Last month, the CDFI Fund awarded $7 billion in NMTC allocation. Where will that allocation be deployed? We have a decent idea, thanks to new data on state targeting from the CDFI Fund.
Heatmap of 2015/2016 Allocation Targeting
The heatmap above shows where CDEs are targeting their 2015/2016 allocation. But it tells a misleading story, with high population states receiving more NMTC allocation.
Rather than adjusting on a per capita basis, instead, I divided targeted amount of NMTC allocation by the number of NMTC eligible census tracts in a state (download the full dataset). That produces this reweighted heatmap.
In the adjusted map, you can see that the top states are Arkansas, Hawaii, Idaho, Montana, Nevada, and Wisconsin. In fact, we project that Wisconsin will receive more than a million dollars per eligible census tract.
The Top Ten States
|State||Estimated amount targeted by 2016 round award recipients||NMTC Eligible Census tracts||2016 NMTC allocation per eligible census tract|
The report includes NMTC success stories and maps of NMTC activity.
Historic New Markets Tax Credit round will drive private-sector investment to communities left behind, growing businesses and creating jobs where they are needed most
WASHINGTON, D.C. – The U.S. Department of the Treasury Secretary Jack Lew announced the Calendar Year 2015 and 2016 New Markets Tax Credit (NMTC) allocation awards today at Educare DC, an NMTC-financed project providing early childhood educational programs in Northeast Washington, D.C. NMTC allocations were awarded to 120 Community Development Entities (CDEs) from around the country.
“The Coalition estimates that the latest round, based on analysis of more than 4,000 NMTC projects, will finance 844 businesses and revitalization projects and create some 166,000 jobs for people in communities left behind, adding to the NMTC’s long history of success,” said Bob Rapoza, spokesman for the NMTC Coalition. “In fact, the NMTC has generated more than $75 billion in total capital investment through public-private partnerships since the first credits were allocated in 2003.”
In April, Treasury announced it would combine the 2015 and 2016 rounds, for a total of $7 billion in NMTC allocations, allowing the 2016 and future award rounds to be announced in the year in which they are authorized. This action was made possible as a result of the PATH Act, which Congress passed in December 2015, providing for a five-year extension. The legislation provided the single largest and longest investment in the community development program’s history.
After this combined round, Treasury is authorized to make three additional allocations of $3.5 billion in 2017, 2018, and 2019. The $7 billion in NMTC allocation costs the federal government only $1.88 billion in foregone tax revenue, and thanks to the NMTC’s public-private partnership model, low-income communities will receive $14 billion in total capital, including $2.8 billion to rural areas. A key criterion of the program is that all applicants must provide a pipeline of projects that are ready to proceed should they receive NMTC financing. As a result of the low cost, the estimated cost per job for NMTC is less than $11,500.
Department of Treasury data shows 75 percent of NMTC activity is in severely distressed rural and urban communities with unemployment rates at least one and a half times the national average, poverty rates of at least 30 percent, or median incomes less than 60 percent of the area median income. Further, since its inception, the credit has led to more than 750,000 jobs. The credit is increasingly being used to bring manufacturing jobs back to America, with a record 30 percent of NMTC financed projects involving the financing of industrial facilities, waste recycling centers, and cutting-edge green-tech businesses in 2015. The credit is also used to finance health centers, child care and community facilities, schools, grocery stores and other businesses identified by communities and local leaders.
“As a result of the credit’s proven ability to create jobs and move the economic needle in the rural and urban areas where it’s been deployed, the NMTC has the support of a strongly bipartisan delegation in Congress,” adds Rapoza.
Congressional leaders also applauded the announcement of the 2015-2016 NMTC allocation awards:
“I was proud to lead efforts to secure a five-year extension of the NMTC in the PATH Act. I’ve seen the impressive results of the NMTC in Missouri, with 177 businesses receiving financing between 2003 and 2014, leveraging over $1.6 billion in total project investments. From the Save-a-Lot in Pagedale and Payit in Kansas City, to the rehabilitation of St. Louis Union Station—the NMTC is creating jobs and boosting local economies.” –Senator Roy Blunt (R-MO), who introduced New Markets Tax Credit Extension Act of 2015 (S. 591) on February 26, 2015, a bill which would make the NMTC permanent. Senator Blunt was the lead sponsor of a similar bill in the 113th Congress as well.
“The New Markets Tax Credit is a vital and cost-effective tool that is creating jobs, boosting opportunity and driving real growth across the country. I’m glad that Congress took the important step of providing a five-year authorization of the NMTC in the PATH Act, which was signed into law last year. I will continue to advocate for this program so that more communities can have access to the capital they need to unlock economic potential in their own backyards.” —Congressman Pat Tiberi (R-OH), who introduced New Markets Tax Credit Extension Act of 2015 (H.R. 855) in the House on February 10, 2015, which would make the NMTC permanent.
“We care about bringing quality, family sustaining jobs to our region and our nation. This is a commonsense bipartisan, initiative that will help revitalize communities and create needed jobs. It’s only right that we encourage private sector job growth for the sake of hardworking men and women everywhere. That’s why we are proud to work with Representatives Tiberi and Neal, and Senators Blunt, Schumer, Daines and Cardin to ensure the support this proposal deserves.”—Congressman Tom Reed (R-NY), an original and lead cosponsor of H.R. 855.
“In the past decade, the New Markets Tax Credit (NMTC) has generated billions in capital and created hundreds of thousands of jobs nationwide in economically distressed communities. In Massachusetts, this highly successful initiative has helped spur development from the Berkshires to Boston. As a longtime supporter of the tax credit, I welcome today’s announcement from the Treasury Department that an additional $7 billion will be invested in projects across the country thanks to the provision. It is another reminder just how effective the NMTC program has been.”—Congressman Richard E. Neal (D-MA), who is the lead Democratic cosponsor on H.R. 855.
To find out more about how the NMTC works in distressed urban neighborhoods and rural communities, watch this video on how the NMTC works in and for rural and urban communities. Contact Ayrianne Parks at 202-393-5225 or email@example.com with press inquiries.
Because of a dearth of available capital, residents of low-income communities often lack adequate access to state of the art healthcare facilities that more affluent communities take for granted. Income is strongly linked to health outcomes, so the need is greater in high-poverty neighborhoods. In high poverty urban areas, safety-net hospitals, which a significant level of care to low-income, uninsured, and vulnerable populations are stretched thin. And in small towns and rural farming communities, since 2010, 71 rural hospitals have closed and another 683 are at risk of closing — limiting access to care and further depressing local economies, according to the National Rural Health Association. One recent analysis showed that nearly two-thirds of the roughly 230 hospitals opened since 2000 are in wealthier, mostly suburban areas.
Recent funding for federally qualified health centers has made a difference, but one of the most important vehicles for financing healthcare facilities in high distress is the New Markets Tax Credit (NMTC). The program financed 432 projects supporting healthcare access between 2003 and 2013, delivering nearly $7 billion in capital to renovate, expand, or construct new hospitals, health clinics, and treatment clinics. One-hundred of those facilities were in rural areas, and 332 facilities were in high-need urban areas. One such project – the Grady Memorial Hospital in Atlanta, Georgia – will celebrate its expansion with a ribbon cutting ceremony on Wednesday, October 5, 2016. Grady was financed with NMTC allocation from Atlanta Emerging Markets, SunTrust Community Development Corporation, and the Community Hospitality Healthcare Services.
Below is a map of healthcare projects financed by the NMTC through 2013:
More NMTC healthcare stories:
Today, the US Census Bureau released their annual report on poverty and income. Economists predicted an increase of 1 to 2 percent in incomes in 2015, but the report showed a surprising 5.2 percent increase. A closer look at the data reveals a stark contrast between the economy in urban and rural communities.
Urban Areas on the Rise
Inside of metropolitan statistical areas (MSAs), median incomes grew by 6 percent. Much of that growth was confined to cities dwellers, whose incomes rose by 7.3 percent compared to suburban and exurban residents, whose incomes rose by a more modest 4 percent. This is the largest increase in median income since before the Great Recession.
The poverty rate declined in MSAs, dropping from 14.4 percent in 2014 to 13.0 in 2015. Inside MSA cities, poverty dropped sharply, from 18.9 percent in 2014 to 16.8 percent in 2015, and in the surrounding suburbs, it dropped from 11.8 percent in 2014 to 10.8 percent in 2015.
Rural Communities Continue to Stagnate
In 2015, rural* median incomes declined by 2 percent, which is just inside of the margin of error. Poverty remained stagnant, increasing a statistically insignificant 0.2 percent in 2015 and settling at 16.7 percent.
Regardless of whether the decline in rural economic conditions was statistically significant in 2015, it is clear that rural communities were left behind last year as our economy continued to grow modestly. Rural mortality and out-migration continues to hinder growth in small towns and farming communities. In fact, the number of rural residents living in poverty actually declined by about 10 percent, from 8.2 million in 2014 to 7.4 million in 2015, but because of population loss, this decline was not reflected in an accompanying decline in the overall poverty rate.
*Includes both micropolitan statistical areas and territory outside of metropolitan and micropolitan statistical areas
Crossposted at the National Rural Housing Coalition
The project created jobs and expanded access to fresh food in a Minneapolis food desert
U.S. Department of the Treasury Secretary Jack Lew traveled to Minneapolis on Monday to meet with community and business leaders to highlight initiatives aimed at supporting financial inclusion. On his tour, he visited Seward Community Cooperative Friendship Store, a fresh foods project financed in part by the New Markets Tax Credit (NMTC) and by a loan from MMCDC with federal Community Economic Development funds, a program that targets job creation for low income individuals. Also in attendance yesterday afternoon was Congressman Keith Ellison (D-MN), who is a longtime supporter of the credit and a cosponsor of bipartisan legislation to make the NMTC a permanent financial tool for economically distressed rural and urban communities.
“By working collaboratively with private and public workforce development programs, the co-op is creating new living-wage jobs with benefits for residents in the neighborhoods surrounding their locations,” said Kevin Shipley, president of Midwest Minnesota Community Development Corporation (MMCDC) and a board member of the NMTC Coalition. “However, the project greatly benefited from CED funding for job creation and would not have been possible without the NMTC.”
Faced with capacity crowds at its existing store, Seward turned to its longtime partners, MMCDC, for NMTC financing to expand to two new sites. MMCDC provided $8.48 million in affordable flexible capital. The Seward Co-Op, with a project cost of $15 million, was completed in 2015. The project included the financing of a new food production facility, along with a new grocery store in a Minneapolis neighborhood where fresh food options were scarce. The new store was built using environmentally friendly, sustainable products and services, and a focus on healthy and sustainable products carries through to the food choices on the shelves and at the restaurant. The company employs 350 people in all and the store’s wages start at $13 per hour.
Through 2015, MMCDC has been awarded $544 million in NMTC allocations for use in Minnesota, Wyoming, and the Dakotas. The Detroit Lakes based CDC has financed everything from health clinics to manufacturing facilities, using the NMTC to create thou
sands of jobs in areas underserved by conventional lenders.
“The NMTC nearly faced extinction last year, but thanks to strong support from leaders in both parties, along with Secretary Lew and the Administration, Congress extended the program last December through 2019,” said Bob Rapoza, spokesperson for the NMTC Coalition.
In April, Secretary Lew made the decision to combine the 2015 and 2016 rounds for the NMTC, making more credits available for businesses and communities desperately in need of capital to succeed.
“The Treasury will award a record $7 billion in NMTC allocation. Community development organizations like MMCDC will put that capital to work, creating well over 100,000 jobs in rural and urban communities,” adds Rapoza.
Sen. Roberts visits Children’s Campus of KC to discuss strategies that help close the achievement gap
Local health and education center highlights importance of high-quality facilities to the success of at-risk children
KANSAS CITY, Kan., Aug. 8, 2016 — When Sen. Pat Roberts sat down with preschoolers today at the Children’s Campus of Kansas City (CCKC), he was focused on much more than story time and snacks. The senior senator from Kansas dropped in on the first day of school to learn more about CCKC’s model for closing the achievement gap among low-income kids—starting with a unique community facility designed specifically for young learners.
CCKC is home to three non-profit organizations that provide a continuum of services focused on the health and wellness of children from birth to age five. That includes nearly 150 preschool students participating in CCKC’s Educare program, which lays a strong educational foundation for children who might otherwise be derailed by the deep and lasting implications of poverty.
“I am pleased to visit Children’s Campus to see firsthand a local partnership trying new methods to teach and nurture low-income children in a facility specifically designed for their needs,” Sen. Roberts said. “These children are the most vulnerable in our society, and it is very encouraging to see a community harness the resources it has, like the University of Kansas Medical Center, LISC, Wyandotte County and other organizations by working together to meet the educational and developmental needs of at-risk children. Reading to these kids is a great way to start the day, and I hope they are off to a great start for the year.”
Funding gaps almost derailed CCKC before the first brick was laid—even though expanding access to quality early education programs and services has been a local priority, notes Heather Schrotberger, director of Project Eagle, the University of Kansas Medical Center program that operates Educare Kansas City.
“We know that quality early childhood education can make all the difference in a child’s future,” she said. “It is a powerful anti-poverty strategy. Young children flourish when we create early education settings designed for their needs, with classrooms and teachers that keep them safe and engaged. That’s why CCKC exists.”
In other words, space matters. According to a report published by the National Institute for Early Education Research (NIEER), a facility’s layout, size, materials and design features can improve program quality and contribute positively to child development, while a poorly adapted and overcrowded environment undermines it. The physical configuration of early care and education spaces directly affect adult/child interaction and influence how children grow and learn.
But financing high-quality, appropriate space for young learners – much less space that can also accommodate other family services, as is the case with CCKC – is not easy. Early fundraising and philanthropic support enabled the project to secure a conventional bank loan, but CCKC still faced a significant funding gap. The project utilized the federal New Markets Tax Credit (NMTC) program, which is designed to encourage private-sector investment in underserved communities, to fill that critical shortfall.
CCKC highlights an important intersection between federal policy and local impact, said Matt Josephs, LISC senior vice president of policy, who joined Sen. Roberts on the CCKC tour. “The corner of 5th St. and Minnesota Ave. might seem like it’s a long way from Washington, but federal programs like the New Markets Tax Credit have a significant local impact,” said Josephs, who also serves on the board of the New Markets Tax Credit Coalition. “CCKC is illustrative of how NMTCs can be used to deliver private sector investments into distressed neighborhoods, helping to not only provide critical services to community residents, but also to revitalize the neighborhoods and fuel further growth.”
Stephen Samuels, executive director with LISC’s Kansas City program office, notes that these kinds of investments also have significant economic benefits for the city at large. LISC helped finance CCKC as part of its comprehensive efforts to revitalize disadvantaged neighborhoods.
“CCKC allows parents to go to work without worrying if their children are in a safe, nurturing place,” he said. “It has created more than 200 jobs in a community with high poverty and unemployment rates. And, it has transformed a vacant commercial corner into an active, vibrant space,” he explained. “By connecting so many critical local partners and institutions, this facility is not only an imperative for our children; it is a significant, lasting asset for our community.”
CCKC is a collaborative partnership aimed at improving outcomes for young children and their families. Three agencies representing the fields of early childhood education, parenting education, family support, health, education and research have co-located on the campus and collectively built a system of services that address the multiple needs of young children and their families, paying special attention to addressing the educational achievement gaps between low-income children and their higher income counterparts. These agencies are:
Juniper Gardens Children’s Project – Juniper Gardens Children’s Project, of the University of Kansas, works to improve children’s developmental experiences and their academic and social achievements through research.
Project Eagle – Project Eagle, of the University of Kansas Medical Center, directs multiple programs on site, including an Early Head Start program (Educare of Kansas City, serving 150 students), a Maternal Infant Early Childhood Home Visiting Program, and the Connections centralized screening and referral system for Wyandotte County.
The Family Conservancy – The Family Conservancy provides mental health assessments and services, parenting education, crisis intervention, assistance to overcome poverty, and professional development to enhance the quality of early education across the community.
LISC equips struggling communities with the capital, program strategy and know-how to become places where people can thrive. Since 1980, LISC has invested more than $16 billion to build or rehab 348,000 affordable homes and apartments and develop 56 million square feet of retail, community and educational space.
For more on the importance of developing early childhood education facilities, read Building Early Childhood Facilities: What States Can Do to Create Supply and Promote Quality, published by NIEER and authored by LISC, or visit http://www.lisc.org/our-initiatives/education/early-childhood-facilities/.
About New Markets Tax Credits
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 $75 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.
- Kay Hawes, associate director of news and media relations, University of Kansas Medical Center, 913-617-8698 (cell) or firstname.lastname@example.org
Democratic Platform Supports the NMTC
On Monday, July 25th, delegates at the Democratic National Convention approved a party platform that included several proposals to protect and expand the New Markets Tax Credit:
- Ending Poverty and Investing in Communities Left Behind: “We will expand and make permanent the New Markets Tax Credit.”
- Building Strong Cities and Metro Areas: “We will support entrepreneurship and small business growth in cities by providing mentoring and training to entrepreneurs and small business owners in underserved communities as well as expanding federal funding for the New Markets Tax Credit, community development financial institutions, and the State Small Business Credit Initiative.”
- Investing in Rural America: “We will expand access to equity capital for businesses and expand the New Markets Tax Credit to better serve rural small businesses.”
Republican Senator Proposes Doubling NMTC Allocation in 2017, 2018, and 2019
Both parties are increasingly looking at the NMTC to help jumpstart business development in rural areas. Earlier this month, Senator Cory Gardner (R-CO) introduced the Rebuilding and Renewing Rural America Act (S. 3243), a broad legislative package that – among other things – extends tax credits to rural communities and lessens the regulatory burden in rural areas.
The legislation calls for an increase in NMTC allocation in 2017, 2018, and 2019, from $3.6 billion to $7 billion. Earlier this year, CDFI Fund announced that they would combine the 2015 and 2016 rounds and award $7 billion in the fall of 2016, so Gardner’s legislation would provide a stable level of allocation over the next four years.
However, the bill would set-aside the additional $3.5 billion in NMTC allocation to organizations with a significant mission of serving, or providing investment capital for, rural renewal communities. Rural renewal community are defined in the bill as any low income community which has a population of at least 200 people but not more than 25,000 people and is not located in a metropolitan area of 200,000 or more, or which is entirely within an Indian reservation.
The NMTC statute – as amended in 2004 – requires that the CDFI Fund ensure non-metro counties get their fair share of NMTC investment. In 2014, the Coalition produced a report on the impact of the program in rural areas.
More information on rural investments:
On June 29, 2016, U.S. Rep. Lynn Jenkins (KS-02), the fifth-highest-ranking member of House Republican leadership and a member of the U.S. Ways and Means Committee, toured Kansas City startup PayIt. PayIt is a cloud-based mobile solutions platform for government, leveraging its technology and insights to rewrite and automate the citizen engagement experience.
PayIt’s patent-pending mobile platform brings speed and simplicity to the citizen-government payment processing experience for state and local services, such as the DMV, permits and licensing, turnpike passes, income tax, traffic citations and more. Kansas Transportation Authority recently deployed the PayIt Kansas mobile app, providing K-TAG account users the ability to access and manage their K-TAG account anytime, anywhere, directly from their smartphones.
The visit was an opportunity to showcase to Rep. Jenkins how the New Markets Tax Credit (NMTC) program facilitates financing for a variety of businesses and projects, from housing developments to community centers to manufacturing plants, located in states and communities that are underserved by traditional sources of capital.
A member of Kansas City’s thriving technology start-up community, PayIt’s rapid growth also reflects the area’s strong tech talent and entrepreneurial spirit.
NMTC financing for the project was provided by Advantage Capital Partners.
Last month, to mark National Small Business Week, Congressman Xavier Becerra (D-CA), Chairman of the House Democratic Caucus, joined Treasury Secretary Jack Lew at the NMTC-financed L.A. Prep in Lincoln Heights.
The L.A. Prep project involved the acquisition and renovation of 56,000 square foot former warehouse into an incubator for small food producers who have outgrown their startup spaces. The project moved forward thanks in part to $16 million in NMTC allocation from Los Angeles Development Fund and UrbanAmerica. Capital Impact Partners provided $11 million in leveraged debt, with $5.1 million in equity provided by U.S. Bancorp CDC. Civic Enterprise, real estate development firm focused on revitalizing emerging urban neighborhoods, developed the project.
“Two-hundred jobs created: 50 tenants and one-third minority-owned businesses at L.A. Prep & L.A. Kitchen,” said Congressman Becerra. “I’m so proud we have places like this in the district, setting small business owners up so that they can get access to capital and help create more jobs for people across our district and beyond – not to mention, nutritious and delicious food!”
All L.A. Prep tenants receive: an exclusive production space; on-site access to everything a growing food-making business needs: flexible cold, dry and frozen storage; a demonstration kitchen; co-working space and more; a staffed warehouse to assist with receiving and logistics. L.A. Prep partner and co-founder Food Centricity, a business accelerator focused on early and growth stage food companies, provides business support and other key services to help the tenants succeed.
Tenant Spotlight: L.A. Kitchen
L.A. Prep’s largest tenant is the social enterprise L.A. Kitchen, which offers culinary training programs for at-risk individuals.
L.A. Kitchen is the vision of Robert Egger, founder of the award-winning D.C. Central Kitchen. The idea is this: L.A. Kitchen collects or purchases surplus fruits and produce from farms and wholesale companies in the region. These products fuel a 15-week, culinary arts job training program, preparing at-risk foster youth and older adults transitioning out of incarceration for jobs in the culinary field, helping reduce systemic patterns and become productive members of the Los Angeles community.
Photos from Secretary Lew and Congressman Becerra’s visit:
— Xavier Becerra (@RepBecerra) May 3, 2016