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.
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
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.
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
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
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
***$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.
