Guest Post: Indian Country Completely Shut Out of New Markets

INDIAN COUNTRY COMPLETELY SHUT OUT OF NEW MARKETS TAX CREDITS

Gavin Clarkson

Not a single Native Community Development Enterprise (NCDE) was selected for an award in the most recent round of New Markets Tax Credit (NMTC) allocations (just announced by the CDFI Fund of the US Department of the Treasury) despite at least one Native-sponsored applicant and one non-Native applicant totally dedicated to Indian Country deployment. These two CDEs’ allocation requests were peer reviewed and ranked ‘highly qualified’ to be eligible for an allocation.

The NMTC program, which annually allocates about $3 Billion in Federal Tax credits that are sold to private investors for investing in low income communities’ economic development projects, has allocated over a $100 Billion in tax credit authority since the program’s inception in 2003. Indian Country NCDEs have only just started to receive a small portion of the annual allocations, in recent years. In total, Native CDEs have received about $250 Million in tax credit authority, or about 0.25% of total investment authority. While small in proportion to total NMTC allocation, this amount has made the NMTC program a significant source of Indian Country investment capital in only a few short years. Until this year, that is.

The failure to allocate ANY NMTC to Native CDEs in the most recent competition puts hundreds of millions of dollars of Indian Country pipeline projects at risk and highlights the need for the Federal Government to more directly address Indian Country’s rapidly expanding capacity to utilize NMTC. There is precedence at the CDFI Fund to solve this problem: Carve Out a portion of each NMTC allocation for competitive allocation just among Native CDEs similar to the already existing carve out that exists in the Native American CDFI Assistance (NACA) program, which reserves other elements of the CDFI Fund’s programs just for Indian Country. Without such a carve out, Indian Country will continue, in any given year, to be at risk of being crowded out of the intense competition for NMTC by other low income communities, whose larger populations support the formation of more CDEs that can enter, and potentially, win in the annual NMTC competition.

This entry was posted in economic development, Guest Post: Gavin Clarkson, taxation and tagged , . Bookmark the permalink.

6 Responses to Guest Post: Indian Country Completely Shut Out of New Markets

  1. Brent McFarland says:

    I am very interested in this article and would like to talk to the author. Any way of reaching him?

  2. DelRay says:

    Very good Intel, proof that we must be thinking and working about our economic wellbeing. Capitalism is the arena of choice for modern fights. We must endeavor to persevere. In the words of Chief Dan George. Furthermore, we must encourage and mentor our young to become the leaders that we will need today, tomorrow and into the future. Leaders that will rebuild the wealth of our great nations .

  3. Len Goeller says:

    Good analysis and a thoughtful proposal to resolve the obstacles faced by Native American projects and the CDE/CDFIs that serve them. Create a NMTC set aside the way that NACA helps Native CDFIs. Precedent for a set aside also includes Gulf Coast set asides. The Fund can direct its NMTC resources to target the neediest of its potential allocatees.

    It is well recognized by the Fund and in the industry that Native CDE/CDFIs are at a disadvantage when they compete with major banks and Real Estate investors for NMTC. A set aside would allow Native organizations to compete with their peers, and the result would provide significant capital resources for Tribes and Reservations.

  4. Pingback: Guest Post, Postcript 2014: Indian Country Completely Shut Out of New Markets Tax Credits … Once Again | Turtle Talk

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