The Spokane region is missing out on one of the most effective and flexible economic development tools the federal government has ever created — and it’s costing us jobs, investment, and the community facilities we desperately need.

The New Markets Tax Credit, a program of the U.S. Treasury, was authorized by Congress in 2000 in an effort to stimulate investment and economic growth in distressed urban and rural communities. The program has been a huge success. Through 2024, the tax credits have created or preserved 1.2 million jobs and leveraged $143 billion of private investment through 8,900 projects in low-income communities.

Instead of providing a direct federal grant, the tax credits attract private sector investment by incentivizing banks to invest in qualified projects through Community Development Entities, which are specialized lenders that have been awarded tax credits by the U.S. Treasury. Banks receive a 39% tax credit over seven years in exchange for their investments in distressed areas.

The result is below-market, highly flexible, forgivable financing that can cover real estate, construction, equipment, or working capital — essentially free money for projects that create jobs or deliver essential services. NMTC projects typically need a minimum value of $10 million in total project costs to make them economically viable. The net benefit of NMTC financing is about 20% of the amount of tax credits committed to the project. For example, a $20 million project that secures $20 million in NMTCs from a Community Development Entity would net about $4 million for the project.  

Since 2011, however, Spokane County has closed exactly zero NMTC deals. In the past 14 years, we have conservatively walked away from between $50 million and $100 million in direct federal subsidy and several times that amount in total project investment. Meanwhile, smaller cities and rural towns across America are using the program aggressively and successfully. Many projects in our region have been built over the last 14 years that would have been good candidates for this federal incentive.

In 2024, 350 NMTC projects were funded in 44 states, representing $4.8 billion in tax credits, and creating 37,000 permanent full-time equivalent jobs. The types of projects funded in 2024 include manufacturing (114), health care (75), municipal facilities/community hubs/schools and recreation (39), housing (18), arts/culture (17), grocery/fresh food (12), and more. Many of these projects were completed in small rural towns and urban areas far smaller than Spokane. Last year, in the entire state of Washington, only two NMTC projects were closed; neither was in Spokane County.

This isn’t because we lack qualified census tracts. Forty-two of Spokane’s 74 tracts meet NMTC eligibility criteria — defined as having a poverty rate of 20% or higher, or median income at or below 80% of the area median. It’s not because our projects are too small — the program routinely funds deals ranging from $10 million to over $40 million. And it’s certainly not because Spokane lacks projects that are attractive to community development entities; our manufacturing, health care, education, and nonprofit sectors have exactly the kinds of projects those entities are looking for.

We’re simply not in the game. 

That can and should change immediately — for two important reasons. 

First, an unusual double allocation round means that $10 billion in new credits are expected to be awarded by the U.S. Treasury by the end of November — the largest single-year in the program’s history. Existing Community Development Entities will receive larger allocations and new CDEs likely will receive awards, dramatically increasing the funding opportunities for qualified projects. 

Second, the NMTC program is now a permanent part of the tax code. The One Big Beautiful Bill Act signed July 4, 2025, includes a provision to end the decades-old uncertainty over program extensions. Until this law passed, NMTCs had to be extended by Congress every two or three years. 

"Achieving permanence for the NMTC program provides certainty to thousands of businesses and investors and will deliver more jobs, business opportunities, and capital to high-impact investments prioritized by local communities," says Phil Glynn, board president of the New Markets Tax Credit Coalition.

With the future of the program secured, investors and CDEs can operate with long-term predictability, and capital will flow faster than ever.

Here’s what our region must do — starting today:

1. Businesses, nonprofits, developers, and public entities need to ask one simple question during site selection and project feasibility: “Does this location and project qualify for New Markets Tax Credits?” Do not buy or lease land without knowing the answer.
2. Engage early. The most successful NMTC deals are structured and marketed to CDEs months before closing. Waiting until you’re ready to break ground is too late.
3. Work with NMTC experts, such as consultants, attorneys, and accountants who know the program and the national CDE landscape. Not every CDE funds every project type, and the allocation is fiercely competitive. 
4. If you have a project with a total cost of at least $10 million that will create or retain significant jobs, and/or provide needed goods and services, please reach out. We can quickly assess eligibility and connect you with the right NMTC consultants or other experts.  

The federal government just handed our region a massive opportunity, doubling the amount of the tax credit award and making the program permanent. Urban and rural areas across America are lining up. Spokane has sat on the sidelines long enough. 

Let’s get in the game.

Steve MacDonald is the director of community and economic development for the city of Spokane. He can be reached at [email protected], 509-625-6835.