Stabilize the Federal Financing Delivery System
Access to federal capital is critical and extremely beneficial to state and local government and private sector investment in economic development projects. Access to capital is paramount to leveraging private capital as shown by dozens of creative federal programs aimed at encouraging private sector investment. Nonetheless, both the public and private sector have struggled with the use and engagement of federal resources due to the lack of predictability and reliability of the programs offered by the federal government. Uncertainty has hurt the implementation and long-term effectiveness of federal assistance, and Congress must act to eliminate programmatic uncertainty. Specifically, CDFA recommends the following:
Permanently Authorize and Fund the New Markets Tax Credit (NMTC) Program
The CDFI Fund administers the highly effective New Markets Tax Credit (NMTC) Program. The NMTC program has been a model for attracting and catalyzing investment in America’s low-income census tracts. Unfortunately, the NMTC program has not had consistent program authorization. Typically, the program operates on two to three-year authorization and funding cycles. In some years, the program is retroactively authorized and appropriated to account for prior years that were not previously approved by Congress. Often, the program is authorized and appropriated at the very last minute causing ripples and consternation throughout the development finance industry. Nothing impedes financing success more than funding uncertainty. Simply put, the private sector cannot plan for investment and expansion if it’s uncertain that the NMTC program will be authorized and/or funded. The NMTC Program should be permanently authorized and tied to inflation, with an annual appropriation of no less than $3.5 billion.
U.S. Customs and Immigration Services EB-5 Regional Center Program
The popular and extremely successful EB-5 Regional Center Program housed at USCIS has driven billions of private-sector led investment into American communities since the early 1990s. This program, which leverages direct foreign investment in return for accelerated citizenship opportunities, has not only proven to be very successful but also highly efficient. In recent years, the program has catalyzed thousands of development projects that otherwise would not have materialized and has created millions of permanent jobs. Unfortunately, the program remains temporarily authorized and requires regular reauthorization by Congress. This ongoing battle pits an important economic development tool against political barriers. Tools such as EB-5 need not be subject to speculative political pressures and should be a permanent program. CDFA recommends that Congress pass immediate and permanent reauthorization of the EB-5 Regional Center Program.
Read the 2019 Policy Agenda