Make New Markets Tax Credit a Permanent Part of the Federal Tax Code

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Jul 11, 2024, 18:53 ET

FOREST CITY, Iowa, July 11, 2024 /PRNewswire/ -- The NMTC Program has been vital to the nation's economy and low-income communities since established by Congress in December of 2000. NMTCs have spurred $8 of private investment for every $1 of Federal funding, revitalizing underserved rural and urban communities nationwide.

Through 2023, $76 billion in tax credit authority has been awarded by the CDFI Fund; more than $72 billion helped stimulate 8,000+ projects, creating over 1.2 million jobs in communities having a history of disinvestment.

Bipartisan Support for Over 20 Years
As congressional members come and go, RDP joins the many communities and businesses working to educate legislators on the progress and vitality of this valued program. The Program has had great bipartisan support since inception, recognized as a pivotal force in helping communities not only recover but grow stronger through job creation and business/community development. As communities grow, they become more attractive to investors catalyzing a ripple effect that spurs further investments and revitalization.

The NMTC program was initially authorized by Congress for seven years as part of the Community Renewal Tax Relief Act of 2000. Since then, Congress has extended the NMTC eight times, most recently through the Omnibus and COVID Relief and Response Act of 2020 at $5 billion, the largest extension in the history of the Credit; scheduled to expire December 31, 2025. Proposed bipartisan legislation (S.234 & H.R.2539) would extend the program indefinitely and expand both allocation level and investor base.

How Does the NMTC Program Work?
The NMTC Program permits individual and corporate taxpayers to receive a non-refundable tax credit against their federal income tax in exchange for making equity investments in financial intermediaries known as Community Development Entities (CDEs). A CDE is a domestic corporation or partnership that provides loans, investments, or financial counseling in low-income urban and rural communities. CDEs apply to compete annually for NMTC allocation authority from the CDFI Fund. If received, NMTCs are carefully invested toward select, qualified projects expected to have maximum economic and catalytic impact in low-income communities. Projects must meet the specific criteria of Severely Distressed, Targeted Populations, or Qualified Non-Metro Counties. Since inception of the NMTC Program, the CDFI has completed 19 allocation rounds and issued 1,563 awards totaling $76 billion in tax allocation authority.

NMTCs often fill the financing gap when traditional financing falls short or is unavailable, such as in smaller rural communities located outside the preferred region of a traditional lender, or to spur jobs and economic development in communities desperately in need of economic stability. NMTC investments offer more favorable financing terms and conditions than are available through conventional financing to encourage investments within low-income qualified regions. The tax credit provided to the investor typically totals 39% of the total investment cost and is claimed over a period of seven years.

Projects Financed with NMTCs
The flexibility of NMTCs support a wide range of development, both for-profit and non-profit businesses in manufacturing, food, retail, housing, health, technology, energy, education, and childcare… nearly everything that spurs economic development can be financed (examples), with the exception of specified businesses relative to massage/tanning, gambling, collectibles, liquor, and such.

Rural Development Partners
Rural Development Partners is a CDE with a national service area. From 2004 through 2023, RDP has won twelve NMTC awards from the U.S. Treasury totaling $751.7 million, helping 50 businesses and nonprofits expand to provide quality jobs, economic impacts, and healthy food access in underserved communities. To learn more about RDP visit their Website, Facebook, LinkedIn.

Contact: [email protected]

SOURCE Rural Development Partners