The Delta Grassroots Caucus (DGC) is a broad coalition of grassroots leaders in the eight-state Delta region. DGC is also a founding partner of the Economic Equality Caucus,
which advocates for economic equality across the USA.

New Markets Tax Credit Legislation--a Constructive Step for the Economy and Jobs

Posted on November 04, 2010 at 01:24 PM

The election results emphasized that job creation and economic recovery are the top issues for most Americans now. The New Markets Tax Credit (NMTC) is one innovation that has led to constructive economic development activities in the Delta, although it needs to be utilized much more. Congress returns to Washington on November 15th for a lame duck session, and Congress needs to act on tax extender legislation before adjourning for the year.

The NMTC has received bipartisan support and we would encourage our partners across the region to read the facts below and share this information with your Members of Congress as they prepare for the upcoming session.

This is the first of two messages about the NMTC. This message focuses on the legislation that ought to be completed in the session of Congress starting Nov. 15, and then in the next section we plan to include some information from Alan Branson of Enterprise Corporation of the Delta/HOPE Community Credit Union, which engages in productive work with the NMTC as well as many other constructive development activities in the Delta region.

Much of the information below was provided by the NMTC Coalition, a group of economic development organizations and individuals across the country who support the NMTC. Much of this information was provided by Clifton Avant of Entergy, a long-time Delta regional advocate and supporter of the NMTC.

The message is clear: Congress should pass a NMTC extension for 2010, along with Alternative Minimum Tax relief for NMTC investors, in whatever legislation Congress will consider before the end of the session.


The NMTC was designed to stimulate private investment and economic growth in low-income urban neighborhoods and rural communities by offering a seven-year, 39 percent federal tax credit for Qualified Equity Investments (QEIs) made through investment vehicles known as Community Development Entities (CDEs). CDEs use capital derived from the tax credits to make loans to or investments in businesses and projects in low-income areas.

The NMTC was enacted in December 2000 as part of the Community Renewal Tax Relief Act. The original authorizing legislation provided $15 billion in NMTC authority between 2000 and 2007. In December 2005 Congress provided an additional $1 billion in Credits targeted to communities in federally-designated “Gulf Opportunity Zones” devastated by Hurricane Katrina. In December 2006 Congress passed the Tax Relief and Health Care Act which extended the Credit through 2008 with an additional $3.5 billion in Credit authority. In July 2008 the Housing and Economic Recovery Act extended NMTC through 2009. The pending legislation needs to be passed now.


Authority for New Markets expired on December 31, 2009 and until Congress passes legislation to extend the NMTC with additional credit authority the Community Development Financial Institution Fund is unable to make NMTC allocation awards for 2010.

The legislation pending before Congress extends NMTC through 2010 at $5 billion. The House passed their version of tax extenders, H.R. 4213, the Tax Extenders Act of 2009 on December 9, 2009. Alternative Minimum Tax relief for New Markets investor is included in HR 4849, the Small Business and Infrastructure Jobs Act of 2010, which was passed by the House on March 24, 2010.

The Senate has not yet acted on tax extender legislation. S3793, the Job Creation and Tax Cuts Act, sponsored by Finance Committee Chairman Baucus, contains identical provisions on NMTC as the House-passed bills – $5 billion in additional Credit authority for 2010, and an exemption from the Alternative Minimum Tax (AMT) for investment in NMTC from March 15, 2010 through January 1, 2012.

Many political leaders of both parties in Congress and the Obama administration talk a great deal about job creation and economic development, but passage of the NMTC legislation would be productive action rather than rhetoric. The NMTC has bipartisan support, so the parties need to work together and pass this legislation. Please provide this information to your Members of Congress and remind them that we need action and not talk.


The NMTC has a proven track record. To date, the NMTC has raised more than $14 billion in QEIs for investment in low-income communities and nearly 300 CDEs are using the Credit to support a wide variety of community and economic development initiatives. Examples of these activities include investment for the establishment of a new aerospace facility in rural Oklahoma, and financing a solar manufacturing facility that will create 1,500 new ‘green’ jobs in a low income community outside of Albuquerque, New Mexico.

According to the CDFI Fund, through 2007 NMTC investments have helped to support the development or rehabilitation of over 68 million square feet of real estate in low-income communities, creating 210,000 constructions jobs; and helped to create or maintain over 45,000 full time equivalent jobs at businesses operating in low-income communities across America

Action Needed The Coalition is asking its members to contact their Senators and Representatives; particularly those who serve on the House Ways & Means Committee or Senate Finance Committee or are part of the Congressional leadership team. The message is simple: we want Congress to pass a NMTC extension for 2010, along with AMT relief for NMTC investors, in whatever legislation Congress will consider before the end of the session.

Please contact Congressional offices in the States and Districts where you are headquartered and where you have made NMTC investments. Describe your NMTC project in terms of the positive impact it has had on the community. If one of your NMTC investments helped finance a business please ask that business representative to also make a call to their Member of Congress to tell the story of the impact of the Credit. Please make your calls as soon as possible.

Key Points

· Demand for Credits is strong. Some 250 NMTC applications, totaling over $23 billion in potential new investments, were received by Treasury in June and those applications are now pending, based on extension of the program. If Congress acts the Treasury Department will provide allocations before the end of the calendar year.

· The NMTC provides a substantial return for modest government investment. The cost to the federal government of $5 billion in New Markets Tax Credits is $1.347 over 10 years.

· To date, the NMTC has raised more than $18 billion in investments in low income communities. Research indicates that NMTC financing is usually paired with other sources of capital on a dollar for dollar basis – meaning some $36 billion in capital has been invested in low income communities to finance businesses, community facilities and mixed use projects.

· According to the Treasury Department, every $1 of foregone tax revenues under the NMTC leverages about $12 of private investment in distressed communities on a cost basis. NMTC dollars are critical in spurring private sector investment in communities facing economic challenges.

· NMTC investments range from an investment by a faith-based CDE in a new childcare facility on the west side of Chicago, to the creation of the first new supermarket and shopping center in Southeast Washington, DC in many years, to the establishment of a new aerospace facility in rural Oklahoma, to financing a solar manufacturing facility that created 1,500 new ‘green’ jobs in a low income community outside of Albuquerque, New Mexico. We have had some good projects in the Delta but need many more.

· The most economically distressed communities in the country continue to benefit from the NMTC. According to the CDFI Fund, 95% of the 2009 recipients of allocations indicated that at least 90 percent of their activities will be provided in areas of higher economic distress including high rates of poverty and unemployment.

· For more information please visit the New Markets Tax Credit Coalition website at

The NMTC is beneficial, although there are some ways it could be improved even further, and the next message will address those issues.

Thanks-Lee Powell, MDGC (202) 360-6347