More than $31.1 billion in New Markets Tax Credit (NMTC) investments have been made between fiscal 2003 and 2013 to revitalize low-income communities, reports the Community Development Financial Institutions (CDFI) Fund.

The 8,060 NMTC investments (or transactions) made through fiscal 2012 can be broadly categorized into three purposes—real estate development, business operations, and other:

• 4,670 (57.9 percent) of the total number of NMTC investments, in the amount of $20.3 billion (65.3 percent), were in real estate development and leasing activities;

• 3,234 (40.1 percent) of the total number of NMTC investments in the amount of $10.2 billion (32.9 percent) were in operating businesses. A small fraction of investments in operating businesses, totaling $398,684 were in microenterprises; and

• 156 (1.9 percent) of the total number of NMTC investments in the amount of $577.7 million (1.9 percent) were investments in other financing purposes.

Areas of investment

In the NMTC competition, community development entities (CDEs) can score better if they commit to directing a significant portion of their NMTC investments to areas of higher distress.

CDEs can satisfy this commitment by investing in census tracts that meet at least one of the following three “severe distress” criteria: poverty rates of 30 percent or greater; median family income at or below 60 percent of applicable area median income; or unemployment rates at least 1.5 times the national average.

The CDFI Fund reports that 2,799 (72.7 percent) projects, in the amount of $22.9 billion (76.4 percent), were, at least partly, located in census tracts that met one of the three indicators of “severe distress.”  In addition, 926 (24.1 percent) projects, in the amount of $7.7 billion (24.7 percent), were, at least partly, located in census tracts that met all three indicators of “severe distress.”

In the latest allocation round for calendar year 2013, all 87 of the allocatees indicated that they would devote at least 75 percent of their investments to areas of higher distress.

The CDFI Fund report is available here.