NEW YORK, Jan. 3, 2013 /PRNewswire-USNewswire/ -- Congress has given low-income neighborhoods the capacity to attract new businesses, create jobs, build more affordable housing and generate economic opportunity for residents with its inclusion of two important community-focused tax credits in its New Year's tax package.
HR 8—passed by both the House and Senate on Tuesday in response to the fiscal cliff—renews the New Markets Tax Credit, which supports business development in high-poverty neighborhoods, through 2013. It also makes a technical change that preserves the value of the Low Income Housing Tax Credit, which connects private capital to the development of rental housing that is affordable to low-income families, seniors and special needs residents.
Together, these two programs represent some $14 billion annually in private capital focused on community recovery, as well as 160,000 jobs each year. What's more, they encourage the kind of ongoing private market engagement in poor neighborhoods that has proven critical to their recovery, according to Michael Rubinger, president and CEO of the Local Initiatives Support Corporation (LISC).
"Long-term investments in low-income neighborhoods would not take place without these two programs. That is absolutely clear," Rubinger said. "Without them, tens of thousands of jobs would not be created. Families would remain trapped in unhealthy, deteriorating housing. Blight would grow. Fledgling local entrepreneurs would languish. Community facilities would not be built. And the private sector would have little reason to focus resources on the kinds of projects that help distressed neighborhoods become good places to live."
The New Markets Tax Credit was enacted in 2000 to encourage investments in businesses, real estate projects and community facilities in some of the nation's most impoverished communities. The program expired at the end of 2011. The tax package extends the program for 2012 and 2013, with $3.5 billion in credit authority to be allocated for each year.
The Housing Credit was created as part of the 1986 Tax Reform Act and provides an incentive for investors to finance affordable rental housing, and to stay involved in the success of those projects for at least 15 years. The credit supports development of more than 100,000 affordable rental units every year—nearly all the affordable housing built nationwide. The fiscal cliff legislation includes a provision that sets a minimum floor on the value of the Housing Credit for credits allocated through 2013. In that, it provides certainty for investors and developers while maximizing the capital available to house vulnerable populations.
"Lawmakers have been under tremendous pressure to make budget decisions that protect essential programs and services, while also restraining spending," Rubinger said. "In the case of these two programs, it is clear that they chose wisely."
LISC combines corporate, government and philanthropic resources to help nonprofit community development corporations revitalize distressed neighborhoods. Since 1980, LISC has raised $12 billion to build or rehab 289,000 affordable homes and develop 46 million square feet of retail, community and educational space nationwide. LISC support has leveraged nearly $40 billion in total development activity. For more information, visit www.lisc.org.
Colleen Mulcahy, LISC Communications
312-342-8244 or email@example.com
Matt Josephs, LISC SVP/Policy
202-739-9264 or firstname.lastname@example.org