Lawmakers, Community Development Leaders Gather in Washington, D.C. to Discuss Tax Policy Trends and Plans for 2019

Coalition gathers NMTC stakeholders for a policy conference, releases new state statistics

WASHINGTON, D.C. (December 18, 2018) — The New Markets Tax Credit (NMTC) Coalition held its Annual Conference on December 12 and 13 in Washington, D.C. The event featured members of Congress as keynote speakers, and panels on timely community development matters. Attendees were also provided with insights from the Treasury Department and the release of updated state statistics on NMTC efficacy.

NMTC Coalition President Kermit Billups opened the conference, welcoming speakers and guests. The experienced NMTC practitioner and Greenline Ventures EVP highlighted recent successes and looked to the future of the NMTC Coalition. Keynote speakers at the conference included U.S. Reps. Terri Sewell (D-Ala.) and Tom Reed (R-N.Y.). Both indicated their desire to work with House colleagues to see the NMTC not only extended, but made permanent and expanded.

“We have seen firsthand the impact the New Markets Tax Credit program has had here in New York and want to ensure it has a fair shot at continuing to boost jobs in our community,” Congressman Reed said. “While the economy continues to grow, small businesses – the lifeblood of our economy – still struggle to secure the capital needed to spur revitalization.”

“The New Markets Tax Credit helps create a better environment for businesses and transformative projects to thrive – boosting wages, services and economic development where it’s needed most,” Reed concluded.

A legislative outlook panel was led by moderator Bob Rapoza, NMTC Coalition spokesman, and included key congressional staff. Many attendees headed to congressional visits that afternoon, followed by a reception in the Kennedy Caucus Room where they were addressed by Senators Ben Cardin (D-Md.) and Rob Portman (R-Ohio), Senate NMTC Extension Act cosponsors and Senate Finance Committee members, who discussed NMTC impact and the future of tax policy.

Sen. Cardin said, “In Maryland, the New Markets Tax Credit has been deployed on a diverse range of infrastructure and community development efforts, from affordable housing, to health clinics, to community centers. Since 2003, the credit has resulted in billions of dollars in investment across the state and created over 34,000 jobs. It is time to make this incredibly valuable program permanent.”

Senator Rob Portman added, “Pro-growth federal policies are helping grow our economy and strengthen our communities. More than ever, we need to continue support for programs like the New Markets Tax Credit that spur investment in areas that truly need it and help create new industry, infrastructure, and jobs for cities and towns across the U.S. that have felt left behind. I’ve seen the results that these tax credits can have on our communities. Last year in Ohio, $280 million in New Markets Tax Credit financing generated a total of $462 million in public-private project investment for 29 projects in the state. Our local communities depend on these tax incentives for projects that transform our communities, create jobs, and make a real difference in peoples’ lives, and I’ll continue fighting to make them permanent.”

The final keynote of the conference came from Community Development Financial Institutions (CDFI) Fund Director Annie Donovan. At the close of her remarks, Donovan announced her departure from the CDFI Fund. During her five years as director, Donovan oversaw tremendous growth in the agency’s funding and programming and the largest ever CDFI and NMTC program award rounds. Integrating more data into policy-making was a top priority for Donovan.

Panels during the conference also included NMTC board and leadership, economic development experts and Treasury Department professionals. Those discussions focused on Opportunity Zones, NMTC investor prospects, NMTC financing disaster relief, and the latest insights from the Treasury Department.

“Since its inception, the New Markets Tax Credit has financed more than 5,000 projects and created over one million jobs,” said Bob Rapoza. “The conference provides 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.”

Helping Beyond Thanksgiving: Investing in the Revitalization of Low-Income Communities

Thanksgiving is a time to gather with friends and family, a time to reflect on our privileges and the past year’s accomplishments and—most of us—also look forward to enjoying a big, festive meal.  Whether you host or travel to a loved one’s homes, many Americans will spend this Thursday gathered around a table, enjoying the comfort of a warm home and delicious food, and maybe even watching some football that afternoon. For those people living in poverty, struggling with homelessness, those affected by devastating natural disasters, or those without access to affordable, healthy food, the holiday can be quite a different experience.
L.A. Prep is a New Markets Tax Credit (NMTC) financed project in Los Angeles that will serve as an incubator for 50 small- to medium-sized food producers who have outgrown their startup spaces. The anchor tenant of the project is L.A. Kitchen, which is a commercial kitchen and produce processing hub that prepares meals and nutritious snacks for seniors and low‐income families.
According to the U.S. Department of Agriculture (USDA) Economic Research Service (ERS), “data from the latest census (2000), about 23.5 million people, or 8.4 percent of the U.S. population, live in low-income neighborhoods that are more than a mile from a supermarket. Low-income neighborhoods are areas where more than 40 percent of the population has income less than or equal to 200 percent of the Federal poverty threshold ($44,000 per year for a family of four in 2008).” A 2017 ERS report also found that “11.8 percent of American households were food insecure at least some time during the year in 2017, meaning they lacked access to enough food for an active, healthy life for all household members.” However, that number may be higher, depending on where you live. The January 2017 Point-in-Time count from the HUD Annual Homeless Assessment Report found that there are 553,742 people experiencing homelessness in the United States. Hundreds are without homes after the camp fire in California, and thousands are still dealing with hurricane damage from this year and last year. Many of us volunteer on Thanksgiving, serving food to individuals and families in need. But how can we help those less fortunate beyond a few hours spent volunteering on Thanksgiving? This is an issue central to the field of community and economic development. Since being implemented, the New Markets Tax Credit has been used across the country to help improve many of these challenges through the financing of food banks, grocery stores located in food deserts, homeless shelters and other community facilities that serve communities and people in need. Since 2003, the NMTC has financed 276 of grocery stores, farmers’ markets, food delivery services, food banks, and other projects expanding access to food in underserved areas. NMTC practitioners like Habitat for Humanity, LISC, Greenline Ventures and many others in our community have been key in helping families repair and rebuild homes after hurricanes or providing financing to organizations like the Houston Food Bank and North Dallas Food Bank, which provided direct assistance to the families and communities affected by the unprecedented flooding and destruction of Hurricane Harvey and Irma. If we want to help, we need to get to the root of the problem and invest in programs that are focused on improving the lives of people and communities struggling with economic hardship. Helping organizations and businesses access the capital necessary to grow local businesses, expand community services and create good paying jobs is key and the NMTC has a strong record of accomplishing just that.

Helping Meet Housing Needs After Katrina

Housing damaged by Katrina

After Katrina and Rita, the New Markets Tax Credit (NMTC) served an important role in rebuilding community facilities including hospitals and schools, helping businesses replace damaged furniture and equipment, and bringing life back to devastated areas. Disasters isolate low-income areas that already lag far behind affluent communities in the availability of basic services like healthcare as well as the physical infrastructure needed to grow businesses and create economic opportunity. The construction of facilities and infrastructure is important, but economic recovery is difficult - if not impossible - if residents have no where to live. Katrina and Rita collectively displaced 1.3 million people and caused severe or major damage to tens of thousands of owner-occupied homes in areas struggling with high poverty and unemployment before the storm.

The NMTC played an underappreciated role in financing new or renovated homes for displaced families after the storm. NMTC financing supported more than 1,000 single-family homes for displaced residents of disaster areas. One example is a groundbreaking, scalable project supported by Greenline Ventures, a community development organization that finances projects that provide returns for investors and create positive impact in communities.

A Model for Rebuilding Homes

Hurricanes - like thunderstorms - often create damage that looks scattered or convective on a map. One neighborhood be severely damaged while an adjacent neighborhood sits remarkably untouched. Displaced residents wait in shelters or stay with family and friends, but their luckier neighbors see their economic prospects suffer as well. A community cannot fully recover until its residents return to their homes, making it whole again. 

"Housing really is the most immediate concern after a hurricane," said Kermit Billups of Greenline Ventures.

While programs like LIHTC are very effective in financing large-scale rental developments, federal affordable housing policy does leave some gaps, and Greenline Ventures saw an opportunity to use the NMTC's flexibility to meet scattered, single-family housing needs and put people back to work. Greenline provided $700,000 in NMTC financing to a small, local developer to support 13 new affordable single-family houses in Louisiana.

To expedite the project, Greenline coordinated with local housing agencies and helped first-time developers understand the scope and desired outcomes of the rebuilding effort while helping them navigate red tape. They engaged local, minority and woman-owned contractors for most of the work, and eighty-five percent of the workers hired for construction were local. To finance the project, Greenline provided a clustered site redevelopment loan product that was not available on the conventional market and only possible thanks to subsidy from the NMTC.

"We followed the General Patton model of development: GET IT DONE." said Billups. "Housing kits and materials were shipped directly to construction sites so that building could begin as quickly as possible."

The project served as a scalable model for GO-Zone Housing development through public-private partnerships. It also provided the developer with credentials to receive an award for $75 million in FEMA and New Orleans funds to build similar housing in the region. Ultimately, they financed 450 units in New Orleans, Baton Rouge, and Lake Charles, creating an additional 540 construction jobs.

Before and After

Learn about other disaster recovery efforts supported by the NMTC

The NMTC as a Disaster Assistance Tool

Habitat for Humanity and the NMTC

Theresa Jackson and her family evacuated from New Orleans, eventually making their way to Jackson after they were hoisted off their New Orleans apartment rooftop by helicopter, deposited on Interstate 10, and transported to military barracks in San Antonio. “I am grateful for [Habitat for Humanity] stepping in and helping us to get back to normal as quickly as possible and helping us get established in the Jackson community,” she said. “[Habitat for Humanity] is responsible for double miracles in our lives – helping us recover from Hurricane Katrina, and providing us with the opportunity to fulfill a lifelong dream of owning a home. We are very grateful.” Learn more from Habitat for Humanity of the Mississippi Gulf Coast.

Hurricane Katrina destroyed or damaged tens of thousands of homes. After the hurricane struck, Habitat for Humanity went into high gear, building affordable single family housing for victims of the storm. Local habitat affiliates, along with tens of thousands of volunteers, worked tirelessly to build and repair thousands of houses. The New Markets Tax Credit helped accelerate Habitat's work in the gulf coast, providing tens of millions in funding for builds. 

After the Closure of Five Major Hospitals, St. Thomas Community Health Center Helps Fill the Void

In March 2011, St. Thomas Community Health Center (STCHC) began the $8.0 million acquisition, rehabilitation and renovation of a blighted, 19th century building to expand its health care services and operations. STCHC is a 25-year-old, non-profit, comprehensive, section 330-funded Federally Qualified Health Center located in a highly distressed low-income community (LIC) in New Orleans, LA. STCHC provides high quality and accessible health care services to the uninsured, underinsured and the working poor in Orleans and surrounding Parishes (counties) for little to no cost. Since Hurricane Katrina and the closure of five major hospitals in Orleans Parish, STCHC had seen a 34% increase in its patient user client base. To better meet the growing needs of its target market, STCHC desperately needed to expand beyond its existing inefficient and less than desirable facilities. Both facilities, located within steps of each other, were originally built in the 1800s and had undergone piecemeal renovations but neither was construed with the intent of serving as a health care facility. The new facility, located in a National Register Historic District, was renovated and rehabbed to serve the growing needs of STCHC and the community. STCHC currently served 21,500 patients annually but projected a 114% increase in patient visits to over 45,000 patients annually over the next 7 years. The new 10,906 square foot facility increased their usable square footage by 85% and was designed as a space and energy efficient, state-of-the-art ambulatory care facility providing STCHC flexibility and ease while significantly enhancing its health care programs and services.

NMTC Helps the Houston Food Bank Meet Demand after Katrina

After Hurricane Katrina, many New Orleans residents were forced to relocate to Houston. The result was a huge surge in demand at the Houston Food Bank, an innovative nonprofit serving the Greater Houston area. With the help of NMTC financing, the food bank was expanded significantly. Watch:

The NMTC helped AMCREF support GO Zone businesses

AMCREF Community Capital (AMCREF) received $72 million in allocation for disaster affected communities. For example, the AMCREF financed the Gulf Coast Agricultural and Seafood co-op. Located in a highly distressed low income community in Bayou LaBatre, Alabama, the Co-Op was formed by 23 local shrimp and crab companies having difficulty disposing of their seafood processing waste after their previous facility was destroyed by Hurricane Katrina.

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Smith NMTC Habitat for Humanity Builds

Smith NMTC Associates, LLC created and refined the NMTC model for Habitat for Humanity builds and since 2008 has helped facilitated the creation more than 200 affordable, single-family homes in the Go Zone and more than 3,000 nationwide. Below is a map of the builds facilitated by Smith NMTC in the Go Zone (click the map to learn more):

smithnmtcmap

NMTC Helps Rebuild Historic 9th Ward School

Capital One, AMCREF, and Dudley Ventures, used the NMTC to relocate and rebuild the Holy Cross School, a 127 year-old non-Archdiocesan parochial school whose former facilities in New Orleans’ Lower 9th Ward were severely damaged by Hurricane Katrina.

NMTC Financed Hundreds of Habitat for Humanity Homes in Katrina Damaged Areas

A few examples:

Five Gulf Coast Habitat for Humanity affiliates built nearly 300 houses in communities affected by Hurricane Katrina with the help of the New Markets Tax Credit. U.S. Bancorp Community Development Corporation, Habitat for Humanity International CDE, and Smith NMTC partnered to make it happen.

National New Markets Fund and Capital One partner to finance 85+ Habitat for Humanity homes in Jackson, MS. Like many parts of Metro Jackson and Mississippi's Gulf Coast region, the area where the new homes will be built was impacted severely by Hurricane Camille in 1969 and again by Hurricane Katrina in 2005. As a result, it suffered from inadequate and unsafe housing.

NMTC financing supported Bay-Waveland Habitat for Humanity build dozens of homes

 

2006 GO Zone Allocation Award Winners

2007 GO Zone Allocation Award Winners

Bipartisan Disaster Relief Legislation Modeled After the GO-ZONE Relief Package

NOTE: This was written in 2015. In the 114th Congress, there were several pieces of legislation adapting the NMTC for use in disaster relief or any other sort of sweeping economic disruption, like Hurricane Sandy or the decline of economic activity in coal country.

Given the many successes of the NMTC in rebuilding hospitals, schools, and even housing after Katrina, bipartisan legislation was introduced in both houses of Congress after several recent disasters, including Hurricane Sandy. The legislation is mirrored after the Hurricane Katrina relief effort.

Learn more:

Senate legislation (114th Congress): National Disaster Relief Tax Act of 2015 (S. 1795), introduced by Senator David Vitter (R-LA) along with cosponsors Senators Chuck Schumer (D-N.Y.), Bill Cassidy (R-La.), Shelley Moore Capito (R-W.V.), Joe Manchin (D-W.V), Michael Bennet (D-Co.), Cory Booker (D-N.J.), Kirsten Gillibrand (D-N.Y.) and Bob Menendez (D-N.J.).

House legislation (114th Congress): National Disaster Relief Tax Act of 2015 (H.R. 3110), introduced by Congressman Tom Reed (R-NY) along with Bill Pascrell (D-NJ) and more than a dozen other cosponsors.