Local economic development represents one of the most pressing challenges facing communities across the United States and its territories. While national economic indicators may show growth and prosperity, many communities continue struggling with persistent poverty, limited employment opportunities, declining infrastructure, and shrinking tax bases. Traditional economic development strategies often prove insufficient in these contexts, as conventional capital markets systematically underinvest in areas perceived as too risky or insufficiently profitable. The New Markets Tax Credit (NMTC) program offers a powerful solution to this market failure, providing the financial incentives necessary to unlock transformative economic development in communities that need it most.
The Strategic Framework for Local Development
Successful local economic development through NMTC requires more than simply accessing capital—it demands strategic planning that aligns investment with community priorities, builds on local assets and competitive advantages, addresses systemic barriers to prosperity, and creates sustainable foundations for long-term growth. Communities that approach NMTC strategically can leverage the program to achieve coordinated, comprehensive development that transforms economic trajectories rather than merely funding isolated projects.
This strategic approach begins with an honest assessment of local conditions, including economic strengths and weaknesses, demographic trends and workforce characteristics, infrastructure assets and gaps, competitive positioning within regional economies, and community development priorities and capacity. Understanding NMTC within this local context allows communities to identify the specific investments most likely to catalyze broader economic transformation.
Strategic NMTC deployment also requires coordination among multiple stakeholders, including local government economic development agencies, Community Development Entities (CDEs), Community Development Financial Institutions (CDFIs), private sector investors and developers, community-based organizations and residents, and anchor institutions such as hospitals and universities. When these stakeholders align around shared economic development goals, NMTC investments can achieve synergistic impacts that exceed what any single project might accomplish in isolation.
Sector-Specific Development Strategies
Different communities face different economic challenges and opportunities, requiring tailored approaches to NMTC deployment. Manufacturing represents a particularly valuable sector for many communities, as production facilities create quality jobs with family-sustaining wages while generating demand for local suppliers and services. NMTC has supported manufacturing operations ranging from food processing and textiles to advanced manufacturing and clean energy components, helping communities rebuild their industrial bases, which were eroded by decades of deindustrialization.
Healthcare facilities offer another high-impact development opportunity, particularly in medically underserved areas. Community health centers, hospitals, specialty clinics, and dental facilities financed through NMTC address critical service gaps while employing significant numbers of healthcare professionals and support staff. These facilities enhance health outcomes, lower emergency care costs, and foster stable, anchor employment that supports local economies. The combination of essential service delivery and economic impact makes healthcare one of the most valuable sectors for NMTC investment in many communities.
Commercial real estate development can catalyze neighborhood revitalization when strategically deployed. Mixed-use projects that incorporate retail, office, and residential space create vibrant destinations, attracting additional investment and activity. Grocery stores in food deserts enhance nutrition while providing employment opportunities and accessible shopping options. Small business incubators nurture local entrepreneurship. These commercial developments work best when integrated with broader neighborhood strategies rather than standing as isolated projects disconnected from the community context.
Infrastructure as Economic Foundation
Economic development ultimately depends on adequate infrastructure—the physical, social, and institutional foundations that enable business activity and community wellbeing. NMTC investments in infrastructure create platforms for sustained economic growth that benefit entire communities rather than just individual projects. Physical infrastructure, including manufacturing facilities, logistics centers, technology infrastructure, and energy systems, provides the capacity to attract additional investment and support business operations.
Social infrastructure proves equally essential, including educational facilities that prepare workers for available employment, childcare centers that enable parents to work, healthcare facilities that maintain the health of the workforce, and community centers that foster social capital and civic engagement. These investments address root causes of economic distress rather than merely symptoms, creating conditions where broader prosperity becomes possible. Understanding the NMTC application process for infrastructure projects helps communities secure funding for these foundational investments.
Institutional infrastructure—the networks, organizations, and systems that coordinate economic activity—may be less visible but proves critical for sustained development. CDFIs and CDEs provide ongoing capital access that supports business formation and growth. Small business development centers offer technical assistance to entrepreneurs. Workforce development systems connect residents to training and employment. Industry associations facilitate collaboration and knowledge sharing among professionals. NMTC can support the development of this institutional capacity alongside physical projects, building comprehensive ecosystems for economic growth.
Addressing Geographic Disparities and Market Gaps
Economic development challenges often vary significantly even within regions, requiring place-based strategies that respond to local conditions. Rural communities may need different approaches than urban neighborhoods. Former industrial cities face different challenges than communities that never developed strong economic bases. Communities of color may require special attention to historical discrimination and ongoing barriers. NMTC’s flexibility allows for tailored approaches that address specific geographic contexts and market gaps.
Rural economic development through NMTC often focuses on strengthening agricultural value chains, supporting natural resource-based industries, improving broadband and transportation connectivity, and developing healthcare and educational infrastructure. These investments enable rural areas to participate in broader regional economies while preserving their distinct character and community structures. The program’s geographic targeting ensures that rural communities qualify for NMTC alongside urban areas, creating opportunities in places often overlooked by conventional economic development initiatives.
Urban neighborhoods face different challenges, including concentrated poverty, disinvestment, and infrastructure decay. NMTC investments in these contexts often emphasize neighborhood commercial corridors, affordable commercial space for local entrepreneurs, community facilities and social services, and transit-oriented mixed-use development. These strategies aim to rebuild neighborhood economies while preventing displacement of existing residents—a critical consideration as communities improve and property values increase.
Integrating NMTC with Comprehensive Development Strategies
NMTC achieves its most significant impact when integrated with other economic development tools and initiatives rather than deployed in isolation. Many communities successfully layer NMTC with complementary programs, including Opportunity Zone investments for additional tax benefits, historic tax credits for adaptive reuse projects, state and local tax incentive programs, and federal grant programs for infrastructure and economic development. Working with professionals experienced in CDFI certification requirements and multiple financing programs helps communities construct comprehensive funding packages.
This integrated approach requires sophisticated coordination and planning, but generates returns that exceed what single-program strategies can achieve. A manufacturing facility might combine NMTC with state job creation incentives, workforce training grants, and infrastructure improvements funded through federal programs. A mixed-use development might layer NMTC with historic tax credits, affordable housing programs, and local facade improvement grants. These blended finance structures maximize public benefit per dollar invested while improving project feasibility.
Community Engagement and Equitable Development
Unlocking local economic development through NMTC requires genuine community engagement and commitment to equitable outcomes. Too often, economic development prioritizes external investors or wealthy residents, providing minimal benefits to existing low-income populations. Projects may create jobs that residents aren’t qualified for, commercial spaces they can’t afford, or developments that accelerate their displacement. Authentic community engagement helps ensure NMTC investments serve rather than harm vulnerable populations.
Effective engagement encompasses early community input on development priorities, meaningful participation in project design and selection, commitments to local hiring and supplier development, provision of affordable space for community-serving businesses, and ongoing accountability through community advisory structures. Communities should demand transparency about project benefits—who gets hired, at what wages, with what advancement opportunities. They should insist on anti-displacement measures that allow existing residents to benefit from neighborhood improvements. These equity considerations should be non-negotiable elements of NMTC deployment in communities facing gentrification pressure or histories of discriminatory development.
Building Local Development Capacity
Sustained economic development requires local capacity to identify opportunities, structure projects, secure financing, and manage implementation. Many low-income communities lack this capacity due to resource constraints and a history of disinvestment. NMTC can support capacity building through technical assistance for community organizations, training for local developers and entrepreneurs, support for local CDFIs and development intermediaries, and mentorship from experienced development professionals. Reviewing successful NMTC for real estate projects provides valuable learning opportunities for communities building their development capacity.
This capacity building represents investment in sustainable development ecosystems rather than just individual projects. Communities with strong development capacity can identify and pursue opportunities proactively rather than waiting for external actors to initiate projects. They can negotiate better terms and ensure that the community benefits. They can successfully maintain projects and build on initial successes through additional development. This institutional strengthening may be NMTC’s most important long-term contribution to local economic development.
Performance Measurement and Continuous Improvement
Effective local economic development requires rigorous measurement of outcomes and a willingness to learn and adapt based on results. Communities should establish clear metrics for NMTC success, including the number of jobs created and their quality, resident hiring percentages, the number of small businesses supported or developed, tax revenue generation, and changes in property value and their distribution. Regular assessment against these metrics enables accountability and continuous improvement in development strategies.
This measurement should extend beyond immediate project outcomes to assess broader community impacts. Has unemployment decreased? Have household incomes increased? Do residents report improved quality of life? Has the population decline reversed? These community-level indicators reveal whether NMTC investments are achieving their ultimate purpose of improving lives and building prosperity. An honest assessment may indicate that specific strategies are more effective than others, enabling communities to refine their approaches and maximize the impact of future investments.
Overcoming Common Development Challenges
Communities pursuing local economic development through NMTC often encounter predictable challenges, including insufficient deal flow and project pipeline, lack of experienced local developers, difficulty attracting and retaining CDE partners, limited community engagement capacity, and competition from other communities seeking similar investments. Addressing these challenges requires a proactive strategy rather than passive hope that projects will materialize.
Building a project pipeline often requires dedicated economic development staff who can identify opportunities, cultivate relationships with potential developers, and provide technical assistance to advance projects. Attracting CDEs may require demonstrating community commitment through local match funding, streamlined permitting processes, or infrastructure investments. Capacity building for community engagement may necessitate foundation support or technical assistance from nonprofit intermediaries. These investments in the development process and capacity pay dividends through improved project quality and community benefit.
Conclusion
Unlocking local economic development with New Market Tax Credits requires strategic vision, coordinated implementation, authentic community engagement, and commitment to measurable results. The program provides powerful financial tools, but realizing its full potential depends on how communities deploy these resources in service of comprehensive development strategies that address local conditions and priorities. By focusing on sector-specific opportunities, building necessary infrastructure, integrating complementary programs, ensuring equitable outcomes, and strengthening local capacity, communities across the United States and its territories can leverage NMTC to achieve transformative economic development that creates prosperity, opportunity, and improved quality of life for residents who need it most. Communities ready to develop strategic NMTC deployment plans should seek free project analysis from experienced advisors who can help translate development aspirations into actionable strategies and fundable projects.