New Markets Tax Credit Update -Renewal of Popular Program Pending in Congress

The New Markets Tax Credit (NMTC) is a popular program, with a proven record of job creation and economic development in low-income urban neighborhoods and rural communities.  The NMTC expired on December 31, 2011, but community development advocates are hopeful that pending bills in the United States Senate and House will extend the NMTC for five more years with an annual allocation of at least $5 billion.

H.R. 2655, co-sponsored by Congressman Neal (D-MA) and Congressman Gerlach (R-PA) and the identical S. 996 co-sponsored by Senator Snowe (R-ME) and Senator Rockefeller (D-WV) are slowly making their way through Congress.  The bills enjoy broad bi-partisan support, and both Senators Kerry and Brown and most members of the Massachusetts Congressional Delegation are co-sponsors.

The most recent congressional hearing on H.R. 2655 was held on June 8, 2012 before the Select Revenue Measures Subcommittee of the House Ways and Means Committee.  Aaron Gornstein, Undersecretary for Housing and Committee Development in Massachusetts (and former Executive Director of CHAPA) gave testimony in support of extension of the NMTC and several other programs.  Undersecretary Gornstein lauded the economic and job creation success of several Massachusetts projects that employed NMTC including the River Valley Market in Northampton, the Holyoke Health Center and High Performance Computing Center in Holyoke and the Colonial Theater Restoration in Pittsfield.  More importantly, Undersecretary Gornstein cited the economic value of the NMTC program.  Since its inception nine years ago, investments in NMTC financial businesses have totaled $45 Billion, of which an estimated $20.9 Million were direct NMTC investments, and the remainder was leveraged from public and private sources.  These NMTC investments created or retained an estimated 300,000 jobs.  In 2010 alone, NMTC financed businesses totaled $9.5 Billion and created almost 70,000 jobs and, taking into account funds leveraged at the project level, produced $8 of project-level investments for each $1 of forgone tax revenue due to the NMTC.  More importantly, Undersecretary Gornstein stressed that “every NMTC Investment has been made in a neighborhood or community historically underserved by private capital,” and that “NTMC investments are creating jobs and supporting development in places where it is most needed.”  Based on the testimony of the hearing, the extension of NMTC enjoys broad bi-partisan support (which it is hoped will not doom it in this current political environment).  Community advocates are hopeful of an extension of the NMTC for at least 2012 if not for the entire 5 year period contemplated by H.R. 2655 and S. 996.

While the NMTC has expired, the CDFI Fund is taking applications for the 2012 allocations of credits, pending congressional approval.  CDE Certification Applications are due this Friday August 3, 2012 while NMTC Program Applications for allocations are due on September 12, 2012.