This week, the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) announced $3.5 billion in New Markets Tax Credit (NMTC) awards nationwide. 85 organizations were awarded with tax credit allocation authority under the tenth award round of the NMTC Program.
As described by the CDFI Fund, the NMTC Program permits taxpayers to receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as Community Development Entities (CDEs). These CDEs offer the credits to taxable investors in exchange for stock or a capital interest in the CDE. Because the service areas of many federally qualified health centers (“FQHCs” or “health centers”) overlap these specific census tracts, health centers can often qualify to utilize NMTC investments as part of their capital financing. NMTC transactions typically provide below-market, interest-only loans during the seven year tax credit period; most transactions are also structured so that all or a portion of the original investment amount can become equity to the health center at the end of year seven—in effect, the NMTC portion of the investment does not need to be repaid.
New Markets Tax Credit investments are place-based and must be located in eligible census tracts. To find out if a site you have in mind is eligible for this program and to connect with a CDE interested in investing in your area, contact Mark Lurtz at firstname.lastname@example.org.
For more information on how health centers can take advantage of this program and the newly available allocation, read our publication “Spotlight on Capital Resources: New Markets Tax Credits” available on our website http://www.caplink.org/resources.