In the early years of the program, well over half of NMTC projects lacked the sort of community facility or social service provider components discussed on the previous pages. The most noticeable trends in project selection are the shift away from retail, the service sector, accommodation, and commercial office space toward community facilities and manufacturing (see chart below).

BUSINESS FINANCING AND COMMERCIAL REAL ESTATE

The chart above shows trends in projects involving business financing and commercial real estate (“commercial”). For the purposes of our analysis, these projects are defined as any project without a community facility, nonprofit, or social service component. Commercial projects expand job opportunities and entrepreneurship in distressed communities. Many of these projects directly generated more than 1,000 jobs.

INDUSTRIAL SECTOR

As the program matured, CDEs increasingly used NMTC financing to help triage American manufacturing, which has suffered a decades’ long slump in terms of its share of the U.S. economy. Between 2001 and 2019, manufacturing fell from 27 percent to 21 percent of U.S. non-government Gross Domestic Product (GDP). As a share of commercial financing, industrial projects now account for well over half (58 percent) of all NMTC financing dollars after accounting for under 25 percent of all NMTC financing from 2001-2009.

OTHER TRENDS

CDEs have increasingly financed business incubators, research labs, and entrepreneurial spaces along with grocery stores. CDEs shifted away from non-grocery retail, restaurants, and automotive businesses, though the financing of automotive retailers increased in the early years of the Great Recession as CDEs helped triage the automotive industry.

Hotel projects, which are often a linchpin for restoring downtown foot traffic and tourism spending, generating state and local tax revenue, and providing accessible job opportunities, have declined as a share of allocation directed toward commercial real estate. Early in the program, many CDEs promoted the revitalization of central business districts through the historic rehabilitation of vacant and abandoned buildings in to commercial real estate, including hotels. As program competition increased and central business districts recovered from decades of decline, project location shifted outside these districts toward areas of higher distress. Hotel projects declined from 9.7 percent of all commercial financing (and 5.8 percent of all project financing) from 2001-2010 to 5.5 percent of commercial financing (and 3.3 percent of all financing) between 2011 and 2019.

The energy and natural resources category on the previous page’s chart includes sustainable timber and clean energy projects. The latter experienced a growth in popularity after the advent of several clean energy financing tools during the second term of George W. Bush and the first term of Barack Obama.

COMMUNITY FACILITY TRENDS

In terms of community facilities, CDEs have increasingly financed multi-component community facilities, daycare and youth-oriented projects, emergency service providers, and YMCAs. Theaters and museums, single-family housing, general purpose charities, and religious facilities have declined in popularity as a share of annual NMTC allocation.