INDIANAPOLIS, Ind.– Indianapolis secured $55 million in federal tax credits to encourage investment and development in the city’s at-risk and low income neighborhoods.
The New Markets Tax Credits (NMTC) are from the U.S. Department of Treasury to assist with transformative neighborhood projects. In a press release, the city states it will use the NMTC award to provide gap coverage financing for developments designed to spark development and create jobs in distressed neighborhoods.
There are some limitations to the program.
Congress established the NMTC program back in 2000, permitting individual and corporate tax payers to receive non-refundable tax credits against federal income taxes when they make financial investments in Community Development Entities (CDE). The CDEs go on to them provide loans, financial counseling and investments in low income neighborhoods.
Investors receive a tax credit totaling 39-percent of the cost of their investment, to be claimed over seven years, while the CDEs raise and use the capital to invest in urban and rural development.
As of the end of the 2015 fiscal year, New Market Tax Credits have generated $8 for every $1 of federal funding, creating roughly 164 million square feet of manufacturing,office and retail space nationwide.
Mayor Joe Hogsett made the announcement Tuesday morning at the Ivy Tech Culinary School and Conference Center on Meridian Street. A fitting backdrop, the school’s renovation and overhaul were made possible by leveraging millions in federal tax credits to gain private capital.
Indianapolis received a $32 million allocation from the program in 2010. In addition to the Ivy Tech Culinary School and Conference Center, the money also helped fund the Avondale YMCA.
“The New Markets Tax Credits program has proven to be one of the most effective tools in making community development projects not only a possibility, but a success. This $55 million allocation will provide our city with the resources to break the cycle of disinvestment in underserved neighborhoods by funding highly impactful community development projects – projects that will spark economic revitalization and job creation where we need it most,” Hogsett said.
Indianapolis was one of 120 organizations nationwide to receive part of the $7 billion in NMTC awards.