Since our founding in 2008, Smith NMTC Associates has been a pioneer in leveraging the federal New Markets Tax Credit (NMTC) program to support the proliferation of affordable for-sale housing across the country.

The NMTC program is one example of a federal place-based policy—designed to incentivize sustained, place-based investment in distressed communities—and is considered the single most impactful place-based policy in U.S. history. As a leader in leveraging the NMTC program for affordable for-sale housing, we examine the history of the program, why place-based investments lead to critical impact, and how the NMTC program can be strengthened.

The History of the New Markets Tax Credit (NMTC) Program 

In 2000, Congress passed the New Markets Tax Credit (NMTC) bill to incentivize sustained, place-based investments in low-income communities, designed to lift distressed neighborhoods out of poverty.

Under the direction of the U.S. Department of Treasury’s Community Development Financial Institutions Fund, NMTCs incentivize sustained investment in low-income communities funding projects that bring jobs, affordable homeownership, healthy food, medical care and community, and commercial goods and services to those communities and their residents.

How Place-Based Investments Empower Low-Income Communities 

Compared to other person-based policies, such as the earned income tax credit or unemployment insurance, the NMTC program is place-based. Place-based policies address social and economic disparities in specific neighborhoods, many of which have faced historical discrimination and disinvestment for decades.

By investing in disenfranchised communities, place-based policies strengthen local empowerment and economic mobility through wealth-building strategies, such as for-sale affordable homeownership projects, mixed-use developments, or community resources.

The NMTC program contributes to significant economic growth: Since the program’s launch in 2000, the program has deployed more than $62.9 billion in investments in low-income communities and businesses, resulting in the creation or retention of more than 857,000 jobs and the construction or rehabilitation of nearly 239 million square feet of commercial real estate.

Using NMTCs for Affordable For-Sale Housing  

The NMTC program has historically been leveraged for several types of projects: Community revitalization, job creation, and other economic development initiatives including affordable homeownership development projects. However, using the NMTC program to spur the creation of affordable for-sale housing is critically underutilized. In 2023, of the $76 billion in NMTC funding deployed, less than 2 percent was deployed to affordable for-sale housing development projects.

In 2008, Smith NMTC Associates pioneered the first use of the NMTC program for affordable homeownership development—transforming communities and the lives of families throughout the U.S. We now serve as the leading NMTC consultant for affordable for-sale housing and we partner with CDEs and nonprofit developers to leverage this critical program to increase access to affordable for-sale housing and community facilities. By using the NMTC program as the driver for change, our work helps restore long-term economic wellness in underserved communities across the United States.

Unlike renting an affordable house or apartment, owning a home provides families, especially low-income and families of color, with the opportunity to accumulate intergenerational wealth and pave the way for a foundation of continued financial stability.

Opportunities to Strengthen the New Markets Tax Credit Program 

In partnership with the U.S. Department of Treasury, the IRS, and the CDFI Fund, there are a number of critical administrative and legislative revisions that would encourage the expansion of NMTCs for affordable for-sale housing.

Administrative Revisions 

• Incentivize applicants to commit a portion of allocation funding received to affordable homeownership projects
• Add funding affordable for-sale housing as an innovative use of NMTC funding
• Provide as much space to discuss the benefits of for-sale housing as are provided for job creation
• When training reviewers include  for-sale housing projects in the examples discussed
• Discuss for-sale housing projects in FAQs and other materials to help socialize the concept that it is a valid use within the industry

Legislative Changes 

• Make the NMTC program permanent
• Include developing for-sale housing projects in areas of high affordable housing need as a qualified “Higher Distress Criteria”
• Create a carveout for affordable for-sale housing similar to the carveout for development in non-metro census tracts

Our Impact 

We offer transparency with our proprietary models because we believe so deeply in homeownership—and its ability to enact sustainable change in the lives of low-income families across the country. You can access all our available resources, including our three models, for reference.

We’re also committed to serving as a resource and a collaborative partner for anyone interested in utilizing the NMTC program for affordable for-sale homeownership. Reach out to us at info@smithnmtc.com to schedule a call or learn more.