CEOs of four leading Community Development Financial Institutions call on Congress to preserve the New Markets Tax Credit
To Members of the Tax Reform Conference Committee:
As leaders of four of the nation’s largest nonprofit financial institutions dedicated to improving economic opportunity in local communities, we write to urge your support for the preservation of the New Markets Tax Credit (NMTC) during upcoming negotiations on tax reform legislation.
Congress passed the NMTC in 2000 as part of a bipartisan effort to stimulate investment and economic growth in low-income cities, towns and rural areas that struggle to attract the capital needed to build new businesses and create jobs. The NMTC offers private investors a tax incentive for investing in businesses or economic development projects located in the nation’s highest-need communities—and, very importantly, it leverages those investment dollars to bring in more capital from other sources.
The tax reform bills passed by the House and Senate present a stark choice. The House bill would terminate the NMTC immediately, putting $14 billion in total project financing at risk—including $2.8 billion for rural areas—and jeopardizing the 170,000 jobs those investments would have generated. The Senate bill, on the other hand, preserves the final two years of NMTC authority.
We urge the conference committee to, at the very least, ensure that NMTC authority extends to 2019—if not extend its authority permanently.
By every objective measure, the NMTC has been a resounding success:
- Between 2003 and 2015, $41 billion in NMTC allocation generated $82 billion in total project investments in more than 5,000 NMTC-qualified businesses—an unprecedented level of investment to America’s low-income communities. Those NMTC investments generated more than one million jobs at a cost to the government of less than $20,000 per job.
- The NMTC provides more than $1 billion annually to community facilities, making it the most important federal tool for the financing of community facilities. Since 2003, it has financed more than 1,600 hospitals, schools, daycare centers, treatment facilities, and other service providers.
- Nearly 1,000 manufacturing and industrial businesses have received more than $12 billion in total project financing through the NMTC program.
- For every dollar invested by the federal government, the NMTC generates more than $8 in private investment.
- Nearly one in four NMTC projects are in rural communities.
NMTC financing has built businesses, transit-oriented developments, community health clinics, charter schools, healthy food retailers, and mixed-use developments. In addition to generating new economic activity in low-income urban and rural communities, the NMTC program generates new tax revenue that helps the programs more than pay for themselves.
For example, the NMTC helped finance the 15,000 square-foot Urban Sprouts Child Development Center in University City outside St. Louis, where half of the children are from low-income households that rely on subsidies to pay their fees.
Near the historic Findlay Market in Cincinnati—a neighborhood with a 71 percent poverty rate and 24 percent unemployment rate—$25 million in NMTC financing the redevelopment of nine buildings to include a job training program, rental housing, and retail space for small business start-ups.
Thanks to $12 million in NMTC financing, Progressive Community Health Centers—a Milwaukee-based federally qualified health center—is in the process of constructing a new 42,000-square-foot facility to replace one of their current clinics that provides vital health care services to the medically underserved population in Milwaukee. The new facility will enable PCHC to grow from serving approximately 8,000 to 17,000 patients annually and expand their range of offered services.
The NMTC is helping local residents in East Aldine, Texas, build the skills and networks they need to launch or grow small businesses through the Economic Development Center near downtown Houston. This incubation center also houses a range of programs for the community, including workforce development, financial services, after-school support and health services. In Haltom City, Texas, the NMTC has allowed Meals on Wheels to open a 60,000-square-foot meal production and distribution facility to expand their services by 50 percent—to 1.5 million meals per year, by 2020
Just last month—because of NMTC financing—the YMCA of Greater Louisville broke ground on a 62,000 square-foot comprehensive community health facility. In the works for over a decade, the new state-of-the-art YMCA will include several health and wellness providers as well as a new bank branch – and serve as a commercial anchor for West Louisville.
NMTC investments were also critical to the development of four affordable grocery stores in lower-income communities in rural Oklahoma, Texas and Virginia, as well as one in urban Florida. And these investments helped open a junior and senior academy (serving grades 6-12) at the Charles R. Drew Charter School, which is now ranked first academically in the Atlanta Public School system. This project is estimated to bring 485 full time jobs to the local community.
The New Markets Tax Credit program is working across America. Community Development Financial Institutions across the country, and thousands of businesses and investors, need this proven tool to keep investment capital flowing into those places that need it most, from small farming towns to distressed urban neighborhoods. We hope that Congress will remember the 52.3 million people who live in communities struggling with high poverty and unemployment and preserve the NMTC.
Thank you for your consideration,
Ellis Carr, Capital Impact Partners
Joe Neri, IFF
Nancy O. Andrews, Low Income Investment Fund
Don Hinkle-Brown, Reinvestment Fund