Rural Jobs Zone Act Would add $500 Million in NMTC Allocations in both 2018 and 2019
Under H.R. 6627, legislation introduced by two members of the House Ways and Means Committee, Reps. Jason Smith, R-Miss., and Terri Sewell, D-Ala., an additional $1 billion in new markets tax credit (NMTC) allocation authority would become available to community development entities (CDEs) that commit to investing in rural jobs zones. The legislation defines a rural jobs zone as any area outside a city or town with a population of 50,000 or more and its immediate adjacent urbanized area, using the definition of areas eligible for assistance under the U.S. Department of Agriculture’s (USDA) Business & Industry programs.
It’s important to note the definition of rural jobs zones would only apply to the additional $1 billion to be invested in rural job zones. The Community Development Financial Institutions (CDFI) Fund would still require CDEs to invest a proportional share of the $3.5 billion authorized in calendar year (CY) 2018 and CY 2019 in non-metropolitan counties.
As administrator of the NMTC Program, the CDFI Fund would be responsible for deciding when and how to allocate the additional $1 billion in NMTC allocation authority. Depending on when the legislation was signed into law, it is unlikely but not inconceivable that the CDFI Fund may have an opportunity to include the initial $500 million in its CY 2018 award announcement of $3.5 billion that is projected to occur in early CY 2019 even though the CY 2018 round is already underway with applications that were due on June 28.
Don’t forget, the CDFI Fund successfully awarded the initial Gulf Opportunity (GO) Zone allocations after the application deadline had passed in 2006. Because applications for the 2006 NMTC round were submitted prior to the passage of the GO Zone legislation, allocations were made to pending applications to most quickly make awards to groups that could deploy investments in the GO Zone. Procedurally, the CDFI Fund issued an amended CY 2006 round notice of allocation availability (NOAA) that indicated priority would be given to those CDEs that evidenced the strongest mission of recovery and redevelopment in the GO Zone.
Back in 2006, the NMTC application deadline was extended given the proximity to when the Federal Emergency Management Agency issued its major disaster declaration as a result of Hurricane Katrina. It’s currently expected that December during the post-midterm-election lame duck session is the earliest the Rural Jobs Zones Act might become law. In that case, the CDFI Fund would have to devise a strategy that might include a supplemental questionnaire to expedite the review of rural jobs zones-related applications if it wanted to include the $500 million in the CY 2018 award announcement of $3.5 billion in early 2019.
In the event the CDFI Fund is not in a position to combine the additional $500 million in the CY 2018 award announcement, the CDFI Fund would likely award the entire $1 billion additional allocation in connection with the CY 2019 NMTC award announcement of $3.5 billion.
Regardless of the timing, the $1 billion in rural jobs zones allocation will provide a significant boost to investments in extremely underserved rural areas.
See below for map for rural job zones that would be eligible for the special $1 billion NMTC allocation.
Of the $1 billion in new allocation authority, at least 25 percent, or $250 million, would be prioritized to persistent poverty counties and high migration rural counties.
See below for a map indicating persistently poor counties as defined by HR 6627.
Similarly, see below for a map indicating high out-migration counties defined by the bill.
Lastly, the follow map includes both targeted counties.