Seventy-three Community Development Entities (CDEs) have been awarded $3.5 billion in New Markets Tax Credits (NMTCs).

The recipients were selected from a pool of 230 applicants that requested a total of $16.2 billion in tax credit allocation authority in the 2017 round. The selected CDEs are headquartered in 29 different states, the District of Columbia, and Guam.

New Markets Tax Credits (NMTC) recently helped G.S. Precision, Inc. (GSP), a manufacturer of high-precision components primarily for the aerospace and defense industries, grow in Battleboro, Vt. When it became known that GSP was considering a move to expand in another state, Brattleboro Development Credit Corp. and state agencies assembled a package of incentives, including a $5.3 million NMTC investment by the Massachusetts Housing Investment Corp. and an $11.7 million NMTC investment by Vermont Rural Ventures, to enable the company to expand two industrial buildings and purchase new equipment. GSP jobs were retained, and the company plans to add at least 100 new jobs over the next five years.
Courtesy of Massachusetts Housing Investment Corp. New Markets Tax Credits (NMTC) recently helped G.S. Precision, Inc. (GSP), a manufacturer of high-precision components primarily for the aerospace and defense industries, grow in Battleboro, Vt. When it became known that GSP was considering a move to expand in another state, Brattleboro Development Credit Corp. and state agencies assembled a package of incentives, including a $5.3 million NMTC investment by the Massachusetts Housing Investment Corp. and an $11.7 million NMTC investment by Vermont Rural Ventures, to enable the company to expand two industrial buildings and purchase new equipment. GSP jobs were retained, and the company plans to add at least 100 new jobs over the next five years.

About $2.4 billion, or 70%, of the investment proceeds will likely be used to finance or support loans to or investments in operating businesses in low-income communities, according to the Treasury Department’s Community Development Financial Institutions (CDFI) Fund, which administers the program.

About $1.1 billion, or 30%, will likely be used to finance and support real estate projects in low-income communities.

“With this opportunity, we can leverage even more resources to drive projects leading to new jobs and economic development in some of the most economically distressed neighborhoods in our country,” says Deborah De Santis, president and CEO of CSH, which received $50 million in NMTCs. “Not only will we be able to spur economic revival in places where it’s needed most, this new NMTC allocation will help fulfill our goals of expanding housing and health-care services to hundreds who are struggling to improve their lives.”

CSH, which provides financial products to supportive housing developers as well as technical assistance and training to nonprofits, plans to use its new allocation for mixed-use projects in highly distressed low-income communities.

Several other organizations familiar to the affordable housing industry or their affiliates also received an allocation, including Cinnaire, The Community Builders, Enterprise Community Investment, Housing Partnership Network, Low Income Investment Fund (LIIF), Massachusetts Housing Investment Corp. (MHIC), and the Rose Urban Green Fund. Full list of recipients.

“The NMTC program has proven to be a very effective way of channeling private capital into distressed areas throughout New England and across the country,” says Joe Flatley, president of MHIC, which received a $65 million award. “The success of this program is a testimony to the power of public-private partnerships. We are pleased to have received another allocation award today and are proud to be among other entities which also received awards.”

LIIF received $60 million in the latest round and has been awarded $518 million in NMTCs since its first allocation in 2007 to invest in high-impact projects.

“From health clinics to schools to child-care facilities, NMTCs have allowed LIIF to invest in integrated projects that benefit whole communities,” says Kimberly Latimer-Nelligan, COO and executive vice president, community investment programs, at LIIF. “As a result of LIIF’s previous NMTC investments, more than 12,800 jobs have been created or preserved and more than $1.1 billion has been generated in investments for distressed communities.”

Through its previous NMTC allocations, LIIF provided $7 million to the Lafayette Family YMCA in Lafayette, Ind. The YMCA has been serving Lafayette's youth and adults for more than a century, and its expansion will include new child-care and education programs and an on-site health clinic expected to serve 10,000 patients annually.

Established by Congress in December 2000, the NMTC program permits individual and corporate taxpayers to receive a nonrefundable tax credit against federal income taxes for making equity investments in CDEs. CDEs that receive the tax credit allocation authority under the program are domestic corporations or partnerships that provide loans, investments, or financial counseling in low-income urban and rural communities. The tax credit provided to the investor totals 39%of the cost of the investment and is claimed over a seven-year period. The CDEs in turn use the capital raised to make investments in low-income communities.

The 2018 and 2019 allocation rounds at $3.5 billion each were retained in the Tax Cuts and Jobs Act.