The NMTC program can be used to support commercial real estate projects and operating businesses that are located in qualified census tracts. Community facilities, charter schools and healthcare centers are examples of the types of projects that CSCDC is pursuing with its NMTC allocation. Residential rental housing (over 80% residential), and projects that include liquor stores, gambling facilities, country clubs and massage parlors are not eligible for the NMTC program.
For a project to qualify for CSCDC’s NMTC allocation, it needs to be located in a qualifying census tract (QCT) that is considered highly distressed under one of the following primary criteria:
- the poverty rate is above 30%
- the area median income is less than 60% of benchmarked median income, or
- the unemployment rate is at least 1.5x the national average
If the QCT does not meet the primary criteria, secondary criteria can be considered.
Demand for NMTCs is significant and there are far more qualifying projects seeking NMTC allocation than there is available allocation – with some estimates indicating demand at 10-12 times availability. When selecting projects, CDEs will consider projects that will be financially viable – they can raise the remaining 80-85% of capital through other sources – and they will create significant community impact in low-income communities. Such community impacts can include the:
- Creation and retention of permanent jobs
- Provision of essential goods and services (such as retail goods, child care, education, health care or other human and community services)
- Meeting of a community’s economic development goals
Finally, a project must demonstrate that NMTCs are essential for it to move forward, as CDEs are charged with providing NMTCs only to projects that could not proceed without this valuable taxpayer subsidy.