2024-2025 NMTC Allocation Application: Deep Distress Areas and Simplifying Eligibility Mapping

The New Markets Tax Credit (NMTC) program has been pivotal in driving investments into low-income communities across the United States since its inception in 2000. Created by Congress and administered by the U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund, the NMTC program incentivizes individual and corporate investors to make equity investments into specialized financial institutions, known as Community Development Entities (CDEs). These CDEs, in turn, use the capital to fund businesses and real estate projects in low-income and distressed areas, channeling much-needed resources into regions often overlooked by traditional investment flows.

Over its two-decade history, the NMTC has financed over 10,000 businesses in urban, rural, and tribal communities nationwide, helping to support local economies and create jobs in some of the most distressed areas.

PolicyMap’s origins are deeply rooted in the same mission that underpins the NMTC program. As part of Reinvestment Fund, a CDFI and NMTC CDE, PolicyMap was founded with a commitment to providing accessible, data-driven tools to support community development efforts. Our platform offers analysis-ready data not only on NMTC eligibility but also on related federal programs, including CDFI Investment Areas and Community Reinvestment Act (CRA) eligibility, among others.

New Eligibility Areas in the 2024-2025 NMTC Allocation Application

For the upcoming 2024-2025 NMTC Allocation Application (access the draft for comment here), the CDFI Fund has outlined new criteria for identifying “Deep Distress” areas. While applicants must commit to investing at least 85% of their resources in census tracts designated as either “Severe Distress” or in low-income, non-metropolitan areas, “Deep Distress” provides an additional target for CDEs looking to strengthen their applications.

Census tracts fall into the Deep Distress category if they meet one of the following criteria:

• Poverty rate over 40%
• Median family income that does not exceed 40% of the statewide or metro area median family income
• An unemployment rate at least 2.5 times the national average

By contrast, Severe Distress tracts have slightly less stringent criteria, with poverty rates exceeding 30%, median family income set at 60% of the benchmark, and unemployment rates 1.5 times the national average.

Applicants who commit to investing in Deep Distress areas will generally be scored more favorably by the CDFI Fund and may be considered for additional allocations.

Simplifying Eligibility Mapping with PolicyMap

Understanding and mapping NMTC eligibility can quickly become complex, particularly when dealing with overlapping designations like Severe Distress and Deep Distress. To simplify this process for our users, PolicyMap has added “Deep Distress” census tracts to our composite NMTC Eligibility layer. This layer allows users to visualize both Severe Distress and Deep Distress tracts in one unified view, making it easier to identify target areas for investment.

In the map example below for Wayne County, Michigan, Deep Distress tracts are shaded red, while Severe Distress tracts appear in maroon/brown. Additionally, the layer reflects tracts that are NMTC eligible but do not meet the extra distress criteria, as well as those that are not eligible at all.

The Largest NMTC Allocation Yet: What to Expect in 2025

The upcoming 2025 NMTC allocation is anticipated to be significant – with the CDFI Fund announcing it will combine the 2024 and 2025 funding rounds into a single $10 billion allocation. This will be the largest NMTC funding round in the program’s history.

Industry experts, including those at Novogradac, expect that the increased funding will attract more applications from CDEs, driving greater demand for allocations. In the last few years, the demand for NMTC funding has been roughly three times the available funding, and this trend is expected to continue with the upcoming allocation.

With record funding and demand expected, it will be critical for CDEs to be able to quickly qualify their project locations against areas of both Severe Distress and Deep Distress. PolicyMap is proud to offer data and tools that support CDEs in their critical work of securing and effectively deploying NMTC dollars into the communities that need it most.