New Market Tax Credits

D.C. Housing Enterprises is a non-profit subsidiary of the District of Columbia Housing Authority and is one of the few Public Housing Authorities that the Community Development Financial Institutions Fund has certified as a Community Development Entity. As a CDE, DCHE originates New Markets Tax Credits (NMTC) by providing tax credits to investors in return for equity investments in businesses that serve low-income communities. From 2009 to date, DCHE has received $128 million dollars of New Market Tax Credit allocations and has invested hundreds of millions of dollars in community-oriented real estate and business developments. DCHE has a diverse portfolio of NMTC-financed projects that create catalytic economic impacts in low-income communities throughout the District of Columbia. Our projects extend direct benefits to low-income residents including many who reside in DCHA-sponsored housing by providing quality jobs, goods, and services. DCHE prioritizes investments in highly distressed communities that lack private sector capital and in projects that are in alignment with DCHA’s broader mission of creating stronger, equitable communities for low-income persons. Our investments bring quality jobs, goods, and services which are essential to create vibrant, healthy, and inclusive neighborhoods for all citizens in the District of Columbia.

What is “New Markets Tax Credit”?

The New Markets Tax Credit was designed to increase the flow of capital to businesses and low-income communities by granting private investors a modest tax incentive. Over the past 10 years, the NMTC has proven to be an effective, targeted, and cost-efficient financing tool valued by businesses, communities, and investors across the country.

The NMTC was authorized in the Community Renewal Tax Relief Act of 2000 as part of an effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities that lack access to the patient capital needed to support and grow businesses, create jobs, and sustain healthy local economies.

The NMTC program attracts capital to low-income communities by providing private investors with a federal tax credit for investments made in businesses or economic development projects located in some of the most distressed communities in the nation – census tracts where the individual poverty rate is at least 20% or where median family income does not exceed 80% of the area median.

To learn more about the NMTC program, click here for the Community Development Financial Institutions Fund’s presentation.

Portfolio

Direct Community Investment

DCHE provides loans and access to capital through NMTC investments that assist under-capitalized real estate projects and businesses such as a health care center or community facility. A NMTC allocation creates a net benefit to the project or business by allowing the equity received from the investor to stay in the project. DCHE offers loans with flexible financing terms to impactful real estate projects that create substantial economic benefits in low-income communities.

DCHE has made more than $80 million NMTC investments in Qualified Active Low-income Community Businesses (QALICB) and supported over $450 million in community real estate and businesses in the District of Columbia. We incorporate direct job and employment training opportunities for DCHA residents in every NMTC investment we make. DCHE’s NMTC investments prioritizes the expansion of economic opportunities for public housing residents and low-income persons throughout the District of Columbia. DCHE continues to explore investment opportunities that respond to the growing needs of communities that often require jobs, medical facilities, and better goods and services.

Community Impact

DCHE’s NMTC program is a valuable economic resource that has created over 1000 construction and permanent jobs with over 150 jobs set-aside for DCHA residents. Workforce and employment training opportunities will serve up to 4000 students and Project Sponsors work closely with Office of Resident Services to ensure that DCHA residents have direct access to the training programs financed with NMTC’s.

As an affordable housing provider, we invest in projects that create and attract quality real estate and operating businesses. Our goal with each investment is to help spur economic growth so low-income residents will have improved access to an array of goods and services that are essential to promoting strong and vibrant communities.

Partnerships

As a Certified Community Development Entity, DCHE partners with mission-oriented developers, community organizations, government affiliates, and investors to finance projects that create a multiplier effect through direct economic investment activities in under served communities here in the District of Columbia. DCHE engages local and national partners to support NMTC investments that yield long term benefits for low-income persons.

U.S. Bancorp Community Development Corporation (USBCDC) is the largest NMTC Investor in the industry. DCHE have been partners with U.S. Bank since 2011 having invested more than $45 million in NMTCs with U.S. Bank. DCHE will continue to strengthen our relationship with U.S. Bank and other investors such as JPMorgan Chase, PNC Bank, SunTrust, Bank of America, and Wells Fargo to ensure the District of Columbia benefits from NMTC investment opportunities that help deliver jobs and important amenities to communities that need them the most.

The partnership DCHE has formed with the New Market Tax Credit Coalition has been instrumental in helping to advance the PATH legislation that members of Congress approved which authorized a five-year extension and NMTC allocation authority of $17.5 billion. The NMTC Coalition is a strong advocate for strengthening low-income communities across the country and DCHE will continue to support their efforts to permanently incorporate NMTCs into the IRS tax code.

DCHE works closely with the Office of the Deputy Mayor for Planning & Economic Development (DMPED) and other local agencies to ensure that all resources that support economic development are invested in a manner that maximizes economic outcomes for low-income communities in the District of Columbia. DCHE NMTC investments have also received funding from the DMPED and other local agencies and DCHE will continue to coordinate our investment efforts with local partners.

Glossary

CDE – COMMUNITY DEVELOPMENT ENTITY

A Community Development Entity (CDE) is a domestic corporation or partnership that is an intermediary vehicle for the provision of loans, investments, or financial counseling in low-income communities. Community Development Entities, through a competitive application process, are financial intermediaries through which private 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. Using the capital from these equity investments, CDEs can make loans and investments to businesses operating in low-income communities on better rates and terms and more flexible features than the market.

QEI – QUALIFIED EQUITY INVESTMENT

A Qualified Equity Investment is an investment made into a CDE to provide cash for either stock in a corporation or a capital interest in a partnership in exchange for tax credits.

QLICI – QUALIFIED LOW-INCOME COMMUNITY INVESTMENT

A Qualified Low-Income Community Investment is any capital or equity investment in, or loan to, a Qualified Active Low-income Community Business (QALICB)

QALICB- QUALIFIED LOW-INCOME COMMUNITY BUSINESS

A Qualified Active Low-income Community Business is any corporation (including a non-profit corporation) or partnership engaged in the active conduct of a qualified business in a low-income community meeting standards pertaining to gross income, use of property, and services performed. In most cases, an entity formed to own real estate in a low-income community will meet the standards for a QALICB.

Contact

Majalia Ansel
Manager
1133 N. Capitol Street, NE
Washington, DC 20002
mansel@dchousing.org