HOPE’s Strategic Use of New Markets Tax Credits Maximizes Development Impact in Distressed Communities in the Deep South
September 8th, 2021
By: Sara Miller, Hope Policy Institute
September 8, 2021
The federal New Markets Tax Credit (NMTC) program finances community facilities and businesses which support economic development, job creation and the expansion of essential community services such as quality health care, education, and other services to underserved communities. A program of the Community Development Financial Institutions Fund (CDFI Fund), the NMTC program leverages private capital to encourage investment in low income communities. NMTCs are allocated to organizations that serve low-income communities through a competitive application process. Those organizations then partner with private investors to deploy economic investments in their communities.
Since the launch of the NMTC program in 2002, Hope Enterprise Corporation (HOPE) has been allocated $190 million in NMTCs used to finance 90 businesses, community facilities, and non-profit organizations in the Deep South. HOPE’s NMTC investments have created more than 3,700 jobs in the states of Alabama, Arkansas, Louisiana, Mississippi and Tennessee. Just in the past five years, HOPE’s investments in 13 NMTC projects are projected to generate $5.1 billion in private sector reinvestment over the next 20 years.
This paper highlights some of the needs HOPE seeks to address through its work with the NMTC program and the effects of those investments in distressed communities throughout the Deep South. HOPE’s NMTC impacts are unique in addressing persistent poverty and serving communities of color. The share of HOPE’s NMTC investments deployed in persistent poverty counties is more than double the share of NMTC investments overall. More than half of HOPE’s NMTC projects are also located in counties where the majority of people who reside in the county are people of color.
The paper concludes with recommendations to ensure more NMTC investments are deployed in the places that need them most, by increasing the investments in persistent poverty areas and to make the program more inclusive by increasing allocations to community development entities controlled by people of color.
Read the full brief here.