Legislative Permanence, Combined Allocation Rounds, Ibanez Tribute Highlights of Spring NMTC Conference

While smoke from Canadian wildfires marred visibility in Washington, D.C., June 8-9 during the Novogradac 2023 Spring New Markets Tax Credit Conference, things got slightly clearer for new markets tax credit (NMTC) stakeholders for two major issues.

Attendees heard plenty about a permanence bill for the NMTC and the possibility of merging three remaining authorized NMTC allocation rounds into two during the conference, where more than 400 stakeholders gathered to learn, advocate and network.

Permanence: ‘A Great Opportunity’

The top priority for many NMTC participants is a permanent extension of the NMTC. The New Markets Tax Credit Extension Act of 2023 (S. 234, H.R. 2539) would do just that–along with adding an inflation adjustment factor and allowing the credit to be taken against alternative minimum tax liability.

Rep. Jason Smith, the chair of the House Ways and Means Committee and keynote speaker at the conference, is a longtime supporter of such legislation and has been an original co-sponsor on previous iterations of that bill. He said his committee is working on marking up an economic package to send to the full House this month and that he’s optimistic that the economic package and an NMTC permanence provision could make it into legislation this year.

“There’s a huge appetite for a bipartisan agreement at the end of the year, which is a great opportunity for success for the new markets tax credit,” Smith told attendees.

Michael Novogradac, interviewing Smith, asked whether any of the must-pass bills due between now and Sept. 30 might be a good vehicle for the permanence provision. Smith said that a year-end bill is a better bet.

Other speakers at the conference also expressed confidence that a permanence bill stood a good chance of passage, with Jeff McMillen of Akin Gump calling it as bipartisan a tax bill as exists. Novogradac called out the support on the Ways and Means Committee as very unusual, “in a positive way.”

During another panel, Chimeka Gladney of Truist highlighted the adaptability of the NMTC to meet various needs. She discussed how changing priorities of the CDFI Fund are met by community development entities (CDEs) and qualified active low-income community businesses. “But,” she added, “it would sure help if it were permanent.”

The other major legislative issue discussed at the conference is the Rural Jobs Act (S. 1455), which was introduced in the Senate in May and will likely be introduced soon in the House. The bill would provide an additional $1 billion in NMTC allocation over two years for rural areas. Smith was the sponsor of that legislation the previous three times it was introduced and he said to expect a House version any day–although his position as the chair of the Ways and Means Committee makes it unlikely he’ll be a sponsor.

Combined Rounds: Mixed News

With the calendar year (CY) 2022 round of allocation for the NMTC still scheduled for release this fall–Christopher Allison of the CDFI Fund verified that his organization is on track to meet that deadline and subsequently issue the application for the CY2023 round “as quickly as administratively feasible” thereafter–there has been significant push from the NMTC community to look at combining rounds.

Bob Rapoza, founder of the New Markets Tax Credit Coalition (NMTCC), said the NMTCC is pushing for the CDFI Fund to combine the $5 billion rounds for CY2023, 2024 and 2025 into two $7.5 billion rounds. An alternative is to have a $5 billion CY2023 round, then issue $10 billion in allocation authority in 2025 as a single round.

The CDFI Fund previously combined the 2015 and 2016 rounds into one $7 billion round, so there is optimism that it is achievable.

Allison told conference attendees that the CDFI Fund lacks the authority to carry forward amounts or to “smooth-out” allocation from multiple rounds. Rapoza didn’t disagree with that, but suggested a combined round is possible.

“The way this really gets done is through politics,” Rapoza said during his appearance at the conference. “But to get there, we have to satisfy people that we worked through the people who work for the senators and representatives.”

Smith said there have been talks with the U.S. Department of the Treasury, but he issued no assurances that progress was being made.

Advocacy: Statistics and Stories

The NMTCC released the annual New Markets Tax Credit Progress Report, based on a survey of CDEs about investments. In the year before the 2023 report, CDEs used $3.2 billion in NMTC allocation authority to deliver $6.7 billion in total project investment in low-income communities; helped create more than 29,000 full-time jobs and more than 23,000 construction jobs; supported 98 manufacturing businesses with 4.8 million square feet of new or renovated facilities; and saw 30.5% of projects done in nonmetropolitan areas.

Several speakers encouraged stakeholders to use details from that report to advocate for the NMTC. But that wasn’t all.

Speaking in the “Measuring and Reporting Community Impact” panel Friday morning, Darryl Jacobs, partner at Ginsberg Jacobs LLC, highlighted the need for more than statistics when promoting the NMTC.

“We’re not going to get permanence because of how many jobs were created,” he said. “We’ll get permanence because of telling stories.”

Jacobs gave the example of how rural broadband projects are making very specific changes in quality of life to residents. He also said to communicate broad benefits of NMTC developments, including such things as overall taxes paid.

Remembering a Community Development Legend

While NMTC permanency, combining allocation rounds, advocacy and networking were plentiful, the highlight of the conference was likely a tribute to Bob Ibanez, the former NMTC program manager at the CDFI Fund and a senior manager at Novogradac, who died in April of cancer.

Following the announcement of the Novogradac Journal of Tax Credit Community Development QLICI of the Year Awards, Novogradac partner Brad Elphick paid tribute to Ibanez and Ibanez’s widow, Jill, spoke to the attendees, thanking them for honoring her husband and letting them know how much he loved the community development world. Elphick announced the formation of the Robert E. Ibanez Award for outstanding achievement in community development, which will be awarded at the Novogradac 2024 Spring New Markets Tax Credit Conference in Washington, D.C., June 6-7, 2024. Nominations for that award will be accepted beginning in January 2024.