The Urban Institute released a 2021 report entitled “Where Do New Markets Tax Credit Projects Go?” This report analyzes the census tracts where NMTC-funded projects are located to determine if the funds are being utilized to benefit the intended populations. Overall, the Urban Institute concluded that most NMTC project dollars go to the most disadvantaged neighborhoods throughout the United States.
Census Tract Location Requirements
Census tracts, or U.S. census-designated neighborhoods, must meet certain requirements to be eligible for investment via the NMTC program. Specifically, census tracts must lie within qualified low-income communities. About half of U.S. census tracts qualify by meeting at least one criterion under the NMTC definition of a low-income community.
Location of NMTC Projects by State, City, and County
According to the Urban Institute, most NMTC projects are concentrated in the Northeast, the Northwest, and some northern Midwestern and Southern states. The District of Columbia received the highest level of total project cost per person in eligible communities. In contrast, Puerto Rico received the lowest level of total project cost per person in eligible communities.
The 50 largest cities in the U.S. received 41% of the total NMTC investments and 33% of the projects, despite having only 20% of the eligible population. Baltimore was the city receiving the most NMTC investment in total project cost per eligible population. Larger counties receive the most NMTC investment in total project cost per eligible population, followed by smaller counties. Mid-size counties received the least NMTC investment.
Location of NMTC Projects by Neighborhood
Census tracts that receive NMTC-funded projects tend to be more economically distressed than those tracts that do not receive projects. For example, their poverty rate is 26% compared to the 19% poverty rate of the tracts that do not receive NMTC-funded projects or an average income of $41,000 instead of $50,000. Individuals living in census tracts with NMTC projects also were less likely to have college degrees, lower homeownership rates, lower median rents, and fewer home sales.
Neighborhoods with NMTC projects also tend to have more black residents and fewer white residents than neighborhoods without NMTC projects. These neighborhoods also tend to be in commercial areas with higher numbers of jobs available for which people from outside the neighborhood travel.
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