RDP Welcomes US Congressman Randy Feenstra and Iowa Legislators for NMTC Discussion

Picture taken by Globe Gazette

Picture taken by Globe Gazette

Forest City, Iowa – Rural Development Partners (RDP) was honored to welcome U.S. Congressman Randy Feenstra (IA-4) to Forest City to discuss the CDFI Funds New Markets Tax Credit (NMTC) Program, of which Feenstra is a supporter. Iowa State Senator David Rowley (District 5/Dickinson County), and Iowa State Representative Henry Stone (District 9/Winnebago County) accompanied the congressman for this discussion.

Established in 2000, the Federal New Markets Tax Credit Program incentives community development and economic growth by attracting private capital to low-income or underserved communities. The program generates $8 of private investment for every $1 of federal funding, allowing individual and corporate investors a tax credit against their federal income tax in exchange for equity investments in underserved regions. The tax credit totals 39% of the original investment amount and is claimed over a period of seven years.

This program has flown under the radar in some communities because of the complexities that RDP eases through as an experienced Community Development Entity (CDE), well-versed in the NMTC Program. RDP’s CEO Dan Helgeson stated that NMTCs can help provide availability to equity and cash that red tape and intricacies can lead to a dead end in terms of economic development.

In 2022, 102 CDEs were given NMTC authority by the CDFI, 21 with a rural focus, others a metro, each with a diverse mission to provide a variety of economic development opportunities across the nation. NMTC funding has been a critical source of financing for businesses and community facilities by filling the funding gap for projects ranging from healthcare and food bank distribution centers to manufacturing and community facilities, mixed-use housing and more. The NMTC program supports expanded services providing employment opportunities that improve quality of life while spurring catalytic economic impacts that revitalize communities.

Make the NMTC Program Permanent

RDP’s Governing Board Chairman, Chris Edgington, and CEO Dan Helgeson advocated for permanency of the NMTC program. Since inception, the program has involved extensions that require government approval and periodic waiting to know if funding will be available. The NMTC Program was extended on a yearly basis for many years, then for five years in 2020, now scheduled to expire in 2025 unless the program is extended or becomes a permanent part of the tax code. Helgeson estimated that a typical NMTC application process is about three months, closing the deal might take another two and a half months. Both noting that the lack of permanency of the program is an issue, citing the importance of timing for applicants seeking tax credits. There are no guarantees at closing if they are still awaiting new funding appropriation.

Linking Communities with the NMTC Program

State Representative Henry Stone asked how Iowa Legislators could help make a positive impact and link communities in need with the program. “Most of them don’t know about us,” said Edgington, adding that an economic development person who really digs into it can make a big impact in a region and also promote it. He said that word of mouth and spreading information about the parameters of the program in rural areas and small towns would be very beneficial. RDP is on Facebook, Linked In, and other platforms explaining how they and others like them, can help businesses grow and expand through the program. RDP has also had communications with Iowa Economic Development Authority officials, including Director Debi Durham.

Feenstra said he’s seen a lot of manufacturers that have models for adding 30-50 jobs, but some are outside-of-the-box; RDP and others could build upon that. Helgeson cited an example of $10 million venture capital invested in a $30 million project. A project could include grants, bank loans, sponsor equities, and more; NMTC could provide an estimated $7 million in equity. “We’re incentivizing investors to want to put their money in that investment and make it work,” Feenstra said. “Equity is the key. You need ‘x’ amount of equity for many projects.” Feenstra also raised concerns about not wanting to provide assistance to companies, or their subsidiaries, that have available cash for expansion projects. “CDEs are accountable for where we’re putting those dollars,” said Helgeson.

RDP’s Community Investment Program

RDP believes that creating quality jobs is an important impact of the NMTC investment, but sometimes more is needed. NMTC and Community Partners are asked to consider opportunities within their community that compliment jobs by addressing needs that support low-income people in workforce training, recruitment, and retention. RDP allows room for creativity and flexibility of individual communities to make locally focused recommendations that create a win-win-win for the community, the QALICB (Qualified Active Low-Income Community Business), and RDP through alignment with their vision and mission. Once an acceptable initiative is agreed upon, RDP and their NMTC partner (QALICB) provide a privately funded matching funds grant to help fund the initiative. RDP’s Community Investment Program is not part of the NMTC structure but an added investment specific to RDP.

Rural Development Partners

Rural Development Partners is a CDE with a national service area, eligible to apply for an annual allocation of Federal New Markets Tax Credits (NMTCs). From 2004 through 2023, RDP has won twelve NMTC awards from the U.S. Treasury totaling $751.7 million, helping 50 businesses and nonprofits expand to provide quality jobs, economic impacts, and healthy food access in underserved communities. RDP seeks to serve and partner with businesses, non-profit organizations, communities, and government entities that share its mission to build public-private partnerships for catalytic job growth in rural America. To learn more about partnering with RDP, reference the RDP Lead Guide linked.