The New Markets Tax Credit Program (NMTC Program) was established by Congress in 2000 to spur new or increased investments in operating businesses and real estate projects located in low-income communities (generally, a Census tract exhibiting poverty of 20% or more, or median family income of less than 80%, or less than 85% in the case of a high-outmigration rural county, as of the most recent Census). The NMTC Program attracts investment capital to low-income communities by permitting investors to receive a tax credit against their Federal income tax liability in exchange for making equity investments in specialized financial institutions called Community Development Entities (CDEs). The credit totals 39 percent of the original investment amount and is claimed over a period of seven years (five percent for each of the first three years, and six percent for each of the remaining four years). The investment in the CDE cannot be redeemed before the end of the seven-year period.
Dakotas America is a certified CDE that has been approved to serve a national service territory.
For more detailed information regarding specific NMTC Program regulations and requirements, additional information can be found at www.cdfifund.gov.
Dakotas America Project Parameters
Dakotas America generally focuses on new operating businesses, business expansions and new commercial real estate initiatives that are $5MM or more in project cost. Our primary mission and business focus is to serve projects in the health care, education and vital community service sectors. Dakotas America also places a priority upon agribusinesses and processing entities that can offer major economic impacts across large regions. Dakotas America is eligible to serve all 50 states; our geographic focus and priority is placed upon rural counties and minor urban areas (population of under 1 million) that have been underserved by the NMTC Program.
In addition to satisfying basic NMTC low-income community eligibility requirements, Dakotas America will only serve projects that are located in Census tracts that are deemed “distressed” per NMTC Program parameters. This means that to be qualified, the Census tract must exhibit at least one of the following conditions as of the last Census:
- poverty rates greater than 30 percent
- median family income does not exceed 60 percent of AMI
- unemployment rates at least 1.5 times the national average
- project is located in a non-metro county
- project uses a “targeted populations” approach
If one of the three criteria cannot be met, then the project must meet two or more of the following criteria:
- poverty rates greater than 25 percent; median family income does not exceed 70% of AMI; or have unemployment greater than 1.25 times the national average
- federally designated Native American reservation
- Brownfields redevelopment areas
- federally designated medically underserved areas
- federal EZs
- ARC/DRA areas designated as distressed
- FEMA public and private disaster areas (subject to timeframe)
- HUB business (must garner HUB certification)
- state enterprise zones or local tax-increment financing districts, enterprise zone programs, state/local programs targeting distressed communities
Dakotas America prioritizes projects that positively impact low-income communities and low-income persons. Dakotas America also assesses project/sponsor state of readiness for use of an NMTC transaction, potential for project sustainability, and other factors before determining if that project is qualified for use of Dakotas America’s NMTC allocations.