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- Federal Guidelines
- CDFI Fund New Markets Tax Credit (NMTC)
Big news for people that use New Markets Tax Credits (NMTC): The CDFI Fund just released new guidance data to determine what areas are eligible for NMTC, and what areas show higher distress. These new guidelines are up on PolicyMap. Additionally, PolicyMap has a new layer showing both eligibility, areas of “Severe Distress,” and non-metropolitan counties in a single layer, making it easier to find areas that meet the higher threshold of distress.
If you’re not familiar with NMTC: The New Markets Tax Credit Program is a federal tax credit that incentivizes business and real estate developers to invest in lower-income areas. A major part of the application determines whether the area served by the development is low-income, or underserved in certain specific ways.
What’s in This Update?
With this update, the criteria are all the same: eligible tracts have income at or lower than 80 percent of the area median income, or a poverty rate greater than 20 percent. (Area median income refers to the median family income of the state, or if the tract is in a Metropolitan Statistical Area with a higher median family income than the state as a whole, the median family income of the MSA.)
The difference is these economic indicators now come from the 2011-2015 Census American Community Survey (ACS). From 2012 to 2017, the application required data from the 2006-2010 ACS. Census tract-level ACS data is released as five-year estimates, and can be thought of as a five-year average. This should be a welcome improvement, as application eligibility will now be based on data more reflective of the current reality.
Knowing that many decisions and applications have already been made using the old 2006-2010 data, the CDFI Fund has created a one-year transition period where either sets of data can be used. They’ve set up an FAQ document on the transition that you should definitely read: https://www.cdfifund.gov/Documents/NMTC%20CIMS%20November-Census%20Transition%202011-2015%20ACS%20Oct30-2017-4.30pm.pdf.
When you access the data in PolicyMap (or in any of our widgets that feature this data), the 2011-2015 will show up by default. To change to the older data, go to “Year” in the map legend, and select 2006-2010.
New Data Layer
In addition to the data update, we’ve created a new simple layer for you to be able to identify areas that are not only eligible, but are also either areas of “Severe Distress” or in non-metropolitan counties. Applicants that commit to providing at least 75 percent of their NMTCs to areas that meet criteria of higher distress, including severely distressed tracts and non-metropolitan counties, generally score more favorably. (Applicants can also score more favorably if over 60% of their projects’ owners, employees, or customers are “low-income persons”, however, this is specific to each project and cannot be mapped.)
You can access this new layer by going to the Federal Guidelines menu, “CDFI Fund New Markets Tax Credit (NMTC)” section, “Severe Distress and Non-Metropolitan” submenu, and clicking on “Eligibility and Severe Distress/Non-Metropolitan”.
If you have any questions about the data, feel free to contact us. If you have questions about the NMTC program, the CDFI Fund is probably the better source for information, but we’ll help you where we can.