New Markets Tax Credit Program

Objective

The New Markets Tax Credit Program (“NMTC Program”) provides investment capital for operating companies and real estate development projects in order to foster job creation and community development in low-income communities throughout New York State. 

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Overview

Overview

The NMTC program is intended for borrowers / projects that can demonstrate new, quality, permanent job creation for low-income communities throughout New York State, or otherwise provide goods and services that benefit residents of those communities.    

The Empire State New Market Corporation (“ESNMC”), a subsidiary of Empire State Development (“ESD”), is a certified Community Development Entity under the federal Department of Treasury’s CDFI Fund. In November 2016, ESNMC received a second NMTC allocation award of $55 million, and expects to deploy the allocation during the 2017 calendar year.

Eligibility

Program Eligibility
Borrowers must meet the definition of a “Qualified Active Low-Income Community Business” as defined under the NMTC Program guidelines. In addition, investments must be located in census tracts that meet the definition of “higher distress” per NMTC program guidelines (see definitions below).

ESNMC will target:

  • At least 50% of its financing activities to borrowers in non-metropolitan (i.e. rural) counties as defined by the CDFI Fund
  • Operating businesses seeking growth capital for equipment, inventory, and other growth needs
  • Business or non-profit owner-occupied facilities
  • Commercial or mixed-use real estate projects

NMTC product types:

  • Small projects or businesses with borrowers seeking $200,000–$400,000 in flexible low-cost capital, as part of a total project budget of $2 million or less. 
  • Projects or businesses that have capital needs that are at least $10 million and have a $1.5–$2 million gap that can be filled by flexible low-cost NMTC capital.

ESNMC will consider, on a case-by-case basis, other investments that may not fit these categories.

Qualifying Your Site for NMTCs
The following information is presented for guidance; experienced NMTC professionals will help to confirm eligibility. ESNMC will consider qualification as part of an overall evaluation of a potential NMTC investment.

To determine if your site is located in a qualified NMTC census tract, access the CDFI Fund’s website page that helps determine if your location qualifies for NMTCs and is located in a census tract that also meets some criteria/definition of “higher distress”:

Sites located in non-metropolitan (i.e., rural) census tracts must meet the following criteria:

  • Median family income: < 80%
  • Poverty rate: > 20%

Sites located in metropolitan areas must meet one of the primary criteria listed below or two of the secondary criteria listed below:

Primary criteria for sites located in metropolitan areas include:

  • Median family income: < 60%
  • Poverty rate: > 30%
  • Unemployment rate: > 1.50x the National Average

Secondary criteria for sites located in metropolitan areas include:

  • Poverty rate greater than 25%; median family income not exceeding 70%; or unemployment rates at least 1.25 times the national average
  • Federally designated Empowerment Zone, Enterprise Community or Renewal Community
  • SBA designated HUB Zone, when NMTC financing will support businesses that obtain HUB Zone certification by the SBA
  • Federal Brownfield sites as defined under 42 U.S.C. 9601 (39)
  • Area encompassed by a HOPE VI redevelopment plan
  • Native American or Alaskan Native areas, Hawaiian Homelands, or redevelopment areas by the appropriate Tribal or other authority
  • Areas designated as distressed by the Appalachian Regional Commission of Delta Regional Authority
  • Colonias areas as designated by the U.S. Department of Housing and Urban Development
  • Federally designated medically underserved area, when NMTC financing activities will result in the support of health-related services
  • State Enterprise Zone, or other similar state/local programs targeted toward economically distressed communities
  • Counties for which the Federal Emergency Management Agency has issued a "major disaster declaration" and made a determination that such county is eligible for both "individual and public assistance" provided that initial investment be made within 24 months of the disaster declaration
  • Businesses certified by the Department of Commerce as eligible for assistance under the Trade Adjustment Assistance for Firms program
  • Businesses located in food deserts under the Healthy Food Financing Initiative definition (USDA-ERS) to the extent NMTC financing will increase access to healthy food

Disqualified Businesses:

  • Massage parlor
  • Hot tub facility
  • Suntan facility
  • Country club
  • Racetrack or other facility used for gambling
  • Store whose principal purpose is the sale of alcoholic beverages for consumption off premises
  • Development or holding of intangibles for sale
  • Private or commercial golf course
  • Certain farming businesses

Resources

Funding Criteria & Selection Process
ESNMC will give prioritization for projects that:

Have demonstrable community impact:

  • Business or project creates quality jobs and jobs accessible to low-income people
  • Larger permanent FTE jobs and those that include training opportunities, benefits, local hiring, and/or pay living wages are preferred
  • Offer job training and career advancement opportunities for unemployed / underemployed populations
  • Financing that will create Healthy Foods outcomes or provide community goods and/or services in LICs. Greater levels of products or customers served are preferred
  • Financing that will support minority borrowers or those that provide MBE contracting opportunities
  • Demonstrate environmental Impacts, i.e., greater levels of LEED, demonstrated energy savings, or other green features
  • Support veterans through hiring, training or services
  • Spur additional private sector investment in the local area
  • Other community benefits not listed here will be considered as well

Project readiness:

  • 75% of the project’s total funding has been identified, and preferably committed
  • If bank debt is involved, the prospective lender has prior experience with NMTC financing
  • If the project involves construction, then projects that can commence construction (full construction drawings and all required permits / approvals) to be available by September 2017

Other New York State involvement and local support:

  • Part of a larger redevelopment plan supported by local or regional economic development councils
  • NY State is providing other forms of assistance that may be used to leverage the NMTC financing

How to Apply

Application Process
Visit the CDFI Fund Address Qualification website to determine whether the project is located in a qualifying low-income community.

  • Type in your address in the upper right hand corner and hit enter or click the search button. Click on the address that pops up and then click on “Zoom To.” Click anywhere on the map near the site to see the qualification criteria for the site.
  • If the project is located in a Low-Income Community, your ESD Regional Office will then screen potential projects for suitability.

To assist with additional screening please download and fill out the NMTC Intake Form.

Contact Information
For more information about New York State’s allocation of the federal New Markets Tax Credits or for questions about your project’s eligibility, send an email with the project’s location and a brief description to your local ESD Regional Office, and ask to have your project screened.