On November 4, 2021, the U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund (CDFI Fund) released the Notice of Allocation Availability for the calendar year (CY) 2021 round of the New Markets Tax Credits (NMTC) Program; thus, the CDFI Fund is now accepting applications for the CY 2021 NMTC round. Pursuant to the Taxpayer Certainty and Disaster Tax Relief Act of 2021, included in the Consolidated Appropriation Act of 2021 (Public Law 116-260), there is $5 billion in NMTC allocation authority available for the CY 2021 NMTC allocation round.
The NMTC Program is designed to encourage capital investment in low-income areas that have traditionally had inadequate access to capital. Established by Congress in 2000, the NMTC Program permits institutional investors to receive a credit against federal income taxes for making equity investments in community development entities (CDEs). For every $1 invested into a CDE, a 39% tax credit is generated over a seven-year period. CDEs that receive NMTC allocation authority use the capital raised to make investments in, or loans to, businesses located in low-income and marginalized communities. The resulting subsidy to a project generated from the monetized NMTCs can amount to as much as 15% – 20% of the total project costs.
The NMTC Program has proven to be an effective means of rebuilding economically distressed communities, and new and rehabilitated projects are being developed throughout the country as a result of the NMTC Program, including manufacturing facilities, healthcare and childcare facilities, community facilities, schools, mixed-use facilities and hotels. Any developers that are considering constructing a new project or rehabilitating an existing project in a low-income area should consider pursuing NMTCs given the value available through the NMTC Program.
If you have a project that is eligible for NMTCs, you may want to contact CDEs regarding their evaluation process for inclusion in their CY 2021 NMTC Application. If you are interested in becoming a CDE and applying for an allocation of NMTCs in the CY 2021 NMTC round, note that the CDE Certification Application submission deadline is November 18, 2021. If you are CDE or a CDFI and are interested in applying for the CY 2021 NMTC allocation round, click here to view the 2021 Application FAQs and click here to view the application.
Note that all applications must be submitted electronically. The CY 2021 NMTC allocation Applications are due January 13, 2022. We have listed other notable deadlines below.
Important CY 2021 Deadlines
- CDE Certification Application Submission Deadline: November 18, 2021
- NMTC Application Registration in AMIS: December 6, 2021
- NMTC Allocation Application Submission in AMIS: January 13, 2022
- QEI Issuance and QLICI Requirements: March 21, 2022
For existing CDEs, the CDFI Fund has issued new Compliance and Monitoring FAQs. View them here.
For more information about New Market Tax Credits or Butler Snow’s Public Finance, Tax Incentives and Credit Markets group click here.