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 Phoenix
has an exciting new program that will help our community grow in
areas that have not seen as much economic growth as in past years
– Phoenix New Markets Program. While industry
experts who helped shaped this new legislation have known about
the potential benefits of the federal New Markets Tax Credit (NMTC)
Program for several years, most communities only recently learned
about its potential economic impact. We have a new tool that will
provide much needed cash and equity investment to assist in the
economic revitalization of our under-served
communities by creating new jobs, enhancing Phoenix’s
commercial, retail and industrial development, and financing small
businesses.
Through the NMTC Program, our primary
mission is to improve the economic conditions in Phoenix’s
under-served communities. Participants in Phoenix’s program
must conduct business and provide services in an eligible census
tract that meets community impact standards. Minimally, the recipient
must show that their activity:
- Creates
jobs for residents or low-income persons
- Increases
wages or incomes for residents or low-income persons
- Targets
job creation to areas of high unemployment
- Finances
or assists businesses committed to remaining in the eligible census
tract
- Finances
or assists businesses owned by residents
- Finances
or assists minority or women-owned businesses
- Other
proposed community impact
The Program is administered by the U.S.
Department of the Treasury, Community Development Financial Institutions
Fund (CDFI). The CDFI awarded Phoenix a $170 million allocation
that allows Phoenix to issue tax credits of $66.3 million to eligible
investors. In exchange for tax credits, the Phoenix New Markets
Program will raise equity that will provide below market rate loans
and equity investment for eligible
businesses in under-served areas of Phoenix. Under
this program, investors will receive a 39% tax credit over 7 years.
- 5% for each of the
first 3 years
- 6% for each of the
last 4 years
In December 2000, Congress passed legislation
creating the New Markets Tax Credit (NMTC) Program as part of the
Community Renewal Tax Relief Act to encourage private investment
in low-income communities.
The U.S. Department of the Treasury,
Community Development Financial Institutions Fund (CDFI) administers
the NMTC Program, which will release $15 billion from 2002 through
2007. After a highly competitive process, CDFI made its first allocation
in March 2003 to 66 agencies that will receive $2.5 billion. In
May 2004, CDFI announced its second allocation to 62 agencies that
will receive $3.5 billion.
In order to be considered for the
program, Phoenix created an independent non-profit corporation,
Phoenix Community Development and Investment Corporation (PCDIC),
to become a certified Community
Development Entity (CDE). Of the $2.5 billion, Phoenix has been
awarded $170 million in NMTC allocation or $66.3 million in tax
credits ($170 million X 39%).
We have two programs designed to
reach our goals:
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