The New Markets Tax Credit (NMTC) Program catalyzes essential investment throughout Texas’s vast and economically diverse landscape. From Houston’s urban neighborhoods to Dallas-Fort Worth’s opportunity zones, from San Antonio’s historic districts to the Rio Grande Valley’s colonias, NMTC financing unlocks capital for transformative projects in areas where conventional lending remains insufficient. CBO Financial collaborates with Texas developers, energy sector companies, healthcare systems, advanced manufacturers, and community organizations to structure comprehensive financing solutions that strengthen the Lone Star State’s economy while addressing persistent challenges in the border region, rural communities, and urban neighborhoods experiencing economic transition.
Texas’s multifaceted economy—characterized by energy production, healthcare and life sciences, technology, advanced manufacturing, aerospace, international trade, agriculture, and logistics—creates exceptional opportunities for NMTC deployment. The program provides a 39% federal tax credit to investors who deploy capital in qualified low-income communities, substantially reducing borrowing costs and enabling projects that serve critical community needs. Whether you’re developing medical research facilities in Houston’s Texas Medical Center district, expanding manufacturing operations in the I-35 corridor, creating mixed-use developments in Austin or El Paso, or building healthcare infrastructure along the Texas-Mexico border, NMTC financing delivers the capital advantage necessary for project success in Texas’s competitive markets.
How the NMTC Program Works in Texas
The NMTC Program operates through certified Community Development Entities (CDEs) authorized by the U.S. Treasury’s CDFI Fund to make Qualified Low-Income Community Investments (QLICIs) throughout Texas. Projects must be located 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 subsequent four years.
Texas contains extensive eligible geography across its major metropolitan areas, mid-size cities, and rural communities. Houston, Dallas, Fort Worth, San Antonio, and Austin feature numerous qualifying census tracts throughout their urban cores and surrounding areas. The Rio Grande Valley—including Brownsville, McAllen, Harlingen, and surrounding communities—presents widespread NMTC opportunities due to persistent poverty and infrastructure needs. Border cities, including El Paso, Laredo, and Eagle Pass, contain substantial eligible geography. Rural Texas—particularly counties in East Texas, West Texas, and the Panhandle—presents NMTC opportunities due to agricultural transition, energy sector volatility, and limited economic diversification.
The program supports sectors central to tTexas’s economic priorities: energy sector operations, including renewable energy manufacturing, healthcare and life sciences facilities, advanced manufacturing operations, aerospace component production, technology and innovation spaces, international trade and logistics facilities, food processing and agricultural value-chain facilities, and mixed-use urban developments. CBO Financial connects Texas projects with the state’s robust network of regional and national CDEs, navigating compliance requirements while ensuring projects advance commercial project financing objectives aligned with state economic development strategies.
Eligible Projects and Borrowers
Texas projects eligible for NMTC financing address critical infrastructure and economic development needs across the state’s diverse regions. Healthcare infrastructure projects remain critically important given Texas’s large uninsured population and disparities in healthcare access between urban centers and rural areas. Hospital expansions, federally qualified health centers, specialty clinics serving border communities, behavioral health facilities, dental clinics, and rural health clinics all qualify when serving underserved populations. Texas’s challenges with maternal mortality, diabetes prevalence in border communities, and rural healthcare access make healthcare facilities particularly compelling NMTC candidates.
Energy sector projects, while requiring careful structuring given NMTC restrictions on certain extractive activities, can qualify when focused on manufacturing, processing, or renewable energy. Solar panel manufacturing facilities, wind turbine component production, battery storage systems, hydrogen production facilities, and renewable energy installations providing community benefits qualify for NMTC support. Texas’s position as a national energy leader creates substantial opportunities for energy-related manufacturing and processing operations.
Advanced manufacturing facilities producing automotive components, aerospace parts, electronics, machinery, plastics, and chemicals qualify when demonstrating job creation in low-income communities. Aerospace manufacturing, leveraging Texas’s concentration of NASA facilities, military installations, and private space companies, represents a strong NMTC opportunity. Technology and innovation spaces—including incubators, accelerators, research parks, and data centers—qualify when spurring economic development in transitioning communities or serving underserved entrepreneurs.
International trade and logistics facilities leverage Texas’s extensive border crossings and port infrastructure. Warehousing operations, distribution centers, cold storage facilities, customs brokerage operations, and intermodal logistics facilities qualify when creating jobs in low-income communities. Food processing and agricultural infrastructure projects—including meat processing, produce packing and distribution, dairy processing, and specialty food production—support Texas’s massive agricultural sector.
Educational facilities such as charter schools, early childhood education centers, STEM learning facilities, and workforce training centers address academic needs and qualify for financing. Cultural facilities, including museums preserving Hispanic heritage and Texas history, performing arts venues, and community centers, support Texas’s diverse communities.
Downtown revitalization projects in mid-size cities—Waco, Amarillo, Lubbock, Corpus Christi, Beaumont, Abilene, Wichita Falls—leverage NMTC to transform underutilized properties into vibrant mixed-use developments. Historic building rehabilitation in Texas’s older communities creates modern commercial space while preserving architectural heritage.
Border region projects addressing infrastructure needs in colonias—unincorporated communities often lacking basic services—represent particularly impactful NMTC opportunities. Water and wastewater infrastructure, community facilities, healthcare centers, and economic development projects in these underserved communities address critical needs.
Eligible borrowers include for-profit businesses, nonprofit organizations, and local government entities developing qualified projects. The borrower must demonstrate substantial service to low-income communities and prove that NMTC financing is essential to project feasibility. CBO Financial creates comprehensive capital stacks through CDFI consulting services that combine NMTC with conventional debt, equity, Texas Enterprise Fund incentives, local economic development programs, historic tax credits, and other complementary funding sources optimized for Texas’s development environment.
Benefits of the NMTC Program for Texas
The NMTC Program delivers substantial economic benefits to Texas communities while providing borrowers with competitive financing terms. The 39% tax credit significantly reduces effective capital costs, often enabling projects to achieve debt service coverage ratios that satisfy lenders while maintaining operational sustainability. For capital-intensive projects common in Texas—medical research facilities, manufacturing plants, energy infrastructure, large-scale developments—this cost reduction frequently determines project viability.
Beyond financial mechanics, NMTC investments generate measurable community impact aligned with Texas’s development priorities. Job creation remains a central metric, with projects committing to create or retain positions accessible to low-income individuals. In Texas’s distressed communities—whether in Houston’s Third Ward, Dallas’s southern sectors, Rio Grande Valley colonias, or rural counties—quality job creation carries substantial importance for reducing poverty and providing economic opportunity in the nation’s second-most-populous state.
NMTC projects catalyze significant private investment—each allocation dollar typically attracts multiple additional capital dollars, multiplying the program’s economic multiplier effect. This leverage proves especially important in Texas, given the scale of development opportunities and the ability of individual projects to impact entire communities or regions. Texas’s border communities particularly benefit from NMTC’s capacity to finance projects serving essential community needs despite challenging market conditions. Healthcare facilities in the Rio Grande Valley, manufacturing operations in border cities, infrastructure improvements in colonias, and economic development projects leveraging international trade become feasible through NMTC’s cost reduction and its attraction of mission-driven investors.
The program provides patient capital with flexible repayment structures. Unlike conventional loans requiring immediate full debt service, NMTC transactions often feature interest-only periods during initial years, allowing projects to stabilize operations before principal payments commence. This flexibility proves valuable for projects with extended development timelines or those serving markets with limited immediate revenue potential. To evaluate your Texas project’s NMTC potential, initiate free project analysis with CBO Financial’s experienced team.
Regulatory & State Development Framework
Texas’s economic development infrastructure strongly supports NMTC deployment through various state and local programs. The Texas Economic Development and Tourism Office, part of the Office of the Governor, coordinates state economic development efforts and administers programs including the Texas Enterprise Fund and the Skills Development Fund. Understanding how to layer these state resources with federal NMTC benefits can enhance project economics. However, Texas generally relies more on local incentives than state-level programs compared to many other states.
Local governments in Texas offer substantial incentives through tax abatements, Chapter 380/381 economic development agreements, tax increment financing, and other local programs. Texas’s strong local control tradition means cities and counties drive much of the economic development incentive activity, and coordination with local officials is essential for maximizing benefits.
For border region projects, federal programs through agencies like the U.S. Department of Agriculture, Economic Development Administration, and Department of Housing and Urban Development often provide complementary funding. The Texas Water Development Board administers programs addressing water infrastructure needs in colonias and underserved communities.
Regional economic development organizations—including the Greater Houston Partnership, Dallas Regional Chamber, San Antonio Economic Development Foundation, Austin Chamber of Commerce, and numerous border region organizations—provide project support and help navigate local programs. For healthcare projects, partnerships with federally qualified health center networks strengthen applications.
The Texas Workforce Commission provides workforce training resources through the Skills Development Fund and other programs that add value to manufacturing and business expansion projects. Texas’s extensive community college system offers customized training supporting project workforce needs.
For projects in opportunity zones—which overlap substantially with NMTC-eligible census tracts—opportunity zone benefits provide additional tax incentives that can be strategically combined with NMTC. Texas contains hundreds of designated opportunity zones offering substantial investment potential.
CBO Financial ensures projects meet both federal NMTC compliance requirements and Texas’s regulatory framework. We coordinate timing between NMTC closing schedules, local incentive negotiations, environmental reviews, and approval processes. Our understanding of Texas’s regional economic development dynamics—including the importance of building relationships with city councils, county commissioners courts, and economic development corporations—streamlines project execution across the state’s diverse markets.
Get Started with NMTC Financing in Texas
If you’re developing a project in a Texas low-income community—whether in major metros like Houston, Dallas, or San Antonio, border communities in the Rio Grande Valley or El Paso, or rural counties across the state’s vast geography—NMTC financing merits thorough evaluation. The program’s capacity to reduce capital costs while attracting impact-focused investment to underserved areas makes it uniquely powerful for addressing Texas’s development challenges, particularly supporting border region infrastructure, healthcare access expansion, and economic diversification.
CBO Financial’s approach begins with a comprehensive project assessment: verifying census tract eligibility, analyzing community impact potential, evaluating NMTC suitability relative to Texas’s numerous local incentive programs and opportunity zone benefits, and identifying optimal CDE partners. We then develop customized capital stacks that may combine NMTC with conventional debt, equity investments, local incentives, opportunity zone benefits, historic tax credits, where applicable, and other complementary sources.
Texas clients benefit from our established relationships with CDEs, tax credit investors, and lenders highly active in the state’s competitive markets. We understand Texas’s unique development context—the energy sector’s importance and volatility, the healthcare needs in underserved communities, the opportunities in aerospace and advanced manufacturing, the border region’s distinctive challenges and international trade advantages, and the nuances of local economic development across the state’s diverse metropolitan areas and rural regions. This Texas-specific expertise increases NMTC allocation success rates and streamlines transaction execution.
Project size shouldn’t discourage NMTC exploration. Texas hosts some of the nation’s most significant NMTC transactions in markets like Houston and Dallas, while projects ranging from $3 million in rural communities to over $200 million in major metros regularly close using sophisticated structuring approaches. Early engagement with experienced advisors who understand both NMTC mechanics and Texas’s specific development environment maximizes success potential. Connect with new markets tax credit consultant requirements professionals at CBO Financial today to discover how NMTC can transform your Texas community development vision into reality.