Two Tennessee organizations awarded $90 million in New Markets Tax Credits
Three Roots Capital in Knoxville and Pathway Lending in Nashville were among 102 Community Development Entities across the nation that were awarded tax credit allocations totaling $5 billion.
Two Tennessee based organizations have been awarded $45 million each in the federal New Markets Tax Credit (NMTC) Program.
Three Roots Capital in Knoxville and Pathway Lending in Nashville were among 102 Community Development Entities (CDEs) that were awarded tax credit allocations totaling $5 billion through the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund). Those receiving awards were selected from a pool of 197 applicants that requested an aggregate total of $14.8 billion in tax credit allocation authority. The award recipients are headquartered in 36 different states and the District of Columbia. More than 20 percent of the investments will be made in rural communities. It is estimated that these award recipients will make nearly $1 billion in New Markets Tax Credit investments in non-metropolitan counties.
“For more than 20 years, the New Markets Tax Credit has catalyzed needed investment into the nation’s low-income rural and urban communities, which have a long history of disinvestment,” said CDFI Fund Acting Director Marcia Sigal. “It has created jobs, helped build businesses, and is a pivotal force in helping these communities not just recover but to grow stronger.”
The most recent announcement brings the total amount awarded through the NMTC Program to more than $76 billion through 19 rounds.
“This is a goal and an opportunity we have been pursuing for five years,” said Grady Vanderhoofven, President and Chief Executive Officer of Three Roots Capital. “We submitted four unsuccessful NMTC applications before we finally were successful, so this award is a testament to tenacity and perseverance. Now, we want to deploy these incredibly hard-won federal tax credits in a way that produces substantial, positive, economic impact. We are seeking manufacturing/industrial and commercial office projects in severely distressed areas of Appalachia, including East Tennessee. In an ideal scenario, we would be able to support multiple projects in our own backyard, so to speak.”
If you are not familiar with the program, here’s an explanation of how it works from the Department of the Treasury.
“CDEs are financial intermediaries through which investment capital flows from an investor to a qualified business located in a low-income community. CDEs use their authority to offer tax credits to investors in exchange for equity in the CDE. With these capital investments, CDEs can make loans and investments to businesses operating in distressed areas that have better rates and terms and more flexible features than the market. The NMTC Program helps to offset the perceived or real risk of investing in distressed and low-income communities. In exchange for investing in CDEs, investors claim a tax credit worth 39 percent of their original CDE equity stake, which is claimed over a seven-year period. In addition to receiving a tax benefit, investors have the advantage of entering new, unsaturated markets before their competitors, thereby increasing their chances of success. The NMTC Program enables investors to gain recognition for supporting the revitalization of America’s communities.”
Here’s a link to more information about the latest awards.