The Treasury's Community Development Financial Institutions Fund (CDFI Fund) has released its Notice of Allocation Availability (NOAA) for the calendar year 2017 round of the New Market Tax Credit (NMTC) program, announcing an allocation of up to $3.5 billion for the CY 2017 round.

Background

Congress established the NMTC Program in 2000 to permit individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in community development entities (CDEs). The credit totals 39% of the investment and may be claimed by the investor over seven years. The CDE must use substantially all of the investment to make qualified investments in low-income communities. Treasury's CDFI Fund selects successful applicants after a competitive application and rigorous review process. To date, the CDFI Fund has made 1,032 awards, totaling $50.5b in tax credit allocation authority.

Deadlines

The NOAA lists several upcoming deadlines:

— CDE certification application: May 17, 2017
— NMTC electronic application submission: June 21, 2017
— Prior allocatees' issuance of Qualified Equity Investments (QEI): August 18, 2017

The NOAA also explains that the deadlines for CDEs to report QEIs to the CDFI Fund have been updated from the CY 2015-16 NOAA to meet the minimum QEI issuance threshold. Specifically, to be eligible to apply for a NMTC in the CY 2017 allocation round, "any Applicant that received a NMTC allocation award in a previous Allocation round is required to meet the corresponding minimum [QEI] issuance threshold with respect to its prior-year allocation."

Additional resources

The NOAA governs the 2017 application round and contains all guidelines for potential applicants. The NOAA also provides links to:

— NMTC application materials and resources
— CDE certification application materials and resources
— Presentations for potential NMTC applicants
— Updated frequently asked questions document for NMTC certification, compliance monitoring and evaluation questions

Further, the CDFI fund will hold two one-hour conference calls strictly to answer application questions. The dial-in number for both calls is 1-888-935-0259, and the pass code is 7371412. Pre-registration is not necessary. The calls will be held:

— Tuesday, May 9, 2017, 2:00 - 3:00 p.m. EDT
— Thursday, May 11, 2017, 3:00 - 4:00 p.m. EDT

Implications

The deadline to certify as a CDE in order to be eligible to apply for the 2017 round is May 17, now less than two weeks away. Efforts to certify must be started as soon as possible.

CDEs looking to apply have until June 21, 2017 to submit a completed application to the CDFI Fund. CDEs are currently looking for pipeline projects to round out their 2017 applications.

Parties that have projects that may benefit from a forgivable loan under the NMTC program should pursue discussing those projects with CDEs. Such projects should:

1. Qualify for NMTC eligibility
2. Create quality jobs
3. Be in the manufacturing or health care industry, or provide healthy food options, community facilities or services to low-income areas that are distressed
4. Be expected to be on-going in 4Q 2017 and the 12 months thereafter

The NMTC team can help to address the qualifications and how the program works. The NMTC team also has extensive relationships with a number of CDEs.

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