January 28, 2011
Putting America Back to Work:
Reauthorize the New Markets Tax Credit for Job Creation in Low-Income Communities
Statement by Frank Altman, President and CEO
We at the Community Reinvestment Fund, USA (CRF) wholeheartedly support President Obama's State of the Union call to get American companies back in the businesses of creating jobs. The President noted that the stock market is strong, corporate profits are up and the economy is growing. Yet unemployment remains unacceptably high and for the most part the strengthening economy has yet to reach into America's low-income communities, whether rural or urban.
Carolina Reid writing in the Federal Reserve Bank's Community Investments cited Gregory Acs and wrote "The consequences of unemployment for low-income communities may also be higher; lower-income households experience greater income losses (as a percentage of income) during recessions, and it takes them longer than higher-income households to get back on their feet. Unemployment can have particularly devastating effects on single-parent households, as well as on households that have come to depend on two full incomes to make ends meet."1
As we climb out of this recession, the imperative for job creation is clear and focus on low-income communities is compelling. That has been CRF's focus since its beginning 23 years ago, having now lent $1.2 billion for community development. Just last month CRF's Board of Trustees adopted our new strategic plan and that plan renews and strengthens CRF's emphasis on job creation. It is and will be our #1 focus.
So we join with President Obama and the Congress. CRF pledges to do its part to get America's small businesses moving and creating jobs. And we will continue to focus our energies on America's low-income communities and disadvantaged populations. We have set for ourselves the goal of financing $290 million in community development projects in this next year. That amount will surpass our strongest year by almost 40%.
These loans will support jobs and strengthen the social ecosystem that supports those jobs, particularly in low-income communities. These loans will finance small and medium-sized businesses; they will build affordable housing, child care centers, community clinics, ESL and GED centers, workforce training centers and community centers. They will help people build their strong communities.
There is one tool that CRF and the CDFI industry can put to use right now; a tool that Congress can act on quickly. The New Markets Tax Credit (NMTC), enacted in a bipartisan manner in 2000, has over the years attracted $26 billion of private investment into low-income communities.2 It has been a great success. It is awaiting reauthorization.
The NMTC reauthorization got held up in the year-end politics over the Tax Extenders bill last year. But it need not be held up now. It has bipartisan support. It has a pedigree of performance. It has community developers all over the country ready to put it to use creating jobs. And because the NMTC by law is restricted to use only in low-income communities, those jobs will go where they are needed the most.
We at CRF call on Congress and President Obama to quickly reauthorize and sign the New Markets Tax Credit extension.
In his speech, President Obama said "We measure progress by the success of our people. By the jobs they can find and the quality of life those jobs offer. By the prospects of a small business owner who dreams of turning a good idea into a thriving enterprise."
That measure is the most compelling argument for extension of the New Markets Tax Credit. Give us the tool and we will help small business owners turn those dreams into jobs.
1 Reid, Carolina (2009). "Addressing the Challenges of Unemployment in Low-Income Communities" Federal Reserve Bank of San Francisco, Community Investments, Vol. 21, No. 1, Spring 2009.
2 Community Development Financial Institutions Fund, Performance and Accountability Report Fiscal Year 2010, January, 2011.
Posted by: CRFUSA