Native Community Development Enterprise

Guest Post, Postcript 2014: Indian Country Completely Shut Out of New Markets Tax Credits … Once Again

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Guest Post by Gavin Clarkson (an update from last year’s post, here):

For the second time in as many years, NO NATIVE CDEs were selected for an award of New Markets Tax Credits.  Despite strong objections from Native financial leaders, The CDFI Fund once again ignored the stark economic development needs of the Nation’s Tribal Communities and froze Native CDEs out of this important economic development financing program.

The case for a Native Carve Out for NMTCs is stronger than ever.  The time for political action is NOW.  Congress will be considering permanent financing of the NMTC Program as part of the Tax Extenders Act of 2014.  Native political leaders should insist that a central component of permanent financing must be a mandatory Native American NMTC Carve Out.

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Guest Post: Indian Country Completely Shut Out of New Markets

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INDIAN COUNTRY COMPLETELY SHUT OUT OF NEW MARKETS TAX CREDITS

Gavin Clarkson

Not a single Native Community Development Enterprise (NCDE) was selected for an award in the most recent round of New Markets Tax Credit (NMTC) allocations (just announced by the CDFI Fund of the US Department of the Treasury) despite at least one Native-sponsored applicant and one non-Native applicant totally dedicated to Indian Country deployment. These two CDEs’ allocation requests were peer reviewed and ranked ‘highly qualified’ to be eligible for an allocation.

The NMTC program, which annually allocates about $3 Billion in Federal Tax credits that are sold to private investors for investing in low income communities’ economic development projects, has allocated over a $100 Billion in tax credit authority since the program’s inception in 2003. Indian Country NCDEs have only just started to receive a small portion of the annual allocations, in recent years. In total, Native CDEs have received about $250 Million in tax credit authority, or about 0.25% of total investment authority. While small in proportion to total NMTC allocation, this amount has made the NMTC program a significant source of Indian Country investment capital in only a few short years. Until this year, that is.

The failure to allocate ANY NMTC to Native CDEs in the most recent competition puts hundreds of millions of dollars of Indian Country pipeline projects at risk and highlights the need for the Federal Government to more directly address Indian Country’s rapidly expanding capacity to utilize NMTC. There is precedence at the CDFI Fund to solve this problem: Carve Out a portion of each NMTC allocation for competitive allocation just among Native CDEs similar to the already existing carve out that exists in the Native American CDFI Assistance (NACA) program, which reserves other elements of the CDFI Fund’s programs just for Indian Country. Without such a carve out, Indian Country will continue, in any given year, to be at risk of being crowded out of the intense competition for NMTC by other low income communities, whose larger populations support the formation of more CDEs that can enter, and potentially, win in the annual NMTC competition.

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