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Grainy Surface

STATUTORY
Tax Credits

CREDIT BACKGROUND

Throughout the years, our nation’s underprivileged communities have deteriorated due to a lack of investment, which has resulted in a decrease of property value, unoccupied commercial property, insufficient education and healthcare amenities, and comatose manufacturing buildings. Due to these conditions, many communities have struggled to captivate the necessary capital needed from private investors.

Established in 2000 in the Community Renewal Tax Relief Act (P.L.106-554), the New Markets Tax Credit (NMTC) was a bipartisan effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities. On December 28, 2020, President Trump signed a 5-year extension of the NMTC increasing the program from $3.5 billion a year in tax credit allocation authority to $5 billion a year with annual cost of living increases. The NMTC extends a helping hand to these distressed communities to attract private capital by providing investors with a federal tax credit.

HOW THE
NMTC PROgram Works

Community Development Entities (CDEs) go through a competitive application process to receive tax credit authority from the Community Development Financial Institutions (CDFI) Fund. A CDE is a domestic corporation or partnership that is an intermediary vehicle for the provision of loans, investments, or financial counseling in Low-Income Communities. CDEs use their authority to offer tax credits to investors in exchange for equity in the CDE. Using the revenue from the equity investments, CDEs can generate funds, such as loans and investments, to qualified businesses running in low-income communities with better rates and pliable features. Not only does the CDE benefit, but over the next seven years the investor will collect a tax credit worth 39% of their original CDE equity stake.

Grainy Surface

THE BENEFITS

For

Low income Communities

The NMTC Program supports a variety of businesses, including but not limited to grocery stores, childcare centers, health centers, and manufacturing. Low-income communities benefit from these entities because of the influx of jobs created, as well as access to improved facilities for care and education. Since 2003, the NMTC program has created more than 830,000 jobs. Also, supporting the construction of 94.5 million square feet of office buildings, 67.2 million square feet of retail facilities, and 56.7 million square feet of manufacturing facilities. In the future as these communities continue to expand and develop, investors will become more attracted generating an effect that will stimulate additional investments. Economic Development organizations are able to point businesses wishing to expand in their communities to a potential valuable resource to help fill the company’s financial gap in order to complete their project.​​

For

Businesses

​​

Businesses can benefit because through access to flexible and affordable financing, allowing for projects to be completed that may not have been completed without the benefits of the NMTC financing. NMTC financing terms run for 7 years, have lower interest rates, decreased origination fees, higher loan-to-values, lower debt coverage ratios and have forgivable loan aspects. Lending requirements are also typically less restrictive.

TYPES OF
PROJECTS CDES ARE
LOOKING FOR

Covid has shown us that vulnerabilities in our most severely distressed census tracts are not just job related. Education, healthcare, and IT infrastructure are often sorely lacking in our low-income communities. While CDEs are of course looking for job related projects, that create jobs that pay a living wage that low-income residents with limited education can qualify for, they are also looking for projects that meet the social impact health and education needs of the communities. Below is a sample list of the types of projects CDEs are looking for:

Manufacturing

health care

Federally Qualified

Healthcare Centers

Primary Care Clinics

Hospitals

education

Charter Schools

Community Colleges

Historically Black Colleges and Universities

Workforce Development

Veteran Training

community facilities

Community Centers

Day Cares

Senior Centers

Homeless Shelters

Women Shelters

Domestic Violence Shelters

Food Banks

healthy foods

Grocery Stores

Education

Manufacturing

Distribution

New Market Targeted States & Territories

2021/2022 Allocation

  • Arizona, California, Colorado, Florida, Nevada, North Carolina, Tennessee, Texas, Virginia, and West Virginia

  • American Samoa, Guam, Northern Mariana Islands, Puerto Rico and US Virgin Islands

  • Federal Indian Reservations, Off-Reservation Trust Lands, Hawaiian Homelands, and Alaska Native Village Statistical Areas

2020 Allocation

  • Florida, Georgia, Kansas, Nevada, New Mexico, Tennessee, Texas, Virginia, West Virginia, and Wyoming

  • American Samoa, Guam, Northern Mariana Islands, Puerto Rico and US Virgin Islands

  • Federal Indian Reservations, Off-Reservation Trust Lands, Hawaiian Homelands, and Alaska Native Village Statistical Areas

Interested in finding out if your company may qualify?
Please reach out below:
 

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