Senator Baucus and Representative Camp have announced their tax reform “road show” is rolling on to Philadelphia. During their last stop, the two Members of Congress who chair the committees tasked with writing tax reform legislation visited a 125-year-old family business that had received New Markets Tax Credit (NMTC) financing. While the businesses they plan to visit on this stop were not financed by the NMTC, it seems a fitting time to discuss the significant impact the Credit has had in struggling neighborhoods in Philadelphia as well as distressed communities throughout Pennsylvania.
The NMTC is a flexible financial tool that encourages private investment in community development in distressed urban neighborhoods and rural communities. The result? Struggling communities experience much-needed economic growth and job creation. In Pennsylvania alone, the NMTC has provided more than $855 million in investments and leveraged an additional $743 million from other sources, which accounts for $1.6 billion in total capital going to businesses and economic development projects in the Commonwealth. These investments in Pennsylvania have directly created 27,698 jobs.
Project HOME, a community based no-profit launched in 1988, is just one of many examples of NMTC financing at work in Philadelphia. Project HOME along with the City of Philadelphia and the Commonwealth of Pennsylvania are engaged in a collaborative public/private partnership working to address chronic homelessness by expanding the infrastructure of shelters, transitional housing, and social services available to homeless youth and adults. With $1.9 million in NMTC financing provided by LISC and PNC Bank, and a $7.1 million grant provided by private donors John and Leigh Middleton, Project HOME was able to renovate and expand its health clinic and office space and significantly expand the reach of its supportive services.
The Philadelphia project’s goal is to eliminate street homelessness in the city by 2017. If successful, Philadelphia would be the first major U.S. city to do so. Through this effort, 1,200 housing opportunities will be developed, including 1,000 drug- and alcohol-free housing opportunities, and 200 education and employment-based housing opportunities for homeless youth. Project HOME is expected to create the equivalent of 43 full-time jobs and serve more than 2,200 homeless individuals in Philadelphia.
Nationally, NMTC investments have directly created some 350,000 jobs at a cost to the federal government of $19,500 per job and leveraged $55 billion in capital investment to credit-starved businesses in communities with high poverty and unemployment rates. These investments have directly created over 350,000 jobs. To put that number in perspective, during that same period, the U.S. economy created a net of 2.2 million jobs.
In anticipation of the pit stop in Philadelphia, NMTC Coalition President José Villalobos submitted an opinion piece to The Hill, which was published last Friday. In the op-ed, Villalobos notes, “Tax expenditures are often regarded as special interest loopholes, but the NMTC is a program that has the ability to effect positive economic change in neighborhoods and communities.”