The Birmingham City Council approved on Tuesday the creation of the Birmingham Region Community Investment Cooperative District, a new legal entity designed to apply for and allocate federal new markets tax credits (NMTC).

This new organization will combine the efforts of the City of Birmingham, the Downtown Redevelopment Authority and the Commercial Development Authority in pursuing the tax credits, which can be allocated to fund small businesses and real estate development in low-income communities.

It’s “flexible” funding, Josh Carpenter, the city’s director of innovation and economic opportunity, told the council last month. He said it could be crucial for a city facing severe budget cutbacks due to the COVID-19 pandemic.

“We want to continue to keep capital investment up, we want to continue to find new ways to get funding to small businesses, and we’re going to need more funding for more workers to get reskilled,” Carpenter said.

NMTCs are difficult to win, Carpenter said, but a recent federal expansion of the program from $3.5 billion to $5 billion gives the city “a 40% better shot to get it than we’ve ever had,” he said.

The Birmingham Region Community Investment Cooperative District will be run by a five-member board, with three seats chosen by the city and one each chosen by the Downtown Redevelopment Authority and the Commercial Development Authority. David Russell Jr., David Silverstein Jr., and state Sen. Linda Coleman-Madison will the city’s first three appointees.

If the district is successful in receiving NMTCs, the board will be responsible for deciding which projects and businesses the credits will fund. The district’s ability to distribute the credits extends throughout Jefferson County.

District 5 Councilor Darrell O’Quinn told Carpenter that he’d be watching how the board operates “just to make sure that this is directed where it’s most needed.”

“This is something that’s intended to, as it’s named, create new markets,” O’Quinn said. “Historically, there’ve been parts of the city of Birmingham that haven’t gotten the same level of investment, and we want to make sure we don’t go down that same path again.”

The City Council approved the creation of the new district unanimously; similar resolutions will need to be passed by the Downtown Authority and the Commercial Development Authority.