A record $7 billion in New Markets Tax Credit (NMTC) awards will be dispatched to low-income communities across the nation.
The Treasury’s Community Development Financial Institutions Fund (CDFI Fund) announced that 120 organizations will share in the latest NMTC funding round, the largest since the program’s creation in 2001.
The organizations receiving awards were selected from a pool of 238 applicants that requested approximately $17.6 billion in allocation authority.
Approximately $4.8 billion of NMTC investment proceeds will be used to finance and support loans to or investments in operating businesses in low-income communities. About $2 billion will likely be used to finance and support real estate projects in low-income communities.
The program received a big boost last December when Congress authorized NMTCs for an additional five years at $3.5 billion annually. It was the first time that the program, which encourages economic development in low-income and distressed communities by making tax credits available to Community Development Entities (CDEs) for targeted investments in eligible areas, received such a long-term extension. Prior extensions have been for a year or two.
The five-year extension opened the door for officials to combine the 2015 and 2016 rounds, a move that allows the CDFI Fund to announce the allocation of credits in the year for which they are authorized.
A number of groups involved in affordable housing received an allocation. CSH, formerly Corporation for Supportive Housing, received a $65 million award.
“With this opportunity, we can leverage even more resources to drive projects that will lead to new jobs and economic development in some of the most economically distressed communities in our country,” said Deborah De Santis, CSH president and CEO, in a statement “Not only will we be able to spur economic revival in places where it’s needed most, this new NMTC allocation will help us fulfill our goal of expanding housing and health-care services to hundreds who are struggling to improve their lives.”
The Wisconsin Housing and Economic Development Authority (WHEDA) through its affiliate, the Greater Wisconsin Opportunity Fund, received a $75 million allocation.
WHEDA has allocated prior NMTC awards to enhance financing for projects in highly distressed areas throughout Wisconsin that have demonstrable community impact.
The NMTCs are a resource to help fuel job creation and economic development efforts by promoting equity investment in low-income urban and rural communities.
“Tax credit recipients have included manufacturers, small technology firms, central city shopping centers, commercial real estate developments, retail stores, hotels, and health-care facilities,” said Wyman Winston, WHEDA executive director. “Tax credit investments have positive and immediate effects on communities. Wisconsin’s economy will benefit from this exciting news.”
Winston said receiving the tax credits will be extremely helpful to Milwaukee.
“As was the case in previous years when WHEDA attained tax credits, a good portion of the tax credits will once again be used to invest in projects in the Transform Milwaukee area to continue our strong commitment to revitalizing Wisconsin’s first-class city,” Winston said. Transform Milwaukee is a public-private partnership focusing on restoring economic prosperity to five major industrial cores of the city of Milwaukee including Riverworks, the 30th Street Industrial Corridor, Menomonee Valley, Harbor District, and Aerotropolis, including General Mitchell International Airport.
Other organizations or their affiliates receiving a NMTC allocation include CAHEC, Capital One, Chase, Cinnaire, Enterprise, Housing Partnership Network, IFF, Local Initiatives Support Corp., Low Income Investment Fund, Massachusetts Housing Investment Corp., McCormack Baron Salazar, PNC, RBC, Rose Urban Green Fund, SunTrust, Telesis, and Travois. For a full list, visit the award book.
Breaking down this year’s allocatees, officials said 17 are minority-owned or controlled entities. Fourteen allocates met the criteria for “rural CDE” designation. Fifty allocatees, about 42%, will be required to deploy some or all of their investment in nonmetropolitan counties.
The NMTC program permits individual and corporate taxpayers to receive a nonrefundable tax credit against federal income taxes for making equity investments to 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.
Read how NMTCs are helping finance a new health center for low-income and homeless residents in San Francisco.
