New Markets Tax Credits

New Markets Tax Credits (NMTC) works to encourage and jumpstart investment in low-income census tracts to create jobs and bring new opportunities to qualifying areas. The goal of the NMTC award is to fill a financing gap for transformative projects which bring opportunities to low-income or distressed areas.

Bringing High-Impact Investment to Distressed Community Areas

History

The New Markets Tax Credits (NMTC) program was created through the Community Renewal Tax Relief Act of 2000 and is administered through the U.S. Department of Treasury.

How is it Funded?

New Markets Tax Credits is funded by DBL Equity Partners, an entity of Dakota Business Lending, through a process of investing in and monetizing tax credits to fill a financing gap.

Step 1: Allocate

Dakota Business Lending will secure allocation from the U.S. Department of Treasury.

Step 2: Monetize

The funds will flow through DBL Equity Partners (a division of Dakota Business Lending), who will work to monetize the allocation by selling tax credits.

Step 3: Get Cash

The cash from the tax credit sales will come back at a 39% basis.

Step 4: Invest

DBL Equity Partners will use this cash (approx. 25-30% of allocation) to fill the financing gap in projects located in low-income or distressed areas. 

Qualifications

In order to be eligible for NMTC, projects must be:

  • Located in a qualifying census tract
  • The size and scale to be transformative to the (re)development of the distressed area
  • Adaptable to the unique structure and requirements of the program

Project Example: Business Expansion

Project Total: $10 Million

Bank Loan: $5.2 Million

Owner Capital: $2 Million

Gap: $2.8 Million

Criteria: 

  • Transformative Project
  • Job Creation and Retention
  • Low-Income Census Tract
  • Unique Structure
  • 7 Year Compliance
flow-chart-nmtc

NMTC Success Stories

While the NMTC program is new to North Dakota, there have been several other entities across the United States that have been bringing these high impact financial solutions to their communities. Below are a few examples.

Construction site of a stadium during winter

Multi-Purpose Facility

Construction of a multi-purpose facility that will be used to host various sporting events/ tournaments and concerts.

  • 18.6% poverty rate
  • Median income 74.2% of area media income
  • Metro
  • Project cost: $46.5 million
  • 920 direct jobs
  • NMTC allocation: $13.8 million
AdobeStock_329143424 - resize

Historical Buildings

Renovation and rehabilitation project on two historic commercial buildings in a downtown area.

  • 12.7% poverty rate
  • Outmigration tract
  • Median income 82.9% of area media income
  • Rural
  • Project cost: $18.9 million
  • 27 direct jobs
  • NMTC allocation: $10 million
Factory building warehouse

Manufacturing Plant

Expansion of a manufacturing plant with emphasis on manufacturing components to support other local industry.

  • 20.0% poverty rate
  • Median income 75.3% of area media income
  • Rural
  • Project cost: $8.66 million
  • 43 direct jobs
  • NMTC allocation: $8.6 million

Had it not been for the NMTC program, these projects would not have moved forward. As you can see from the numbers, the impact on low income and distressed areas is significant in many ways.

Eligible Areas in North Dakota

Projects located in qualifying census tracts are eligible for NMTC, which are represented by red and yellow on the map.

You can find eligible pockets within the circled cities by zooming in on the map found here.

Creating Impact that Snowballs... Encouraging the "Pay-it-Forward" Concept

One of the ways that DBL Equity Partners and the NMTC program will work to maximize and spread economic impact is by encouraging the "pay-it-forward" concept - an approach that promotes the "repaying" of kindness by passing along assistance and support to others in need. For many small businesses, this entails donating to a specific charity or cause.

Here is an example of a project that shows how a small portion of the NMTC Allocation was used to have a significantly larger impact for students in the distressed area in addition to the impact of the NMTC project itself.

133-Room Renovation of a Historical Downtown Hotel

old red buildings in Menton + hotel sign, French Riviera

***$100,000 of the benefit will go to a local charity program that supports at-risk youth

  • High poverty rate
  • Metro
  • Project cost: $28.3 million
  • 172 direct jobs
  • 422 indirect jobs
  • NMTC allocation: $3.75 million

At-Risk Youth Program

In return for receiving assistance from the NMTC program, the historical hotel pledged to donate $100,000 to an at-risk youth program in efforts to continue to promote economic restoration and workforce development in a community in the Midwest. This helps create a move livable community for working families by assisting young adults at risk with attaining their high school diploma and entering the workforce.

Have a NMTC project in mind or want to learn more?

Contact us with questions, download our NMTC flyer for more information, or fill out a project intake form and help us bring this great investment opportunities to our state.

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