U.S. Treasury Awards $5 Billion To Subsidize Projects Under The New Markets Tax Credit Program

The New Markets Tax Credit (NMTC) program was enacted in 2000 as part of the Community Renewal Tax Relief Act of that year. Intended to address the lack of investment capital available for business and economic development in low income communities, the NMTC program was the federal government’s largest economic development initiative in 20 years.

 

Administered by the Community Development Financial Institutions (CDFI) Fund in the Department of the Treasury, the NMTC program provides a federal subsidy to benefit many different types of projects in eligible census tracts. Once a year, through a highly competitive process, the credits are awarded to community development financial institutions that are certified by the CDFI Fund as Community Development Entities (CDEs). Once they receive an allocation of NMTCs, the CDEs in effect sell the credits to investors and use the capital generated from the sale to subsidize below market project financing.