New Markets Tax Credits

New Markets Tax Credit Program: Glossary of Terms

Shown below are definitions of key words and phrases associated with the NMTC Program and related government investment programs targeted towards low-income communities.

Allocatee: An Applicant that receives an NMTC Allocation.

Allocation Agreement: An agreement to be entered into between the CDFI Fund and a CDE that stipulates the term for the use of the tax credit allocations.

Community Development Entities (CDE): Any domestic corporation or partnership where:

  1. The primary mission of the entity is serving, or providing investment capital for, low-income communities or low-income persons;
  2. The entity maintains accountability to residents of low-income communities through their representation on any governing board of the entity or on any advisory board to the entity; and
  3. The entity is certified by the CDFI Fund as a CDE.

Distressed Community BEA Award: Indicates whether or not a tract qualifies as a Distressed Community for the Bank Enterprise Award (BEA) program, and if it does, whether it qualifies fully or must be aggregated with another contiguous, fully qualifying tract.

Hot Zone: Indicates whether a particular census tract qualifies under Hot Zone criteria (as either a Housing Hot Zone or Economic Development Hot Zone). Please note that non-metropolitan areas will not qualify on a tract level and a county level.

Investment Area: Indicates whether a particular tract qualifies individually under the Investment Area criteria in the CDFI Program. Please note that it is possible to include non-qualifying tracts in an Investment Area, as long as the population of the non-qualifying tracts is no more than 15 percent of the total Investment Area population.

Median Family Income Ratio: Percentage of applicable area median family income

Poverty Rate: Percentage of population living at or below the poverty level

Status: Indicates whether or not a tract qualifies as a Low-Income Community for the New Markets Tax Credit Program. All tracts either qualify or do not qualify on their own merit (i.e., they cannot be aggregated with other contiguous tracts in order to qualify).

Type of Hot Zone: Indicates what type of Hot Zone a particular tract is. Types include: Economic Development Hot Zone, Housing Hot Zone or both.

Unemployment Rate: The percentage of the total U.S. workforce who are unemployed and looking for a paid job.