Reps. Sewell, Reed Introduce Legislation to Invest in Economically Distressed Rural and Urban Communities During COVID-19 Pandemic
February 24, 2021
Washington, D.C. - Today, U.S. Reps. Terri Sewell (D-AL) and Tom Reed (R-NY) introduced the New Markets Tax Credit Extension Act of 2021, legislation to spur economic revitalization in low-income rural communities and urban neighborhoods as the COVID-19 pandemic and economic crisis continues.
“The COVID-19 pandemic has laid bare the historic disinvestments in our rural and underserved communities. Now more than ever, it is critically important that our communities have permanent access to the New Market Tax Credit as a tool to facilitate investments in local businesses and community development projects as we recover from our economic crisis,” said Rep. Terri Sewell. “The NMTC remains crucial to the creation of job growth and opportunity in Alabama’s 7th Congressional District, and I’m proud to introduce this bipartisan bill to ensure our most underserved communities are not left behind.”
“We care about local communities and small businesses across New York who deserve fair access to new economic opportunities,” said Rep. Tom Reed. “We will continue to fight for the passage of the New Markets Tax Credit Extension Act to ensure low-income or rural areas can attract the kinds of critical investments that will generate jobs, revitalize the area, and grow the economy. As our nation recovers from the public health and economic impacts of COVID-19, we must do everything we can to lift up and stand with historically underserved communities.”
“The bipartisan legislation introduced by Reps. Sewell and Reed authorizes significant new assistance through the New Markets Tax Credit (NMTC) to low-income communities that are often left out of the economic mainstream and are now coping with the health and economic consequences of the pandemic,” said New Markets Tax Credit Coalition Spokesperson Bob Rapoza. “From rural communities and urban neighborhoods, and everywhere in between, the additional $4.5 billion in NMTC authority championed by Congresswoman Sewell and Congressman Reed in this pandemic relief legislation, including provisions to make it easier to serve businesses and projects hardest hit in this economic and health crisis, will help provide the investment and patient capital needed to rebuild and grow.”
The New Markets Tax Credit Extension Act of 2021 would provide private investors with a 39 percent credit against federal income taxes for investments made in some of the most distressed communities in the nation. This bill also makes the NMTC a permanent part of the Internal Revenue Code; indexes allocation levels to inflation in future years; and exempts NMTC investments from the Alternative Minimum Tax (AMT).
To be eligible for New Markets Tax Credit (NMTC) financing, businesses being financed must, at a minimum, be located in designated low-income communities, defined by U.S. Census data as census tracts with a poverty rate of at least 20 percent, or with median family incomes that do not exceed 80 percent of area median income.
While all NMTC investments benefit businesses in low-income communities, the NMTC does not target a specific type of business or sector. The NMTC places the project underwriting responsibility with community development organizations with deep ties to the communities in which they work.
Since its authorization, over $55 billion in direct NMTC investment has created well over 1,000,000 jobs. These NMTC investments leveraged nearly $110 billion in capital from other sources for businesses, healthcare centers, manufacturing expansions, and revitalization projects in communities with high poverty and unemployment rates.
In addition to Reps. Sewell and Reed, the bill was cosponsored by 22 bipartisan Ways & Means Committee members. An identical bill was introduced in the Senate by Sens. Ben Cardin and Roy Blunt.
The New Markets Tax Credit Extension Act of 2021 is available here.