The NMTC program provides a 39% federal tax credit over seven years to investors who fund projects in qualifying census tracts. These credits are distributed through Community Development Entities (CDEs), which channel capital into projects and businesses that generate meaningful community impact. Typically, financial institutions and other entities with significant federal tax liability purchase the right to receive the 39% credit over the seven-year credit period through the upfront investment of equity, i.e., a QEI or qualified equity investment, into the CDE. The CDE then loans the proceeds of the QEI to the owner of the project or operator of the business, which such loan comes with very borrower-friendly terms and is forgiven at the end of the seven-year compliance period, resulting in a subsidy to the project or business. The CDEs apply to the federal government for NMTC allocation authority and determine which projects or businesses to grant the subsidy. Obtaining NMTC allocation from a CDE is an extremely competitive process, but manufacturing and industrial facilities in qualified census tracts can be appealing to CDEs looking to unload NMTC allocation, because the NMTC can be used by manufactures not only for the cost to construct a new facility or expand an existing facility, but also to reimburse the manufacturers for the cost of raw materials and inventory looking back for two years prior the date the QEI is made. Indeed, CDEs would be very interested in speaking with manufacturers with facilities in qualified census tracts looking to expand production and add high-paying jobs. Until recently, developers, CDEs and tax credit investors had to rely on Congress to provide new NMTC allocation authority nearly every year, so there was much uncertainty with the program. However, at least for the near-term, that will no longer be the case, as the recently enacted One Big Beautiful Bill Act provides for ongoing and annual NMTC allocation of $5 billion beginning in 2026. And this permanent extension follows a double allocation round of $10 billion to be awarded to CDEs sometime this fall. NLRB – Significant Updates in Labor Under Trump Administration Contributors: Tim Garrett, Hunter Yoches Savvy manufacturing employers will recall the increased union activity and heavy regulation by the Biden-era National Labor Relations Board (NLRB), which impacted manufacturing over the last years of the Biden administration. The NLRB’s prior General Counsel was quite active in numerous areas, as detailed here. Much has changed with the election of President Donald J. Trump. After his inauguration, President Trump immediately terminated the NLRB’s General Counsel at the time, Jennifer Abruzzo. Soon thereafter, the new acting General Counsel rescinded almost all the over-reaching Biden-era NLRB Guidance Memoranda. Noteworthy rescissions include no longer instructing Regional Directors to consider employer surveillance practices as presumptively unlawful, no longer instructing Regional Directors to prosecute employers for non-compete agreements or stay-or-pay agreements, and overturning former restrictions on confidentiality and non-disparagement provisions in severance agreements. In addition, President Trump terminated NLRB member Gwynne Wilcox. While the legality of that termination remains unsettled in a pending lawsuit, a recent United States Supreme Court ruling likely signals that the Supreme Court will uphold the President’s right to terminate Board members, even without cause. Such a finding would be a major shift in the President’s ability to shape labor policy immediately upon taking office. There remains some question about the legality of the prosecutorial structure of the NLRB, which has also been challenged in several lawsuits. In mid-July, President Trump nominated Scott Mayer, currently chief labor counsel for Boeing, and James Murphy, who served many years as counsel to various Republican members of the NLRB, to vacant seats on the NLRB.
5 MANUFACTURING & INDUSTRIAL: OUTLOOK & TRENDS |
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