Hawai‘i And Alaska Delegations Introduce Bill To Improve Economic Prosperity Of Native Communities
Improves Program To Incentivize Investments In Native Communities
News release from Office of Sen Brian Schatz, Friday, January 10, 2020
WASHINGTON – U.S. Senators Brian Schatz (D-Hawai‘i), Lisa Murkowski (R-Alaska), Dan Sullivan (R-Alaska), and Mazie Hirono (D-Hawai‘i) introduced the “Inspiring Nationally Vibrant Economies Sustaining Tribes (INVEST) Act". The Schatz-Murkowski legislation aims to make significant improvements to the existing New Markets Tax Credit (NMTC) program to more effectively reach Native communities, such as those in Hawai‘i.
“By attracting new investment to communities that need it most, the New Markets Tax Credit program is a powerful force for economic development. But Native communities have been left behind,” said Senator Schatz. “This bill will make sure Native communities receive their fair share of allocations and will drive more investments into Native Hawaiian communities to help grow our local economy.”
“Despite the impressive record of the New Market Tax Credit program, Native communities have not been proportionately served. This legislation will not only give Alaska Natives greater opportunity to receive support for community revitalization projects, but will help ensure they actually receive the funds they’ve been allocated,” said Senator Murkowski. “By improving the existing program, we are creating greater incentive to invest in rural communities across the state, allowing these remote areas to build and sustain strong economies.”
The NMTC program was established in 2000 to encourage private investment in low-income communities that traditionally lack access to capital. Investors who make qualified equity investments reduce their federal income tax liability by claiming the credit. Unfortunately, NMTC activity has been highly concentrated in just a few states, with the 10 states with the highest activity accounting for over 50 percent of all NMTC activity. The 25 states with the least NMTC activity account for less than 13 percent of all activity. Furthermore, the current NMTC program has no built-in mechanism to ensure that NMTC investments reach Native American communities.
“The New Market Tax Credit program has shown a lot of promise in directing capital investment toward low-income areas of the country, but the program’s current criteria have challenged the ability of Alaska Native communities to participate,” said Senator Sullivan. “I’m glad to join my colleagues in introducing legislation that will ensure these communities are not left behind in this effort, and that Alaskans will see greater benefit and opportunities in the near future.”
“The New Market Tax Credit program has been an effective tool for promoting community development and economic growth across the country, but more can be done to ensure Native communities share in that success. Under this legislation, Native Hawaiian communities in our state and other Native communities across the country will benefit from new access to much-needed resources,” Senator Hirono said. “I am proud to join Senator Murkowski to introduce this legislation to support Native communities and build on the program’s success.”
For the full text of the bill, click here.
US Treasury: NEW MARKETS TAX CREDIT PROGRAM
“…The NMTC Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs). The credit totals 39 percent of the original investment amount and is claimed over a period of seven years….”
US Treasury: CDE CERTIFICATION HAWAII
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