Emergency NMTC Extension and Expansion Proposal

The NMTC has a 20-year track record of promoting revitalization in America’s economically distressed rural and urban communities. These communities – which were struggling with high poverty and unemployment before the recent economic collapse – now face severe challenges in securing capital, challenges that pre-dated the pandemic.

The NMTC expires at the end of this year. Congress should take action to address the crisis in these communities by passing legislation that permanently extends the NMTC, along the lines of the bipartisan New Markets Tax Credit Extension Act of 2019 (S.750/H.R. 1680), provides an emergency expansion of the NMTC and temporary policies (outlined below) to ensure communities can continue to access NMTC equity through a competitive investor market.

The NMTC ensures private-sector resources reach communities outside the economic mainstream, from remote rural areas of Alaska, to urban neighborhoods struggling with economic dislocation. Through September 2019, the NMTC delivered over $100 billion[1] in total project financing to over 6,000 businesses and projects in areas of deep distress. In 2018, 80 percent of NMTC activity was in areas of extreme poverty and unemployment that far exceed the statutory requirements for economic distress. The NMTC – and the organizations that use it to deploy capital to underserved communities – is well-suited to provide patient flexible capital to support the disaster relief and economic stabilization needed as the virus fades.

The NMTC Coalition recommends the following policies to help increase the flow of investment to low-income communities and ensure the NMTC investor market remains competitive and highly liquid:

Emergency Extension and Expansion of the NMTC

  1. Congress should permanently extend the NMTC along the lines of the NMTC Extension Act of 2019. The bill provides $5 billion in annual authority, an inflation adjustment in out years, and provides relief from AMT for NMTC investors;
  2. Congress should provide an emergency NMTC allocation of $1 billion to be added to the pending 2019 round (for a total of $4.5 billion). The CDFI Fund is currently evaluating the 2019 application round with awards scheduled for the summer. The CDFI Fund can administer the emergency round using existing applications and a supplemental questionnaire, a procedure they used when Congress provided an emergency NMTC authorization during the Great Recession as part of ARRA;
  3. Congress should help communities rebound by providing an additional NMTC allocation of $1.5 billion to be added to the 2020 round (for a total of $6.5 billion for 2020), and $1 billion to the 2021 round (for a total of $6 billion for 2021);
  4. Absent passage of the NMTC Extension Act of 2019, Congress should provide relief from the AMT consideration for NMTC investors. AMT relief would increase competition for NMTCs, bringing high-net-worth individuals into the NMTC investor pool, and driving more benefit to low-income communities for each federal dollar; and
  5. Congress should provide Community Development Entities with temporary relief from Treasury regulation § 1.1001-3 (Modifications of debt instruments), which would help them provide flexibility to borrowers to help them through the crisis.
  6. Congress should ensure communities have access investment capital by temporarily allowing investors to carryback credits for five years and exempting NMTC and other General Business Tax Credit investors from the 75 percent general business credit limitation (Sec. 38(c)(2)) through 2022. Uncertainty over potential near term tax liability can depress demand for the NMTC and drive down the equity price investors contribute in exchange for the credit. Allowing investors to carryback credits up to five years, and temporarily relaxing the 75 percent limitation would ensure demand remains high over the near term for NMTCs, maximizing the benefit to low-income communities. The same goes for other community development credits.

Community development entities (CDEs), investors, and NMTC practitioners have proven they can quickly deliver $7 billion in annual allocation to businesses and revitalization projects. In 2016, the CDFI Fund combined the 2015 and 2016 rounds and awarded $7 billion in allocation to over 100 organizations. It only took CDEs 18 months after signing their award agreements to deploy $7 billion to health clinics, manufacturing expansions, and small businesses. 

The NMTC investor market has weakened during the uncertainty and economic freefall instigated by the pandemic. While investments are continuing, and businesses are receiving financing, we have already seen evidence of pricing decreases in the equity market. The changes outlined above will help enhance market liquidity, improve equity pricing, increase the efficiency of the program, and facilitate financing businesses hard hit by the current health and economic crisis.

While the proposed emergency allocation would be generally available to help communities meet a wide variety of needs, it is important to note the NMTC’s track record in two particular areas of concern in the current environment: economic stabilization and healthcare financing.

[1] NMTC Coalition analysis of CDFI Fund data (2003-2016), its annual survey of CDEs (2017-2018), and OCC data (2018-2019).

Healthcare

Before COVID-19, almost 62 million people did not have regular access to primary health care.

Text Box: NMTC Track Record on Federally Qualified Health Centers (FQHCs): The NMTC is one of the most important sources of funding for the financing and equipping of FQHCs. To date, over $4 billion in NMTC investments have supported the financing of 387 FQHC projects serving over 8 million patients in low-income communities.

The healthcare system in low-income communities is the least prepared to deal with the fallout from the Coronavirus – particularly in rural areas. As the disease stresses Intensive Care Units (ICUs), increasingly monopolizing the resources of hospitals and overwhelming primary care physicians with testing, the entire healthcare system could be stretched to its limit. The need extends beyond ventilators and upgraded ICUs to essential healthcare equipment and infrastructure. Without additional healthcare capacity, doctors will continue to be forced to delay treatments for further extended periods. When the pandemic begins to recede, health systems will be overwhelmed with demand for treatment, surgeries, and procedures postponed during the crisis. This is particularly the case in high-poverty areas already struggling with poor health outcomes and inadequate facilities.

Congress can act now to help distressed communities meet the oncoming tsunami of demand by providing additional resources to community development organizations through the NMTC.

NMTC Track Record on Federally Qualified Health Centers (FQHCs):: The NMTC is one of the most important sources of funding for the financing and equipping of FQHCs. To date, over $4 billion in NMTC investments have supported the financing of 387 FQHC projects serving over 8 million patients in low-income communities.

Healthcare Stores:

Economic Stabilization

When economic calamity strikes, commercial credit markets freeze, philanthropy tightens, and state and local tax revenue collapses. All of these counter-cyclical forces combine to exacerbate recessions by creating a liquidity crisis. The communities hit hardest by the economic fallout from the pandemic are the minority and low-income communities targeted by NMTC.

During the early stages of the Great Recession, Congress took a variety of actions to help capital-starved communities access the resources they desperately needed. The legislation included an authorization of an additional $1.5 billion in NMTC allocation for 2009 and 2010 to help more communities gain access financing to keep businesses open and support critical components of the social safety-net, including health centers, homeless shelters, and other community facilities.

NMTC Track Record After the Great Recession: The NMTC delivered $23.6 billion in total financing to over 1,200 businesses and revitalization projects in hard hit communities between 2009 and 2011. Those investments directly created or retained 85,000 permanent jobs and 94,000 construction jobs at a time when the economy was in a freefall.

[1] NMTC Coalition analysis of CDFI Fund data (2003-2016), its annual survey of CDEs (2017-2018), and OCC data (2018-2019).

Baltimore’s Lexington Market Groundbreaking

Today, officials in Baltimore attended a groundbreaking for the Lexington Market rejuvenation project. Cinnaire provided $11 million in NMTC financing to support the revitalization of the historic Baltimore market. The 238-year old structure will undergo a $40 million transformation to create a modern gathering place for all of Baltimore and a hub for community, culture, health, and wealth-building. Cinnaire Lending and Enterprise Community Loan Fund partnered to provide a $6.7 million loan to facilitate the NMTC financing.

Some highlights via Twitter:

JCT Report Highlights NMTC infrastructure Investment

Yesterday, the Joint Committee on Taxation released “OVERVIEW OF SELECTED PROVISIONS AND OPTIONS RELATING TO FUNDING AND FINANCING INFRASTRUCTURE INVESTMENTS.” The report highlights tax provisions employed for the financing of infrastructure. With the help of CDFI Fund data, the committee was able to identify 171 infrastructure projects financed by the NMTC totaling over $2 billion.

Below, we’ve highlighed a few examples.

Ports and Freight

Industrial waterfront property and long-neglected ports are often the most distressed and environmentally contaminated areas of an urban core. Municipal governments and Port Authorities have used the NMTC for brownfield remediation and to rejuvenate ports, freight terminals, and fishing docks.

Yonkers Pier

Yonkers Pier
Project City:
Yonkers
Project State:
NY
Project Year:
2008
The Yonkers Pier is the only turn-of-the 20th century pier still in use on the Hudson River. The restoration of the Pier is another milestone in the remarkable renewal of ...
Read More

Port of Hueneme

Port of Hueneme
Project City:
Port Hueneme
Project State:
CA
Project Year:
2013
The modernization of the Port of Hueneme retained $7 billion in trade business and 500 livable wage jobs. Clearinghouse CDFI provided $10 million of NMTC allocation for this $14.7 million ...
Read More

America’s Central Port Complex

America’s Central Port Complex
Project City:
Madison
Project State:
IL
Project Year:
2015
The project includes million square feet of new, rail-served manufacturing and warehousing space in the industrial development along the Mississippi River’s Chain of Rocks shipping canal. The warehouse project is ...
Read More
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Broadband

Many rural communities still lack access to high-speed broadband connections. Increasingly, the NMTC has been used to finance broadband expansions into underserved and remote rural areas.

Continental Divide Electric Cooperative Broadband Project

Continental Divide Electric Cooperative Broadband Project
Project City:
Grants
Project State:
NM
Project Year:
2017
Currently, residents and owners of approximately 24,000 homes and business in Grants and the surrounding area have no broadband internet option and rely on satellite internet, the speed of which ...
Read More

Greatwave Communications

Greatwave Communications
Project City:
Cleveland
Project State:
OH
Project Year:
2016
GreatWave Communications is a long-standing operating business located in Conneaut, Ohio that provides high-quality telecommunications services to over 2,000 telephone customers, 1,650 cable television subscribers, and 3,200 broadband internet users ...
Read More

Terra NW

Terra NW
Project City:
Anchorage
Project State:
AK
Project Year:
2011
Installation & Operation of Fiber-Optic & Microwave Broadband Connection: GCI is the largest integrated telecom company in Alaska, having provided cellular service to over 100 rural communities in the past ...
Read More

New Markets Tax Credit Receives One-Year, $5 Billion Extension

Contact: Ayrianne Parks, [email protected], (202) 393-5225

Spending Bill Expected to be Signed Into Law Today Authorizes $1.5 Billion Increase in Allocation

WASHINGTON, D.C. (December 20, 2019) – The Fiscal Year 2020 appropriations bill , H.R. 1865, which will signed into law today by President Trump, includes a one-year, $5 billion extension of the New Markets Tax Credit (NMTC). The NMTC, which faced expiration on December 31, instead received a $1.5 billion increase in allocation that will go far to meet the demand for this important resource that revitalizes communities, creates jobs, increases economic opportunity and improves lives. 

The projected impact of $5 billion in New Markets Tax Credits includes an estimated 138 manufacturing and industrial projects, 55 mixed-use projects, 51 health care projects and 115 community facility projects. It will also generate an estimated 118,000 jobs.

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. Since then, the New Markets Tax Credit has financed more than 6,000 projects and created over one million jobs in all 50 states, the District of Columbia and Puerto Rico. The NMTC was provided a five-year authorization in The PATH Act. (P.L. 114-113) in December 2015.

“As we celebrate the 20th anniversary of the New Markets Tax Credit in 2020, this extension and additional allocation for the next year is vital for many of America’s urban neighborhoods and rural communities, providing access to billions of dollars for high-impact, community revitalization projects,” said Bob Rapoza, spokesperson for the NMTC Coalition. “No other the federal tax incentive is generally available to economically distressed rural and urban communities to promote economic revitalization. We appreciate our champions in Congress who worked to introduce the extension into the spending package, including Sens. Roy Blunt (R-MO) and Ben Cardin (D-MD) and Reps. Terri Sewell (D-AL), Tom Reed (R-NY), who introduced legislation last February to make the NMTC permanent.  We also are grateful to Ways and Means Committee Chairman Richard Neal (D-MA) who is a longtime supporter of NMTC.”

The NMTC works by providing a shallow federal tax credit of 39 percent, taken over seven years, for investments made 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. In 2019, more than 80 percent of all NMTC investments were in communities exhibiting severe economic distress with extremely low-incomes, high unemployment, or high poverty.

“The NMTC, despite its impressive track record in revitalizing communities, has been set at $3.5 billion since 2007, resulting in a 30 percent decrease in buying power. The $5 billion authorization is not only an increase above the current rate for NMTC from $3.5 billion, but also an increase above inflation of over $500 million,” adds Rapoza. “This much needed increase will go far to meet the exceptionally high demand, with is four to five times the availability on average.”

The Coalition notes that communities have come to count on the NMTC as a source of low-cost capital for challenging projects that would not have been possible but-for the NMTC. Since its inception, the Credit has delivered well over $100 billion in flexible capital to farming towns and urban neighborhoods left outside the economic mainstream.

For examples of how the NMTC is making an impact in each state, see the NMTC Coalition’s State Impact Map or check out its Project Database.

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 $100 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.

Tax Policy Trends and Plans for 2020 Were Focus for Lawmakers, Community Development Leaders at Annual D.C. Policy Conference

Coalition gathers NMTC stakeholders, releases state statistics


WASHINGTON, Dec. 16, 2019 /PRNewswire/ — New Markets Tax Credit extension legislation, tax policy trends and plans for 2020 were the focus as the New Markets Tax Credit (NMTC) Coalition held its annual NMTC Policy Conference late last week in Washington, D.C. The two-day event featured several members of Congress as keynote speakers, included visits with Congressional offices on Capitol Hill and provided insights from the Treasury Department. Attendees also received updated state fact sheets on the NMTC’s efficacy.

NMTC Coalition President, Kermit Billups, kicked off the conference by welcoming speakers and guests alike. The experienced NMTC practitioner and Greenline Ventures Executive Vice President highlighted recent successes and looked to the future of the NMTC Coalition.

Keynote speakers included Comptroller of the Currency Joseph Otting and CDFI Fund Director Jodie Harris. Panelists included congressional staff, NMTC board and leadership, economic development experts and Treasury Department professionals. Panels held discussions on modernization of the Community Reinvestment Act, small business loan funds, and the latest insights from the Treasury Department. A legislative outlook panel was led by moderator Bob Rapoza, NMTC Coalition spokesman.

A key focus of the conference was the expiration of NMTC. At the end of the year, the Credit expires, and the Coalition has been working with Congress on the legislation to extend and expand the NMTC.  In November, nearly 1,000 organizations wrote to the Congressional leadership in support of extension legislation.

Attendees brought their message to the Hill for Congressional visits before settling into the Hart Senate Office Building where they were addressed by Senator Roy Blunt (R-MO), Senator Ben Cardin (D-MD) and Ways and Means Committee Chairman, Representative Richard Neal (D-MA) who discussed NMTC and the future of tax policy.

“We [Congress] have to buckle down and get things done,” said Sen. Blunt, noting that he is working with fellow NMTC bill cosponsor Sen. Cardin and members of the Senate Finance Committee on an extension for the NMTC in the year-end negotiations. He went on to discuss his firsthand experience seeing the NMTC at work. “I went to a grocery store opening in south St. Louis—it was the first grocery store in 50 years, and the NMTC provided the financing.”

“You can’t allow it to expire,” said Sen. Cardin, when addressing the group and noting the chilling impact already seen due to uncertainty over the extension of the NMTC. “Permanency allows you to be able to go out and put together these deals that are not easy to be put together. There is a real desire by both the Democratic and Republican leadership to make sure that an extender package, in fact, passes before the end of the year. We are going to keep fighting for as much as we can get,” he added.

“[The NMTC] has real, positive ramifications for the communities in which you make the investment,” said Chairman Neal as he talked about “why we need to preserve and expand the New Market Tax Credit initiative. I’ve been your champion and I’m going to continue to be your champion,” he added.

The NMTC Coalition also released updated state fact sheets with community testimonials, success stories and state statistics available here.

“Since it was established in 2000, the New Markets Tax Credit has financed more than 6,000 projects and created over one million jobs in all 50 states, the District of Columbia and Puerto Rico,” said Bob Rapoza. “The conference provided practitioners with opportunities to discuss ways to build upon its success, helping low-income rural and urban communities access the capital necessary to grow local economies, expand business opportunities, update worn infrastructure, and make needed services like healthcare, education and childcare available to individuals and families living in distressed areas.”

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
[email protected] 
(202) 393-5225

CRA Modernization Proposal Released

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) are soliciting comment on a new proposal to modernize Community Reinvestment Act (CRA) regulations.

Changes to CRA are of great interest to NMTC practioners. Bank investors are important partners in the NMTC program and provide the private sector capital necessary for CDEs to invest in meaningful community and economic development projects in underservedareas. CRA serves as one of several primary motivators for NMTC equity investors. In recent years,demand for NMTCs from CRA-motivated financial institutions has been at or near an all-time high. Higher demand for NMTCs translates to more benefit for businesses, facilities and community revitalization efforts in low-income communities. It allows community development organizations to stretch each dollar of NMTC allocation further, producing a greater community impact and reaching areas of deeper distress. Robust demand for NMTCs also helps CDEs make the vast majority (more than 75 percent) of their loans and investments in severely distressed communities that far exceed the statutory requirements for distress.

The Proposal

The good news is that the NMTC – and activities associated with it – are mentioned throughout the proposal will continue to qualify for CRA consideration under the proposal. But it is not yet clear how the expansion of qualifying activities or the changes in geographic focus will impact demand for NMTCs.

The proposal eliminates the “investment test” and instead classifies all loans, investments, other development services benefiting LMI tracts or populations as “community development.”

We are reviewing the proposal and the Coalition will be providing comments. It includes 22 specific questions (scattered throughout) where the agencies are seeking comment. We’ve isolated them and you can download all the questions in a Word DOC below. The document includes citations where you can find the sections relevant to the questions.

Below are a few sections in the NPR related to the NMTC:

Qualifying activities criteria

(a) General. Retail loans, community development loans, community development investments, and community development services that help meet the credit needs of a bank’s entire community, including low- and moderate-income communities, are qualifying activities if they meet the criteria in this section at the time the activity is originated, made, or conducted. If the activity is subsequently purchased by another bank, it is a qualifying activity if it meets the criteria in this section at the time of purchase.

https://www.occ.gov/news-issuances/federal-register/2019/nr-ia-2019-147-federal-register.pdf (Page 193)

Qualifying Community Development Activities

The proposal broadly outlines the community development loans and investments that would qualify. Below, we’ve excerpted some sections relevant to CDEs and CDFIs:

Community development loans, community development investments, and community development services. A community development loan, community development investment, or community development service is a qualifying activity if it provides financing for or supports:

(1) Affordable housing, which means:

(ii) Owner-occupied housing purchased, refinanced, or improved by low- or moderate-income individuals or families, except for home mortgage loans provided directly to individuals or families;

(2) Another bank’s community development loan, community development investment, or community development service;

(4) Community support services which means activities, such as child care, education, health services, and housing services, that partially or primarily serve or assist low- or moderate-income individuals or families;

(5) Essential community facilities that partially or primarily benefit or serve:

(i) Low- or moderate-income individuals or families; or

(ii) Low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country; (

6) Essential infrastructure that benefits or serves:

(i) Low- or moderate-income individuals or families; or

(ii) Low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country;

,,,

(8) Federal, state, local, or tribal government programs, projects, or initiatives that:

(i) Partially or primarily benefit low- or moderate-income individuals or families;

(ii) Partially or primarily benefit small businesses or small farms as those terms are defined in the programs, projects or initiatives; or

(iii) Are consistent with a bona fide government revitalization, stabilization, or recovery plan for a low- or moderate-income census tract; a distressed area; an underserved area; a disaster area; or Indian country;

(9) Financial literacy programs or education or homebuyer counseling;

(12) A Small Business Administration Certified Development Company, as that term is defined in 13 CFR 120.10, a Small Business Investment Company, as described 13 CFR part 107, a New Markets Venture Capital company, as described in 13 CFR part 108, a qualified Community Development Entity, as defined in 26 CFR 45D(c), or a U.S. Department of Agriculture Rural Business Investment Company, as defined in 7 CFR 4290.50;

(13) Ventures undertaken, including capital investments and loan participations, by a bank in cooperation with: a minority depository institution, women’s depository institution, Community Development Financial Institution, or low-income credit union, if the activity helps to meet the credit needs of local communities in which such institutions are chartered, including activities that indirectly help to meet community credit needs by promoting the sustainability and profitability of those institutions and credit unions.

Qualifying Activities Illustrative List

The proposal also provides a non-exhaustive list of examples of activities that would qualify. A quick scan of that list reveals many activities that overlap with NMTC projects. Three examples explicitly mention the NMTC:

Loan to a small business to purchase real estate related to a New Markets Tax Credit project, as provided for in 26 U.S.C. 45D.

Public welfare investment, under 12 CFR part 24, to a qualified Community Development Entity that will provide financing for a food market to build a 180,000 square foot refrigerated warehouse and food distribution facility.

An investment in a New Markets Tax Credit-eligible Community Development Entity to fund a mixed-use project that will include affordable housing for LMI individuals and families and retail space for small businesses.

https://www.occ.gov/news-issuances/federal-register/2019/nr-ia-2019-147-federal-register.pdf (Pages 98 and 100)

Find the full list: https://www.occ.gov/news-issuances/federal-register/2019/nr-ia-2019-147-federal-register.pdf (pages 86-101)

Other Notable Proposals

Utilizing the NMTC’s poverty threshhold

Interestingly, the proposal references the NMTC’s criteria for poverty:

The proposal also would revise the definitions of distressed nonmetropolitan middle-income area and underserved nonmetropolitan middle-income area to include additional census tracts where there are unmet financial needs. Specifically, the requirement that a distressed area be a nonmetropolitan area would be removed to recognize that there may be urban areas that experience high rates of poverty, unemployment, or population loss and need financial resources. Although the agencies also considered lowering the poverty threshold in the definition of distressed area to as low as 15 percent, they decided to retain the 20 percent threshold because it is consistent with the threshold used in some other Federal programs that are intended to benefit low-income communities, such as the New Markets Tax Credit program.

Calculating the qualifying activities value

Qualifying activities would be quantified as follows:

• Qualifying loans and CD investments would be valued based on their average month-end on-balance sheet dollar value, except that qualifying retail loans originated and sold within 90 days of their origination date would be valued at 25 percent of their origination value.

• Legally-binding commitments to invest that are reported on the Call Report, Schedule RC-L, would be valued based on their average month-end dollar value.

• Qualifying commitments to lend would be valued based on the average month-end dollar value of the allowance for credit losses on those commitments that are reported on the Call Report, Schedule RC-G.

• CD services and monetary or in-kind donations would be credited at the value of the monetary donation or in-kind activity or at the hourly salary as estimated by the Bureau of Labor Statistics for the job category of the service provided for the number of hours provided. If a CD activity partially benefits the intended population or area, then the quantified value would be a pro-rata share of the full quantified dollar value of the activity, as described above, equal to the percentage of partial benefit.

….

A bank would calculate its bank-level and assessment area qualifying activities values by taking the sum of the quantified values of all qualifying activities, adjusted by any applicable multiplier, as follows:

Qualifying loans on balance sheet for at least 90 days and CD investments

PLUS

Twenty-five percent of the origination value of qualifying loans sold within 90 days of origination

PLUS

CD Services and Monetary and In-Kind Contributions

https://www.occ.gov/news-issuances/federal-register/2019/nr-ia-2019-147-federal-register.pdf (Pages 36-37)

Financial Literacy Programs

The proposal adds a criterion for financial literacy programs or education or homebuyer counseling that benefits individuals of all income levels. The agencies believe that financial literacy is an important issue irrespective of income level. Moreover, some stakeholders expressed support for providing CRA credit for financial literacy programs for all individuals. These stakeholders cited high levels of student and credit card debt and a lack of retirement and other savings as reasons for providing broader consideration of financial literacy-related activities.

https://www.occ.gov/news-issuances/federal-register/2019/nr-ia-2019-147-federal-register.pdf (Page 28)

New State Fact Sheets

We’ve updated our State Fact Sheets with NMTC data through the 2nd quarter of 2019. Most of the data is from the CDFI Fund, which recently released NMTC transactions through 2017. The data from 2018 and 2019 comes from the Coalition’s annual surveys, CRA data from Office of the Comptroller of Currency, and many hours of research and correspondence with CDEs.

Economic impact data (by state) remains unchanged and goes through 2015, aligning with our most recent macroeconomic analysis of the program. Jobs include both full-time-equivalent permanent jobs, 12-month FTE construction jobs, direct, indirect, and induced jobs.

The fact sheets include a few other bells and whistles:

  • Multiple testimonials from businesses, nonprofits, local leaders, and community development organizations from each state.
  • A list of organizations who signed onto our November 2019 letter to Congress urging extension of the program.
  • Total project investment maps by county.

Click the states below for more information:

Two New Data Updates from the CDFI Fund

CDFI Fund Releases Applicant Demand from the 2019 NMTC Round

The Fund also announced it had received a total of 206 applications under the 2019 NMTC application round. The CDEs applying early this year were headquartered in 44 states, the District of Columbia, and Puerto Rico.

Applicants requested an aggregate total of $14.7 billion in NMTC allocation authority, over four times the $3.5 billion in authority available for the 2019 round.

CDFI Fund Releases NMTC Data Through FY 2017

The CDFI Fund has released another year of NMTC transaction data. The publicly available data now covers all transaction level activity through FY 2017.

The dataset includes information on the following data: Transaction ID, Project ID, 2010 Census Tract Metro/Non-Metro, 2000/2010, Origination Year, Community Development Entity (CDE) Name,  Project QLICI Amount, Estimated Total Project Cost, City, State, Zip Code, Purpose of Investment, QALICB Type, Multi-CDE, Multi-Tract QLICI. 

The latest year of data shows $3.7 billion in QLICIs made in 2017 generating $6.88 billion in total project financing. Total investment through 2017: $48.3 billion in QLICIs and $92.7 billion* in total project financing.

The Fund’s release also includes a summary report with breakdowns by industry classification code, year, and other factors.

*Note: This number represents NMTC investments reported through 2017. The Coalition’s dataset, which is used for many of the topline numbers in our fact sheets and reports, includes most NMTC data from 2018 and 2019, and the NMTC industry has eclipsed $100 billion in total project investment to date. We will be integrating this dataset into our own and updating our State Fact Sheets for our conference next month.

Multitude of Organizations Urge Congress to Save Soon-to-Expire NMTC

Nearly 1,000 businesses, investors and organizations call on Congress to expand and make the community and economic development tax credit permanent

WASHINGTON, November 20, 2019 – Today, the New Markets Tax Credit (NMTC) Coalition sent a letter addressed to Congressional leadership, the House Ways and Means Committee and its Chairman, Richard Neal (D-MA), as well as to the Senate Finance Committee and its Chairman, Chuck Grassley (R-IA). The letter urges the permanent extension and expansion of the New Markets Tax Credit (NMTC), along the lines of the bipartisan New Markets Tax Credit Extension Act (H.R. 1680 S. 750).

Nearly 1,000 signatures came from banks and credit unions; nonprofits such as Habitat for Humanity chapters, YMCAs, Boys & Girls Clubs,  food banks and heath care clinics; businesses, ranging from very large businesses to small, family-owned operations; city governments; state and local elected officials and agencies; and associations that represent thousands of members.

“As the New Markets Tax Credit nears its expiration at the end of 2019, we hope Members will take note of its broad support,” said Kermit Billups, President of the NMTC Coalition and EVP, Co-Founder at Greenline Ventures. “The letter was signed by nearly a thousand organizations, representing all 50 states, Washington, D.C. and Puerto Rico, and located in every type of community, from rural areas to urban neighborhoods, and everywhere in between. Why? Because they have seen firsthand the success of NMTC in revitalizing communities, creating jobs, increasing economic opportunity and improving lives.”

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 was most recently provided a five-year authorization in The PATH Act. (P.L. 114-113) in December 2015. There is great bipartisan support for NMTC in Congress:  32 Senators signed on in support of S. 750, which was introduced by Senators Roy Blunt (R-MO) and Ben Cardin (D-MD); in the House, H.R. 1680 has 109 cosponsors, led by Reps. Terri Sewell (D-AL), Tom Reed (R-NY), and 24 members on the Ways and Means Committee.

The NMTC works by providing a shallow federal tax credit of 39 percent, taken over seven years, for investments made 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. Last year, more than 80 percent of all NMTC investments were in communities exhibiting severe economic distress with extremely low-incomes, high unemployment, or high poverty. Over the past 15 years, communities have come to count on the NMTC as a source of low-cost capital for challenging projects that would not have been possible but-for the NMTC. Since 2003, the Credit has delivered well over $100 billion in flexible capital to farming towns and urban neighborhoods left outside the economic mainstream.

“Despite an exemplary track record in revitalizing some of the poorest communities in our country, financing over 6,000 businesses, hospitals, daycare facilities, and manufacturing expansions and creating some one million plus jobs, the future of the NMTC is in jeopardy ,”  said Bob Rapoza, spokesperson for the NMTC Coalition.  “Without an NMTC extension, many of America’s urban neighborhoods and rural communities, struggling with high rates of poverty and unemployment, will lose access to billions of dollars for high-impact, community revitalization projects. No other the federal tax incentive is generally available to economically distressed rural and urban communities to promote economic revitalization making a permanent extension and expansion of the New Markets Tax Credit vital.” 

For examples of how the NMTC is making an impact in each state, see the NMTC Coalition’s 2019 NMTC Progress Report, State Impact Map or check out its Project Database.

Contact: Ayrianne Parks
[email protected] 
(202) 393-5225

The Letter

November 20, 2019,

Speaker Pelosi, Leader McConnell, Leader McCarthy, Leader Schumer, Chairman Neal, Chairman Grassley, Ranking Member Brady, and Ranking Member Wyden:

The New Markets Tax Credit (NMTC) expires at the end of 2019. We write to urge you to provide a permanent extension and expansion of the NMTC along the lines of the bipartisan New Markets Tax Credit Extension Act (H.R. 1680 and S. 750).

The NMTC is an important source of financing for businesses and community facilities in America’s most economically distressed rural and urban communities. Over the past 15 years, communities have come to count on the NMTC as a source of low-cost capital for challenging projects that would not have been possible but-for the NMTC. Since 2003, the Credit has delivered well over $100 billion in flexible capital to farming towns and urban neighborhoods left outside the economic mainstream. Those investments have generated over one million jobs at a cost to the federal government of less than $20,000 per job.

Without an NMTC extension, many of America’s urban neighborhoods and rural communities, struggling with high rates of poverty and unemployment, will lose access to billions of dollars for high-impact, community revitalization projects. For these reasons, we urge Congress to provide a permanent extension and expansion of the New Markets Tax Credit.

Signed,

Testimonials about the NMTC from signatories

Dawn Stanhope, President & CEO, Boys & Girls Clubs of Manatee County, Bradenton, FL

Our community has received tremendous investment for our youth through the NMTC program. Without it, we would not have been able to build and expand our facilities to serve nearly triple the amount of youth in our county – from 200 kids per day up to 550! These programs offer parents peace of mind that their kids will be in a safe, supportive environment every day after school and full days in the summer so our youth can reach their full potential as productive, caring, responsible citizens. The funding received from this program made all of the difference and leveraged private investment from philanthropy to an area of high need and little resources to meet that need. A win for all involved, including our very own Congressman’s support, Vern Buchanan.

Thomas De Simone, President & CEO, Genesis LA CDE, Los Angeles, CA

The NMTC is what makes economic development viable in the distressed communities where we work. NMTC provides the equity that traditional investors cannot provide because of real or perceived risk. NMTC is the difference between a project being viable or not.

Kathy Bray, President & CEO, Volunteers of America, Utah, Salt Lake City, UT

NMTCs made it possible to construct a resource center for homeless youth by bringing $1M in equity to the project

Martin Dahl, General Manager / CEO, McLean Electric Cooperative, Inc., Garrison, ND

This New Market Tax Credits make it possible to improve the quality of life in under served areas around the Country. These dollars are essential in providing jobs, medical facilities and schools in these impoverished and under served communities.

Victoria Kaplan, Writing for Change, Seattle, WA

The New Markets tax credit’s are a vital ingredient for developing opportunities in communities of color. It would be a terrible mistake to eliminate this effective vehicle for developing communities that have been shut out of community growth.

Emilee Powell, Manager of Impact Measurement and Financial Stability, Homewise, Santa Fe, NM

We use NMTC to create opportunities for affordable homeownership. Our homeowners help reinvigorate the distressed neighborhoods

Echo Bergquist, The Unity Council, Oakland, CA

It is a crucial source of funding to help stop commercial displacement in the vibrant neighborhood of Oakland whose population we serve.

Wayne Meyer, President, Community Loan Fund Of New Jersey, Inc, New Brunswick, NJ

As a Community Development Finance Institution, we use federal funding through the CDFI Fund’s competitive award programs to leverage private capital and finance high-impact projects in communities where need is greatest but mainstream capital is scarce. To date, NJCC has been awarded $14.8 million in CDFI grants, $50M in CDFI Bond Guarantees and $250 million in CDFI New Market Tax Credits. Together with other capital, this funding leveraged $1.78 billion to create 10,330 quality housing units, 19,760 education seats, 6,340 child care seats, 5.6M commercial and community square feet and 12,390 jobs in some of the state’s most distressed communities. CDFI programs like NMTC have significantly helped to build our capacity to provide loans and investments that meet financing gaps for projects centered on furthering equity and opportunity. We respectfully urge Congress to provide a permanent extension and expansion of the NMTC along the lines of the bipartisan New Markets Tax Credit Extension Act (H.R. 1680 and S. 750).

Steven Brinkman, CEO, The Men’s Center, Incorporated dba recenter, Houston, TX

The NMTC Program has given our organization a new home after 70 years. It has given us and the 500 souls we serve annually a brighter future.

David Snedeker, Executive Director, Northeastern Vermont Development Association, St. Johnsbury, VT

In the many low-income communities of our rural 3-county region of Vermont, the NMTC program is essential for any large economic development projects. The program is able to bring capital to projects that would otherwise not be available.

Mary Kay O’Rourke, President & CEO, Habitat for Humanity of Jacksonville, Inc., Jacksonville, FL

The ability to leverage our assets in order to provide additional affordable housing opportunities for Jacksonville residents.

Susan Hay Patrick, Chief Executive Officer, United Way of Missoula County, Missoula, MT

New Market Tax Credits have supported some of the most urgently needed community-strengthening projects in some of the most economically distressed areas of our region, including our 13 Native American reservations. Financially feasible NMTC-supported projects are creating jobs, fostering community economic self-sufficiency, and improving the health and quality of life for countless residents throughout our region. It is absolutely critical that this high-impact, community-revitalizing program be continued.

Joni Robertson, CAO, Golden Valley Natural, Shelley, Shelley, ID

The NMTC program has provided jobs and benefits to our community. It has been a huge benefit and has benefited many families. It has provided jobs and given employees an opportunity to learn new skills and have opportunities for job advancement within our organization. It has also allowed these employees to become more marketable and gives them future opportunities they would not have had. It has been a great benefit to our company and our community.

Lori Wright, CEO, Southwest Utah Community Health Center, St George, UT

I am working on a capital project and with NMTC I will be able to safeguard funds that allow me to provide ongoing operational services for individuals facing a variety of barriers to care. NMTC are a critical piece in the ability of Health Centers to grow and thus serve more US residents facing barriers to care.

Madeleine Steczynski, Founder & Executive Director, Zumix, East Boston, MA

In 2009, we utilized New Market Tax Credits to purchase and renovate a long-abandoned city-owned fire station, transforming it into a state of the art creative youth development center. We employ over 50 artists, engineers and administrators, who serve close to 1,000 young people per year – dramatically improving their life trajectories. We are celebrating our 28th year, and with the support of the NMTC, own our building outright (with no debt). Hopefully this will provide the foundation for the next 28 years!

David Arnold, Director, Great Lakes Capital, Fort Wayne, IN

The NMTC have literally made redevelopment projects possible that otherwise would not have been feasible. The program has been an important augmentation to state and local public resources in addition to private resources. This combination of investment at all levels ensures that the resources and risks associated with redevelopment projects are equitably shared by all stakeholders. These projects, that would have otherwise not been possible, contribute directly to the job creation and place-making efforts crucial to our long-term community economic development.

Laurel Robinson, President/CEO, Housing Center of the Palm Beaches, West Palm Beach, FL

An opportunity to bridge the funding gap that is universally present in projects that utilize some manner of public funding.

Alex Stillpass, Manager, RSA NMTC Fund LLC, Cincinnati, OH

The NMTC means opportunity to impact local and regional communities for positive change in jobs, wages, education and health care.

Kathy Ray, Executive Director, Four County Alliance of Southeast Idaho, Malad City, ID

The NMTC provides one more tool to help buisness in rural communities to access the capital needed to start a small business.

Bob Calhoun, CEO, St. Lucie Habitat for Humanity, Ft. Pierce, FL

The NMTC provides the essential economic incentive to bring community development to areas that are not served by the local providers. The multiplier effect that the NMTC provides creates positive economic growth well beyond the scope of the funded program.
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