The federal New Markets Tax Credit (NMTC) program, which is currently set to expire in 2008, will likely be extended and eventually made permanent, said Jim Howard, a principal with TransCapital Solutions, LLC, at a panel on NMTCs this year at AHF Live: The Tax Credit Developers’ Summit.

Rep. Charles Rangel (D-N.Y.), chairman of the House Ways and Means committee, took a step toward that goal last week with the introduction of his “Tax Reduction and Reform Act of 2007,” which among other things would extend the NMTC program for one additional year, through the end of 2009, and permit up to $3.5 billion in qualified equity investments.

In the meantime, developers of low-income housing tax credit (LIHTC) properties could benefit from learning how to use NMTCs, according to panelists. Among the many misconceptions about NMTCs are the belief that they can’t be used with LIHTCs or to develop multifamily housing, and that commercial real estate development is the best use of NMTCs, said Herb Stevens, who moderated the panel. Stevens is a partner in Washington, D.C., with the law firm of Nixon Peabody. “There is no one best use of New Markets Tax Credits,” he said. “It is an incredibly broad program that is well-suited to develop commercial properties, small business lending, ecologically sustainable forests, and housing.”

Stevens listed four ways that NMTCs can be used for housing. The first is for a mixed-use building, although a minimum of 20 percent of the revenue in such a project must come from commercial uses. The credits can also be used to finance a developer’s business if it’s located in a qualifying area, or to develop for-sale housing. Finally, NMTCs can be combined with other financing, such as historic tax credits, Community Development Block Grants, or other soft financing.