Investments in economically distressed rural, urban and minority communities
WASHINGTON, July 15, 2020 — The U.S. Department of the Treasury’s CDFI Fund announced the Calendar Year 2019 New Markets Tax Credit (NMTC) allocation awards today. The CDFI Fund awarded $3.5 billion to 76 Community Development Entities (CDEs) from 30 states and the District of Columbia. Additionally, 15 percent of allocatees are Minority CDEs that received allocations totaling $543 million.
“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 $105 billion in total capital investment through public-private partnerships that created more than one million jobs.”
The CDFI Fund indicated 206 CDEs applied for allocations for a total demand of nearly $14.7 billion in credits. With 76 successful applications (37 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. More than half of NMTC allocation goes to communities where a majority of residents are people of color. Of the $51 billion in NMTC allocation deployed through 2019, $27.8 billion went to went to majority-minority census tracts, creating 244,000 permanent jobs.
The vast majority of NMTC projects are in areas of extreme economic distress, with 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 program requirements.
To date, the NMTC financed about 6,400 projects, including nearly 3,000 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, more than 18 million patients have been treated in NMTC-financed healthcare projects, and over 200,000 children participate in youth enrichment programs or receive care in early childhood learning centers.
At the end of 2019, Congress extended the Credit through 2020 at $5 billion in annual credit authority, an increase of almost 40 percent. There is currently bipartisan legislation in Congress aimed at expanding the allocation level and investor base of the NMTC as well as making it permanent. The NMTC Extension Act of 2020, H.R. 1680 in the House and S. 750 in the Senate. There are presently 37 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 126 cosponsors and is led by Reps. Terri Sewell (D-AL) and Tom Reed (R-NY).
In addition, on July 1, the House passed a proposal to modernize America’s infrastructure, H.R. 2, the Moving Forward Act, which includes a permanent extension and expansion of the New Markets Tax Credit (NMTC) at $5 billion in annual allocation with additional credits totaling $3.5 billion provided over the next three years to help communities combat the economic downturn.
“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 2019 awards will be made in rural communities, with $708 million in NMTC investments going to revitalize non-metropolitan counties,” said Rapoza.
For examples of how the NMTC is making an impact in each state, see the NMTC Coalition’s NMTC at Work in Communities report or check out its Project Profile Map. The Coalition also released the sixteenth edition of its NMTC Progress Reporton June 30, which documents the NMTC impact in Calendar Year 2019 and features a special section on the 20th anniversary of the NMTC.
About New Markets Tax Credit Program
the New Markets Tax Credit (NMTC) 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. Since its inception, the NMTC has generated more than one million jobs. Today due to NMTC, more than $95 billion is hard at work in underserved communities in all 50 states, the District of Columbia, and Puerto Rico. For more information, visit www.NMTCCoalition.org.
Contact: Ayrianne Parks