The U.S. Department of the Treasury’s Community Development Financial Institutions Fund (“CDFI Fund”) on August 5 released a Notice of Allocation Availability (“NOAA”) for its New Markets Tax Credit (“NMTC”) program in calendar year 2014. The CDFI Fund announced up to $5 billion of NMTC investment authority to be used to spur investment in qualified businesses in low-income communities and stimulate the economies of those communities. These tax credits are used around the country to provide a portion of the financing for various projects targeting low-income communities, businesses, and enterprises. Typically, NMTC can be used in conjunction with other financing sources that provide financing for the non-housing pieces of an overall community development.
The 2014 allocation round still awaits congressional approval; however, previous NMTC rounds have been approved by Congress in bi-partisan tax legislation extenders. Scott Cockerham of Ballard Spahr’s Tax Credits group has provided analyses of recent efforts to permanently extend the NMTC and other extender bills.
Under this 2014 round of NMTC Allocation, successful Allocatees may be awarded up to $125 million of NMTC authority per Allocatee, unless a greater allocation is necessary to the Allocatee’s strategy, and the strategy produces “extraordinary community outcomes.” As a reference point, in last round’s awards, announced on June 5, 2014, no Allocatee was awarded more than $60 million. The CDFI Fund provides a searchable database to review the amount of the individual awards and other details about successful Allocatees.
Any NMTC applicant for 2014 NMTC authority must be a CDFI Fund-certified Community Development Entity (“CDE”), or its application for CDE certification must be submitted to the CDFI Fund and postmarked on or before August 22, 2014. Additionally, previous, successful applicants must meet revised minimum Qualified Equity Investment (“QEI”) issuance thresholds for previous allocations, which are detailed in the NOAA.
Applicants for 2014 NMTC authority must submit applications electronically through the CDFI Fund website no later than 5:00 p.m. ET on October 1, 2014.