By Stephanie Sung
The future of the New Market Tax Credit (NMTC), a federal subsidy for businesses and development agencies to encourage investment in underserved communities, is now unclear as the program expired at the end of 2013. NMTC officially ended at the close of 2011 but was quickly renewed. There’s no sign of extension this time around, though senators Jay Rockefeller (D-West Virginia) and Roy Blunt (R-Missouri) introduced legislation to make the program permanent in June.
Next City’s Bill Bradley has been covering the successes of NMTCs and recently wrote on what one distressed community in Chicago now faces with its recent expiry:
The loss of NMTCs won’t entirely scare off investors, but it could certainly give them pause. Southside Community Optimal Redevelopment Enterprise (SCORE), an organization on Chicago’s South Side, was awarded $20 million in credits in 2012. Joe Bakhos, SCORE’s community outreach director, expressed worry for how developers and investors will finance projects in low-income neighborhoods once the NMTC program expires.
“It’s usually the piece that comes in and fills in the financing gap,” he said. “It would definitely be a concern if it was eliminated and nothing else were to take its place.”
The importance of access to capital, even in cities where there is clearly social need and market opportunity present, was outlined by national policy organization and Legacy Cities blog supporter the American Assembly. The Assembly published a report in 1997 that represented an important step in building support for what would become the New Market Tax Credit among business, community and political leadership.
The report, titled “Community Capitalism: Rediscovering the Markets of America’s Urban Neighborhoods” is available to download here.