A federal program that was introduced by Congress in 2000 is now available in the CNMI. Civic Integrity, Inc., a Community Development Entity (CDE) designated by the U.S. Department of Treasury is able to bring the New Market Tax Credit (NMTC) program to the CNMI. The program, which is administered by the Community Development Financial Institute, a division of the U.S. Treasury, exchanges federal tax credits for capital investments into low-income communities.
To date, the program has allocated approximately $43 billion in tax credits, with $42 billion resulting in commercial investments throughout the nation. Of the insular areas, only Puerto Rico has been able to avail of the program to the tune of nearly $110 million dollars. Civic Integrity, Inc. is the only CDE in the nation authorized to offer the credits in the CNMI.
“The program provides an exciting opportunity to bring private capital to our community, by which all accounts is considered low-income and severely underserved. With issues surrounding Article XII, local financial institutions are largely restricted and rightfully cautious of commercial lending. The CNMI has launched the State Small Business Credit Initiative (SSBCI), however, commercial financing continues to be a struggle. The new market tax credit program allows large scale lending and equity investments into local projects through the designated financial intermediary, Civic Integrity, Inc. which can service a variety of business enterprises in our community” said local businessman Erick Van Der Maas.
The program, which this year alone will allocate nearly $7 billion in tax credits, provides investors a 39 percent credit against their federal income tax liabilities for their investments into an approved CDE. The CDEs then deploy the capital investments through favorable loan terms or equity investments into business enterprises in identified low-income communities.
In late 2015, Civic Integrity, Inc. was designated by the U.S. Treasury to service the CNMI. The firm has a locally based advisory board, intended to ensure that capital investments that are deployed into the CNMI are in alignment with the community needs and priorities.
“As Commerce secretary, I am very much excited about this program. This program opens up a wealth of opportunity for companies seeking to raise capital through either debt or equity. It provides an attractive incentive for investors into the CDE through the 39 percent credit, while providing the flexibility for the CDE to place the funds into a single project, or a variety of projects. As we are in the process of developing the CNMI’s Comprehensive Economic Development Strategy (CEDS), we will definitely be including this financing option for identified projects” said CNMI Commerce Secretary Mark Rabauliman.
To learn more about the program, visit www.civicintegrity.net.