New Markets Tax Credit

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Enterprise Point of Contact:

Peter Lawrence
Senior Policy Director
Last Updated: December 13, 2011

Issue Background: New Markets Tax Credit

The New Markets Tax Credit (NMTC) program was enacted as part of the Community Renewal Tax Relief Act of 2000 (Public Law No. 106-554) and is administered by the Community Development Financial Institutions Fund (CDFI Fund), a unit of the U.S. Department of the Treasury (Treasury). The NMTC program helps to attract private capital investment to urban, suburban and rural low-income communities throughout the country and targets low-income populations. The NMTC program provides a 39 percent federal tax credit which is claimed over a seven-year period to investors making qualified equity investments (QEI).

The CDFI Fund allocates NMTC authority to Community Development Entities (CDE) via a national competition in which demand far exceeds supply. Since its inception, $26 billion in NMTC authority has been allocated to CDEs, leading to more than $18 billion in private capital raised. That invested capital, targeted for low-income populations, has helped to support more than 15,000 businesses, developed or rehabilitated over 68 million square feet of real estate and created almost 400,000 jobs in low-income communities. According to the Treasury, for every $1 in foregone tax revenue from the NMTC program, approximately $12 of private capital is leveraged for investment in distressed communities. Under the NMTC program, the cost of creating a job in a low-income community is less than $18,000. With this track record, Harvard University recognized the NMTC program as one of the nation's most innovative government programs.

Enterprise is one of the largest NMTC allocatees, having received more than $600 million in allocations since the start of Enterprise’s NMTC program in 2002. Enterprise is committed to focusing on funding green real estate projects.

Current Policy State

Congress passed a two-year extension of the NMTC program, authorized at $3.5 billion for 2010 and 2011, as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312) on December 17, 2010.

Legislative Priorities

Enterprise strongly believes that Congress should make the NMTC a permanent part of the tax code. The program has a proven record of success, as demonstrated by three largely positive reports from the U.S. Government Accountability Office (GAO). By creating a permanent NMTC program, Congress would provide stability in the program, thereby encouraging investors and developers to invest in and maintain their program infrastructure. If the program were made permanent, NMTC equity pricing would increase, providing for greater program efficiency and greater leveraging of government funding. In addition to extending the program or making the program permanent, Congress should allow the NMTC to offset alternative minimum tax (AMT) liability in order to provide parity with other tax credit programs such as the Low-Income Housing Tax Credit and the Historic Rehabilitation Tax Credit.

Publications and Resources

Current NMTC-Related Legislative Proposals (112th Congress)

New Markets Tax Credit Extension Act of 2011 (S. 996 and H.R. 2655)
- Enterprise NMTC Extension Act Bill Summary
An Act to Amend the Internal Revenue Code of 1986 to Extend the New Markets Tax Credit through 2016 (H.R. 3224)
Building American Jobs Act of 2011 (H.R. 992): H.R 992 would allow New Markets Tax Credits to be claimed against the alternative minimum tax, among other tax-related provisions.

Previous NMTC-Related Legislative Proposals (111th Congress)

Enterprise Resources

Policy Points: Affordable Housing Finance Updates
Enterprise Senior Director, Public Policy and Government Affairs, Peter Lawrence is the author of the monthly Policy Points column in the Novogradac Journal of Tax Credits, which covers the latest issues related to the financing of affordable housing. The following articles address the NMTC market:

NMTC: The Quiet Program Financing Great Economic Development Nationwide; April 2011

Positive Impacts of the Low-Income Housing Tax Credit (LIHTC) and New Markets Tax Credit Programs
Enterprise submitted public comments in support of the NMTC and LIHTC programs to the National Commission on Fiscal Responsibility and Reform (NCFRR), both individually and as a part of The Affordable Housing Tax Credit Coalition (AHTCC). The letters were in response to The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation from the President’s Economic Recovery Advisory Board, which outlined options for budget reform that included the elimination or reduction of corporate tax expenditures such as the NMTC program.

October 26,2010: Enterprise comment to the NCFRR in support of the LIHTC and NMTC programs
November 24, 2010: AHTCC letter in support of the LIHTC and NMTC programs

Enterprise Press Releases

Enterprise Receives $62 Million in New Markets Tax Credit Allocation from CDFI Fund (February 24, 2011)

External Resources

GAO NMTC Reports

We are Enterprise. Our family includes Enterprise Community Partners, Inc, a national Section 501(c)(3) charitable organization that provides expertise for affordable housing and sustainable communities. Financing for affordable housing is offered through our tax-exempt subsidiary, Enterprise Community Loan Fund, Inc., and our for-profit subsidiary, Enterprise Community Investment, Inc. Housing development is offered through Enterprise Community Investment's subsidiary, Enterprise Homes, Inc. The content on this website reflects information about all of these entities.