CDFI Fund to Update NMTC Eligibility Criteria

Published by Michael Novogradac on Monday, March 19, 2012 - 12:00am

On March 7 the Community Development Financial Institutions (CDFI) Fund announced the approximate timing for its plans to update program eligibility criteria based on new poverty and income data that was released in December from the 2006-2010 American Community Survey (ACS).

The CDFI Fund says it expects to release in May new tables showing New Markets Tax Credit (NMTC) program eligibility by Census tract, but notes that this timing may be subject to change. In the meantime, eligibility for the NMTC program remains unchanged and linked to the 2000 Census.

The CDFI Fund also announced that policies governing the transition will be released along with the new eligibility tables. The New Markets Tax Credit Working Group recently submitted recommendations to the CDFI Fund regarding the transition to the new Census data. The NMTC Working Group recommended that a transition period be instituted for those transactions that have not closed but involve qualified businesses located in census tracts that were qualified according to previously available census data but subsequently are deemed located in an unqualified tract when the CDFI Fund publishes updated census data.

The NMTC Working Group specifically recommended that a CDE be able to use the previous period’s census tract data for any qualified low-income community investment (QLICI) that closes within 12 months from the release of new data or by December 31 of the year following the year in which the CDFI fund releases new census tract data, if the qualified business is specifically identified in an NMTC allocation application. The transition period would allow transactions to close using the data that was available before the release of the new data.

It will be interesting to see if the CDFI Fund accepts our recommended approach. Either way, the transition rules issued by the CDFI Fund will be important to those with existing allocations as well as those identifying projects to include in their NMTC allocation applications this year.

For questions about NMTC eligible census tracts, I encourage you to contact my partner Brad Elphick, CPA, at (678) 867-2333. More information about the New Markets Tax Credit Working Group is available at www.nmtcworkinggroup.com.