Bipartisan Push to Permanently Extend Federal Tax Credit Encouraging Investment in Economically Disadvantaged Communities

WASHINGTON, Oct. 26, 2018 /PRNewswire/ -- House Republicans and Democrats will formally ask Ways and Means Committee Chairman Kevin Brady (R-TX) to take action and permanently extend the New Markets Tax Credit (NMTC) during the lame duck session of Congress, which begins November 13. The NMTC, a federal tax credit program that has created over one million jobs in distressed rural and urban communities, will expire at the end of 2019 if Congress fails to act.  

The bipartisan effort is being led by Reps. Steve Stivers (R-OH) and José Serrano (D-NY). The Congressmen are currently circulating a letter in the House to collect signatures in support of the NMTC. The letter highlights the importance of the Credit, which provides a modest tax incentive to encourage private-sector investment in communities often left out of the economic mainstream.

"The NMTC has a history of strong bipartisan support and an even stronger track record when it comes to achieving results in some of the most economically distressed communities, from urban neighborhoods struggling with disinvestment to rural and farming towns unable to access the affordable, flexible capital required to grow their economies and expand businesses," said Bob Rapoza, New Markets Tax Credit Coalition spokesman. "In fact, the NMTC helped create 60,000 jobs through $5.8 billion in total project investment in 2017 alone."

By law, all NMTC investments must be made in economically distressed communities. However, more than 72 percent of all NMTC investments have been in communities exhibiting severe economic distress, including unemployment rates more than 1.5 times the national average, a poverty rate of 30 percent or more, or a median income at or below 60 percent of the area median.

"The New Markets Tax Credit helps bring badly needed investment into economically distressed urban and rural communities across the country, financing community facilities, manufacturers, and small businesses. It is crucial that these tax credits are permanently extended to provide certainty to our communities, and I want to thank Congressman Serrano for joining me in this effort," said Congressman Steve Stivers.

In Mr. Stivers' district, Global Cooling, a company that develops and manufactures the Stirling Ultracold brand of ultra-low temperature freezers, is a great example of how New Markets financing can help existing businesses grow and create jobs. Located in Athens, Ohio in a Historically Underserved Business Zone, the NMTC helped finance expanded production of its line of freezers which cool at temperatures below -80 degrees Celsius and build its sales team to focus on new growth opportunities in the U.S. and internationally.

Mr. Serrano's Bronx district also has many examples of how communities use the NMTC to expand access to services more prosperous communities take for granted. Bogopa Service Corp. began developing Food Bazaar locations 26 years ago, with a focus on highly distressed communities to alleviate barriers to fresh food and grocery access. The NMTC was used to finance a location of a Food Bazaar in the Bronx, creating over 200 jobs, half of which were set aside for low-income individuals and women, as well as helping neighborhood residents access healthy foods.

Between 2003 and 2015, $42 billion in direct NMTC investments were made in businesses and these NMTC investments leveraged nearly $80 billion in total capital investment to businesses and revitalization projects in communities with high rates of poverty and unemployment.

Rapoza adds, "Unless Congress acts to extend the NMTC, businesses and communities across the country will lose an important source of capital. Now is not the time to cut off this critical source of financing for our communities that are still struggling to jumpstart their local economies and create job opportunities in areas that have seen little growth since the Great Recession."

The NMTC is a critical source of financing for businesses and community facilities, including childcare and healthcare centers, industrial manufacturing businesses, grocery-anchored retail centers, and mixed-use real estate projects. Information on the NMTC impact by state, including project examples, can be found on the NMTC Coalition's website.

Contact: Ayrianne Parks
[email protected]
(202) 393-5225

SOURCE New Markets Tax Credit Coalition