Focus on Operating Businesses Continues with 2017 NMTC Allocations

Published by Michael Novogradac on Tuesday, February 13, 2018 - 12:00am

With the award of calendar year 2017 new market tax credits (NMTC), the total amount allocated through the program stands at $54 billion. The CDFI Fund allocated $3.5 billion in tax credit authority to 73 community development entities (CDEs), which are again expected to invest more in operating businesses than real estate projects, continuing a trend that began in 2011. This round, the funds awarded to CDEs investing in operating businesses and real estate accounted for $3.419 billion of the total $3.5 billion awarded. There are several other activities CDEs can select on their NMTC applications—financing of other CDEs, loan purchase from other CDEs, and financial counseling and other services—that can account for the remaining $81 million awarded. 

The beginning of the shift emerged in 2011 when the percentage of awards likely to be used for real estate activities dropped below 50 percent of the total funds awarded for the first time since a breakdown of where investments went was provided. 

A number of factors likely contributed to this shift. Since the 2013 round, awardees have been expected to use about $3 of NMTC awards for an operating business for every $1 dollar for real estate activities.


Blog Chart 2017 NMTC Allocation
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What’s Next

Attention now turns to the 2018 application round, which the CDFI Fund announced at Novogradac’s San Diego NMTC conference may open in March with the goal of making 2018 award announcements before the end of the calendar year.  After that, the next, and last, authorized round of NMTC allocations would be in 2019.