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Supporters of New Market Tax Credit Program Hope for Extension

January 9, 2014 Category: Results

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The Karabots Pediatric Care Center in W. Philadelphia used NMTCs to draw investment

New Market Tax Credits, established by the Community Renewal Tax Relief Act of 2000, are in danger of drying up if Congress decides not to extend the federal program.

Legislation was introduced to make the credit permanent, but a push to cut loopholes and subsidies out of the tax code has left the program vulnerable. 

Like other cities struggling to attract investment, Philadelphia has a considerable stake in the program’s extension: in recent years, NMTCs have drawn investment to major development projects such as the Karabots Pediatric Care Center, the Paseo Verde housing development in North Philadelphia, and the NewCourtland LIFE Center in Germantown.

Projects utilizing NMTCs that are currently in progress include the Eastern Tower Community Center in Chinatown, a supermarket in Mantua and the Edison Square shopping strip.

Andrew Frishkoff, executive director of the Philadelphia branch of the Local Initiatives Support Corporation (LISC), stressed that NMTCs are key to his organization’s community development work.

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“The impact of losing NMTC is that Philadelphia would be poorer and less healthy,” Frishkoff wrote in an email.

How NMTCs work gets complicated, but essentially they provide a tax credit, or decrease in tax liability, to investors that provide equity to registered Community Development Entities (CDE) financing development projects in low-income communities.

Organizations such as LISC and the Philadelphia Industrial Development Corporation (PIDC) use their NMTC allocations to finance a variety of projects. Many of these projects could stop dead in their tracks if the NMTC program is not extended.

“Immediately and locally, there are at least ten projects in our pipeline that will not move forward,” said Sam Rhoads, executive vice president of PIDC. 

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