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The Future of the New Markets Tax Credit
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The Republic Bank Foundation YMCA, a multi-purpose facility, is expected to serve 28,000 individuals annually through the YMCA, medical practice, and a bank branch.
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Did you know the New Markets Tax Credit (NMTC) - one of the most effective and cost-efficient tools for stimulating economic growth in low-income communities - is set to expire on December 31, 2019? Created by Congress in 2000 as part of the Community Renewal Tax Relief Act, the NMTC Program incentivizes private-sector capital investments in businesses, real estate projects, and community facilities.
CAHEC New Markets (CNM), an affiliate of CAHEC, is a certified Community Development Entity that raises capital through the NMTC program for lending to qualified businesses in low-income communities. Since inception, CNM has been awarded $120 million in allocation from the U.S Department of Treasury's CDFI Fund and has helped finance a range of real estate and community facility projects.
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The projects funded by the NMTC, including those funded by CNM, have had significant impacts on the communities they serve. Here are five key program accomplishments:
1. More than 72% of all NMTC investments have been in communities exhibiting severe economic distress, including unemployment rates more than 1.5 times the national average.
CAHEC New Markets provided $10 million to the Rocky Mount Event Center, in Rocky Mount, North Carolina. The facility will serve as an economic engine by attracting sporting and other events while also serving the community through an urgent care and specialty healthcare center. This project is in a NMTC high distress census tract with an unemployment rate of 21%, a 33% poverty rate, and is located on the 500th certified brownfield in North Carolina.
2. The New Markets Tax Credit financed 52 health clinics, hospitals, and drug treatment centers in 2017.
The Republic Bank Foundation YMCA will be a newly constructed multi-purpose facility to improve health equity in Louisville, Kentucky. The facility will house a YMCA, primary care medical home, physical therapy practice, counseling services, and a Republic Bank branch. The total project cost is $32.9 million with CNM providing $10 million of NMTC allocation. Construction is expected to be completed by August 2019.
3. Projects financed by the NMTC have created approximately 1,000,000 jobs since its inception - an incredible economic boost to areas that need it most.
CNM's NMTC investments have helped create over 3,600 construction jobs and over 1,400 permanent jobs.
4. The NMTC Program supports a wide range of businesses including manufacturing, food, retail, housing, health, technology, energy, education, and childcare.
One of CNM's focuses has been education - projects funded by CNM have helped create over 2,300 primary and secondary school seats. CAHEC New Markets provided $12 million of NMTC allocation to the Charles R. Drew Junior & Senior Academy in Atlanta, Georgia. The expanded middle school and new high school allows Drew Charter School to complete its "Cradle-to-College" dream providing high quality education in the East Lake community from pre-k through high school.
5. Over the past four years, manufacturing projects have been the most common type of project funded with the NMTC.
CAHEC New Markets provided $9 million of NMTC allocation to build a new, owner occupied 153,000 square foot Dot Foods distribution center in Dyersburg, Tennessee. This new facility created approximately 297 permanent jobs in a highly distressed, rural community.
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Advocating for the New Markets
Tax Credit -
How You Can Help
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The NMTC is currently set to expire in December of 2019, and we need your help to ensure this doesn't happen. The New Markets Tax Credit Coalition put together an
Advocacy Toolkit that provides everything you need to help get involved - including a list of important legislation, how to write an op-ed, and what to say when you're educating people about the impact of the NMTC.
The New Markets Tax Credit Extension Act (H.R. 1098
/S. 384
) - a bill introduced in 2017 - would amend the Internal Revenue Code to make the New Markets Tax Credit permanent. Given the importance of this legislation, The New Markets Tax Credit Coalition has prepared a
target list for assisting people in contacting their key Congressional members.
Additionally, another important piece of legislation for your Congressional members to support is the Rural Jobs Zone Act (H.R. 6627
). Introduced on July 26, 2018, by
Congressman Jason Smith (R-MO) and Terri Sewell (D-AL), this new legislation would authorize an additional $500 million of NMTC allocation in both 2018 and 2019 targeted to certain rural areas with a priority to persistent poverty counties and high migration rural counties.
Please take a few minutes to reach out and educate your members of Congress on the importance of the NMTC and ask them to consider co-sponsoring these bills. Your efforts could help ensure this impactful resource for stimulating economic growth in low-income communities remains intact.
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What is the New Markets Tax Credit?
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Created by Congress as part of the Community Renewal Tax Relief Act of 2000, the New Markets Tax Credit Program incentivizes private-sector capital investments in business real estate projects, and community facilities located in low-income urban and rural communities. The program is based on the idea that there are viable business opportunities in low-income communities and that a federal tax credit would provide an attractive incentive to investors. Through Qualified Equity Investments in Community Development Entities (CDEs), investors are able to claim a federal tax credit based on 39% of the investment amount. CDEs use this investment capital to make loans or equity investments to qualified businesses located in economically distressed communities. The tax credit is claimed by investors over a period of seven years.
Named as one the Top 25 Innovations in American Government by the Ash Center for Democratic Governance and Innovation and the John F. Kennedy School of Government at Harvard University, the NMTC Program leverages $8 of private capital for every $1 of federal investment. In addition, since its creation, the program has helped create or retain over 750,000 jobs and supported the construction of 84.6 million square feet of manufacturing space, 62.7 million square feet of office space, and 42.7 million square feet of retail space.
For more information on CAHEC New Markets, please contact Brian Oxford at
[email protected].
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Who is CAHEC?
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One of the nation's leading nonprofit equity syndicators, CAHEC helps finance the development of attractive and affordable rental housing. Headquartered in Raleigh, N.C., CAHEC works with investors and developers in eleven states and the District of Columbia to raise and invest capital in affordable housing, historic preservation, and community revitalization projects. Since its founding in 1992, CAHEC has raised and committed more than $2.2 billion toward the development of more than 30,000 units of affordable housing.
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