Frequently Asked Questions

Table of Contents

1. How does Lone Star distribute tax credits and returns?

2. What kinds of business are eligible to receive a Lone Star investment under the NMTC program?

3. How are the investors in the Lone Star fund protected?

4. Who are the investors in Lone Star New Markets LP?

5. What is the minimum investment commitment?

6. What industries have the funds invested in previously?

How does Lone Star distribute tax credits and returns?

• Lone Star is authorized to finance projects in low-income communities in the state of Texas. In return for qualifying investments, investors will receive a $9.75 million tax credit over seven years:
  

• Investors may claim a tax credit of 5% of the total value of the investment during each of the first three years and of 6% on the total value of investment for each of the final four years of the credit period,
  

• Investors will receive an additional return on their investment based on the return of the fund itself.

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What kinds of businesses are eligible to receive a Lone Star Investment under the NMTC program?

• Federal Guidelines: All investments must be made in qualified Low Income Community Businesses. Generally, a business must meet two tests to be eligible for this designation. First, it must be located in a low-income community - defined as having a median income below 80% of the median income in the surrounding area.  Second, the business must show that a majority of the assets but revenues are derived from the locations of community. If these tests are met, the investment will satisfy the test for being a low income community investment.
  

• Lone Star Guidelines: Using its New Markets Tax Credits in concert with Lewis Hollingsworth LP's programmatic goals, Lone Star will focus on making investments in businesses in underserved areas of Texas.

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How are investors in the Lone Star fund protected?

• Each transaction considered for New Markets investments is carefully reviewed before being presented to a potential investor. Lone Star follows the same extensive due diligence procedures that have been developed for the successful operation of Lewis Hollingsworth LP and its affiliate, the North Texas Opportunity Fund (“NTOF”). The financial elements of each transaction and the financial history of each participant are carefully reviewed by Lewis Hollingsworth LP's professionals to ensure that the interests of the investors in Lone Star are protected.

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Who are the investors in Lone Star New Markets LP?

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What is the minimum investment commitment?

LSNM and LSGC receive investment commitments from investors that are then drawn down over the 3-4 year investment period as each acquisition is made.  The minimum commitment is $1 million, unless approved by the General Partner.

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What industries have the funds invested in previously?

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Revised: 01/21/08