Coalition submits testimony to Tax Policy Subcommittee, following a bipartisan letter signed by 55 Members of Congress
WASHINGTON, D.C.— Today (May 23, 2016), the New Markets Tax Credit (NMTC) Coalition submitted testimony to the House Ways and Means Subcommittee on Tax Policy urging permanence for the credit. The subcommittee held a hearing last week, allowing Members of Congress to submit their proposals for tax legislation. Congressman Richard E. Neal (D-MA), Ranking Member on the subcommittee, as well as Congressman Mike Thompson (D-CA) expressed support for the NMTC during the hearing. The subcommittee is allowing testimony to be submitted for the record until Thursday, May 26th.
Earlier this year, Speaker of the House Paul Ryan (R-WI) created six committee-led task forces, which are charged with “developing a bold, pro-growth agenda that will be presented to the country in the months ahead.” House Ways and Means Chairman Kevin Brady (R-TX) leads the Tax Reform Task Force and is expected to release a report on his tax reform proposal in June. The Subcommittee hearing was a part of the effort to craft this plan.
The testimony, which was authored by the NMTC Coalition’s Board President Robert Davenport, calls for the NMTC to be made permanent. Davenport is a longtime NMTC practitioner and is the President of the National Development Council, which was founded in 1969 to create economic opportunity in low income communities.
“The NMTC meets an important and critical need for private-sector investment in economically distressed urban and rural communities. It blends the market incentive of Jack Kemp’s Enterprise Zones with the flexible community-driven approach of Lyndon Johnson’s Economic Opportunity Act. Furthermore, data on the impact of the NMTC shows that it has not only achieved its purpose, but it has done so at a relatively low cost to the federal government, particularly when compared to traditional economic development grant programs,” writes Davenport.
This comes on the heels of a bipartisan sign-on letter led by Reps. Steve Stivers (R-OH), José E. Serrano (D-NY), and Mike Turner (R-OH) to Ways and Means Chairman Kevin Brady (R-TX). The letter, which was sent on May 19th, was signed by fifty-five members of the U.S. House of Representatives.
Bob Rapoza, spokesperson for the NMTC Coalition noted the importance of this letter. “The Stivers-Serrano-Turner letter demonstrates solid bipartisan support for the NMTC, which is the direct result of the program’s proven outcomes to grow businesses and local economies, including maintaining and creating over 750,000 jobs since 2003,” said Rapoza.
The NMTC Coalition will be meeting in Washington, D.C. next week on June 1st for its annual NMTC Policy Conference. During the event, the Coalition will release its 2016 NMTC Progress Report, which is the 12th edition of the report. It provides data and detailed insights into how the NMTC was used in 2015, including the types of businesses financed, the communities benefitting from the investing, and the impacts of these investments at both the community and national level.
What do you do with one million square feet of underutilized and vacant department store in your city center, with a building constructed in 1905? That’s the question community leaders in Rochester, New York needed solved with the Sibley Building, once the largest department store in America between New York City and Chicago. In May, Boston-based WinnDevelopment closed on financing of two separate QALICBs for the overall $68.95 million redevelopment component of the site, utilizing $42.51 million in New Markets Tax Credit (NMTC) financing from four Community Development Entities (CDEs) and a mix of public financing sources. The project also utilized more than $13.7 million in state and federal Historic Tax Credits and $1.8 million in loans from the City of Rochester and its Community Development Authority.
The project is proving to be a powerful example of successful partnerships between government entities, educational institutions and the private-sector development community and Sibley is demonstrating how NMTCs are addressing the needs of challenged communities. It is located within the Central Business District of Rochester and a census tract where the unemployment rate is 20.8% (2.63 times the national average) and has a poverty rate of 58.3%.
Sibley integrates meaningful retail, professional offices and health care services, apartments and business incubation space for high-tech research and development into Rochester’s city center and directly anchors the city’s Downtown Innovation Zone and addresses specific issues around engagement, heritage, transportation and neighborhoods outlined specifically in the City of Rochester’s 2014 Master Plan.
The plan includes 70,000 square feet of first-floor retail and hundreds of thousands of square feet of office space on the upper floors.
“This project will help create jobs and grow the local economy – all anchored in an important Rochester landmark,” said Governor Andrew Cuomo. “Repurposing and developing the Sibley Building is an important step for Rochester, and this transformation is a great example of what can be achieved through the Regional Economic Development Council process.”
The overall project funding package included NMTCs in the amount of $20 million of allocation from RBC Community Development, $12.4 million from Urban Research Park CDE, and $8.35 million from Community Impact Capital. PNC Bank, N.A. was the tax credit investor and also provided $1.76 million in NMTC allocation from its affiliated CDE. Furthermore, the project received funding from local and state resources to bring the project to fruition including an Empire State Development loan, funding from the Upstate Revitalization Initiative and Regional Economic Development Council, NYSERDA’s “Cleaner, Greener Communities” grant program and Brownfield Remediation funds. The adaptive reuse of this historic building will be constructed to LEED Silver standards.
The Sibley project won the support of New York Senator Charles Schumer who has been a leading proponent of the NMTC program in the United States Senate. At a December 2015 news conference discussing the need and impact of the New Markets Tax Credits program, Sen. Schumer, D-N.Y. said the tax credits are a critical piece of financing for the project. “Private sector alone led to a vacant downtown,” said Schumer, “[incentives] bring initial development here, and then the rent levels go up and desirability, and you don’t need any more credits. It grows on its own.”
Overall, the Sibley project is estimated to create 1,566 temporary construction jobs, 1,042 permanent FTE jobs, 75 market-rate apartments and 21 affordable apartment units and will spur an immediate direct catalytic investment of $148.4 million within the community. The project is expected to take between 14 months and 24 months to complete, with apartments available for lease beginning in the spring of 2018.
New York State has provided more than $10 million to HTR over the last four years through New York Governor Cuomo’s Regional Economic Development Council initiative, including $5 million towards the construction of their facility located within the Sibley building. The accelerator’s new hub at the Sibley Building provides support for start-up companies across the nine-county Finger Lakes region. The Center for Governmental Research projects that the accelerator’s efforts will create 1,000 direct jobs over the next five years.
The largest peanut shelling plant in the United States is officially open for business. Premium Peanut, located on Barrington Road west of Douglas, has actually been open for 92 days. Friday, however, the company celebrated its grand opening with a ribbon cutting, which was attended by several high-ranking officials, including Gov. Nathan Deal and his wife, Sandra. Several hundred people gathered on the grounds of Premium Peanut for a luncheon and the ribbon cutting.
- Learn more about the event from Douglas Now
Premium Peanut received $20 million in critical New Markets Tax Credit financing from CEI Capital Management LLC and another $3 million in allocation from SunTrust Bank to help expand its operations.
Premium Peanut used the capital to build a shelling facility to benefit a collection of 225 member farms in a cooperative-like arrangement. The peanut processing plant will help the farmers more easily access the market. Through guaranteed contracts and profit distribution, farms will see better overall profitability and smooth out the vagaries of boom and bust cycles that are notorious in the peanut industry.
The shelling facility is located in an an area of Douglas, Georgia with a poverty rate of almost 30 percent and an unemployment rate above 9 percent. The plant will create approximately 100 direct jobs, plus an additional 30 indirect jobs at the storage facilities. The majority of direct jobs will be unskilled positions available to low-income individuals and all will pay a living wage for single adult in the county and include benefits.
“This part of Georgia has what we often find in rural economies. Activity and growth are heavily dependent on natural resource industries as the main drivers,” said CEI Capital Management CEO Charlie Spies. “By supporting a cooperative farming model the New Markets Tax Credit program is doing its job, diversifying a shallow economy to lay the groundwork for a sustainable future.”
The PATH Act, which was enacted in December, 2015, extended the NMTC for five years from 2015 to 2019 at $3.5 billion in annual credit authority for a total of $17.5 billion. Today, the CDFI Fund announced plans to implement the largest and longest authorization of the NMTC since the Credit was established in 2000.
Below, please find the CDFI Fund’s press release announcing an Amendment to the CY 2015 NOAA. For applications submitted last December, the Fund will combine the 2015 and 2016 authorizations and award $7 billion later this year. After this combined round, Treasury will make three additional allocations of $3.5 billion in 2017, 2018, and 2019. They will not skip a year. In short, the $17.5 billion authorized in the PATH act will be allocated in four rounds: the first for $7 billion (later this year), and the next three years at $3.5 billion each in 2017, 2018, and 2019.
As you know, the Coalition wrote to the CDFI Fund in December in support of combining the authorizations for 2015 and 2016 in order to meet the limit established in the NOAA of $5 billion.
Treasury’s action is not unprecedented as the Bush Administration took similar measures to combine rounds during the launch of the NMTC. Combining the 2015 and 2016 rounds will also allow Treasury to ‘catch-up’. Beginning in 2017, the CDFI Fund will be in a position to make allocation awards in the year in which credit are authorized.
These awards will represent the largest allocation in the history of the NMTC and will provide a substantial boost to revitalization efforts.
Below is the CDFI Fund’s press release. We urge you to read the FAQ document.
CDFI Fund Combines CY 2015 and 2016 Rounds of New Markets Tax Credit Program
Combined Round Will Provide Up To $7 Billion in Allocation Authority
The Community Development Financial Institutions Fund (CDFI Fund) has amended its Notice of Allocation Availability (NOAA) for the calendar year (CY) 2015 round of the New Markets Tax Credit Program (NMTC Program). The CDFI Fund is releasing the amended NOAA in advance of its publication in the Federal Register later this week. The NOAA has been revised to include the following:
- The combination of the CY 2015 and the CY 2016 NMTC allocation authorities into one allocation round (the “combined CY 2015 – 2016 allocation round”); and
- An increase in allocation authority available to award for the combined CY 2015 – 2016 round from $5.0 billion to $7.0 billion.
The NMTC Program is an important tool for communities to attract private investment for community development and economic revitalization. In December 2015, Congress authorized the program for five years. By combining the CY 2015 and CY 2016 allocation rounds, the CDFI Fund will be able to announce the allocation of New Markets Tax Credits in the year for which they are authorized, and will be able to help more communities access the benefits of the tax credits sooner.
The CDFI Fund is not re-opening the combined CY 2015 – 2016 round for new applications. All allocation determinations will be made from the existing pool of applications submitted for the CY 2015 round. The CDFI Fund received 238 applications requesting an aggregate total of $17.6 billion in NMTC allocation authority.
Currently, the CDFI Fund anticipates announcing the CY 2015 – 2016 NMTC Program allocations in late 2016.
To learn more about the CDFI Fund and its programs, please visit www.cdfifund.gov. Questions about the CY 2015 – 2016 NOAA should be submitted to the CDFI Fund’s Help Desk at (202) 653-0421 or firstname.lastname@example.org.
Have you registered for the 2016 NMTC Coalition Policy Conference?
The 2016 NMTC Coalition’s Policy Conference will be held on Wednesday, June 1st, from 8:30 am until 4 pm in Washington, DC. This year’s event will take place at the Hotel Palomar located at 2121 P Street Northwest. CDFI Fund Director Annie Donovan is confirmed as a keynote speaker. The Coalition is also inviting other senior Treasury and CDFI Fund staff to participate, as well as other NMTC industry experts. In addition, the Coalition will release its new 2016 NMTC Progress Report.
More details will be posted soon on the Coalition website at http://nmtccoalition.org/events/
Early bird rates are $250 for NMTC Coalition Members, and $300 for non-members. Early bird registration ends on May 3rd. After early bird registration expires, rates will increase to $300 for NMTC Coalition Members, and $350 for non-members. Please note that all registration fees are non-refundable after May 3, 2016.
Today, Senator Mike Crapo visited the future site of Hemming Cedars, a mixed use building in Rexburg. The facility is a New Markets Tax Credit (NMTC) project being financed by Montana & Idaho Community Development Corporation, which is set to begin construction in this spring.
Hemming Cedars is 220,000 square feet of commercial retail and office space, and an apartment complex. It will provide housing, including married student housing, for nearby BYU-Idaho students, as well as parking for both residents and the downtown commercial district. It will also create 125 construction jobs and 75 permanent jobs.
“The opportunity provided by New Market Tax Credits and our positive working relationship with Montana CDC and Wells Fargo has enabled us to further pursue redevelopment and revitalization of the core of the city. We believe this project will help to meet specific needs of our growing community and be another building block toward positive growth and development for this region,” said Richie Webb of the Hemming Corporation, which is the developer on the project.
Hemming Cedars replaces several smaller, older buildings and is the fourth NMTC project in Eastern Idaho. Wells Fargo was the investor for the $40 million project, and Montana & Idaho Community Development Corporation provided $32 million of its NMTC allocation to make the development possible.
“More than 600 jobs, full-time and construction, have been created by the use of the New Market Tax Credit in Idaho,” said Idaho Senator Mike Crapo, a senior member of the Senate Finance Committee. “While we push to streamline our tax code, we must remember the pro-competitive provisions like this that help us grow the economy and create jobs. Credit goes to the partners to make this project for Rexburg and BYU-Idaho a reality.”
The New Markets Tax Credit was enacted in 2000 in an effort to stimulate private investment and economic growth in low income urban neighborhoods and rural communities that lack access to the patient capital needed to support and grow businesses, create jobs, and sustain healthy local economies.
“New Market Tax Credits have made a significant difference for Rexburg,” said Scott Johnson, Director of Economic Development for the City of Rexburg. “By leveraging over $50 million in investment in our area, projects like Hemming Cedars are able to create jobs and economic vitality, and provide services that wouldn’t otherwise be here. Working in partnership with Montana & Idaho CDC has made achieving our goals a reality.”
The NMTC is a 39 percent federal tax credit, taken over seven years, on investments made in economically distressed communities. Today due to NMTC, more than $70 billion is hard at work in underserved communities in all 50 states, the District of Columbia, and Puerto Rico. Since its implementation, Congress has made several last-minute reauthorizations, making it difficult for practitioners and communities to rely on its availability. However, Congress passed a five-year extension of the NMTC in the PATH Act, which was passed in December 2015.
“Senator Crapo recently supported legislation to make sure the NMTC continues, and is available for job growth and community revitalization in cities like Rexburg, other capital-starved areas of Idaho and nationwide,” said Heidi DeArment, Vice President of Montana & Idaho Community Development Corporation and Vice President of the NMTC Coalition. “The federal NMTC has proven time and again that it is a vital, common-sense financial tool that encourages entrepreneurs and private investors to support development and economic growth in rural neighborhoods and urban communities left outside the economic mainstream.”
About Montana & Idaho CDC
Since 1986, Montana & Idaho CDC, a non-profit organization, has provided financing and consulting that change the lives of individuals and strengthen community prosperity. They have provided $400 million in financing to businesses that create jobs, charge the economy, and make their communities better.
About the New Markets Tax Credit Coalition
The NMTC Coalition is a national membership organization of Community Development Entities and investors organized to conduct research on and advocacy for the New Markets Tax Credit. The Coalition hosts two annual conferences and regularly publishes the NMTC Bulletin. To learn more, please visitwww.nmtccoalition.org.
Contact: Ayrianne Parks
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/senator-crapo-visits-new-nmtc-financed-hemming-cedars-site-in-rexburg-id-300240052.html
SOURCE New Markets Tax Credit Coalition
KPVI 6 (NBC)
Yesterday in Riviera Beach, FL, they cut the ribbon on the new Riviera beach Marina Village. Hundreds showed up Thursday afternoon to get a first look at the new waterfront property.
The $35 million redevelopment project is almost complete and will have an event center, restaurants, hotels, shopping and office space. Officials with Riviera Beach CRA, including NMTC Coalition Board Member Tony Brown, are confident that the project will transform the Riviera Beach waterfront into a vibrant and authentic destination spot for residents and visitors alike, spurring broad revitalization of the surrounding community.
“Today is symbolic and just shows public, private partnership and residents coming together and city officials listening to them,” Riviera Beach City Councilwoman Dawn Pardo said.
You can find a photo album of the event on Facebook.
Several news crews were on hand to take in the event, including CBS 12. Below is their report:
Quick update on the President’s FY 2017 Budget.
The Treasury’s Greenbook – which describes revenue proposals – has not yet been released, but the budget narrative includes the following language calling for a permanent NMTC extension at $5 billion in annual authority:
“To support private-sector partnerships and investments that play a key role in strengthening communities, the President also proposed to expand and make permanent the New Markets Tax Credit, which promotes investments in low-income communities. Under legislation signed into law by President Obama in December, $3.5 billion in New Markets Tax Credits will be available annually through 2019. The Budget would make the program permanent with an annual allocation of $5 billion.”
Kudos to President Obama for his continued support for the NMTC and the CDFI Fund, which also received an increase in the FY 2017 budget.
A special contribution by NMTC Coalition Board Member, Shirley Boubert.
The holiday season is a time when our nation reflects on the bounty we have received over the last year, a time to express gratitude, and also a time to remember those who are less fortunate. Many DC families help serve meals and participate in fundraisers for people in need during the holiday season, many needs remain throughout the year. To help address these issues, the District of Columbia Housing Authority is working to finance community development projects that meet the needs of our city. One of the ways we are doing this is by employing the New Markets Tax Credit (NMTC), which leverages private and public resources for a variety of projects in neighborhoods where access to capital is scarce. A great example of this work is the Conway Center, a new affordable housing, medical center, and job training facility being constructed on Benning Road, in partnership with SOME (So Others Might Eat), US Bank, which invested $7 million in equity raised from federal NMTCs, and other local partners like City First Bank, which provided an NMTC allocation to help with construction of the Conway Center.
The SOME project, using federal NMTC financing, is a prime example of how redevelopment tools are being used east of the river to benefit the community as a whole—building up people and creating stronger community resources for all of our residents. In fact, this new development will provide homes to 200 homeless and very low-income families and individuals, treat more than 10,000 patients per year with medical and dental services, and train some 300 residents with marketable job skills.
The District of Columbia Housing Authority—which is dedicated to providing quality affordable housing to extremely low- through moderate-income households, fostering sustainable communities, and cultivating opportunities for residents to improve their lives— has won several New Markets Tax Credit allocations over the last few years and provided a NMTC allocation through its subsidiary DC Housing Enterprises to support the development of Conway Center.
The NMTC is a unique and flexible financial tool that allows local decision-makers to choose what types of projects would most benefit their community. It provides private investors with a modest federal tax credit for investments made in businesses or economic development projects in census tracts in which the poverty rate is at least 20 percent, or median family income does not exceed 80 percent of the area median. Since it was enacted, the NMTC has helped create over 750,000 jobs nationwide and generated billions of dollars in private investments in projects and communities that likely would never have received injections of patient capital otherwise.
Unfortunately, the NMTC has been historically caught in congressional back-and-forth, with the credit only being authorized on a temporary basis. The NMTC most recently expired on December 31, 2014, after Congress passed a one-year, retroactive extension at the end of the 113th Congress. However, as a final act of the 114th Congress, a five-year extension of the NMTC in the PATH Act was passed and signed into law by the President, which is the longest extension of the NMTC since it was implemented. As a result, community facilities like Conway Center will continue to have access to the capital needed to fill the financing gaps that many projects in low-income communities face.
While many areas of Washington, DC are thriving, ever-growing costs of living make it increasingly difficult for lower wage workers and the unemployed to cope with these challenges. It is not possible for our community’s organizations to address the poverty and homelessness alone, but through thoughtful use of community development resources like the NMTC, we can start to make a difference, by growing job opportunities and training; increasing child care, education, healthcare and healthy food access, and creating more affordable, decent housing.
This holiday season, we are expressing our gratitude by recognizing the work being done by SOME—because we are stronger when we work together. To find out more about So Others Might Eat and how to get involved with their efforts to serve those in need, please visit their website www.some.org.
Shirley Boubert is the NMTC Manager DC Housing Enterprises a Subsidiary of the District of Columbia Housing Authority.
On this day 15 years ago, President Bill Clinton celebrated the signing of H.R. 4577, appropriations legislation that included the provisions of the Community Renewal Tax Relief Act and of course, the New Markets Tax Credit.
Below, find a video of President Clinton’s remarks at a White House ceremony along with the transcript and a photo gallery.
“The budget also makes good on our commitment to help every community share in our Nation’s prosperity. This is a big deal to me, and also to America’s future. About 18 months ago, I began the first of what I called new markets tours, to shine a spotlight on people and places that had been left behind in this long and remarkable recovery. I wanted every American investor to see the potential of these communities and the promise of the people who live there.
I knew that government couldn’t do it alone and that, in fact, we would have to find a way to get more private investment into these communities. But I also knew that business could not be expected to go it alone, that we had to find some way to bring hope and opportunity home to these communities.
Now, at the same time, to be fair, there were people in the Congress who were interested in this who were struggling for some bipartisan consensus to bring free enterprise to parts of America that have been left behind. Among them, in the House, were Representative Talent, who is here, and J.C. Watts and Danny Davis, who represents Chicago but, like me, was born in Arkansas. And there were other groups that were looking at this.
So we all worked together to give you a budget that delivers something that I believe is truly unique and significant. It includes the landmark new markets and community renewal initiative. It’s the most significant effort ever to help hardpressed areas, both rural and urban, to lift themselves up through private investment and entrepreneurship. It is a triumph of bipartisanship. And again, I want to thank those whom I just mentioned—especially you, Mr. Talent—and I want to thank the Speaker of the House, Dennis Hastert, who went to Chicago with me and Reverend Jackson and without whom we could not have passed this important initiative.
Here’s what it does. First, it establishes the first-ever new markets tax credit. It sets up a new market venture capital initiative. Now, what does all that mean? It basically means if we can get people to put money into really depressed areas, all the rest of America will share part of the risk by giving them a tax credit to do it. And it’s a darn good investment.
We also expanded and strengthened 40 empowerment zones; that’s the program our administration has run for the last 8 years under the able leadership of Vice President Gore. And we created 40 renewal communities across our Nation; that’s an alternative designed essentially by Republicans in the House, with the Democrats who worked with them. And we decided that since nobody knows how to do this, we ought to try in 40 places with each approach and see which one works better, and see what works better with each approach. It’s a terrific idea, and I only wish I was going to be around when all the results come in. [Laughter]
But over the next—sometime over the next, I’d say, 2 to 4 years, probably more like a 4 year period, we’ll actually have evidence of what happened in the 40 empowerment zones, what happened in the 40 renewal communities. That Congress will take the evidence and, I hope, as a result of that evidence, will then enact legislation that will permanently establish a framework for always encouraging America to invest in the areas that otherwise would be left behind.
And if, like me, you’ve spent a lot of time in the Mississippi Delta or Appalachia or innercity neighborhoods or on Native American reservations, you doubtless have concluded, as I have, that intelligence is pretty equally distributed throughout this country and so is the work ethic. But we have not yet equally distributed opportunity and access to capital. We’re trying to figure out how to do it. This is a truly historic day, and we did it together, and I am very grateful. Thank you.”
President Bill Clinton, December 21, 2000