Like many in the professional services world, the beginning of the year marks the official start of “busy season.” The NMTC industry is no different in this respect. So much so that, every January, the industry comes together for an annual conference to talk about what we learned from the past and what is on deck for the upcoming year.
The NMTC team at FORVIS spent the last week of January in California attending the 24th Annual NMTC Conference hosted by Novogradac & Company, LLP. Over three days, representatives from all facets of the NMTC industry—including community development entities (CDEs), NMTC investors, attorneys, and other professional service providers—met and discussed the current industry trends.
First, on the heels of the September 22, 2023 allocation announcement, the Community Development Financial Institutions Fund (CDFI Fund) opened the next NMTC Program application on October 23, 2023. Applications were due to the CDFI Fund on December 19, 2023. In addition to the application deadline, the CDFI also established an eligibility deadline requiring CDEs to deploy a certain amount of allocation previously received to maintain eligibility for future allocation awards. That deadline is March 21, 2024. CDEs must close on a portion of their allocation by this date, or their application will be pulled from further consideration. This is critical for all CDEs—so much so that we expect to see a pause on any deal activity unrelated to March 21 until CDEs clear this eligibility threshold.
Even with a pending deadline, CDEs are also continuously looking for new projects that meet their investment criteria. From our conversations, the most highly sought-after projects currently include rural projects located in underserved states such as Arizona, California, Colorado, Florida, Nevada, North Carolina, Tennessee, Texas, Virginia, and West Virginia1 that provide direct impact to low-income communities and low-income people through job creation and services. Individually, these criteria are not hard to find. However, many CDEs need a project that captures all three: rural, underserved states via the NMTC Program, and job creation. Any projects that meet these parameters may rise to the top of the list for CDEs.
Lastly, outside of the conference, the CDFI Fund released the 2023 demand for the NMTC Program. In total, 196 different CDEs located in 44 states applied for allocation.2 A total of $14.7 billion of allocation authority was requested; however, only $5 billion is available for this round. The program continues to see demand for allocation in many multiples versus what is available. The CDFI Fund expects to announce the award winners in the fall of 2024.
Please contact the FORVIS NMTC team with any questions: Mike Roney and Wes Ernst.