tax Credits, Zilkha Biomass Energy has secured capital needed to finance a black pellet plant in Selma, Ala.

AMCREF Community Capital announced the closing of $18.8 million in combined federal and Alabama state New Markets Tax Credit financing, and U.S. Bank and Stonehenge Capital Company served as the equity investors in the transaction.

According to the announcement from AMCREF, “As the project’s sole federal and Alabama state New Markets Tax Credit allocatee, AMCREF was able to raise investments from U.S. Bank and Stonehenge and attract other funding to provide patient capital to Zilkha, which will use the funds to renovate and retrofit the former Dixie Pellets plant. The plant is located in a county with an unemployment rate of 11.1 percent, the third-highest rate in Alabama according to the Bureau of Labor Statistics. In addition to the 55 permanent Zilkha positions and 120 supporting jobs, it is estimated that the project will bring 380 construction jobs to the area. Construction is under way on the plant, set to begin operations in 2014.”

Alabama enacted its tax credit in 2012, which serves to make capital available to job-generating projects in areas of the state that are depressed.

If you’re wondering how Alabama’s credit is different from the federal credit, here’s some information that I found, courtesy of the Economic Development Association of Alabama.





Years in Existence

3 months

11 years

Total Allocation

$240 million

$33 billion

Transaction Cap Limits

$10 million

No cap

Credit to Investors



Credit Claimed

Y1: 0%, Y2-7: 8.33%

Y1-3: 5%, Y4-7: 6%


AL Dept. of Commerce


Intended Uses

Real Estate/Operating Businesses

Real Estate/Operating Businesses

Development Schedule

12 months

5 years


 Anyway, Zilkha is renovating the former Dixie Pellets plant, which it bought out of bankruptcy in 2010. Jack Holmes, CEO for Zilkha, said the facility will turn out 275,000 tons of hydrophobic pellets per year.

Now that this project has achieved a pretty lofty milestone, I’m looking forward to watching it progress.