Capital Impact Partners Awarded $55 Million in New Markets Tax Credits to Attract Private Capital and Advance Social Impact Efforts
This award will spur projects that increase access to social services in disinvested communities.
OCTOBER 28, 2022 (Arlington, VA) – Capital Impact Partners has been awarded a $55 million New Markets Tax Credit (NMTC) allocation from the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund). These tax credits incentivize private sector investors to partner in community financing efforts.
“This award will help advance our mission to increase access to critical social services in disinvested communities, spur economic development and wealth creation, and create jobs,” said Raymond Guthrie, chief investment officer and head of capital deployment for Capital Impact Partners. “We are grateful that the CDFI Fund has again recognized our proven track record of working with communities to uplift their needs and solutions, and working alongside the private investors who help make that possible. It further enhances our ability to provide a continuum of financial, knowledge, and social capital.”
Capital Impact Partners is now an 11-time NMTC recipient – with those awards totaling more than $742 million. To date, the organization has used NMTC allocations to support the financing of more than 78 transactions nationally that have increased access to health care, education, healthy foods, affordable housing, and the ability for seniors to age in their communities with dignity, as well as increasing access to capital for entrepreneurs of color.
Capital Impact plans to focus its use of the award to support projects in California, Texas, Michigan, the Washington, D.C. Metro area, and the New York Tri-State Area.
“The New Markets Tax Credit program has played a significant role in projects that are helping to build more equitable and inclusive communities,” said Mindy Christensen, senior vice president of community development real estate for Capital Impact Partners. “We can bring investors and key partners together on projects that will make a difference now and for generations to come.”
Today’s announcement brings the total amount awarded by the CDFI Fund through the NMTC Program to $71 billion. Historically, NMTC Program awards have generated $8 of private investment for every $1 invested by the federal government. Through the end of fiscal year 2021, NMTC Program award recipients deployed more than $62.9 billion in investments in low-income communities and businesses; with impacts such as the creation or retention of more than 857,000 jobs, and the construction or rehabilitation of nearly 239 million square feet of commercial real estate.
“Twenty years ago, the Treasury Department announced the first New Markets Tax Credit awards, and for many economic development projects across the country since then, the New Markets Tax Credit has been a vitally important piece of the puzzle,” said Treasury Chief Lynn Malerba. “This program has created or retained hundreds of thousands of jobs and spurred economic growth in many low-income communities across our country. It is important that Congress sustain these investments over time by making the New Markets Tax Credit Program permanent.”
Creating High-Impact Projects through NMTCs:
Capital Impact Partners has deployed a variety of NMTC allocations to help launch projects nationwide. Examples of those high-impact projects include:
Coastal Bend Food Bank – Texas
Coastal Bend Food Bank (CBFB) is a nonprofit organization in Texas that solicits and distributes food which might otherwise go to waste or be discarded by manufacturers, wholesalers, and retailers. Since 1982, CBFB has been fighting hunger in the Coastal Bend by providing food and personal care products to various charity and service agencies. It is serving 13.7 million pounds of food annually to more than 50,000 individuals in 11 counties throughout South Texas.
The construction of a new 108,200-square-foot warehouse and distribution center in Corpus Christi will enable CBFB to distribute more than 19 million pounds of food by 2028, a 43 percent increase over 2020.
The project is occurring during a community crisis where explosive growth for the food bank has led to urgent facility needs. As a smaller metro area, philanthropic dollars are limited, so NMTC is a critical means of supporting this expansion.
Capital Impact joined with Raza Development Fund, Texas Mezzanine Fund, and US Bank on this $29.25 million NMTC project.
San Ysidro Health Center – California
San Ysidro Health (SYH), Inc. is the second largest health center network in the San Diego area and provides a range of services including medical, dental, pediatrics, women’s health, urgent care, and behavioral health across its more than 40 locations. SYH primarily serves racial and/or ethnic groups (92% of FY20 total patients), patients living with low incomes (95% of 2020 patients at or below 200% FPL), and uninsured patients (20% of 2020 patients). In 2020, SYH had 96,000 unique patients and almost half a million visits.
The ground-up construction of a 44,000-square-foot health clinic and PACE (Program of All-Inclusive Care for the Elderly) center in National City, California, is part of a larger master plan that also includes affordable housing. The new National City clinic will add up to 78,338 visits per year; additionally, the new PACE center will be able to serve 600 older adults.
Capital Impact Partners joined with National Cooperative Bank, Center Capital Fund (Capital Fund, a part of Capital Link), US Bank, Corporation for Supportive Housing, and Border Communities Capital on this $58 million NMTC project.
HOPE Clinic – Texas
HOPE Clinic is a full-time Federally Qualified Health Center (FQHC) in Houston, Texas, serving more than 20,000 unique patients through more than 100,000 patient visits per year. HOPE Clinic provides health care services to all people, regardless of the patient’s ability to pay. In particular, HOPE Clinic serves patients who are uninsured, underinsured, those with limited English proficiency, and patients living with low incomes.
The construction of a new 70,000-square-foot clinic on a vacant lot on the far west side of Houston will include 42 medical exam rooms, six dental operatories, and support expanded services such as substance abuse care, radiology, pharmacy, nutrition and behavioral health.
HOPE Clinic expects to reach nearly 50,000 patients, with approximately 190,000 patient visits annually once the campus is fully operational. In addition, the project expects to create 101 permanent full-time jobs.
Capital Impact Partners joined with Chase Bank, PCDC, and Austin-based CDFI PeopleFund on this $33.4 million NMTC project.
The SEED School of LA County
The SEED School of Los Angeles County is a college-prep boarding school that provides students with a pathway to college and career readiness by engaging in computer sciences, engineering, and studies of systems and societies through transportation infrastructure.
The construction of a 146,931-square-foot charter boarding high school in Los Angeles will give access to 400 students in grades 9-12 to an educational model that includes a rigorous college preparatory program and supportive services within a 24-hour boarding environment. SEED LA will draw students from the county child welfare system, probation facilities, and the surrounding communities from throughout L.A. County.
Capital Impact Partners joined with Low Income Investment Fund, Local Initiatives Support Corporation, Nonprofit Finance Fund, Chase Bank, Los Angeles Development Fund, and Civic Builders on this $97 million NMTC project.
How Do New Markets Tax Credits Work?
Managed by the CDFI Fund, NMTC allocations make their way into the community through the following process:
- A community development entity (CDE) submits an application to the CDFI Fund requesting the authority to allocate a specific dollar amount of tax credits.
- If its application is approved, the CDE is awarded the authority to allocate tax credits to an investor.
- The investor chosen by the CDE receives a tax credit totaling 39 percent of the cost of the investment. The investor can claim that tax credit over a period of seven years.
- In exchange for those tax credits, the investor makes a qualified equity investment (QEI) in the CDE.
- The CDE must use the QEIs it receives from the investor to finance businesses or real estate projects in communities living with low incomes, where the poverty rate is 20 percent or higher or the median income is 80 percent or lower than the Area Median Income. The CDE also has the option of investing in other CDEs making loans in areas with residents earning low incomes.
About Capital Impact Partners:
Capital Impact Partners is transforming how capital and investments flow into communities to provide people access to the capital and opportunities they deserve. We work to champion key issues of equity and social and economic justice by deploying mission-driven financing, capacity-building programs, and impact investing opportunities.
Capital Impact is one of the Momentus Capital branded family of companies, including CDC Small Business Finance and Ventures Lending Technologies. Collectively, we offer a continuum of financial, knowledge, and social capital to help local leaders build inclusive and equitable communities and create generational wealth. This includes a comprehensive package of loan products, impact investment opportunities, training and business advising programs, and technology services that advance locally-led solutions.
A nonprofit Community Development Financial Institution, Capital Impact has disbursed more than $2.5 billion since 1982 to create access to critical social services, grow entrepreneurs, and create quality jobs. Capital Impact’s leadership in delivering financial and social impact has resulted in the organization being rated by S&P Global and recognized by Aeris for its performance.
Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local teams in Austin, TX, Detroit, MI, New York, NY, and Oakland, CA.
Learn more at www.capitalimpact.org and www.momentuscap.org.