WASHINGTON, D.C. (May 23, 2019)– The U.S. Department of the Treasury’s CDFI Fund announced the Calendar Year 2018 New Markets Tax Credit (NMTC) allocation awards today. The CDFI Fund awarded $3.5 billion to 73 Community Development Entities (CDEs) from 35 states, Puerto Rico, and the District of Columbia.
“The federal New Markets Tax Credit is a unique and flexible community development tool with a successful track record, attracting investment capital and boosting economic activity in low-income areas,” said Bob Rapoza, spokesman for the NMTC Coalition. “In fact, the NMTC has leveraged an unprecedented level of investment to low-income communities—generating over $90 billion in total capital investment through public-private partnerships that created more than one million jobs.”
The CDFI Fund indicated 214 CDEs applied for allocations for a total demand of nearly $14.8 billion in credits. With 73 successful applications (34 percent) receiving $3.5 billion, meaning the availability of credits only meets a fraction of the demand.
Established in 2000 in the Community Renewal Tax Relief Act (P.L.106-554), the New Markets Tax Credit is a bipartisan effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities. The NMTC provides a shallow federal tax credit of 39 percent, taken over seven years, for investments in census tracts where the individual poverty rate is at least 20 percent or where median family income does not exceed 80 percent of the area median. However, 75 percent of NMTC activity is in the poorest rural and urban communities in America, characterized by poverty of at least 30 percent and unemployment rates 1.5 times that the national average . Moreover, a recent independent report commissioned by the CDFI Fund to evaluate the operation and outcomes of the NMTC program found that CDEs are meeting and generally exceeding NMTC Program requirements.
To date, the NMTC financed about 6,000 projects, including more than 2,000 community services and facilities, such as hospitals, schools, daycare centers and non-profit service providers – all in areas that weren’t able to provide access to residents before NMTC was invested. As a result, the 17 million patients have been treated in NMTC-financed healthcare projects, and nearly 250,000 students and children attend NMTC-financed schools or receive care in early childhood learning centers.
The NMTC was most recently provided a five-year authorization in The PATH Act. (P.L. 114-113) in December 2015. There is currently legislation in Congress aimed at making the NMTC permanent, The NMTC Extension Act of 2019, H.R. 1680 in the House and S. 750 in the Senate. There are presently 20 Senators signed on in support of S. 750, which was introduced by Senators Roy Blunt (R-MO) and Ben Cardin (D-MD). H.R. 1680 has 75 cosponsors, led by Reps. Terri Sewell (D-AL) and Tom Reed (R-NY).
“The NMTC is a great deal for the federal government, leveraging eight dollars in other investments in communities for every dollar in credits. But, most importantly, the NMTC is a critical tool for our country’s small, overlooked rural towns and blighted urban neighborhoods that have been left outside of the economic mainstream for far too long. One-fifth of the 2018 awards will be made in rural communities, with $682 million in NMTC investments going to revitalize non-metropolitan counties,” said Rapoza.