In a Notice of Allocation Availability, the Treasury's Community Development Financial Institutions Fund (CDFI Fund) announced an allocation of up to $3.5 billion for the calendar-year 2018 round of the New Market Tax Credit (NMTC) program.

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 1,105 awards, totaling $54 billion in tax credit allocation authority.

Deadlines

The NOAA lists several upcoming deadlines:

— CDE certification application: May 24, 2018
— NMTC electronic application submission: June 28, 2018

The NOAA also explains that the QEI issuance threshold and deadlines with respect to its prior-year allocation have been revised. In the CY 2018 NOAA, it states that "the CDFI Fund is not requiring a minimum threshold of QEIs be issued as a condition of eligibility. During Phase 2, the CDFI Fund will consider prior Round Allocatees' QEI issuance recorded in the CDFI Fund's online systems as of September 24, 2018." This will allow for CDEs to delay their deployment of allocation for an extended period and also allow for CDEs that haven't met the previously required thresholds to apply for NMTC allocation in the CY 2018 allocation round.

Additional resources

The NOAA governs the 2018 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

Implications

The deadline to certify as a CDE in order to be eligible to apply for the 2018 round is May 24, now less than two weeks away. Efforts to certify must be started as soon as possible.

CDEs looking to apply have until June 28, 2018, to submit a completed application to the CDFI Fund. CDEs are currently looking for pipeline projects to round out their 2018 applications.

Parties with projects that may benefit from a forgivable loan under the NMTC program should discuss 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 Q4 2018 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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