New Markets Tax Credits News Briefs - July 2015

Wednesday, July 1, 2015

The Community Development Financial Institutions (CDFI) Fund released 2003-2013 data and a summary report for the NMTC program June 2. The data is compiled from annual reports submitted by community development entities (CDEs) that have been awarded NMTC allocations. The reports detail how the CDEs invested qualified equity investment (QEI) proceeds in low-income communities. Results of the report show that through the first 11 application rounds of the NMTC program, the CDFI Fund made 836 awards, allocating a total of $40 billion in tax credit authority to CDEs. The data and summary report are available at www.newmarketscredits.com.

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Nebraska L.B. 559, which amends the state’s New Markets Job Growth Investment Act, was signed into law May 27. The bill changes provisions under the New Markets Job Growth Investment Act regarding how the tax credits are treated. Previously, a taxpayer was not entitled to a tax credit for insurance premium taxes paid under Section 77-2734.03(1) of the act if it used a new markets tax credit (NMTC) to reduce its premium tax liability. Previous law also prevented the credit from being used against insurance premium tax under certain circumstances.

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On May 12, Georgia Gov. Nathan Deal issued a veto statement for the Georgia New Markets Jobs Act (H.B. 439). Gov. Deal said in his statement that the proposed initiative required further study before the bill should pass. H.B. 439 would have provided $55 million in tax credits against insurance premium tax liability for certain equity investments in qualified CDEs. During the legislative process, language was added to H.B. 439 authorizing the Invest Georgia Fund to sell up to $55 million in tax credits against insurance premium tax liability. Gov. Neal closed his statement by saying that combination of these policy initiatives into one piece of legislation and the prospect of implementing these initiatives at the same time under the state’s current budget would have too much of an impact on the general fund.

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The Government Accountability Office (GAO) released May 22 GAO-15-352, “Federal Home Loan Banks: Collateral Requirements Discourage Some Community Development Financial Institutions from Seeking Membership.” GAO was asked to review federal home loan banks’ (FHLBanks) implementation of Housing and Economic Recovery Act of 2008 (HERA) provisions relating to non-depository CDFIs. The report discusses challenges posed by membership and collateral requirements for non-depository CDFIs. It also discusses Federal Housing Finance Agency (FHFA) and FHLBank efforts to encourage broader non-depository CDFI participation in the system. The report found that collateral requirements rather than membership requirements discouraged some non-depository CDFIs from seeking membership in the FHLBank system.

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On May 12, Coastal Enterprises Inc., a community development finance institution (CDFI), announced CEI 7(a) Financing LLC (C7a), a newly launched small business lending company. The wholly owned subsidiary of CEI will make loans of up to $5 million to qualified small business borrowers. The C7a program’s goal is to provide affordable credit to small businesses, particularly in rural regions, that cannot obtain it elsewhere.

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On June 9, the New Markets Tax Credit Coalition released its report, “The New Markets Tax Credit Progress Report 2015.” The report highlights results from the NMTC Coalition’s annual survey of community development entities (CDEs) with NMTC allocations. The survey collected data from CDEs raising capital and making loans and investments in the 2014 calendar year. The coalition found that the NMTC program represents $16.8 billion in total allocation, with $3.8 billion in total project financing. In addition, 239 businesses received NMTC financing and 39,378 total jobs were created by projects that closed in 2014. There is $3.5 billion worth of projects in the pipeline for 2015. The report is available at www.newmarketscredits.com.

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