You can’t use them for investments in residential rental property, casinos, or golf courses, but federal New Markets Tax Credits are among the most versatile economic development tools in the City’s arsenal. So far, the City and the region have been granted credits to support $52 million in investment.
The credits (technically, Section 45d of the Internal Revenue Service Code) give private investors reductions in federal income tax liability equalling 39 percent of the amount of the investment over a 7-year period when they make investments in areas of high unemployment that produce jobs, produce new real estate development, or finance and assist businesses committed to doing business in under-served areas.
There are plenty of regulations — and the applications are complex. But, the possibility of New Markets has drawn the interest of such investors as Allegiant Bank, Bank of Edwardsville, Cass Bank, Commerce Bank, the Danforth Foundation, the Land Development Fund (with BOA), Missouri State Bank, Southwest Bank, Stifel Nicolaus, UMB Bank, and West Point Bank. And a range of different City projects, including new biotech businesses, new retailers, and a roster of problem properties seeking solutions, will find capital because of them.