Menendez, Booker Announce $110M in Federal Tax Credits to Spur Investment, Economic Development in NJ

Menendez, Booker Announce $110M in Federal Tax Credits to Spur Investment, Economic Development in NJ

Trump budget would slash proven federal program that provides vital funding to create economic opportunity, jobs in distressed communities

   

WASHINGTON, D.C. – U.S. Senators Bob Menendez, a senior member of the Senate Banking Committee, and Cory Booker today announced that the Community Loan Fund of New Jersey, Inc. and the Reinvestment Fund, Inc. have been awarded a total of $110 million through the Community Development Financial Institutions (CDFI) New Markets Tax Credit Program (NMTC) to attract private investment and spur economic activity in low income communities throughout the state.  This federal tax credit builds public-private development partnerships by helping to leverage greater private-sector investments than would otherwise be possible.

President Trump yesterday proposed a budget that eliminates funding for the CDFI Fund’s discretionary grant and direct loan programs, a cut of $234 million dollars.

“New Markets Tax Credits are designed to attract private sector investment in our distressed communities and act as the seed money for growth and prosperity by creating a mutual benefit for both the investor and the community,” said Sen. Menendez.  “With millions of Americans living in communities with high unemployment, vacant properties, and stagnant incomes, CDFIs provide these communities with real investments that allow them to start small businesses, create jobs, and purchase homes.  It is irresponsible for the Trump Administration to slash the CDFI Fund, which has proven to work and succeed in encouraging investment across New Jersey and the nation.” 

“By unlocking capital for small businesses and bringing investment to distressed economies, New Market Tax Credits play an important role in strengthening local communities, generating economic growth, and creating jobs,” said Sen. Booker.  “Since my time as mayor, I’ve been committed to supporting federal programs like this that help lift up some of our most underserved communities while creating pathways of opportunities for all New Jerseyans.”

The specific awards to community development organizations making significant investments in New Jersey are:

  • Community Loan Fund of New Jersey, Inc.                           $40,000,000 New Brunswick, N.J.
  • Reinvestment Fund, Inc.                                                      $70,000,000 Philadelphia, Pa.

“The New Markets Tax Credit program remains an essential tool for attracting much-needed private investment into low-income communities across the state,” said Wayne T. Meyer, president of New Jersey Community Capital, which runs the Community Loan Fund of New Jersey.  “This private investment helps create jobs and promotes economic opportunities for local residents.  New Jersey is fortunate that Senators Menendez and Booker realize and advocate for the transformative power of NMTCs. This year’s $40 million allocation will help NJCC spur over $150 million in total investment.”

The CDFI Fund generates economic growth and opportunity in some of our nation’s most distressed communities by offering innovative programs that invest federal dollars alongside private sector capital.  Private community partners have for the better part of a century injected capital, created jobs, and provided mortgage credit, small business loans, and banking services to spur economic growth in lower-income, distressed communities.  In 2016 alone, CDFIs made over 39,000 loans and investments totaling more than $3.6 billion, financed over 11,000 small businesses and over 33,000 affordable housing units.

This year, the CDFI Fund is awarding $3.5 billion in NMTCs to 73 organizations in 29 different states and the District of Columbia to support investments across the nation.  According to the U.S. Treasury Department, for every dollar invested by the federal government, the NMTC program generates over $8 of private investment.

Investments through the NMTC program, established by Congress in December 2000, have created hundreds of thousands of new jobs, and supported the construction of 178 million square feet of manufacturing, office, and retail space.  As the communities benefitting from these investments develop, they become more attractive to investors, creating a ripple effect that spurs more investment.

The NMTC program allows individual and corporate taxpayers to receive a non-refundable tax credit against federal income taxes for making equity investments in vehicles known as Community Development Entities (CDEs).  The CDEs in turn use the capital raised to make investments in low-income communities. 

CDEs that receive the tax credit allocation authority under the program are domestic corporations or partnerships that provide loans, investments, or financial counseling in low-income urban and rural communities. The tax credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. 

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