37% of this year’s New Market Tax Credit recipients were CDFIs
By Frances McMorris
More than 200 applicants bid for the latest round of New Market Tax Credits, a program from the U.S. Department of the Treasury’s CDFI Fund aimed at stimulating investment in low-income communities across the United States. Out of the 100 award recipients announced in early September, 37 were CDFIs or subsidiaries of certified CDFIs, receiving about $1.8 billion of the total $5 billion allocated.
While Congress recently approved a five-year, $25 billion reauthorization of the federal program, Janet L. Yellen, secretary of the U.S. Treasury, in a statement announcing the allocations, called on Congress to “sustain these investments over time by making the NTC program permanent.” The NMTC program is now set to expire at the end of 2025.
CDFI Fund Director Jodie Harris added in a statement that the program “has facilitated essential investments into low-income communities and businesses, helping them to rebuild after years of disinvestment and enabling them to recover from external forces, such as the current pandemic.”
The NMTC program offers private investors incentives, through the use of tax credits, to encourage economic growth in underserved, low-income communities.
This year’s recipients of the NMTC allocations are located in 34 states and Washington, D.C. While there tends to be an urban focus with NMTCs, this year’s awards are notable in that 20 percent — and just over $1 billion — of the investments went to rural communities.
In Ohio, for instance, a total of $215 million in NMTC allocations went to four recipients across the state:
· Cleveland New Markets Investment Fund II, LLC: $50 million
· Dayton Region New Market Fund, LLC: $50 million
· Development Fund of the Western Reserve, Inc.: $50 million
· Ohio Community Development Finance Fund: $65 million.
Separately, Reinvestment Fund, a national CDFI based in Philadelphia, received a $60 million NMTC award. The fund plans to use its allocation to support investments in projects that help communities of color that have been disproportionately affected by the COVID-19 pandemic and the ensuing economic hardships that resulted from the health crisis.
“The pandemic has only underscored the vulnerability of Black and brown communities in the face of persistent systemic challenges,” Don Hinkle-Brown, president and CEO of Reinvestment Fund, said in a statement. Its last allocation supported a range of projects, including the Norton Healthcare Sports & Learning Center in Louisville, Kentucky, which created more than 300 jobs. Reinvestment Fund has received $594 million in NMTC allocations in previous rounds.
Nine-time NMTC recipient Boston-based Blue Hub Capital, a national CDFI, was awarded $20 million in credits this year.
“This new allocation will allow us to work with key investors and local partners to expand our investing in communities that are ripe for economic development, expanded social services and job creation,” Elyse Cherry, CEO of BlueHub Capital, said in a statement. BlueHub’s previous projects range from sustainable forestry projects in rural communities in West Virginia, Florida, and the Northwest to health care providers and community services in the Northeast.
Some $55.9 billion in NMTC monies have been invested in low-income communities since the program’s inception through Fiscal Year 2020. This year, 14 allocation recipients are minority or Native-owned entities, receiving allocations totaling $670 million.
This article is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is developed in partnership with Next City.