Community development impact remains clear with NMTC post-tax reform

For effective, bipartisan programs like the New Markets Tax Credit, last year’s tax reform debate created a great deal of uncertainty. The credit’s existence hung in the balance as the House and Senate each championed their own versions of the tax bill. In the end, congressional leaders recognized the need for the NMTC.

Despite the uncertainty, there remains record demand for the credits over the course of 2017, according to the 2018 NMTC Progress Report released on June 6, 2018. The report found that program participants have met or exceeded prior year’s efforts for poverty targeting, rural investment and job creation, deploying about $4.8 billion in NMTC allocation and creating more than 60,000 jobs in 271 urban and rural communities. All told, the report analyzed 81 percent of the NMTC activity in 2017, or about $3.9 billion out of $4.8 billion. Respondents reported projects in 45 states plus the District of Columbia, ranging from a public library to a sprawling, $200 million multi-use campus for entrepreneurship.

{mosads}Eighty-one percent of projects were located in census tracts that experienced significant declines between 2010 and 2015 despite the overall improvement of the economy. Eighty-three percent of projects were located in severely distressed communities. Furthermore, 48.6 percent of the projects financed were in zip codes that had not previously received NMTC investments.

The report highlights several projects financed by the NMTC in economically distressed rural and urban communities. From helping Benson Woodworking and Unity Homes expand its manufacturing business in Keene, N.H., to Jobs Café at Findlay Market in Cincinnati, Ohio, which provides retail and pop-up spaces for small entrepreneurs, mixed income housing and job training and placement for low-income individuals. The report also details a wood pellet manufacturer in the Arkansas Delta, and several health care centers, schools and other community facilities filling in gaps in the market and meeting the needs of their communities.

NMTC investments overall have generated an unparalleled $156 billion in economic activity in low-income rural and urban communities from 2003 to 2015. No other federal tax credit can make that claim. Additionally, the NMTC more than covers the cost of the credit to the federal government, and it has contributed substantially to boosting tax revenue for state and local governments. NMTC investments generated $6.7 billion in state and local tax revenue from 2003 to 2015.

It’s no wonder the program has been championed by Sens. Roy Blunt (R-Mo.), Ben Cardin (D-Md.), Rob Portman (R-Ohio) and Mike Crapo (R-Idaho), and Reps. Tom Reed (R-N.Y.), Richard Neal (D-Mass.) and Danny Davis (D-Ill.). Despite the NMTC being extended through 2019 in the tax reform law, our mission hasn’t changed.

Together, our goal is still permanency for the New Markets Tax Credit. Funding for community development, especially in rural and urban distressed communities remains competitive—each year, requests for funding surpass allocations by at least a multiple of ten. Despite the legislative uncertainty in 2017, the community development impact of the NMTC remains clear, year after year.

Kermit Billups is president of the NMTC Coalition and executive vice president and co-founder of Greenline Ventures.