New Market Tax Credits
The new market tax credits (NMTC) program provides private-sector investors (e.g., banks, insurance companies, corporations, and individuals) with federal income tax credits in return for new investments in eligible businesses, ranging from small business startups to real estate development. The program is designed to increase the amount of investment capital available to business and economic development programs in low-income communities that traditionally have had poor access to debt and equity capital. A low-income community generally is a census tract with a poverty rate of at least 20 percent or with median family income of up to 80 percent of the area median family income.
Each year, the NMTC program offers a seven-year, 39 percent federal tax credit for qualified equity investments (QEI) made through investment vehicles known as community development entities (CDE). CDEs use capital derived from the tax credits to make loans and capital investments in businesses in underserved areas and projects in low income areas. By making an investment in a CDE, an individual or corporate investor can receive the tax credit worth 39 percent (30 percent net present value) of the initial investment, distributed over seven years, along with any anticipated return on their investment in the CDE. The investor receives a tax credit equal to five percent of the total amount paid for the capital interest or stock purchase over the first three years. For the final four years, the value of the tax credit is six percent annually.
The NMTC was established by the Community Renewal Tax Relief Act of 2000 and is administered by the Community Development Financial Institutions (CDFI) fund under the U.S. Department of the Treasury. The CDFI Fund was created for the sole purpose of expanding the availability of credit, investment capital, and financial services in distressed urban and rural communities.
The Community Development Financial Institutions fund (CDFI Fund) certifies CDEs on an ongoing basis and allocates NMTC allocations annually to select CDEs through a competitive application process. In order to qualify as a CDE, the entity must be a corporation or partnership that has a mission of serving or providing investment capital, for low-income communities or persons. The group must also maintain accountability to residents of low-income communities through resident representation on governing or advisory boards. CDEs can include organizations such as community development corporations (CDCs), community development financial institutions, community development venture capital funds, small business development corporations, community loan funds, specialized small business investment companies and others.
The Marietta-Cobb New Markets Fund, Inc. was established in 2007 through a partnership between the city of Marietta, Cobb County, the Marietta Housing Authority and the Marietta Redevelopment Corporation.
Map of Marietta NMTC area
Map of Cobb County NMTC areas