New Markets: A Tax Credit That Works for America’s Communities | Commentary
As Congress gears up for its five-week summer recess, we suggest our colleagues visit a business or community development project in their area that was financed by the New Markets Tax Credit. You will be impressed.
The NMTC is effectively spurring private investment in economically distressed communities, expanding businesses, creating jobs and growing local economies. However, the future of the NMTC is in jeopardy without congressional action. This flexible federal tax credit, which expired on Dec. 31, 2013, is often the only tool available to generate investment in community revitalization efforts or finance small business expansion, manufacturing ventures, child care and health care facilities, new grocery stores or supermarkets, among others. By offering investors a modest credit against tax liability for investing in low income communities, the NMTC injects private sector dollars into projects in “new markets,” that require a financial boost. In fact, the NMTC has leveraged over $60 billion in total capital investment in businesses located in communities with exceptionally high rates of poverty and unemployment, resulting in the creation of 550,000 jobs in the decade since its implementation.
We have seen the power of NMTC investments firsthand in our districts. In Ohio’s Montgomery County, Miami Valley Childhood Development Centers faced a financial hurdle with crumbling and outdated infrastructure at its Kings Highway facility. The center needed two boilers replaced to continue providing services year-round. It also needed to update its classrooms to ensure a safe, clean and happy environment for the children enrolled at the facility. Using NMTC financing provided by Finance Fund, a nonprofit Community Development Entity headquartered in the state, MVCDC was able to purchase the previously leased building, replace the boilers, and restructure and update the classrooms. There are now 225 children enrolled at the MVCDC head start location on Kings Highway.
In Philadelphia, which was hit hard by the economic recession, the Philadelphia Industrial Development Corporation — a nonprofit, citywide economic development corporation — is revitalizing communities in the city by providing NMTC financing for projects like the construction of a 36,000 square-foot community health facility, Spectrum Health Services, Inc. The West Philadelphia center features a new dental health program, expanded behavioral health services and a demonstration kitchen to teach healthy eating and cooking. By 2018, the facility expects to increase patients from 11,000 to 28,000 and increase its full-time jobs from 60 to 133.
The tangible success of NMTC projects like these is evident in districts around the country, and was the impetus for our letter to House Ways and Means Committee Chairman Dave Camp, R-Mich., and Ranking Member Sander M. Levin, D-Mich. That letter, which stressed the importance of renewing the New Markets Tax Credit, was signed by 50 Republicans and Democrats in the House. It came on the heels of legislation championed by our colleagues Reps. Jim Gerlach, R-Pa., and Richard E. Neal, D-Mass., that would provide permanent authorization for this community revitalization tool. Both members of the Ways and Means Committee, their bill, H.R. 4365, The New Markets Tax Credit Extension Act of 2014, currently has more than 70 co-sponsors, including several of their committee colleagues.
Extending NMTC is more critical now, than ever, to ensure communities do not lose access to a necessary source of capital. We want to make certain this piece of outstanding congressional business does not fall victim to the end of the year gridlock. Tour a New Markets Tax Credit project in your home state, and see its community impact firsthand.
Rep. Michael R. Turner is a Republican from Ohio; Rep. Chaka Fattah is a Democrat from Pennsylvania.