Boston Voyager Magazine, July 24, 2017
Today we’d like to introduce you to Warren Kirshenbaum and Melina Ambrosino.
Warren and Melina, let’s start with your story. We’d love to hear how you got started and how the journey has been so far.
At 23, I left my family in South Africa and came to the U.S. to attend law school in Boston where I met my wife, and I am eternally grateful for that. Leaving one’s country and family behind was life-altering. For a long time, while working toward my law degree and trying to assimilate into American culture I felt as if I were without a country. These efforts were an early demonstration of my unique ability to face adversity and persevere towards success.
I formed my company, Cherrytree Group, in 2006 but only to hold stock-based compensation and worked out of my basement as a business consultant. By 2011 I rented office space, hired staff, including my now Executive Vice-President, Melina Ambrosino, and began to build out a business that combined tax credit consulting, brokerage/syndication, and compliance under one roof.
The Cherrytree Group, based in Newton, Massachusetts, utilizes our staff of 6 to offer tax credit consulting, legal, accounting, brokerage and syndication services. We assist developers of all sizes, general contractors, accountants, engineers, individuals, and investment partnerships in applying for, securing, monetizing, and using available federal and state tax credits. We focus primarily on federal and state Historic Rehabilitation tax credits, Renewable Energy tax credits, such as the Solar ITC, and Massachusetts Brownfields tax credit. Our firm also consults with real estate professionals and investors with passive income to help save on their federal tax obligations. The Cherrytree Group has advised and closed on millions of dollars in state and federal tax credits.
Has it been a smooth road?
Beginning a business in a recession without access to capital left little room for error. Banks, landlords, vendors, and clients invariably did not understand the business, and potential referral sources wanted to see a track record before trusting us. Needing to identify a target market, I noticed that there were disparate tax credit service providers, but no unified providers. I scraped together everything I had to cover overhead, payroll and vendors until I could develop a pipeline and, hopefully, cash flow. The business model I developed was highly unusual for the time: working for success-based fees instead of consulting fees. The pressure of starting a niche business in the eye of a recession, while being a husband and father to three young children, was physically and mentally draining but our team stuck with it.
We’d love to hear more about your business.
Initially Cherrytree focused only on one type of state tax credit, a successful short-term strategy, which was not diversified — placing us at risk for market variations. By 2013, due to further state regulation, our tax credit inventory had become unstable and the process from project initiation to closing was widening: causing dramatic peaks and valleys in our cash flow.
Needing to create additional revenue streams, I searched for another niche, deciding to focus on federal tax credits for both rehabilitation of historic buildings and development of renewable energy facilities, but furthermore to pursue the smaller underserved deals in these areas. Therefore, I spent 2014-2016 learning and developing an expertise and a business model, namely sourcing deals and securing tax credit equity investors for these projects at lower prices and sharing with the investors in the fees and cash flow from the projects — thereby creating several new sources of revenue as well as an ongoing annuity revenue stream.
In December 2016, we closed our first three deals in this new area and now, in 2017, we are building out this diversified revenue stream. We differ from state tax credit competitors in that I have developed a team with unique expertise and knowledge, allowing us to handle complex tax credit matters and voluminous filings that others can’t.
We are also in the process of buying our own building in Newton where we can expand our personnel and continue to grow and thrive. The building that we are buying is a historic property and we are going to build on-site solar powered canopies in order to generate renewable energy to power our building, and perhaps even some of our neighbors. These new moves will allow us to put to practical use the tax credit services that we provide to our clients, and to “live” our work.
On the federal tax credit side, our niche market serves small investors who are subject to unique tax circumstances. We are one of few firms nationally with this expertise, thereby creating a high barrier to entry and a model that can be rolled out in scale. I believe that our firm has the potential to become the “Charles Schwab” of tax credits.
It has always been important to me to create a company that was bigger than myself; a place where employees could enjoy their work and be proud of their efforts. I decorated our office as a home might be; provided employees with not only perks but an above-market compensation package, a rich benefits program, and the certainty that they would be rewarded for dedication/loyalty and share in the profits if the company had a good year. This created a loyal team that is proud of our company.
I focus on treating employees, vendors, and clients in a fair and honest manner, and focus on employee’s strengths when developing them. This has created a culture that allows employees to advance, gain responsibility and secure additional compensation. My company is currently negotiating to buy a small historic building to use as our offices, and we hope to install solar panels to generate renewable energy, thereby bringing to life the work that we do.
Is our city a good place to do what you do?
The Greater Boston area has been a good place for the tax credit business, mostly because it is one of the centers nationally of the tax credit business. Moreover, given the history of Massachusetts as one of the havens of the Industrial Revolution, there are many former mill complexes, former factories, and other historic structures, as well as generous state incentives for renewable energy and environmental clean-up that have made the tax credit programs in our State enviable nationally. This confluence of factors, as well as the access to talented young employees has allowed us as a business to develop and grow our focus on programs that are both environmentally conscious and pro-development, as well as being positive economic growth engines for the state and local governments.