Section 1 Short title
This Act may be cited as the “New Markets Tax Credit Military Installation Act of 2013” or the “NMTC Military Installation Act”.
New Markets Tax Credit Military Installation Act of 2013
A BILL
To amend the Internal Revenue Code of 1986 to provide for the permanent application of the new markets tax credit for the redevelopment of communities impacted by realignment or closure of military installations.
Sec. 2 Findings
Congress finds the following:
Since 1988, through 5 separate rounds of the Base Realignment and Closure process, more than 300 military installations located in 48 States and 3 United States territories have had their missions eliminated or realigned.
120 of these former installations were major base closures, resulting in the loss of 300 or more military and civilian jobs at each closure. While these communities received Federal support in the 1990s, there are currently no Federal programs to support the physical redevelopment at closed or realigned installations.
Despite local active efforts to promote redevelopment, nearly 100 of these closed or realigned military installations are located in economically distressed communities now suffering from high unemployment and disproportionately high poverty rates as determined by the Department of the Treasury.
More than 20 of these former installations are located in even harder hit severely distressed communities as defined by the Department of the Treasury.
One example is the City of Vallejo, California, which in 2008 filed for bankruptcy protection due in part to closure of the Mare Island Naval Shipyard and the accompanying loss of almost 10,000 jobs.
When a military base is closed, the Department of Defense is required to complete any necessary environmental cleanup at the former base and then transition the property to a Local Redevelopment Authority, usually a local government. Together, the Department of Defense Office of Economic Adjustment and the Local Redevelopment Authority create a redevelopment plan for the property. The goal of this process is to lead to a timely, beneficial, revenue generating reuse of these former military bases.
However, numerous former military installations have taken much longer and cost much more than expected to clean up, thereby significantly delaying reuse and causing many of these communities to become or remain economically distressed.
In 2000, the New Markets Tax Credit (NMTC) program was created to spur private sector investment in low-income communities suffering from chronic unemployment and high poverty rates by providing investors with a 7-year, 39-percent Federal income tax credit for investments made through investment vehicles known as Community Development Entities. According to the Department of the Treasury, every $1 of foregone tax revenues under the NMTC program leverages about $12 of private investment in distressed communities on a cost basis.
Recently, the community in Brunswick, Maine, has been successfully redeveloping the former Naval Air Station located there, by using among other tools the NMTC. In particular, the NMTC was used to build a new, $15 million, 80,000 square foot manufacturing facility operated by Swedish medical supply maker Molnlycke Health Care. A second NMTC was used to make $20 million in renovations of facilities now operated by aircraft manufacturer Kestrel Aeroworks. This latter project could have been 3 times as large had additional NMTC funds been available. These two projects alone will bring over 200 high-tech, high-wage jobs among other significant economic benefits to this economically distressed former military community.
Communities surrounding these former military installations still face the difficult challenges of economic redevelopment resulting from the loss of the Federal workforce and the supporting infrastructure associated with the former military missions located there. Focusing part of the successful NMTC to help these communities that are still struggling after the military exodus will help facilitate the economic redevelopment that these distressed communities need.
Sec. 3 Permanent application of new markets tax credit limitation with respect to communities impacted by realignment or closure of military installations
In general— Subsection (f) of section 45D of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(4) Special rule for allocation of limitation for redevelopment of communities impacted by realignment or closure of military installations
“(A) In general—Notwithstanding paragraph (1), for calendar year 2014 (and each calendar year thereafter) the Secretary shall allocate $100,000,000 in new markets tax credit limitation among qualified development entities selected by the Secretary to make qualified low-income community investments within the former boundaries of military installations realigned or closed pursuant to a base closure law (as defined in section 101(a)(17) of title 10, United States Code).
“(B) Qualified development entity mission requirement—A qualified community development entity shall be eligible for an allocation under subparagraph (A) only if a significant mission of such entity is the redevelopment of such a military installation.
“(C) Carryover of unused limitation—If the new markets tax credit limitation for any calendar year exceeds the aggregate amount allocated under subparagraph (A) for such year, such limitation for the succeeding calendar year shall be increased by the amount of such excess.”
Effective date— The amendments made by this section shall apply to allocations after December 31, 2013.