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39 Va. Tax Rev. 111 (2019-2020)
New Market Tax Credits, Fiscal Federalism, & the Dormant Commerce Clause

handle is hein.journals/vrgtr39 and id is 117 raw text is: NEW MARKET TAX CREDITS, FISCAL FEDERALISM, & THE DORMANT COMMERCE CLAUSE Rebecca Kerley * TABLE OF CONTENTS I. INTRODUCTION ...................1.......................11 II. NMTC TRANSACTIONS ....................... .....113 A. Overview ............................. ........113 B. Leveraged Transactions and Developer Incentives.........115 C. Credit Allocation Applications and CDE Incentives.......118 D. Investor-CDE Credit Market ......... .............119 E. Developer Incentives and CDE-Developer Financing Market........................................120 III. STATE AND LOCAL INCENTIVES. ...........................121 A. Positive Externalities ofNMTC financing...... ......121 B. Subsidization................................... 125 IV. DORMANT COMMERCE CLAUSE ANALYSIS ....... ...........130 A. Fiscal Federalism Justification for Court Action............ 130 B. Competitive Neutrality.................. .......... 132 C. Internal Consistency ................... .........135 D. Previous Dormant Commerce Clause Doctrine..............139 V. CONCLUSION ............................................140 I. INTRODUCTION The Federal New Markets Tax Credit (NMTC) program was passed in 2000 as part of the Community Renewal Act under President Clinton.' The purpose of the program was to encourage investment into low-income communities through the provision of NMTCs - nonrefundable federal income tax credits.2 Proponents hoped that investment would spur economic growth in communities which had traditionally been underserved by financial institutions and, consequently, lacked the access to capital and * The author of this Note is a 3L at the University of Virginia School of Law. Julia S. Rubin & Gregory M. Stankiewicz, The New Markets Tax Credit Program: A Midcourse Assessment, 1 COMMUNITY DEV. INV. REv. 1 (2005). 2 Richard C. Hula & Marty P. Jordan, Private Investment and Public Redevelopment: The Case of New Markets Tax Credits, 10 POVERTY & PUB. POL'Y 11, 13 (2018); see also Rubin & Stankiewicz, supra note 1. 111

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