Demand for New Markets Tax Credits (NMTCs) jumped 26 percent this year, announced the Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund).
Officials revealed that they received 314 applications under the 2011 round, the largest number of applications since the program’s first year in 2002. The number of applications is a 26 percent jump from the 2010 round.
This year’s hopeful applicants requested an aggregate of $26.7 billion in allocation authority, a 14 percent increase from last year. The amount is more than seven times the $3.5 billion in available NMTC authority.
This year’s applicants are headquartered in 44 states and the District of Columbia.
With many communities still trying to recover from the economic downtown, the strong interest in NMTCs isn’t surprising, according to federal officials.
The demand for credits demonstrates the need for investment in the nation’s low-income communities, said CDFI Fund Director Donna J. Gambrell.
“The economic development industry has long known how valuable a tool these tax credits are for bringing together the final layer of financing for essential economic development and community service projects,” she said in a statement.
The application deadline was July 27. The CDFI Fund anticipates announcing the winning applicants in early 2012.
The NMTC program was established by Congress in 2000 and permits individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in community development entities (CDEs). The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. Substantially all of the taxpayer's investment must in turn be used by the CDE to make qualified investments in low-income communities.