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Presenter urges Spokane to pursue New Markets Tax Credit allocations to finance clinics, shelters and job-creating projects
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Summary
Steve McDowell told Spokane council that few New Markets Tax Credit projects have closed locally and urged coordination with CDEs and banks to capture federal allocations that could finance health centers, mixed-use development and job-creating manufacturing projects in qualifying census tracts.
Steve McDowell briefed Spokane's council on how New Markets Tax Credits (NMTC) work and argued the city is missing opportunities to attract private investment into low-income census tracts.
McDowell described NMTCs as a tax-code incentive administered through the CDFI Fund that encourages banks to buy tax credits from certified community development entities (CDEs); those purchases provide subsidized capital to qualifying projects in low-income census tracts. "New market tax credits are really not so much a program as a financial incentive through the tax code that's designed to stimulate private investment," he said, adding the structure typically functions as a seven-year low-interest loan that supports projects in exchange for tax credits to the investing bank.
Citing national data through 2024, McDowell said roughly $76,000,000,000 in NMTC allocations has triggered about $143,000,000,000 in private investment across roughly 9,000 projects and created more than 1,000,000 jobs. He said the Treasury's recent December award distributed $10,000,000,000 in tax-credit allocations to 142 CDEs, expanding local opportunity.
Locally, McDowell said Spokane appears underused: research turned up about five historical deals in the program's history in the area. He highlighted Craft3 (Portland) and Heritage Bank as potential CDE/partner connections and pointed to several project types that fit the program's goals, including health clinics, shelters, mixed-use development and manufacturing.
Responding to council concerns about displacement and zoning, McDowell said NMTCs are a finance tool, not a zoning override: "This this isn't forcing a factory into a neighborhood because zoning prohibits that," he said. He added that typical NMTC deals tend to be larger projects ("typically...$8'$10 million on the low end") though specialized structures can make smaller projects viable, citing Habitat for Humanity as an example.
Council members asked whether legal or statutory barriers prevent local use; McDowell said no specific legal barrier exists and attributed Spokane's low activity to lack of awareness and local champions who market projects to CDEs. He urged the council to help identify candidate projects and support outreach, while noting he had no formal request for an immediate vote or ordinance.
The briefing closed with several council members offering to help identify projects and to host periodic updates; no formal actions or votes were taken at the study session.
