One hundred community development entities (CDEs) were selected to share in $5 billion in New Markets Tax Credits (NMTCs), announced the Community Development Financial Institutions Fund.
The organizations receiving awards were selected from a pool of 208 applicants that requested an aggregate total of $15.1 billion in tax credit allocation authority. The award recipients are headquartered in 34 different states and the District of Columbia. One-fifth (20%) of the investments will be made in rural communities.
“These investments will create jobs and spur economic growth in urban and rural communities across the country,” said Treasury Secretary Janet L. Yellen. “Many of the communities that will receive these funds have confronted economic challenges over many decades—challenges that have been made more difficult by a lack of investment. It’s critical that Congress sustain these investments over time by making the New Markets Tax Credit program permanent.”
This year’s awardees include Cinnaire, a nonprofit Community Development Financial Institution and low-income housing tax credit syndicator, which received a $60 million allocation.
“The NMTC has proven to be one of the most successful models for a public-private partnership, driving capital to America’s most disinvested neighborhoods,” said Mark McDaniel, president and CEO of Cinnaire, an eight-time NMTC recipient with awards totaling more than $419 million.
“With this year’s award, we are focusing on organizations that support education, including early childhood, school-age children, and adults seeking vocation training opportunities,” he said. “We also plan to support projects that create job opportunities for individuals without a college degree or other barriers to obtaining employment. We look forward to partnering with and providing NMTC allocation to projects that will help all people have access to the tools and opportunities they need to succeed.”
McCormack Baron Salazar’s MBS Urban Initiatives CDE affiliate also received a $60 million allocation.
Since its first award in 2006, the CDE has provided this key gap financing for 55 projects across the United States, including educational facilities, health care, grocery stores and retail, light industrial, mixed-use, and cultural spaces that have created and maintained more than 9,500 jobs, educated over 45,000 students a year, and provided services for over 300,000 low-income individuals, said the firm.
Other organizations receiving an allocation include CAHEC New Markets, The Community Builders, Corporation for Supportive Housing, ESIC New Markets Partners, Gulf Coast Housing Partnership, IFF, Local Initiatives Support Corp., Low Income Investment Fund, and The Rose Urban Green Fund.
The latest awards are made through the 2020 round of the program.Established in 2000, the NMTC permits individual and corporate taxpayers to receive a nonrefundable tax credit against federal income taxes for making equity investments in financial intermediaries known as 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.
Federal officials have completed 17 allocation rounds and have made 1,354 awards totaling $66 billion in tax allocation authority. This includes $3 billion in Recovery Act Awards and $1 billion of special allocation authority used for the recovery and redevelopment of the Gulf Opportunity Zone.
Congress has extended the program through 2025 at $5 billion in annual credit authority, and there is legislation in Congress aimed at expanding the allocation level and investor base of the NMTC as well as making it permanent, said the New Markets Tax Credit Coalition.