[Congressional Record Volume 153, Number 69 (Monday, April 30, 2007)]
[Extensions of Remarks]
[Pages E888-E889]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              INTRODUCTION OF NEW MARKETS TAX CREDIT BILL

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                         Monday, April 30, 2007

  Mr. NEAL of Massachusetts. Madam Speaker, I rise to offer legislation 
to extend the New Markets Tax Credit program for an additional five 
years. I am pleased to be joined by Rep. Ron Lewis in offering this 
bill, along with several other cosponsors.
  The New Markets Tax Credit program has proved to be a remarkably 
successful way to revitalize communities. Current authority for the 
program, however, is due to expire at the end of next year. It is 
important that we extend this credit soon and that we provide for a 
long-term extension.
  The credit was first enacted in 2000 as part of the Community Renewal 
Tax Relief Act. From enactment through fiscal year 2005, the New 
Markets Tax Credit has generated financing for the construction or 
rehabilitation of over 43 million square feet of real estate, and has 
helped to create or retain 72,000 construction jobs and 20,000 full 
time equivalent jobs in low-income community businesses.
  The credit stimulates investment and economic growth in low-income 
urban neighborhoods and rural communities. Investors receive over seven 
years a 39 percent Federal tax credit for Qualified Equity Investments, 
with a 5 percent credit during the first three years and 6 percent 
during the next four years. These investments are made through vehicles 
known as Community Development Entities (CDEs), which raises capital 
from the tax credits and then makes loans to or investments in worthy 
businesses and projects in low-income areas. These CDEs must be 
domestic corporations or partnerships with a primary mission of 
providing investment capital to low-income persons or communities, must 
provide accountability to the communities or residents, and must be 
certified by the Treasury Secretary as an eligible entity.
  Eligible communities, which include both metropolitan and rural 
areas, are low-income communities with a high poverty rate or low 
median family income. In the 2006 extension of this credit, the 
Treasury Secretary was directed to prescribe regulations ensuring that 
there was a balance in allocations between metropolitan and 
nonmetropolitan counties. Further, the Treasury Secretary may also 
designate targeted populations as low-income communities if certain 
individuals or an identifiable group of individuals, including an 
Indian tribe, are low-income persons or lack adequate access to loans 
or equity investments. Some have recently argued that service-connected 
disabled veterans are such a group and I encourage the Treasury 
Secretary to look into this reasonable suggestion.
  Finally, the law requires that businesses, in order to be eligible 
for such investments, show that at least half of the total gross income 
of the business is derived from active operations in a low-income 
community, and that a substantial portion of the business property and 
the services performed by the employees are located in a low-income 
community.
  I believe that all of these rules ensure that the credit is 
appropriately targeted. A recent GAO report found that the program is 
very effective at increasing investment in low-income communities. To 
date, New Markets Tax Credit investments in low-income communities 
total over $7.7 billion. The tax credit has been used to support a wide 
variety of community and economic development initiatives including, 
among others, the financing of charter schools, health care facilities, 
manufacturing businesses, grocery-anchored retail centers, and numerous 
other commercial and mixed-use real estate projects.
  Now, despite this explanation, some of my colleagues may be wondering 
how these credits really work. Let me detail one local success story 
from my Congressional district, and encourage my colleagues to look 
into projects in their districts as well. Hot Mama's Foods is a 
Massachusetts-based food company, specializing in salsas, pestos, and 
other spreads. Recently, the company was able to secure a loan from the 
Massachusetts Development Finance Agency, a CDE, along with other 
financing in order to relocate to a USDA-certified food production 
facility in Springfield, which is in my district. That relocation and 
expansion meant the company could add an additional 10 jobs to its 50-
person workforce and revitalize a neighborhood.

[[Page E889]]

  These tax credits work. They help businesses expand and add valuable 
jobs. The credits need to be extended. I urge my colleagues to join us 
in sponsoring the New Markets Tax Credit Extension Act of 2007.

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