WASHINGTON: In a long awaited announcement several months late, the U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund) announced more than $3.5 billion in New Markets Tax Credit awards aimed at stimulating investment and economic growth in low-income urban neighborhoods and rural communities nationwide. A total of 76 organizations (Allocatees) across the country will receive tax credit allocation authority under the 2014 round of the New Markets Tax Credit Program.

“Every community deserves a chance to succeed, and the New Markets Tax Credit Program is an economic development tool that spurs growth and breathes new life into neglected, underserved low-income communities,” said U.S. Treasury Secretary Jacob J. Lew. “The tax credit allocation authorities announced today will go to community development organizations that will make much needed private sector investments in businesses and real estate projects located in the nation’s distressed urban and rural communities. Along with these investments come jobs, vital services, and opportunities where they are needed the most.”

“Over its fifteen year history, the New Markets Tax Credit program has successfully fostered competition for private sector investment into low-income communities that lack access to the capital needed to support and grow businesses, create jobs, and sustain healthy local economies,” said Annie Donovan, Director of the CDFI Fund. “The investments made possible by today’s awards will have significant impact nationwide."

The New Markets Tax Credit Program, established by Congress in December 2000 and officially expired at the end of last year, permits individual and corporate taxpayers to receive a non-refundable tax credit against federal income taxes for making equity investments in vehicles known as Community Development Entities (CDEs). Since the program’s inception, New Markets Tax Credit investments are estimated to have created nearly 600,000 new jobs and supported the construction of more than 160 million square feet of retail, manufacturing, and office space. As the communities benefiting from these investments develop, they become more attractive to investors, creating a ripple effect that spurs more investment.

CDEs that receive the tax credit allocation authority under the program are domestic corporations or partnerships that provide loans, investments, or financial counseling in low-income urban and rural communities. The tax credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. The CDEs in turn use the capital raised to make investments in low-income communities. CDEs must apply annually to the CDFI Fund to compete for New Markets Tax Credit Program allocation authority. The 76 organizations receiving awards were selected from a pool of 263 applicants that requested approximately $19.9 billion in allocation authority. They are headquartered in 27 different states and the District of Columbia, and collectively, these organizations will support investments across the nation.

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