Adam N. Michel
The New Markets Tax Credit (NMTC) program was created to spur private investment in distressed communities. More than two decades later, the results resemble a government-run investment fund for real estate developers, banks, and politically connected nonprofits. As my Cato colleagues Norbert Michel and Jerome Famularo document in their recent briefing paper, “The Case Against the CDFI Fund,” the NMTC has become the largest and most expensive arm of the Treasury’s Community Development Financial Institutions Fund, a program that increasingly looks like corporate welfare dressed in the language of community revitalization.
This post presents nine examples of the NMTC subsidizing luxury real estate, boutique hotels, political nonprofits, fast-food franchises, and unproductive agriculture. Each highlights how NMTCs routinely go to ventures that would be better left to state and local governments, left to private capital, or not subsidized at all. Worse, the program’s complexity and opacity make it ripe for abuse and hard to evaluate.
$15.1 million for a film studio in Pontiac, Michigan. In 2010, a group of high-profile investors, including a billionaire mall developer and Ari Emanuel (brother to Rahm Emanuel, former White House chief of staff and mayor of Chicago), secured $15.1 million in federal NMTC to turn a shuttered General Motors plant into a state-of-the-art movie studio. Officials promised 3,600 jobs and hailed the deal as Pontiac’s economic revival. The job creation never materialized. The studio reported only 2 employees in 2010 and 12 in 2011. When the studio defaulted, the state employee pension fund, which guaranteed $18 million in bonds for the project, was left footing the bill. A lengthy New York Times exposé chronicled how investors walked away with profits and no financial obligations, despite the project’s failure to deliver meaningful jobs or economic revival.
$10 million for a film studio in New Orleans, Louisiana. In 2022, Second Line Stages completed its expansion, giving New Orleans its “first large-scale, state-of-the-art film production facility.” With a total project cost of $45.2 million, developers secured $10 million in NMTC and $3.3 million in federal historic tax credits (two of the renovated warehouses were considered historic). The project was sold as a necessary investment in film infrastructure so that the region could attract more business. However, in 2025, the state government had to expand Louisiana’s film tax credit program “to revive the state’s stagnant film industry,” with one film crew manager noting that he had only worked a handful of days in 2025 and that “many of his peers in the industry struggled to find work.”
$11.25 million to boost Hawaii’s food independence. Ecotrust is an “anti-racist” organization that supports “climate resilience” and stewardship that is “racially and economically just.” Since 2004, Ecotrust has received $427 million in NMTC and funded 40 projects. In 2024, they received $11.25 million in credits to invest in a “cutting-edge solar powered lettuce greenhouse and associated packhouse” for a produce grower in Waimea, creating 18 new jobs. The project’s goal was to promote sustainable agriculture and enhance food security. Beyond sustainability, there is a deeper motivation behind Hawaiian food independence: cost. The Jones Act is a 1920 law mandating that all goods transported between US ports be carried on US-built and US-crewed ships. Since domestic ships are significantly more expensive than foreign ships, this protectionist legislation raises shipping prices for domestic trade, costing the average Hawaiian family almost $1,800 per year. In this case, federal funds are subsidizing costly methods of local farming to offset the artificially high cost of importing food from the mainland.
$12 million for a political nonprofit’s new headquarters. The Dolores Huerta Foundation’s mission is to empower social justice through civic engagement, education equity, and LGBTQIA+ equality. Ahead of the 2024 general election, the foundation released voter guide recommendations to raise the state minimum wage to $18 an hour, borrow $10 billion to respond to climate change, and allow local governments to impose rent control. In 2025, the California Statewide Communities Development Corporation handed out $12 million in federal NMTCs to Dolores Huerta to construct a 30,200 sq. ft. “multi-use community facility,” which will serve as their new headquarters. The project also received additional NMTC funding from Clearinghouse Community Development Financial Institution and Enterprise Financials’ Community Development Entity.
$3 million for a new Culver’s restaurant in Chicago, Illinois. Culver’s is a staple Midwestern fast-food chain, and the federal government appears to agree. In 2021, the $5 million construction of a new Culver’s location received $3 million in NMTC. The 4,400 sq. ft. stand-alone restaurant is staffed by 10 full-time employees, each of whose jobs was subsidized to the tune of $300,000.
$10 million for upscale apartments in New Orleans, Louisiana. Avalon Partners and Catalyst Development completed a $10.5 million rental apartment conversion in one of the city’s most desirable areas near the French Quarter. The project provides “premier housing in the Central Business District.” The $10 million in advertised NMTCs combined with $1.8 million in historic tax credits exceeds the projected project cost.
$7.5 million for a luxury hotel renovation in Miami Beach, Florida. In 2019, Hotel Greystone, a historic art deco building located in downtown Miami Beach, reopened after a $65 million renovation. With $7.5 million in NMTCs and $5.44 million in historic tax credits, the federal government funded about 20 percent of the total project. The renovation included state-of-the-art rooms, a 6,000 sq. ft. rooftop pool, eight penthouse suites with private jacuzzi terraces, and a white-glove service restaurant.
$10.5 million for a boutique hotel in Andalusia, Alabama. Earlier this year, developers in Alabama won $10.5 million in NMTCs to “rejuvenate the historic Timmerman building” into a beaux arts–styled Andalusian Boutique Hotel. The new 58-room hotel will join the upscale, luxury Ascend Collection by Choice Hotels.
$12.5 million for a public library in Petersburg, Virginia. The Petersburg Library Foundation, a nonprofit formed in 2002 to raise private funds to replace its existing library, eventually turned to Wells Fargo to tap into $12.5 million in NMTC financing, which ultimately covered most of the project’s cost. The 42,160 sq. ft. facility opened to residents in 2014, creating only one full-time job.
Nathan Throneburg contributed to this piece.