New Markets Tax Credit Program
Created by the U.S. Federal Government in 2000 as part of the Community Renewal Tax Relief Act, the New Markets Tax Credit (NMTC) program encourages investment in low-income communities. Through the NMTC Program, real estate projects or businesses in a low-income community are able to generate capital by providing investors – typically a bank or financial institution – a tax credit as an additional incentive for capital investment.
The authority to determine how tax credits are allocated is granted to financial intermediaries called Community Development Entities (CDEs). CDEs have been certified by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury after completing a rigorous application process and demonstrating their commitment and history of investing capital into low-income communities. CSCDC is a certified CDE.
Certified CDEs compete annually to receive awards under the NMTC Program and the CDFI Fund typically designates 70-120 CDEs to receive a NMTC allocation each year. Once awarded, a CDE may sub-allocate NMTC allocation authority to qualified projects or businesses that are aligned with the objectives of the NMTC program.
In the last 18 years, the CDFI Fund has awarded $61 billion in tax credit authority to certified CDEs. CSCDC was awarded a $35 million NMTC allocation in 2013, a $38 million NMTC allocation in 2014 and a $70 million NMTC allocation in 2016.