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CDFI Fund Representatives Talk 2023 Awards Date, Application Review, Combined Round Proposal

Published by Brad Stanhope on Wednesday, March 6, 2024

Journal Cover March 2024   Download PDF

The calendar-year 2023 (CY 23) new markets tax credit (NMTC) allocation awards should be announced in late summer or early fall, while the NMTC application will be released for public comment shortly and there is no decision yet on whether to combine allocation rounds ahead of the current expiration date for the NMTC incentive.

Those were the key takeaways Jan. 26 from a CDFI Fund panel at the Novogradac 24th Annual New Markets Tax Credit Conference in Carlsbad, California.

The panel provided insight on the same day that the Community Development Financial Institutions (CDFI) Fund announced that it had received applications from 196 community development entities (CDEs), requesting $14.7 billion in NMTC allocation authority for CY 23 round–nearly triple the $5 billion in allocation authority.

"We've seen relatively consistent demand over the past few rounds," said Christopher Allison, program manager for the NMTC program at the CDFI Fund.
Allison said the calendar-year 2023 allocation winners will likely be announced in late summer or early fall.

"It's always our goal to announce allocation awards when they're ready," said Allison. "There are a lot of moving parts. In the past few rounds, we've made efforts to streamline the review process, which has resulted in a slight shift by maybe a month between when awards are announced and the opening of the next round. I'm hopeful that trend continues and we maintain the progress."

Allison noted that last year's award announcement–Sept. 22–came quicker than some expected.

"We may have surprised a few folks when we announced last year's awards on the last day of summer instead of fall," he said. "But we're going to put them out when they're ready."

Allison said the CY 2023 applications are in the middle of the review process, which contains multiple steps, including a requirement that awards to rural CDEs are proportionate to the number of rural CDEs that are highly qualified applicants, with a minimum of 20% of qualified low-income community investments made in nonmetropolitan counties.

Allison said the recently reformatted NMTC application–which changed to a more tabular format for the CY 2023 round–was done to communicate the application questions more clearly and to more closely align with applications for other CDFI Fund programs.

"Our hope is that it's easier to use than the format we'd been using, which we'd used since the beginning of the program," Allison said. "It may take some time getting used to and the application will go through public comment."

Allison said he expected the allocation application to be released for public comment "in the next month or so" after the conference. This year's review is part of a regular cycle in which the CDFI Fund can make substantial changes and receive public comment.

The possibility of combining allocation rounds–most notably to merge the CY 2024 and CY 2025 rounds into a single $10 billion allocation award round was discussed multiple times at the conference. Allison said he was aware of the desire by many stakeholders to do so but had no other comments.

"I don't have anything to announce other than what we've already said," he said. "We've obviously gotten the letters from the [New Markets Tax Credit] Coalition and [Novogradac New Markets Tax Credit] Working Group. We're considering a lot of strategies and share the goal of timely awards."

Allison was joined on the panel remotely by Trefor Henry, the associate program manager of the CDFI Fund's Office of Compliance Monitoring and Evaluation, and Oscar Gonzales, the associate program manager of Financial Strategies and Research at the CDFI Fund.

Henry was asked about concerns expressed by CDEs that have lost their CDFI certification that the situation will cause problems with their NMTC applications.

"CDFIs will have a substantial grace period to come into compliance with new CDFI certification criteria," said Henry. "For this new markets tax credit round, it's CDE certification that's important, not CDFI certification. We treat CDE and CDFI certification as discrete matters. … Once you're certified as a CDE, your certification no longer is reliant on CDFI certification."

Meanwhile, Gonzales said that census tract data for U.S. territories was released as an Excel file on the CDFI Fund website. That data was not included with the American Community Survey census data released in September 2023.

Allison also touched on site visits to CDEs by the CDFI Fund staff.

"This is an opportunity to go into the field and go through things with a CDE, one by one," Allison said. "We go from soup to nuts and learn a lot. COVID prevented us from doing those, but it's something important to me and our team."

After a break for a couple of years, Allison said his group did four site visits in 2023. He said the quick turnaround between the awards and the application makes it a challenge.

"We can't do it while we're evaluating [a CDE's] application," Allison said. "We don't want the perception that the CDFI Fund did a site visit and then you got an award. Or not. The window between the awards announcement and the application is very small now, so it can be challenging to do it every round. But we hope to do so this year."

He said some visits may include a visit to a qualified active low-income community business funded by the CDE, but that often is a challenge due to the businesses being far away from the CDE. 

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