As promised in 2021, the Community Development Financial Institutions (CDFI) Fund has launched a New Markets Tax Credit (NMTC) Program Native Initiative. This initiative aims to spur greater investment in Federal Indian Reservations, Off-Reservation Trust Lands, Hawaiian Home Lands, and Alaska Native Village Statistical Areas.
These NMTC Native Areas historically have lacked representation in the NMTC program. For instance, in the latest round of NMTC funding, only one native entity received NMTC funding. The NMTC program also has historically favored investment in urban rather than rural environments, which leads to disadvantages for the inherently rural settings of most Indian areas.
How Tribes and Tribal Organizations Can Participate
Tribes and organizations that serve tribal interests can participate in and benefit from the NMTC Program Native Initiative in two different ways:
- Tribes and tribal organizations can apply to become certified as qualified community development entities (CDEs), seek NMTC allocation, and make loans to projects in NMTC Native Areas. There already are 69 Native CDFIs that automatically could qualify for CDE status. The NMTC Program Native Initiative looks to facilitate the application and allocation process for native CDFIs and other tribal organization applicants.
- Organizations that serve tribal interests can seek NMTC financing as qualified active low-income community business (QALICB) borrowers. QALICBs then use the NMTC loan funds for real estate development projects in NMTC Native Areas.
CDFI Fund Selects Contractor to Conduct NMTC Program Native Initiative
The CDFI Fund recognizes that barriers exist for tribes and organizations promoting tribal interests participating in the NMTC program. As a result, the CDFI Fund has contracted with Big Water Consulting, LLC (“Big Water”) to conduct the work of the NMTC Program Native Initiative. Big Water will produce a survey of historic NMTC lending practices in NMTC Native Areas, create a self-assessment guide for native-owned or controlled entities, and conduct technical workshops for those entities that wish to participate in the program.
NMTC and the NACA Program
Many NMTC participants also participate in other tax credit programs and funding sources, such as the federal historic rehabilitation tax credit, the Low-Income Housing Tax Credit (LIHTC), the Opportunity Zone Program, and state tax credit programs. Native CDFIs can participate in the Native American CDFI Assistance Program (NACA Program), which offers financial assistance and technical assistance grants to Native CDFIs. These entities can use NACA funds for projects that also qualify for NMTCs.
We Can Work Together to Develop Communities
Savage & Associates is an economic development law firm providing sophisticated legal and business advice to clients interested in making significant changes in their communities. We advise developers, investors, nonprofit organizations, entrepreneurs, and anyone looking to effectuate change. You can contact our offices by calling 215.880.9441 in Philadelphia or 202.817.3941 in Washington D.C. to discuss your ideas. You can also find Savage & Associates online 24 hours a day, seven days a week, to get more information about the innovative financial tools we can use to make your vision a reality. From New Markets Tax Credits to Historic Tax Credits, we can design the unique transaction best designed to achieve your objectives.