In a speech on Wednesday, Treasury Secretary Timothy Geithner announced that 32 organizations across the country will be awarded $1.5 billion in tax credits as part of the Administration’s efforts to revitalize the nation’s hardest-hit communities.
The New Markets Tax Credit program, which has been in place since December 2000 but received a funding boost from the American Recovery and Reinvestment Act passed in February, allows taxpayers to receive a credit for making qualified investments in projects aimed at low-income communities.
“Many communities have been left with a shortfall of financial support and are unable to pursue desperately needed projects, leaving residents to fall even further behind,” Geithner said in a statement released prior to his speech. “The New Markets Tax Credit program helps break that cycle by providing an incentive to invest in communities to break ground on new projects, create jobs, and offer much needed services.”
The program focuses on bringing capital to a wide spectrum of projects, including those that focus on the development of real estate, medical and educational facilities and alternative energy, Geithner said in his speech. The credit offered to the investor is equal to 39% of the cost of the investment and is claimed over a period of seven years, according to the Treasury.
Topping the list of the 32 organizations receiving tax rewards is ESIC New Markets Partners LP, a real-estate investment and lending firm in Columbia, Md., with $95 million in tax credits. Close behind are the Capital One Community Renewal Fund in McLean, Va., and NCB Capital Impact in Arlington, Va., each with $90 million in tax credits.
Giving private companies incentives “offsets some of the risks” the companies take by investing in these projects, Geithner said. The chosen organizations provide services to a combined 33 states, the District of Columbia and Puerto Rico.
Geithner’s announcement was made at Project Hope -- a former beneficiary of the tax-credit program -- in the Roxbury section of Boston.
In a briefing following the afternoon speech, Treasury officials explained that the latest batch of recipients were actually leftover applicants from the 2008 applicant pool. The program received 239 applications requesting close to $22 billion during the 2008 round, but only $3.5 billion could be awarded at the time. The 70 chosen recipients -- each of whom were graded on their business strategy, community impact, management capacity and capitalization strategy -- were announced in October, the officials explained.
The Recovery and Reinvestment Act enacted in February, however, allocated another $3 billion to the New Markets Tax Credit Program to cover the 2008 and 2009 years. The additional funding allowed Treasury officials to revisit the existing applicant pool and extend $1.5 billion in tax credits to organizations that weren’t initially chosen.
