New Market Tax Credits

Overview

CRDC can help developers, banks and investors in low-income communities through the critical and exciting New Markets Tax Credit (NMTC) program. The program offers a 39% federal tax credit over seven years to entities that make loans to and/or equity investments in businesses and commercial real estate projects that are located in eligible communities.

Eligible Communities

Eligible communities are federally designated census tracts that have a poverty rate of at least 20% OR a median income that does not exceed 80% of the statewide average. Click here for a list of eligible NMTC communities in New Hampshire.

How it Works
Investors – generally banks and institutional investors – receive a 39% federal tax credit over seven years for making a “qualified equity investment” in an eligible NMTC project. This investment must be made in a “community development entity” (CDE) approved by the U.S. Treasury. The CDE then becomes the conduit for the tax credits

What Businesses Qualify for CDE Loans and Investments?
Almost all businesses located in low-income areas could qualify for loans or equity investments. Aside from location, businesses must meet the following criteria:

At least 50 percent of the business’s income must be derived from activity in a low-income community; A substantial proportion of the business’s property must be located in a low-income community; The employees of the business must perform a substantial proportion of their work in the low-income community; and Less than 5% of the business’s assets can be held in unrelated investments.

An LLC formed solely to own real estate leased to third parties will usually meet all of these qualification criteria.

CRDC’s Partnership with Coastal Enterprises, Inc.

In order to bring the benefits of the NMTC program to New Hampshire CRDC has partnered with Coastal Enterprises, Inc. of Portland, Maine. One of the most successful CDE’s in the country, CEI has been allocated over $200 million in NMTC tax credits to award to eligible projects. One of the first such projects in New Hampshire was the Plymouth Community Health Center, a $3,700,000 project sponsored by CRDC. A $1,340,000 tax credit awarded to project investors by CEI allowed a CRDC subsidiary to borrow funds at over 3% below market rate and structure an affordable lease.