New Markets Tax Credit Coalition Blog
“The New Markets Tax Credit: Creating Economic Opportunity in Rural America” Report Finds that NMTC Has Generated A Significant Amount of Jobs and Investment in Rural Communities
A report issued yesterday by a coalition of community development organizations and financial institutions details how the New Markets Tax Credit (NMTC) has spurred private investment in rural communities around the United States. This federal tax credit, which expired on December 31, 2013 and is awaiting congressional action, has generated over $7 billion in investments and 67,000 jobs in rural America.
Freeport Press, in Freeport, Ohio, is an excellent example of the impact New Markets Tax Credit investments can have in rural communities. (Photo from the Finance Fund)
“While there is ample data on the New Markets Tax Credit’s track record of delivering capital to our most challenged communities, there was little research on the economic impact of the NMTC in rural America in particular–until now,” explained Bob Rapoza, spokesperson for NMTC Coalition.
The report analyzes job creation and investment trends of the NMTC in rural America between 2003 and 2011. Specifically, it highlights the NMTC’s role in helping rural communities tackle two persistent problems: the loss of manufacturing jobs and inadequate access to healthcare facilities. During this time, the NMTC delivered over $1.4 billion in total project financing to rural manufacturing projects like Continental Tire in Sumter, South Carolina, and $536 million to rural healthcare facilities or clinics like the Delta Memorial Hospital in Dumas, Arkansas.
“Based on the findings of this report, it is clear the NMTC is a significant player in delivering capital to rural businesses and economic development projects,” said NMTC Coalition president Jose Villalobos.
One such project is Viracon, a rural, Minnesota-based manufacturer of energy-efficient specialty glass for skyscrapers, which is sold across the world. Midwest Minnesota Community Development Corporation (MMCDC), a board member of the NMTC Coalition, provided a low-cost, $14.4 million financing package for Viracon’s new 650 production lines at their plant in Owatonna, Minnesota. As a result, the company was able to preserve its global competitiveness and the 800 living-wage jobs it provides for U.S. workers.
The NMTC was enacted in 2000 in an effort to spur private investment and economic growth in communities with poverty rates of at least 20 percent or median incomes at or below 80 percent of the area median by offering a modest incentive on investments made in these communities.
Contact: Bob Rapoza
In a letter sent earlier this week to House Ways and Means Committee Chairman Dave Camp and Ranking Member Sander Levin, a bipartisan cohort of fifty members of the House urged the Committee to take up a New Markets Tax Credit extension. The letter – along with growing cosponsorship lists for NMTC extension legislation in the House and Senate – is yet another signal that there is broad bipartisan support for an extension on both chambers.
Many thanks to Reps. Mike Turner (R-OH) and Chaka Fattah (D-PA) who took the lead on circulating the letter.
Expired Federal Tax Credit Program Helped Bridge Financing Gap for Center
ATLANTA, GA—The grand opening of the National Center on Civil and Human Rights took place in downtown Atlanta yesterday. More than seven years in the making, the grand opening signals the successful completion of a mission to “create a safe space for visitors to explore the fundamental rights of all human beings.” But it might not have been possible without the New Markets Tax Credit (NMTC), a federal tax credit that helps leverage private investment for development projects in economically distressed neighborhoods.
Among those in attendance for the ribbon cutting and grand opening festivities were New Markets Tax Credit (NMTC) Coalition members, Invest Atlanta and PNC Financial Services Group, which together provided $24 million in NMTC financing for the $79 million project. Atlanta Emerging Markets, Inc., Invest Atlanta’s Community Development Entity (CDE) provided $13 million NMTCs, and PNC Bank’s CDE, Development Ventures, provided $11 million in credits. PNC also served as the investor for the project.
The museum will commemorate the American Civil Rights Movement and the historic struggle for equality. It will also include exhibits on the modern Global Human Rights Movement. The ribbon cutting for the 43,000-square-foot facility was attended by icons of the civil rights movement, including Rep. John Lewis (D-Ga.), an original Freedom Rider. Senator Johnny Isakson (R-Ga.), Mayor Kasim Reed and former mayor Shirley Franklin also spoke at the grand opening event.
“The Center on Civil and Human Rights’ opening is a victory for the city, celebrating its rich history and the connection to today’s challenge —it is a remarkable project that has been in the making for the last decade,” said Dale Royal, NMTC Coalition Board Member and Senior Project Manager, Redevelopment & President, Atlanta Emerging Markets, Inc. “The center will be a destination, attracting people from across the United states, and around the world, and the New Markets Tax Credit financing was a critical piece in making it happen.”
The NMTC expired on December 31, 2013, and the future of this important financial tool is contingent upon congressional action. Reauthorization efforts for the NMTC, as well as other 54 other expired tax credits, stalled in the Senate last month due to procedural hurdles. In the House, the Committee on Ways and Means is in the process of reviewing individual provisions; the NMTC is expected to be taken under consideration. Meanwhile, bills to provide a permanent authorization for the NMTC have been introduced in the House and Senate, respectively the New Markets Tax Credit Extension Act of 2014 (H.R. 4365) and the New Markets Tax Credit Extension Act of 2013 (S. 1133).
A new report released by the Coalition earlier this month found that, in the last calendar year alone, survey respondents reported $4.9 billion in total project financing through the NMTC, which helped finance more than 250 businesses and create over 54,000 jobs in economically distressed communities. While all of these investments were made in qualified low income communities, the Coalition noted that 80 percent were made in severely distressed communities, with 56 percent made in areas with unemployment rates 1.5 times the national average.
“The New Markets Tax Credit has resulted in an unprecedented level of investment in communities left outside the economic mainstream,” said Bob Rapoza, spokesperson for the NMTC Coalition. “Moreover, the NMTC is often the only opportunity available for credit-starved, small and medium-sized businesses. We are hopeful the NMTC will be extended so that it can continue to be used to revitalize communities and provide financing for funding gaps in the completion of landmark projects like the National Center for Civil and Human Rights.”
On the heels of the Administration’s announcement of $3.5 billion in NMTC allocation authority last week, President Obama today visited a NMTC-financed project in Pittsburgh, Pennsylvania. From the Treasury Department’s blog:
President Obama paid a visit today to TechShop Pittsburgh, one of eight workshops nationwide that provides affordable access to world class manufacturing tools, computers, and software to create and design prototypes for high-tech inventions, computer accessories, and quality crafts.
TechShop is located in Bakery Square, a mixed-use real estate development comprised of six buildings, the center piece being the former Nabisco bakery building. Thanks to support from the Treasury Department’s New Markets Tax Credit Program, Bakery Square is now a bustling center of commerce in Pittsburgh. It now provides 250,000 square feet of renovated space that houses 17 businesses, a 110-room hotel, and a parking garage. Investments in Bakery Square were made possible in part by $13 million in New Markets Tax Credits from the Commonwealth Cornerstone Group, a community development entity which received $33 million in federal tax credits in the latest round of the New Markets Tax Credit Program from the Treasury Department. To continue these efforts in underserved communities throughout the nation, the President called for a permanent extension of the New Markets Tax Credit Program in the Administration’s fiscal year 2015 budget proposal.
The Oregonian profiles United Fund Advisors and Ecotrust, two Portland-based CDEs that received a combined $90 million in allocation in the most recent round:
…for the newest round of tax credits, said Portland Family of Funds executive chair Carl Talton, the firm will prioritize investments in Oregon businesses, particularly rural Oregon. He said the firm has a pipeline of project possibilities and business relationships in place.
The Missoulan profiles Montana Community Development Corporation, winners of a $55 million allocation in the most recent round:
The new Poverello Center homeless shelter and the shiny, energy-efficient Garlington, Lohn and Robinson building in Missoula both were financed in part by new market tax credits allocated by the MCDC. Neither project would have been the same without the financing.
And in the Arkansas Business Journal has the details on the NMTC’s role in financing a 19,000-SF youth development center in Little Rock.
Our House Inc.’s $5 million Children’s Center that opened June 7 was paid for with help from New Markets Tax Credits. In September, the Little Rock nonprofit that helps homeless adults and children with housing, job training and education, closed on a $5 million New Markets Tax Credits deal; the credits are issued by the U.S. Treasury. “It’s really an innovative financing model,” said Georgia Mjartan, Our House’s executive director.
New Report Demonstrates Widespread Impact of Expired Federal Tax Credit Program on Economically Distressed Communities
New Markets Tax Credit Responsible for Creating a ‘Significant Share’ of All Jobs Created in America in 2013, Finds 2014 NMTC Progress Report
WASHINGTON, D.C. – The New Markets Tax Credit (NMTC) was responsible for creating more than 54,000 jobs last year, according to a new report released by the NMTC Coalition. The 2014 NMTC Progress Report, which the Coalition released today during its annual Policy Conference, details how the NMTC was used and the impact it had, including job creation, on economically distressed communities in the previous calendar year. Also included are profiles from a handful of NMTC projects – ranging from a manufacturing facility in South Carolina to a retail center in Michigan, and a community health clinic in Colorado to a charter school in New York – taking the aggregate analysis and putting it in context.
“These projects illustrate how a diverse group of community development entities (CDEs) are using the NMTC to attract investors, finance business and development activities, and generate tangible economic impacts that benefit low income rural communities and urban neighborhoods across the country,” said Bob Rapoza, spokesperson for the NMTC Coalition.
Like its predecessors, this year’s Progress Report, the tenth such annual publication, offers updated investment and transaction information from NMTC Allocatee survey respondents for the previous calendar year (2013). It includes data from 64 Community Development Entities (CDEs), representing $17.1 billion in total allocations from 2003 through 2013. In the last calendar year, the respondents reported $4.9 billion in total project financing that helped finance 280 businesses and create 54,643 jobs in economically distressed communities. While all of these investments were made in qualified low income communities, the Report notes that 80 percent of these investments were made in severely distressed communities, with 56 percent in areas with unemployment rates of at least 1.5 times the national average.
The NMTC expired on December 31, 2013. Reauthorization efforts for the NMTC, as well as other 54 other expired tax credits, stalled in the Senate last month due to procedural hurdles. In the House, the Committee on Ways and Means is in the process of reviewing individual provisions; the NMTC is expected to be taken under consideration. Meanwhile, bills to provide a permanent authorization for the NMTC have been introduced in both the House and Senate, respectively The New Markets Tax Credit Extension Act of 2014 (H.R. 4365) and the New Markets Tax Credit Extension Act of 2013 (S. 1133).
“This is an important financial tool that communities nationwide are using to revitalize their local economies. The NMTC has resulted in an unprecedented level of investment in communities left outside the economic mainstream,” Rapoza said. “For many rural and urban communities, the NMTC is the only opportunity available for credit-starved, small- and medium-sized businesses.”
The 2014 Progress Report is just one of the topics being discussed at the Policy Conference today, where attendees include CDEs, investors and stakeholders from across the country that are engaged with NMTC work in their communities. The Conference provides a forum for attendees to hear directly from members of Congress, including Congressmen Richard Neal (D-MA) and Chaka Fattah (D-PA), as well as CDFI Fund Deputy Director Dennis Nolan, about how the NMTC is working to attract investment capital and generate economic activity in low income areas. Additionally, conference attendees will have the opportunity to hear from key Treasury Department officials, NMTC investors and leading law firms helping navigate the regulatory and legal factors faced by NMTC practitioners, and Congressional staffers will provide insight on the state of NMTC legislation in both chambers.
Tomorrow (Wednesday, June 11, 2014), the Coalition will hold a briefing on Capitol Hill to present the findings in the 2014 NMTC Progress Report. Senator Roy Blunt (R-MO), the third ranking Republican in the Senate and lead Republican on the Senate NMTC extension bill, will provide remarks, Coalition staff will discuss the report’s research and analysis and NMTC practitioners will share their experience implementing the NMTC program.
For more information on both the conference and the briefing, please visit the “Events” page on the NMTC Coalition’s website.
About New Markets Tax Credit Program
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. 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 $60 billion is hard at work in underserved communities in all 50 states, the District of Columbia, and Puerto Rico.
About 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 visit www.nmtccoalition.org