New Markets Tax Credit Eligibility Data Updated

The 2017 New Markets Tax Credit (NMTC) application was just released by the CDFI Fund, and you can use PolicyMap to help determine how well your application will score. This year, we’ve changed some of the language around the data to make it match more closely with the language used in the application, which should make it easier to use.

The New Markets Tax Credit Program is a federal tax credit that incentivizes business and real estate developers to invest in lower-income areas. A major part of the application determines whether the area served by the development is low-income, or underserved in certain specific ways.

Basic eligibility for NMTC requires a development to be in a census tract with income at or lower than 80 percent area median income, or poverty to be greater than 20 percent. (Area median income refers to the median family income of the state, or if the tract is in a Metropolitan Statistical Area with a higher median family income than the state as a whole, the median family income of the MSA.) This is based on older 2006-2010 Census American Community Survey (ACS) data. We have a single indicator showing eligibility under either of these criteria:

If you want to dig deeper into this data, we also have individual indicators showing eligibility under either of these criteria (poverty and median family income), as well as the specific values for poverty and tract family income as a percent of area median income.

Looking at this year’s application, the big section that PolicyMap can help with is “Part II: Community Outcomes” on page 41. Question 24 specifically looks at indicators of higher distress, which can help an application score more highly. There are 14 items on this list, and if an application qualifies for any one of the first three items, or any two of the rest, it “will generally score more favorably,” according to the application.

Here are each of these items, with links to the indicators PolicyMap has available (some are non-geographic, or not mappable for the nation):

1. [SEVERE DISTRESS] Census tracts with poverty rates greater than 30 percent; OR Census tracts with, if located within a non-Metropolitan Area, median family income that does not exceed 60 percent of statewide median family income, or, if located within a Metropolitan Area, median family income that does not exceed 60 percent of the greater of the statewide median family income or the Metropolitan Area median family income; OR Census tracts with unemployment rates at least 1.5 times the national average.
2. [NON-METROPOLITAN COUNTIES] Qualifying census tracts that are located in counties not contained within a Metropolitan Statistical Area (MSA), as defined in OMB Bulletin No. 10–02 (Update of Statistical Area Definitions and Guidance on Their Uses) and applied to the 2010 census tracts.
3. [TARGETED POPULATIONS] As permitted by IRS and related CDFI Fund guidance materials, projects serving Targeted Populations to the extent that: (a) such projects are 60 percent owned by Low-Income Persons(LIPs); or (b) at least 60 percent of employees are LIPs; or (c) at least 60 percent of customers are LIPs.
4. [25% POVERTY/70% MEDIAN FAMILY INCOME/1.25 UNEMPLOYMENT RATE] Census tracts with one of the following: (i) poverty rates greater than 25 percent; or (ii) if located within a non-Metropolitan Area, median family income that does not exceed 70 percent of statewide median family income, or, if located within a Metropolitan Area, median family income that does not exceed 70 percent of the greater of the statewide median family income or the Metropolitan Area median family income; or (iii) unemployment rates at least 1.25 times the national average.
5. [Small Business Administration (SBA) Designated HUB ZONES] to the extent QLICIs will support businesses that obtain HUB Zone certification by the SBA.
6. [BROWNFIELDS] Brownfield sites as defined under 42 U.S.C. 9601 (39).
7. [HOPE VI REDEVELOPMENT] Areas encompassed by a HOPE VI redevelopment plan.
8. [FEDERAL NATIVE AREAS] Federally designated Native American, Alaskan Native areas, or Hawaiian Homelands.
9. [ARC/DRA AREAS] Areas designated as distressed by the Appalachian Regional Commission or Delta Regional Authority.
10. [COLONIAS AREAS] as designated by the U.S. Department of Housing and Urban Development.
11. [FEDERAL MEDICALLY UNDERSERVED AREAS] Federally designated medically underserved areas, to the extent QLICI activities will result in the support of health related services.
12. [FEDERAL/STATE/LOCAL ZONES] Federally designated Promise Zones, Impacted Coal Counties, Base Realignment and Closure areas, State Enterprise zone programs, or other similar state/local programs targeted towards particularly economically distressed communities.
13. [FEMA DISASTER AREAS] Counties for which the Federal Emergency Management Agency (FEMA) has: issued a “major disaster declaration” and made a determination that such County is eligible for both “individual and public assistance”; provided that the initial investment will be made within 36 months of the disaster declaration.
14. [HEALTHY FOODS FINANCING INITIATIVE (HFFI) DESIGNATED FOOD DESERTS] Census tracts identified as Food Deserts under the HFFI definition (USDA-ERS), to the extent QLICI activities will increase access to healthy food.

(The NMTC Program has its own lexicon of acronyms; a QLICI is a Qualified Low-Income Community Investment.)

The CDFI Fund says that applicants should use the CDFI Fund’s CIMS3 mapping service to determine whether projects are in eligible areas, and it’s probably a good idea to do that before submitting your final application. However, PolicyMap is a convenient place to take a first look, not only because its indicators show eligibility for each criteria, but it also has data for these higher distress criteria.

Where PolicyMap becomes really useful is if you have a list of projects or potential projects by address, and want to check eligibility for all of them at once. You can load all these points using the data uploader, and then download a spreadsheet showing each point’s eligibility using the new download tool.

Longtime users of PolicyMap’s NMTC data will notice that the wording around many of the indicators has changed this year. We’ve gotten rid of terms like “primary criteria” and “severely distressed”, and replaced them with the more common terms used by the CDFI Fund on the application. We’ve broken out “Severe Distress” and “Non-Metropolitan Counties” into two different indicators, since each needs to be noted individually on the form. We hope all this will make applying for NMTC easier than ever before.

All this data can be accessed on PolicyMap in the “Federal Guidelines” menu.