KANSAS CITY, Mo. — Federal leaders are hoping a government program with past success can help lift the United States economy out of COVID-19 hardships. About a month before leaving office, President Donald Trump authorized the largest extension of a program called “New Market Tax Credits.”
In its most basic sense, the program allows investors in development projects to save money on their federal income taxes if the development is in certain census tracts with low-incomes and other qualifying data, as outlined in this map.
President Bill Clinton enacted the program in 2000. After Hurricane Katrina in 2005, President George Bush expanded the program to help with recovery efforts. In 2009, President Barack Obama leaned on the program to help get through the Great Recession.
In and around Kansas City, Missouri, Enterprise Bank and Trust is one of the only local banks currently working with the US Treasury Department in the New Market Tax Credits program.
“We really do want to use these for the benefit of our community as a whole,” Adam Kilpatrick, Enterprise’s senior vice president of commercial real estate in the Kansas City region, said.
He said the bank only uses the program to help fund projects if they couldn’t be built without New Market Tax Credits. He said the program is especially useful when building community centers or educational facilities, which offer invaluable resources to underserved communities, but whose main missions are not to make money like a traditional development.
“Really, New Market Tax Credits were created to drive development, drive jobs in those underserved areas,” Kilpatrick said.
Data from Enterprise Bank and Trust shows that projects it has guided through the New Market Tax Credit process since 2013 have created more than 600 permanent jobs in the KC region.
Some of those projects include converting the former Westport Middle School into a co-working space called Plexpod. Right now, Enterprise is working with the PBS television station in Kansas City to expand its community offerings though the Picture This campaign. In rural areas, Enterprise helped the YMCA expand and renovate its facility in Atchison, Kansas.
“It’s completely changed my life,” Steve Shipman said of the Atchison Family YMCA/Cray Community Center.
In 2015, doctors diagnosed Shipman with skin cancer. After beating the cancer through radiation and chemotherapy, he joined the YMCA’s Livestrong Program for cancer survivors. He’s gone from not being able to walk up stairs, to now working out at the facility in downtown Atchison five to six days a week.
“I got in on a program here at the Y, started very slowly, it’s just increased, and it’s been the best thing that’s ever happened,” Shipman said.
Kilpatrick, at the bank, admitted the New Market Tax Credit program is very complex and requires a thorough legal review, which is why Enterprise tries to offer all the related services under one roof.
“When it works, it works really, really well, which is why few things these days have the bipartisan support these credits do,” Kilpatrick said.
This fall, the Treasury Department will announce which partners it will work with in the next round of New Market Tax Credits. Enterprise has applied to be a partner again.