New Urban Institute Research on the NMTC

Today, the Urban Institute is out with new issue briefs on the New Markets Tax Credit. The Urban Institute found that communities with NMTC investments saw reductions in poverty and increases in median incomes.

We investigated more than 5,700 NMTC projects that were facilitated by $55 billion in qualified investments into nonprofits and businesses. We found that NMTC investments are associated with large increases in local economic activity following a project, including reductions in poverty and increases in the median income and the number of firms, jobs, and residents with jobs.

"Can Place-Based Investments Like New Markets and Opportunity Zones Help Low-Income Neighborhoods and Residents?" by Brett Theodos, Christina Plerhoples Stacy, and Daniel Teles.

There are some interesting facts and figures in the issue briefs.

Where do NMTC Projects Go?

Urban Institute compared eligible and ineligible census tracts using data from the 2000 census and found significant (if unsurprising) differences in economic conditions. Compared to ineligible tracts, NMTC eligible census tracts have fewer college graduates; are more diverse; and have higher poverty and unemployment rates.

They also found that in 2004, the number of jobs located within the average NMTC eligible tract was higher than the number located in more affluent tracts. This finding may seem counterintuitive, but it’s unsurprising when you consider commuting patterns between the affluent suburbs and dense urban areas where many jobs were inaccessible to neighborhood residents. This was particularly the case in 2004 in hollowed-out downtown business districts, many of which are no longer eligible for the NMTC.

In the Coalition’s 20th Anniversary Report, we found that NMTC projects have been shifting away from central business districts over the course of the program into areas of greater economic distress. 

"Where do NMTC Projects Go?" Urban Institute, 2021.

The Urban Institute counted NMTC projects per tract to see how much clustering there is of NMTC projects. Nearly half of NMTC projects are in a census tract with only one project (through 2017).

"Where do NMTC Projects Go?" Urban Institute, 2021.

If I were to hazard a guess, I suspect that many of the tracts with high concentrations of projects are in Louisiana, where Congress targeted a special round of GO-Zone allocation after Hurricane Katrina in 2005. I took a quick look, and here are the census tracts with the most NMTC projects:

NMTC Coalition Analysis of CDFI Fund Transaction Data Through 2019

We will have more on this new research in the coming weeks. Below are the issue briefs:

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