In a bid to spark development in low-income and under-served communities, the U.S. Department of the Treasury announced on Wednesday that it will award $3.5 billion in tax credits to several organizations. The New Markets Tax Credit will be distributed among 85 organizations that will channel the credits through 28 states and Washington, D.C. The Treasury Department’s Community Development Financial Institutions Fund (CDFI) hopes this credit will assist in President Barack Obama’s commitment to spur economic growth across the United States.
From the press release:
The New Markets Tax Credit addresses one of the most significant obstacles to economic development that low-income communities face: a lack of access to patient, private investment capital,” said Treasury Assistant Secretary for Financial Institutions Cyrus Amir-Mokri.
The $31 billion worth of tax credits awarded in past years have gone toward preserving hundreds of thousands of jobs and bringing community facilities and new businesses in to neighborhoods that desperately needed them. I expect today’s awardees will continue that trend.
In fact, over 70 percent of New Markets Tax Credit investments have been made in communities that meet the highest distress criteria, above even the program’s requirements, said CDFI Fund Director Donna J. Gambrell. That result effectively demonstrates how essential the New Markets Tax Credit Program is to spurring economic development in underserved areas.”
The New Markets Tax Credit was extended as part of the latest “fiscal cliff” deal for the rest of 2013. The credit was established in 2000, and it is provided to individual and corporate taxpayers who invest in what’s called “Community Development Entities.”