New Markets Tax Credits
The New Markets Tax Credits (NMTC) program was created by the U.S Congress in 2000 to attract private investment to revitalize neighborhoods with high rates of poverty and unemployment. To date, over $50 billion has been invested nationwide through the NMTC program to finance commercial, industrial, community facility, and mixed-use real estate projects in qualifying Census tracts.
Invest Atlanta utilizes the NMTC program as a tool to provide low-interest loans to builders and businesses with large redevelopment projects. To be eligible, a project must be located in an area with high poverty and unemployment. Projects with total planned capital costs/business investments of at least $4 million work best for NMTC financing.
Eligible project types include:
- Business and industrial expansions, including capital expansions and working capital, that retain and/or create high-quality jobs
- Community facilities that deliver vital services, such as healthcare, recreation, and job-training
- Retail Centers that provide healthy food options and/or commercial goods to underserved LICs
Please note, Multi-family properties are NOT eligible for NMTC financing; however, mixed-use projects with substantial commercial components may be eligible.
How Does it Work
The NMTC program takes private equity contributed by investors and turns it into gap financing for redevelopment projects. Investors receive a 39% federal income tax credit over 7 years in exchange for their private equity investment. The private equity is combined with a bank loan or a project sponsor’s charitable contributions to finance total project cost. Typically, NMTC financing is structured as a 7-year interest-only loan with a 20% portion of the debt forgiven at the end of the loan term.
Invest Atlanta established Atlanta Emerging Markets, Inc. (“AEMI”) as its subsidiary to manage the city’s NMTC activities. AEMI is certified by the U.S. Department of the Treasury as a Community Development Entity to provide financing products targeted to under-served areas. Atlanta Emerging Markets, Inc. serves as a matchmaker between investors seeking tax credits and projects seeking low-cost financing.
NMTC Program Priorities
Atlanta Emerging Markets, Inc. seeks to spur job creation, economic development, and neighborhood revitalization in under-served areas of the City of Atlanta by providing NMTC funding for priority projects that:
- Provide goods or services to low income communities, such as health care services or groceries
- Create jobs and/or enhance access to jobs for disadvantaged communities
- Create catalytic change in underserved neighborhood centers
- Foster sustainable development outcomes
- To pre-screen a property address for eligibility, visit
Novogradac and Company’s online mapping site.
- For additional information on New Markets Tax Credits visit
SB Friedman’s “New Markets Tax Credit Program Summary,”
the New Markets Tax Credit Coalition (http://www.newmarketstaxcreditcoalition.org/) or
the Department of Treasury’s CDFI Fund (www.cdfifund.gov).