The New Markets Tax Credit (NMTC) Program provides vital financing for economic development projects across South Dakota’s diverse communities. From Sioux Falls’s growing urban center to Rapid City’s western gateway, from tribal lands throughout the state to agricultural communities across the prairie, NMTC financing enables transformative investments in areas where traditional capital markets fall short. CBO Financial partners with South Dakota developers, agrarian enterprises, healthcare providers, tribal organizations, and tourism businesses to structure financing solutions that strengthen the Mount Rushmore State’s economy while addressing unique challenges, including geographic isolation, economic volatility in agriculture and tourism sectors, and infrastructure needs on tribal lands.
South Dakota’s resource-based economy—characterized by agriculture, financial services, healthcare, tourism, manufacturing, and energy production—creates significant opportunities for strategic NMTC deployment. The program offers a 39% federal tax credit to investors who provide capital to qualified projects in low-income communities, substantially reducing borrowing costs and making economically vital projects financially feasible. Whether you’re expanding agricultural processing capacity, developing healthcare facilities in frontier counties, creating economic development projects on tribal lands, or building tourism infrastructure in the Black Hills region, NMTC financing can provide the capital advantage necessary to move your project forward.
How the NMTC Program Works in South Dakota
The NMTC Program functions through certified Community Development Entities (CDEs) authorized by the U.S. Treasury’s CDFI Fund to make Qualified Low-Income Community Investments (QLICIs) throughout South Dakota. Projects must be situated in census tracts where the poverty rate exceeds 20% or the median family income falls below 80% of the area median. Investors providing equity to CDEs receive tax credits totaling 39% over seven years—5% annually for the first three years and 6% annually for the remaining four years.
South Dakota contains extensive eligible geography spanning urban areas, rural communities, and tribal lands. Sioux Falls, the state’s largest city, features qualifying census tracts despite the city’s overall economic strength. Rapid City contains eligible tracts, particularly in areas experiencing economic transition. Smaller cities, including Aberdeen, Watertown, Brookings, Mitchell, and Pierre, include qualifying geography. Rural South Dakota—particularly counties in the northern tier, along the Missouri River, and in the southwestern region—presents widespread NMTC opportunities due to agricultural consolidation, population decline, and limited economic diversification.
Tribal lands represent exceptionally significant NMTC opportunities in South Dakota. The state is home to nine federally recognized tribes—including the Oglala Sioux Tribe (Pine Ridge Reservation), Cheyenne River Sioux Tribe, Standing Rock Sioux Tribe, Rosebud Sioux Tribe, Lower Brule Sioux Tribe, Crow Creek Sioux Tribe, Yankton Sioux Tribe, Sisseton-Wahpeton Oyate, and Flandreau Santee Sioux Tribe. These tribal jurisdictions encompass substantial territory where conventional capital access remains severely constrained and unemployment rates on reservations significantly exceed state averages.
The program supports sectors fundamental to South Dakota’s economic priorities: agricultural processing and value-added facilities, healthcare and behavioral health infrastructure, tourism and cultural heritage facilities, financial services operations, advanced manufacturing, renewable energy projects, technology and innovation spaces, and community facilities serving rural and tribal populations. CBO Financial connects South Dakota projects with regional and national CDEs, navigating compliance requirements while ensuring projects advance NMTC for healthcare projects objectives aligned with state economic development goals.
Eligible Projects and Borrowers
South Dakota projects eligible for NMTC financing address critical infrastructure and economic development needs across multiple sectors. Agricultural processing and value-added facilities represent a natural fit given South Dakota’s position as a leading agricultural state. Meat processing operations, grain handling and ethanol production facilities, dairy processing plants, specialty crop processing, and farm-to-market distribution infrastructure all qualify when serving low-income communities and creating accessible employment opportunities. South Dakota’s significant livestock production and crop agriculture create substantial opportunities for value-added processing that retains economic benefits within rural communities.
Healthcare infrastructure projects remain a high priority given South Dakota’s challenge of maintaining healthcare access across its vast, sparsely populated geography. Critical access hospital improvements and expansions, rural health clinics, Indian Health Service facility enhancements, behavioral health treatment centers, dental clinics, and telehealth infrastructure qualify when serving underserved populations. South Dakota’s challenges with substance abuse, mental health access, particularly on tribal lands, and rural provider shortages make healthcare facilities particularly compelling NMTC candidates.
Tourism and cultural heritage facilities leverage South Dakota’s significant tourism economy, anchored by Mount Rushmore, the Black Hills, and tribal cultural sites. Hotels and lodging facilities in underserved areas, cultural centers preserving Lakota and Dakota heritage, museums, entertainment venues, and tourism support infrastructure qualify for NMTC support. Projects that extend tourism benefits to tribal communities and rural areas beyond traditional tourist corridors address important economic development objectives.
Financial services operations, including credit card processing centers, banking operations, and fintech facilities, leverage South Dakota’s favorable regulatory environment for financial services. These facilities qualify when located in eligible census tracts and create accessible employment. Manufacturing facilities producing agricultural equipment, food processing machinery, precision components, or other goods qualify when demonstrating job creation in low-income communities.
Renewable energy projects, including wind energy facilities and component manufacturing, solar installations, and biomass energy operations, align with South Dakota’s abundant renewable resources. Technology and innovation spaces—including business incubators, coworking facilities, and research centers—qualify when supporting economic diversification in communities dependent on cyclical agriculture and tourism industries.
Educational facilities such as tribal schools, charter schools, early childhood education centers, and workforce training facilities address academic needs and qualify for financing. Community facilities, including recreation centers, libraries, cultural centers, and mixed-use developments providing essential services in small towns and on tribal lands, qualify for NMTC support.
Downtown revitalization projects in South Dakota’s smaller communities—Aberdeen, Watertown, Brookings, Mitchell, Yankton, Pierre, and Huron—leverage NMTC to restore aging commercial districts and create modern business infrastructure serving rural populations.
Eligible borrowers include for-profit businesses, nonprofit organizations, tribal entities and enterprises, and local government authorities. Tribal projects require specialized structuring given the unique jurisdictional considerations on reservation lands. CBO Financial creates comprehensive capital packages through CDFI funding that combine NMTC with conventional debt, equity, tribal lending programs, state incentives, USDA financing for agricultural and rural projects, and other complementary sources tailored to South Dakota’s development landscape.
Benefits of the NMTC Program for South Dakota
The NMTC Program delivers tangible economic benefits to South Dakota communities while providing borrowers with advantageous financing structures. The 39% tax credit substantially reduces effective capital costs, often enabling projects to achieve debt service coverage acceptable to lenders while maintaining operational viability. For capital-intensive projects common in South Dakota—agricultural processing facilities, healthcare campuses, tourism infrastructure—this cost reduction frequently determines whether projects proceed or remain unrealized.
Beyond financial mechanics, NMTC investments generate significant community impact. Job creation and retention constitute primary program objectives, with projects committing to creating positions accessible to low-income individuals. In South Dakota’s rural areas and on tribal lands, where employment alternatives are minimal and population retention remains a critical challenge, job creation carries substantial importance for community sustainability.
South Dakota’s tribal nations benefit substantially from NMTC’s improved capital access. Projects on tribal lands have utilized NMTC financing for healthcare facilities, cultural tourism enterprises, agricultural ventures, renewable energy projects, and commercial developments. These investments build wealth and economic infrastructure in tribal communities, supporting sovereignty and economic self-determination. The ability to finance projects on reservations facing some of the nation’s highest poverty rates makes NMTC particularly valuable for tribal economic development.
South Dakota’s smaller communities particularly benefit from NMTC’s ability to finance projects serving essential community needs despite limited profitability potential. A healthcare clinic in a frontier county, a grocery store in a rural town losing population, or a tourism facility extending economic benefits beyond traditional corridors, becomess feasible through NMTC’s cost reduction.
NMTC projects also catalyze significant private investment—each allocation dollar typically attracts multiple additional capital dollars, multiplying the program’s economic effect. This leverage proves especially important in South Dakota’s capital-scarce environment, particularly for projects in remote locations or on tribal lands where conventional lenders perceive elevated risk.
The program provides patient capital with flexible repayment terms. Unlike conventional loans requiring immediate full debt service, NMTC structures often feature interest-only periods during initial years, allowing projects to stabilize operations before principal payments commence. This flexibility proves especially valuable for projects in South Dakota’s cyclical agricultural and tourism economies or those with seasonal revenue patterns. To evaluate your South Dakota project’s NMTC potential, contact CBO Financial for a free project analysis with its specialized team.
Regulatory & State Development Framework
South Dakota’s economic development ecosystem supports NMTC deployment through various state-level programs and agencies. The Governor’s Office of Economic Development administers incentive programs that complement NMTC financing, including the Revolving Economic Development Initiative (REDI) Fund, Workforce Development Grants, Value-Added Finance Program, and various industry-specific initiatives. Understanding how to layer these state resources with federal NMTC benefits can significantly enhance project economics.
The South Dakota Development Corporation provides financing tools, including loan programs and guarantees that may complement NMTC transactions. South Dakota’s unique financial services regulatory environment attracts credit card processors and fintech companies, and projects in this sector can benefit from both NMTC and industry-specific advantages.
For agricultural projects, South Dakota’s robust agricultural support infrastructure—including programs through the Department of Agriculture, South Dakota State University Extension, and commodity organizations—can provide complementary resources. USDA programs administered through South Dakota’s state office, including Business & Industry Loan Guarantees, Rural Energy for America Program, and Value-Added Producer Grants, often complement NMTC structures for agricultural and rural projects.
For tribal projects, coordination with the nine tribal governments, the Great Plains Tribal Chairmen’s Association, and tribal economic development offices facilitates project development. The South Dakota Department of Tribal Relations works to improve state-tribal collaboration. CBO Financial brings specialized experience structuring NMTC transactions for tribal enterprises, navigating Bureau of Indian Affairs requirements, tribal employment rights ordinances, and trust land lending considerations.
Regional economic development organizations, including Sioux Falls Development Foundation, Rapid City Economic Development Partnership, and various county and municipal development entities, provide project support and help identify available local incentives. The South Dakota Governor’s Office of Economic Development maintains regional offices that can facilitate connections to appropriate resources.
For tourism projects, the South Dakota Department of Tourism provides marketing support and can validate project feasibility for projects expanding tourism infrastructure. The Black Hills region’s established tourism ecosystem provides models for successful tourism development that can be replicated in other areas.
CBO Financial ensures projects meet both federal NMTC compliance requirements and South Dakota’s regulatory framework. We coordinate timing between NMTC closing schedules, state incentive applications, tribal government approvals for reservation projects, environmental reviews, and local approval processes. South Dakota’s business-friendly regulatory environment and pragmatic approach to economic development facilitate project execution, though projects on tribal lands require specialized expertise in navigating federal and tribal regulations.
Get Started with NMTC Financing in South Dakota
If you’re developing a project in a South Dakota low-income community—whether on tribal lands, in frontier rural counties, in Sioux Falls or Rapid City, or in small towns across the prairie—NMTC financing deserves serious consideration. The program’s capacity to reduce capital costs while directing investment to underserved areas makes it uniquely powerful for addressing South Dakota’s development challenges, particularly supporting tribal economic development, maintaining viability in rural areas facing population decline, and diversifying economies dependent on agriculture and tourism.
CBO Financial’s process begins with a comprehensive project evaluation: verifying census tract eligibility, analyzing community impact potential, assessing NMTC suitability relative to other financing options, including state programs and tribal resources, and identifying optimal CDE partners with experience in rural and tribal markets. We then construct customized capital stacks that may combine NMTC with conventional debt, equity investments, Governor’s Office of Economic Development incentives, tribal lending programs for reservation projects, and USDA programs for agricultural and rural initiatives.
South Dakota clients benefit from our established relationships with CDEs, tax credit investors, and lenders active in rural and agricultural markets. We understand South Dakota’s unique development context—the farm economy’s cyclicality, the importance of tourism in the Black Hills and beyond, the challenges of extreme weather and geographic isolation, the opportunities on tribal lands, and the specialized considerations for projects in frontier counties. This South Dakota-specific expertise streamlines the NMTC process and increases allocation success rates.
Project size shouldn’t deter NMTC exploration. While South Dakota’s smaller population means projects are often more modest than in larger states, transactions ranging from $2 million to $40 million regularly close using creative structuring approaches tailored to the state’s markets. The key is early engagement with experienced advisors who understand both NMTC mechanics and South Dakota’s specific development landscape. Connect with new market tax credit consultants and overview professionals at CBO Financial today to discover how NMTC can make your South Dakota community development project a reality.