U.S. Treasury Department's CDFI Fund Announces Fiscal Year 2023 NMTC Awards $5 Billion investment in economically distressed rural, urban, and minority communities
Washington, DC
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September 24, 2024 02:19 PM Eastern Daylight Time
The U.S. Department of the Treasury's CDFI Fund announced the Calendar Year 2023 New Markets Tax Credit (NMTC) allocation awards last week. The CDFI Fund awarded $5 billion to 104 Community Development Entities (CDEs) headquartered in 35 states, Puerto Rico and the District of Columbia.
"For more than two decades, the federal New Markets Tax Credit has been a unique and flexible community development tool, successfully attracting investment capital and boosting economic activity in low-income areas," said Bob Rapoza, spokesman for the NMTC Coalition. "In fact, the NMTC has leveraged an unprecedented level of investment to low-income communities—generating more than $135 billion in total capital investment through public-private partnerships that created more than 1.2 million jobs."
The CDFI Fund estimates that the $1.2 billion in NMTC allocations (more than 20 percent) will be deployed to rural America, and at least 85 percent of the $5 billion total will go to severely distressed communities.
The CDFI Fund indicated 196 CDEs applied for allocations for a total demand of $14.7 billion in tax credits. However, with 104 successful applications (53 percent) receiving $5 billion, the availability of credits continues to meet only a fraction of the true demand in communities across America.
Established in 2000 in the Community Renewal Tax Relief Act (P.L.106-554), the New Markets Tax Credit is a bipartisan effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities. The NMTC provides a shallow federal tax credit of 39 percent, taken over seven years, for investments in census tracts where the individual poverty rate is at least 20 percent or where the median family income does not exceed 80 percent of the area median.
Since its inception, the NMTC program has financed more than 8,500 projects, including nearly 3,000 community services and facilities, such as hospitals, schools, daycare centers, and non-profit service providers – all in areas that lacked access to quality facilities before the NMTC investments.
At the end of 2020, Congress extended the Credit through 2025 at $5 billion in annual credit authority, the largest ever NMTC extension. Without congressional intervention, the program may expire, once again, in 2025.
“During this Congress, leaders in both the U.S. Senate and House introduced the New Markets Tax Credit Extension Act, H.R. 2539 and S. 234, bipartisan legislation to make the NMTC a permanent part of the Internal Revenue Code,” added Rapoza. “Establishing permanence will provide certainty in delivering resources to low-income and marginalized communities, creating jobs, increasing economic opportunity and improving lives at a time when underserved communities face significant challenges. It’s time for the NMTC program, with its proven track record and its bipartisan, bicameral support, to become permanent.”
For examples of how the NMTC is making an impact in each state, see the NMTC Coalition's Project Profile Database. The Coalition also released the 20th anniversary edition of its NMTC Progress Report on June 5th, which documents the NMTC impact in Calendar Year 2023.
The New Markets Tax Credit (NMTC) was enacted in 2000 to stimulate private investment and economic growth in low-income urban neighborhoods and rural communities that lack access to the patient capital needed to support and grow businesses, create jobs, and sustain healthy local economies. Since its inception, the NMTC has generated more than one million jobs. Today, due to the NMTC, more than $135 billion is hard at work in underserved communities in all 50 states, the District of Columbia, and Puerto Rico. For more information, visit www.NMTCCoalition.org.
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