At the annual Novogradac Fall New Markets Tax Credit (NMTC) Conference, Cherry Bekaert’s Laurel Tinsley participated in the Preparing for a Record Allocation Round panel. Tinsley provided key predictions and strategic advice for stakeholders preparing for the $10 billion calendar year (CY) 2024 – 2025 new markets tax credit allocation round.
Allocation Round Panel: Strategic Advice
The upcoming CY 2024 – 2025 double round of NMTC allocation is poised to distribute $10 billion in 2025 and is attracting significant interest.
Drawing lessons from the 2015 – 2016 double round, panelists expect a rise in applicants, winners and award sizes, with familiar community development entities (CDEs) likely to reapply. Past data shows that 2015 – 2016 double round allocations jumped to 50.4% from the previous rounds’ 28.9% and 28.1%. Additionally, that round saw an average award size of $58 million compared to the $46 million and $40 million for the previous two rounds.
Panelists also anticipate that the increased funding could widen the scoring range, allowing more participants to succeed. In the past, applicants had to score very highly, more than 106 out of the 110-point scale. It is possible applicants in the 104 – 105.9 range could receive more funds this round. In other words, more qualified applicants and more funding to go around.
Additional Takeaways From the NMTC Novogradac Conference
Strategic advice additionally emphasized preparation and readiness across stakeholders:
- Community Development Entities: CDEs were advised to maintain a methodical focus on long-term goals. This can give CDEs the leverage to use NMTC funding in a way that creates lasting value for the community and better align with the program’s mission.
- Qualified Active Low-Income Community Businesses (QALICBs): QALICBs should be project-ready, given the uncertainty of future rounds. Keep in contact with consultants and legal specialists and be ready to begin construction as soon as financing is ready.
- Investors: Investors are encouraged to leverage the increased tax credit volume and align with Community Reinvestment Act (CRA) targets. Due to the $10 billion allocation, more investors could also be attracted to the program for the first time. “In a larger round, there is room for some new investors” states Tinsley.
Panelists also strongly advocated for making the NMTC program permanent, citing its unparalleled contributions to community development and viewing the double round as a chance to showcase its value and secure its future.
To explore the insights and strategic advice shared in this Novogradac article, download the full PDF here.
Your Guide Forward
Cherry Bekaert has an experienced and knowledgeable Strategic Financing team that is available to guide you through the NMTC applicable process. If you would like to learn more about the program or get started with an initiative to help your community grow, reach out to a specialist today.
