[Federal Register Volume 66, Number 84 (Tuesday, May 1, 2001)]
[Notices]
[Pages 21846-21850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10545]



Federal Register / Vol. 66, No. 84 / Tuesday, May 1, 2001 / Notices

[[Page 21846]]


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DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund


Guidance, New Markets Tax Credit Program

AGENCIES: Community Development Financial Institutions Fund, Department 
of the Treasury.

ACTION: Guidance, New Markets Tax Credit Program.

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SUMMARY: Title I, subtitle C, section 121 of the Community Renewal Tax 
Relief Act of 2000 (the ``Act''), as enacted by section 1(a)(7) of the 
Consolidated Appropriations Act, 2001 (Pub. L. 106-554, December 21, 
2000), amended the Internal Revenue Code (the ``IRC'') by adding IRC 
section 45D, New Markets Tax Credit. Section 45D requires the Secretary 
of the Treasury (``Treasury'') to establish a program that will provide 
an incentive to investors in the form of a tax credit over seven years, 
which is expected stimulate investment in new private capital that, in 
turn, will facilitate economic and community development in distressed 
communities. Section 45D, among other things, also requires the 
Secretary to issue guidance on (i) how entities may apply to receive 
allocations of New Markets Tax Credits (``NMTCs''); (ii) the 
competitive procedure through which such allocations will be made; and 
(iii) the actions that will be taken to ensure that proper allocations 
are made to appropriate entities. The Secretary has delegated such 
authority to the Under Secretary (Domestic Finance), who has in turn 
delegated such authority to the Director of the Community Development 
Financial Institutions Fund (the ``Fund''). Pursuant to section 121(f) 
of the Act, this document provides guidance on how an entity may apply 
to become certified as a ``qualified community development entity'' 
(``CDE''), how a CDE may apply to receive an allocation of NMTCs, the 
competitive procedure through which such allocations will be made, and 
the actions that will be taken to ensure that proper allocations are 
made to appropriate entities.
    In addition, this Guidance seeks comment from the public as to 
certain application and allocation issues that the Fund may address in 
subsequent guidance (see Section VII, ``Pending Issues,'' for further 
detail). All material submitted in response to this Guidance will be 
available at the Fund for public inspection and copying.
    As provided by IRC section 45D(i), Treasury is authorized to 
prescribe regulations relating to the NMTC Program as may be 
appropriate, including regulations that (i) limit NMTCs for investments 
that are directly or indirectly subsidized by other Federal tax 
benefits, including the Low-Income Housing Tax Credit under IRC section 
42, and the exclusion from gross income for certain tax-exempt bond 
interest under IRC section 103; (ii) prevent abuse of the purposes of 
IRC section 45D; (iii) provide rules for determining whether the 
``Substantially All Test'' found at IRC section 45D(b)(1)(B) is treated 
as met; (iv) impose appropriate reporting requirements; and (v) apply 
IRC section 45D to newly formed entities.
    Simultaneously with the issuance of this Guidance, the Internal 
Revenue Service (``IRS'') is issuing an Advance Notice of Proposed 
Rulemaking (the ``ANPRM'') that invites comments from the public on 
certain issues that the IRS may address in regulations relating to the 
NMTC Program and IRC section 45D.
    The Fund has the authority to allocate to CDEs the authority to 
issue to their investors, for calendar year 2001, up to the aggregate 
amount of $1 billion in equity as to which NMTCs may be claimed; for 
each of years 2002 and 2003, up to $1.5 billion in equity as to which 
NMTCs may be claimed; for each of years 2004 and 2005, up to $2 
billion; and for each of years 2006 and 2007, up to $3.5 billion. 
Amounts not allocated in any calendar year may be carried over to 
succeeding years, to the extent provided in IRC Sec. 45D(f)(3).
    This Guidance does not solicit applications either for CDE 
certification or allocations of NMTCs. The Fund expects, in the future, 
to issue additional guidance that will solicit CDE certification 
applications and applications for NMTC allocations.

DATES: Written and electronic comments on the issues set forth below in 
Section VII, ``Pending Issues,'' must be submitted to the Fund by July 
2, 2001.

ADDRESSES: Comments in response to the issues set forth below in 
Section VII, ``Pending Issues,'' should be sent by mail to: Acting 
Director, Community Development Financial Institutions Fund, U.S. 
Department of the Treasury, 601 13th Street, NW., Suite 200 South, 
Washington, DC 20005; by e-mail to <a href="/cdn-cgi/l/email-protection#e78483818e8f828b97a78483818ec99395828694c9808891"><span class="__cf_email__" data-cfemail="503334363938353c2010333436397e24223531237e373f26">[email protected]</span></a>; or by 
facsimile at (202) 622-8244. This is not a toll free number.

FOR FURTHER INFORMATION CONTACT: Information regarding the Fund and its 
programs may be downloaded from the Fund's web site at http://www.treas.gov/cdfi.

SUPPLEMENTARY INFORMATION:

I. Definitions

    Allocation Agreement: means a formal agreement, by and between the 
Fund and a CDE that has been provided with a NMTC allocation, that 
specifies the terms and conditions of such NMTC allocation.
    Community Development Entity or CDE: see Qualified Community 
Development Entity, below.
    Community Development Financial Institution or CDFI: means an 
entity that has been certified by the Fund as meeting the criteria set 
forth in section 103 of the Community Development Banking and Financial 
Institutions Act of 1994 (12 U.S.C. 4702). For further details, refer 
to the CDFI Program regulations set forth at 12 CFR 1805.201.
    Comprehensive Investment Plan: means a document, to be included in 
a CDE's application for an allocation of NMTCs, that provides 
historical information and a minimum five-year investment strategy that 
offers a detailed discussion of (a) the applicant's track record in 
making investments and promoting community development; (b) the 
applicant's financial and operational capacity, including its ability 
to track NMTC investment proceeds; (c) the capacity, skills, and 
experience of its management team; (d) an analysis of its target 
market; (e) its plan for raising capital with a NMTC allocation; and 
(f) its strategy for using the proceeds from such an allocation 
(including its financial and community development underwriting 
criteria).
    Credit Allowance Period: means the seven-year period beginning on 
the date on which a Qualified Equity Investment, as hereinafter 
defined, is initially made.
    Low-Income Community: means any population census tract in which 
(A) the poverty rate is at least 20 percent, or (B)(i) in the case of a 
tract not located within a Metropolitan Area (as hereinafter defined), 
the median family income for such tract does not exceed 80 percent of 
statewide median family income, or (ii) in the case of a tract located 
within a Metropolitan Area, the median family income for such tract 
does not exceed 80 percent of the greater of statewide median family 
income or the Metropolitan Area median family income. With respect to 
(B) in the preceding sentence, possession-wide median family income 
shall be used (in lieu of statewide income) in assessing the status of 
census tracts located within a possession of the United States. Upon 
application by an entity for certification as a CDE, the Fund may 
designate under IRC section 45D(e)(2) an area within a census tract

[[Page 21847]]

as a Low-Income Community if (A) the boundary of the area is 
continuous; (B) the area would otherwise meet the definition of a Low-
Income Community if it were a census tract; and (C) there is inadequate 
access to investment capital in the area (as demonstrated by studies, 
surveys, or other analyses provided by the applicant). In the case of 
an area that is not tracted for population census tracts, the 
equivalent county divisions (as defined by the Bureau of the Census for 
purposes of determining poverty areas) shall be used for purposes of 
defining poverty rates and median family incomes. For the purpose of 
determining whether a business meets the definition of Qualified Active 
Low-Income Community Business, as hereinafter defined, the CDE shall 
use the most recent census or other data that is available at the time 
of its investment in the business.
    Low-Income Persons: means individuals residing in Low-Income 
Communities having an income, adjusted for family size, of not more 
than (i) for non-Metropolitan Areas, 80 percent of the statewide median 
family income; and (ii) for Metropolitan Areas, the greater of (A) 80 
percent of the statewide median family income or (B) 80 percent of the 
Metropolitan Area median family income.
    Metropolitan Area: means an area designated as such by the Office 
of Management and Budget pursuant to 44 U.S.C. 3504(e) and 31 U.S.C. 
1104(d) and Executive Order 10253 (3 CFR 1949-1953 Comp., p. 758), as 
amended.
    Qualified Active Low-Income Community Business: means, with respect 
to any taxable year, any corporation (including a nonprofit 
corporation) or partnership if, for such taxable year: (i) at least 50 
percent of the total gross income of such entity is derived from the 
active conduct of a Qualified Business within any Low-Income Community; 
(ii) a substantial portion of the use of the tangible property of such 
entity (whether owned or leased) is within any Low-Income Community; 
(iii) a substantial portion of the services performed for such entity 
by its employees are performed in any Low-Income Community; (iv) less 
than five percent of the average of the aggregate unadjusted bases of 
the property of such entity is attributable to collectibles (as defined 
in IRC section 408(m)(2)) other than collectibles that are held 
primarily for sale to customers in the ordinary course of such 
business; and (v) less than five percent of the average of the 
aggregate unadjusted bases of the property of such entity is 
attributable to nonqualified financial property (as defined in IRC 
section 1397C(e)). For this purpose, a proprietorship may be considered 
a Qualified Active Low-Income Community Business if the business would 
meet the requirements of the preceding sentence if it were 
incorporated. In addition, the term Qualified Active Low-Income 
Community Business includes any trade or business, including any 
program, department, or division of a business, that would qualify as a 
Qualified Active Low-Income Community Business if such trade or 
business were separately incorporated.
    Qualified Business: means any business that meets the definition 
found at IRC section 1397C(d), except that (i) in lieu of applying IRC 
section 1397C(d)(2)(B), the rental to others of real property located 
in any Low-Income Community shall be treated as a Qualified Business if 
there are substantial improvements located on such property, and (ii) 
IRC section 1397C(d)(3) (relating to the rental of tangible personal 
property) shall not apply. The rental to others of residential rental 
property (as defined in IRC section 168(e)(2)(A)) is not a Qualified 
Business.
    Qualified Community Development Entity or CDE: means any domestic 
corporation or partnership if (A) the primary mission of the entity is 
serving, or providing investment capital for, Low-Income Communities or 
Low-Income Persons; (B) 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 (C) the entity is certified by the Fund as a CDE. A CDE may also be 
a limited liability company (``LLC'') that meets the above tests. 
SSBICs, as hereinafter defined, and CDFIs will be deemed to be CDEs in 
the manner hereinafter set forth.
    Qualified Equity Investment: means any equity investment in a CDE 
if (A) such investment is acquired by the investor at its original 
issue (directly or through an underwriter) solely in exchange for cash; 
(B) substantially all of such cash is used by the CDE to make Qualified 
Low-Income Community Investments; and (C) the investment is designated 
by the CDE as a Qualified Equity Investment. Qualified Equity 
Investment also includes the purchase of a Qualified Equity Investment 
from a prior holder, to the extent provided in IRC section 45D(b)(4). 
Qualified Equity Investment does not include any equity investment 
issued by a CDE more than five years after the date the CDE receives a 
NMTC allocation. For purposes of this Guidance, ``equity investment'' 
means (A) any stock (other than nonqualified preferred stock as defined 
in IRC section 351(g)(2)) in a corporation and (B) any capital interest 
in a partnership. An LLC shall be deemed to be either a corporation or 
a partnership, according to the LLC's treatment under federal tax law.
    Qualified Low-Income Community Investment: means (A) any capital or 
equity investment in, or loan to, any Qualified Active Low-Income 
Community Business; (B) the purchase from a CDE of any loan made by 
such entity that is a Qualified Low-Income Community Investment; (C) 
financial counseling and other services to businesses located in, and 
residents of, Low-Income Communities; and (D) any equity investment in, 
or loan to, any CDE.
    Specialized Small Business Investment Company or SSBIC: is defined 
in IRC section 1044(c)(3). For further information, contact Austin 
Belton, Small Business Administration (``SBA''), at 202/205-7027.

II. The New Markets Tax Credit Program: How the Credit Works

    By providing an incentive in the form of a tax credit over seven 
years, NMTCs are intended to stimulate the investment of $15 billion in 
new private capital in CDEs that, in turn, will make investments in 
eligible businesses in distressed urban, rural, and Native American 
communities, thus facilitating economic and community development.
    Through the NMTC Program, an entity may apply to the Fund to be 
certified as a CDE (see Section IV, ``Eligibility,'' for further 
detail). Nonprofit entities and for-profit entities may be certified as 
CDEs by the Fund. Only CDEs that are for-profit entities are eligible 
to compete for, and receive, an allocation of authority to issue 
Qualified Equity Investments with respect to which investors will be 
entitled to claim NMTCs. A taxpayer (including, for example, 
individuals, corporations, partnerships, and investment funds) that 
makes a Qualified Equity Investment in a CDE that has received a NMTC 
allocation from the Fund may claim a five percent tax credit on the 
investment amount for each of the first three years and a six percent 
tax credit for each of the next four years. If the CDE fails to issue 
equity investments to use all or part of its NMTC allocation within 
five years from the date of the Allocation Agreement, the unused 
portion of the allocation will terminate.
    IRC section 45D(b)(1)(B) requires that the CDE use ``substantially 
all'' of the cash raised as a result of its NMTC

[[Page 21848]]

allocation to make Qualified Low-Income Community Investments (the 
``Substantially All Test''). The Substantially All Test will be treated 
as met if at least 85 percent of the aggregate gross assets of the CDE 
are invested in Qualified Low-Income Community Investments (the ``Safe 
Harbor Test,'' found at IRC section 45D(b)(3)). If the Safe Harbor Test 
is met, the CDE need not trace the use of cash from the particular 
stock issuance (or other equity investment) with respect to which the 
NMTCs are claimed. The IRS may address issues related to the 
Substantially All Test in subsequent regulations.
    Under IRC section 45D(d)(1)(A), Qualified Low-Income Community 
Investment includes any capital or equity investment in, or loan to, 
any Qualified Active Low-Income Community Business. Please note, 
however, that under IRC section 45D(f)(2)(B), the Fund will give 
priority when evaluating whether to award a CDE with a NMTC allocation 
to any CDE that intends to satisfy the Substantially All Test by making 
Qualified Low-Income Community Investments in one or more businesses in 
which persons unrelated to the CDE (within the meaning of IRC section 
267(b) or section 707(b)(1)) hold the majority equity interest (see 
Section V, ``Evaluation,'' below).
    If selected for an allocation of NMTCs, a CDE will receive a Notice 
of NMTC Allocation, which will set forth the amount of the CDE's NMTC 
allocation and describe the general terms and conditions that will 
govern said allocation. The general terms and conditions will include, 
among others, the requirement that the CDE enter into an Allocation 
Agreement with the Fund for the duration of the Credit Allowance Period 
and comply with certain reporting requirements so that the Fund can 
monitor the CDE's compliance with IRC section 45D, this Guidance, and 
subsequent guidance and/or regulations. The CDE may not issue Qualified 
Equity Investments to its investors until such time as the Fund and the 
CDE have executed the Allocation Agreement.
    Under IRC section 45D(g)(3), the following constitute events of 
recapture: (i) the CDE ceases to qualify as a CDE; (ii) the CDE ceases 
to meet the Substantially All Test; or (iii) the CDE redeems Qualified 
Equity Investments during the Credit Allowance Period. The IRS may 
address recapture issues in subsequent regulations.

III. Applications

    At a future date, the Fund will make available two application 
forms: (i) An application for CDE certification and (ii) an application 
for an allocation of NMTCs. An entity may submit these applications 
concurrently or separately (provided, however, that if they are 
submitted separately, the CDE certification application must be 
submitted prior to the submission of an allocation application). The 
CDE certification application form will require that the applicant 
provide, among other items, specific information relating to its 
primary mission and its accountability to residents of Low-Income 
Communities, as described below. The NMTC allocation application form 
will require that the applicant provide, among other items, a 
Comprehensive Investment Plan. Further details regarding eligibility 
and other program requirements will be set forth in the application 
packets, which will be made available at a future date.

IV. Eligibility

    IRC section 45D(c) specifies the eligibility requirements that each 
entity must meet in order to be certified by the Fund as a CDE. At the 
time an entity submits its CDE certification application, the entity 
must be a duly organized and validly existing legal entity under the 
laws of the jurisdiction in which it is incorporated or otherwise 
established. As described above, a CDE is any domestic corporation or 
partnership (including LLCs) if (A) the primary mission of the entity 
is serving, or providing investment capital for, Low-Income Communities 
or Low-Income Persons; (B) 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 (C) the entity is certified by the Fund as a CDE.
    SSBICs and CDFIs are automatically eligible to be designated as 
CDEs, but must complete abbreviated application materials in order to 
receive a CDE designation from the Fund. Any entity, regardless of tax 
status, may apply to the Fund for designation as a CDE; however, only 
for-profit CDEs are eligible to apply for allocations of NMTCs.
    To comply with the primary mission requirement, an entity must (a) 
provide organizational documents that, in the opinion of the Fund, 
clearly evidence a mission of directly serving or providing investment 
capital for Low-Income Communities or Low-Income Persons; and (b) be 
able to demonstrate that at least 60 percent of its activities are 
dedicated to directly serving Low-Income Communities or Low-Income 
Persons. In order to be certified as a CDE, an entity must demonstrate 
that it 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. In the case where a CDE is a limited 
partnership or an LLC, this accountability requirement may be met if 
residents of Low-Income Communities are represented on the governing or 
advisory board of the entity's managing general partner or other 
controlling entity (such as a nonprofit CDFI). A CDE may maintain 
accountability to residents of Low-Income Communities by having board 
members who are directly representative of the Low-Income Community 
(i.e., they are Low-Income Persons or other residents of the Low-Income 
Community).
    A CDE is not limited in the number of Low-Income Communities that 
it may serve or propose to serve.
    A CDE certification will last for a period of 15 years unless it is 
revoked or terminated by the Fund. To maintain its CDE certification, a 
CDE must certify annually during this period that the CDE has continued 
to meet CDE certification requirements.
    Previous awardees under the Fund's Community Development Financial 
Institutions Program (the ``CDFI Program'') and/or the Bank Enterprise 
Award Program (the ``BEA Program'') are eligible to apply for 
allocations of NMTCs, but such applicants are not ensured NMTC 
allocations. Further, the Fund reserves the right, in its sole 
discretion, to declare a NMTC Program applicant to be ineligible for a 
NMTC allocation if the applicant is an awardee under the CDFI Program 
and/or the BEA Program and is out of compliance with the agreements 
governing said award(s). Similarly, the Fund reserves the right, in its 
sole discretion, after consultation with the SBA, to declare a NMTC 
applicant to be ineligible for a NMTC allocation if the applicant is no 
longer certified as a CDE by virtue of it no longer being deemed a 
SSBIC by the SBA.
    A CDE that is an insured depository institution may not receive a 
BEA Program award for the provision of any financial assistance or 
services that are also Qualified Low-Income Community Investments if 
such assistance or services were provided with cash proceeds of a 
Qualified Equity Investment for which the investor received the 
benefits of NMTCs. A CDE that is an insured depository institution may 
not receive both a BEA Program award and a NMTC allocation for the same 
equity investment in a CDE.

[[Page 21849]]

V. Evaluation

    All applications for allocations of NMTCs will be reviewed for 
eligibility and completeness. If determined to be eligible and 
complete, each application for a NMTC allocation will be evaluated by 
the Fund on a competitive basis to determine the applicant's ability 
and strategy for carrying out its Comprehensive Investment Plan and the 
extent to which the applicant will maximize the effective use of the 
NMTC allocation. The Fund will conduct the substantive review of said 
applications in accordance with the criteria and procedures described 
in this Guidance, and subsequent guidance or regulations that the Fund 
may issue, which will include a description of the scoring system to be 
used by the Fund in the evaluation of applications.

Phase One

    In Phase One of the substantive review, each Fund reader will 
evaluate applications for NMTC allocations and award points to be 
distributed among the following categories of information (or others 
that the Fund deems appropriate):

    (a) Institutional investment and community development track 
record;
    (b) Financial and operational capacity;
    (c) Capacity, skills and experience of the management team;
    (d) Market analysis;
    (e) Capitalization strategy;
    (f) Investment strategy;
    (g) Projected community development activities and projected 
impact.

    In addition, as provided by IRC section 45D(f)(2), the Fund will 
give preference to any CDE that (i) has a record of having successfully 
provided capital or technical assistance to disadvantaged businesses or 
communities, or (ii) intends to satisfy the Substantially All Test by 
making Qualified Low-Income Community Investments in one or more 
businesses in which persons unrelated to the CDE (within the meaning of 
IRC section 267(b) or section 707(b)(1)) hold the majority equity 
interest. For purposes of (i), the Fund will also consider the record 
of the entity controlling the CDE. A record of having successfully 
provided capital or technical assistance to disadvantaged businesses or 
communities may be demonstrated either by the past actions of the CDE 
itself or by an entity controlling the CDE (e.g., where a new CDE is 
established by a nonprofit corporation with a history of providing 
assistance to disadvantaged communities, or where the new CDE is 
controlled by a CDFI or SSBIC).

Phase Two

    Once the initial evaluation is completed, the Fund will determine 
which applications will receive further consideration for allocations 
based on application scores, written recommendations of individuals who 
performed initial reviews based on the above stated categories of 
information, and the amount of NMTCs available. Applicants that advance 
to Phase Two may receive a site visit and/or an interview (by telephone 
or in person) by a Fund reviewer for the purpose of obtaining 
clarifying or confirming information. At this point in the process, 
applicants may be required to submit additional information about their 
applications in order to assist the Fund with its final evaluation. 
After conducting such site visits and/or telephone interviews, the Fund 
reviewers will evaluate all applications in accordance with the 
evaluation criteria outlined above and prepare recommendation memoranda 
containing recommendations on the amount of the NMTC allocation, if 
any, that should be provided to each applicant.
    A final review panel of Fund staff will consider the reviewers' 
recommendation memoranda and make final recommendations to the Fund's 
selecting official. In making its recommendations, the final review 
panel also may consider the institutional diversity (e.g., size, type, 
focus, affiliation), geographic diversity of applicants, and other 
factors that the Fund deems appropriate.
    In the case of an applicant that has previously received financial 
or technical assistance awards from the Fund under the CDFI Program or 
the BEA Program, the Fund will consider the applicant's level of 
success in meeting its performance goals (if applicable), financial 
soundness covenants (if applicable), and other requirements contained 
in its existing award agreement(s) with the Fund.
    The Fund's selecting official will make the final allocation 
determination based on the applicant's file, including, without 
limitation, reader and reviewer recommendations and the panel's 
recommendation, and the amount of NMTCs available.
    In the case of regulated CDEs, the Fund's selecting official 
reserves the right to take into consideration the views of the 
appropriate Federal banking agencies. In the case of applicants that 
are also SSBICs, the Fund reserves the right to consult with the SBA.
    The Fund reserves the right to change these evaluation procedures, 
upon public notice, if the Fund deems it appropriate.

VI. Monitoring

    The Fund will collect information, on at least an annual basis, 
from each CDE that is a recipient of a NMTC allocation and/or a 
Qualified Low-Income Community Investment, including such audited 
financial statements and opinions of counsel as the Fund deems 
necessary or desirable, in its sole discretion. The Fund shall use such 
information to monitor each CDE's compliance with the Fund's 
requirements for certification as a CDE and the CDE's compliance with 
the provisions of its Allocation Agreement, and to determine, among 
other matters, whether substantially all of the CDE's equity raised 
through its NMTC allocation is used to make Qualified Low-Income 
Community Investments. The Fund will also use such information to 
assess the impact of the NMTC Program on Low-Income Communities. The 
Allocation Agreement shall include provisions setting forth the CDE's 
reporting requirements.

VII. Pending Issues

    In developing guidance to assist potential applicants to the NMTC 
Program, the Fund has identified certain issues that may be addressed 
in additional guidance and/or regulations. The Fund invites comments 
from the public on these and any other issues on which the public 
believes guidance is particularly needed.
    1. IRC section 45D(f)(2) requires that in making allocations of 
NMTCs, priority be given to: (a) any applicant that has a record of 
having successfully provided capital or technical assistance to 
disadvantaged businesses or communities or (b) any applicant which 
intends to satisfy the Substantially All Test by making Qualified Low-
Income Community Investments in one or more businesses in which persons 
unrelated to the CDE hold a majority equity interest.
    (a) How should the Fund implement this policy? For instance, should 
the Fund incorporate preference points into the scoring? Should the 
Fund make awards to organizations that are deemed competitive and meet 
one or both of these criteria before providing an allocation to any 
other applicant?
    (b) What specific factors should the Fund consider when evaluating 
whether an applicant meets the requirements for priority treatment?
    (c) Should more weight be given to one priority category over the 
other and should an applicant be allowed to

[[Page 21850]]

receive preference points under both priority categories?
    2. Should there be limits as to the amount of a NMTC allocation 
that may be awarded to an applicant in a calendar year?
    3. During the evaluation process of NMTC applications, the Fund 
will request that applicants provide information on their track records 
for providing capital or technical assistance to Low-Income Communities 
and disadvantaged businesses and the effect that such investment/
technical assistance has had on such Low-Income Communities or 
businesses. Applicants may also be required to describe the social 
underwriting criteria that they will use when deciding which companies 
to invest in. If an applicant receives a NMTC allocation, it will be 
required to report to the Fund on the ways in which the Qualified 
Equity Investments are used to benefit Low-Income Communities.
    (a) What indicators should the Fund assess when evaluating the 
community development impact of an applicant's prior activities or the 
social underwriting criteria of its loan policies?
    (b) On what basis should the Fund judge how ``successfully'' 
capital or technical assistance has been provided?
    (c) What information should the Fund request from allocation 
recipients as indicators for evaluating the effectiveness of the NMTC 
Program (e.g., number of jobs created or retained, increases in 
revenues of businesses receiving Qualified Low-Income Community 
Investments, rates of return to investors from Qualified Equity 
Investments, or number of clients served at facilities that are 
developed)?

    Authority: Consolidated Appropriations Act of 2001, Pub. L. 106-
554.

    Dated: April 20, 2001.
Jeffrey C. Berg,
Acting Director for the Community Development Financial Institutions 
Fund.
[FR Doc. 01-10545 Filed 4-30-01; 8:45 am]
BILLING CODE 4810-70-P


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