Late last week, the CDFI Fund updated NMTC eligibility using data from the 2016-2020 American Community Survey. From their release:
- New Markets Tax Credit Program Low-Income Community (LIC) Data is now available. The updated LIC data may be used as of September 1, 2023. The CDFI Fund has also updated the list of High Migration Rural Tracts. Information on the transition from 2011-2015 ACS data to 2016-2020 ACS data for the NMTC Program is available on the CDFI Fund website here. The transition period is based on the date the Qualified Low Income Community Investment (QLICI) closes. The updated data is available in both Awards Management Information System (AMIS) for geocoding transactions for the Allocatee Transaction Level Report (TLR) submission and CDFI Information Mapping System (CIMS) for identifying whether potential NMTC investments are located in NMTC-eligible LICs.
- Island Areas 2020 update is tentatively scheduled for release in December 2023. The US Census Bureau released the 2020 Island Areas Decennial Census information and data files in July 2023. The CDFI Fund is in the process of reviewing this information to assemble the individual program eligibility data files. The Island Areas covers American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, and the US Virgin Islands. Entities should refer to their program specific policies on how to proceed until the new Island Areas data files are released.
The new eligibility data will be grandfathered during a transition period in which both the 2011-2015 ACS and 2016-2020 ACS datasets can be used. From the Transition FAQ:
3. Will there be a transition period for NMTC investments that were started under the 2011-2015 ACS data to be closed?
Yes. The CDFI Fund recognizes that CDEs may have already begun to structure potential QLICIs based on the older 2011-2015 ACS data. CDEs using older 2011-2015 ACS data to qualify investments may continue to use 2011-2015 ACS data to qualify Areas of Higher Distress until directed otherwise by the CDFI Fund (see timeline below). For investments made in the 50 states, the District of Columbia and Puerto Rico, a CDE that has been awarded NMTC allocation authority can use the following timelines for guidance on the data they should use to qualify potential investments.
- QLICIs closed (meaning an investment for which the CDE has distributed cash proceeds from a Qualified Equity Investment (QEI) to a Qualified Active Low Income Community Business (QALICB)) before September 1, 2023 must use the 2011-2015 ACS data for determining Low-Income Community eligibility.
- QLICIs closed between September 1, 2023 and August 31, 2024 may use either the 2011-2015 ACS data or 2016-2020 ACS data for determining Low-Income Community eligibility.
- QLICIs closed on or after September 1, 2024 must use 2016-2020 ACS data applied to the 2020 census tracts for determining Low-Income Community eligibility.
Notable Changes
The 11 digit census tracts from the 2016-2020 ACS may not be directly comparable to comparable to the 2011-2015 dataset, because the Census Bureau increased the number of census tracts from 74,133 to 85,395. Some tracts split while others were redrawn.
However, there are a few interesting trends.
Share of Eligible Census Tracts (Nationwide)
State Trends: Eligible Tracts
I compared the share of NMTC eligible tracts in each state over the two periods (2011-2015 vs 2016-2020).
The five states where the share of NMTC eligible census tracts declined the most between 2015 and 2020 were DC (-9.5% – see image below), Mississippi (-8.2%), Georgia (-6%), Idaho (-5.2%), and Alabama (-4.6%).
The five states with the largest increase in the share of eligible census tracts were North Dakota (4.4%), South Dakota (4.2%), Maine (2.7%), West Virginia (2.6%), and Wyoming (2.5%).
High Migration Rural Counties
Section 223 of the American Jobs Creation Act of 2004 amended the definition of Low-Income Communities to include, among other things, census tracts in High Migration Rural Counties with a median family income at or below 85% of the applicable area median family income. A High Migration Rural County is any county which, during the 20-year period ending with the year in which the most recent census was conducted, has a net out-migration of inhabitants from the county of at least 10 percent of the population of the county at the beginning of such period.
Counties classified as High Migration Rural Counties:
