The Treasury Department’s Community Development Financial Institutions Fund plans to distribute $3.5 billion in New Markets Tax Credit awards to revitalize low-income communities.
A total of 87 organizations across the country will receive tax credit allocation authority under the calendar year 2013 round of the New Markets Tax Credit Program.
“The New Markets Tax Credit Program creates jobs and critical investments in low-income neighborhoods and rural communities across the nation,” said acting assistant secretary for financial institutions Amias Gerety in a statement. “Often the New Markets Tax Credit is the most critical piece of the puzzle when trying to finance important economic development projects across the country. Its ability to attract private-sector capital into some of the most economically distressed and underserved communities is a hallmark of this important economic development program.”
The New Markets Tax Credit Program was established by Congress in December 2000. The program allows individual and corporate taxpayers to receive a credit against federal income taxes for making equity investments in vehicles known as Community Development Entities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. The Community Development Entities in turn use the capital raised to make investments in low-income communities.
Over $31.1 billion of New Markets Tax Credit transactions have been reported from the program’s inception through the end of fiscal year 2012, and over 74 percent of these were made in severely distressed communities, according to Dennis Nolan, acting director of the Community Development Financial Institutions Fund. “The New Markets Tax Credit Program is clearly targeting economic development in communities that critically need financing to help create new businesses, affordable housing and jobs,” he said in a statement.
Community Development Entities must apply annually to the CDFI Fund to compete for New Markets Tax Credit Program allocation authority. The 87 organizations receiving awards were selected from a pool of 310 applicants that requested over $25.9 billion in allocation authority. They are headquartered in 32 different states and the District of Columbia, and they have identified principal service areas that will cover nearly every state in the country and the District of Columbia.