is similar to Community development finance institutions
Community wealth building groups and taxonomic categories
In 2004, the staff of 3CDC accepted the daily operating responsibilities for the Cincinnati New Markets Fund (CNMF) and The Cincinnati Equity Fund (CEF). The separate governing Board of these two private equity funds consolidated financing programs geared toward downtown redevelopment in order to accomplish the common goal shared by all three organizations. CEF and CNMF loans spur economic development in distressed and struggling neighborhoods by providing:
- A key source of capital as lending institutions abandon the market
- Capital for land banking
- Funding for pre-development activities (design, environmental review, etc.)
- 2-4% interest rates
- Interest-only payments (NMTC loans)
- No pre-sale requirements
- Loans made on non-recourse basis to developers
- Loan proceeds revolve and are reinvested in additional projects
The success achieved to date is due to the dedication and endurance of the CEF and CNMF Board of Directors, City officials and staff, community organizations and residents.
The Cincinnati New Markets Fund is a private organization comprised of 13 leading Cincinnati corporations. CNMF focuses on making loans and equity investments that help to revitalize and strengthen the center city of Cincinnati, including both the central business district (CBD) and the adjacent Over-the-Rhine (OTR) neighborhood.
NMTC Program Basics:
The New Markets Tax Credit Program (NMTC) was established by Congress in December of 2000 as part of the Community Renewal Tax Relief Act. It provides a credit against federal income taxes to privately managed investment institutions. In turn, these investment institutions, or community development entities (CDE), make loans and capital investments to drive economic and community development in distressed communities. Each CDE defines its unique “service area” where it will invest the resources it obtains through CDE certification.
Consistent with its comprehensive business strategy, CNMF’s main focus is on the three census tracts comprised of Downtown and OTR bounded by Fifth Street to the south, Central Parkway to the west, Liberty Street to the North and Broadway Street to the East. These census tracts are severely distressed neighborhoods and qualified investment communities for NMTC investments.
By making an investment in a CDE, an individual or corporate investor can receive a tax credit worth 39% of the initial investment, distributed over seven years, along with any anticipated return on their investment in the CDE. The program is administered by the CDFI Fund, an arm of the U.S. Treasury.
