Source: https://www.federalregister.gov/articles/2011/06/06/2011-13864/notice-of-allocation-availability-noaa-inviting-applications-for-the-cy-2011-allocation-round-of-the
Timestamp: 2016-08-31 23:28:34
Document Index: 766938176

Matched Legal Cases: ['§ 45', '§ 45', '§ 45', '§ 45', '§ 45', '§ 45', '§ 45']

Federal Register | Notice of Allocation Availability (NOAA) Inviting Applications for the CY 2011 Allocation Round of the New Markets Tax Credit Program
Dates: Electronic applications must be received by 5 p.m. ET on July 27, 2011. Applications sent by mail, facsimile or other form will not be accepted. Please note the Community Development Financial Institutions Fund (the CDFI Fund) will only accept applications and attachments (i.e., the CDE's authorized representative signature page, the Controlling Entity's representative signature page, investor letters and organizational charts) in electronic form (see Section IV.D. of this NOAA for more details). Applications must meet all eligibility and other requirements and deadlines, as applicable, set forth in this NOAA. Allocation applicants that are not yet certified as Community Development Entities (CDEs) must submit an application for certification as a CDE that is postmarked on or before June 22, 2011 (see Section III of this NOAA for more details).
Comments Close: 06/22/2011
-32403 (12 pages)
Shorter URL: https://federalregister.gov/a/2011-13864 Table of Contents Back to Top
B. Program guidance and regulations: This NOAA provides guidance for the application and allocation of NMTCs for the ninth round of the NMTC Program and should be read in conjunction with: (i) Guidance published by the CDFI Fund on how an entity may apply to become certified as a CDE (66 FR 65806, December 20, 2001); (ii) the final regulations issued by the Internal Revenue Service (26 CFR 1.45D-1, published on December 28, 2004) and related guidance, notices and other publications; and (iii) the application and related materials for this ninth NMTC Program allocation round. All such materials may be found on the CDFI Fund's Web site at http://www.cdfifund.gov. The CDFI Fund encourages applicants to review these documents. Capitalized terms used, but not defined, in this NOAA shall have the respective meanings assigned to them in the allocation application, IRC § 45D or the IRS regulations.
A. Allocation amounts: Pursuant to the Act, the CDFI Fund expects that it may allocate to CDEs the authority to issue to their investors up to the aggregate amount of $3.5 billion in equity as to which NMTCs may be claimed, as permitted under IRC § 45D(f)(1)(D). Pursuant to this NOAA, the CDFI Fund anticipates that it will not issue more than $125 million in tax credit allocation authority per applicant. The CDFI Fund, in its sole discretion, reserves the right to allocate amounts in excess of or less than the anticipated maximum allocation amount should the CDFI Fund deem it appropriate. In order to receive an allocation in excess of the $125 million cap, an applicant, at a minimum, will need to demonstrate that: (i) No part of its strategy can be successfully implemented without an allocation in excess of the applicable cap; and/or (ii) its strategy will produce extraordinary community impact. The CDFI Fund reserves the right to allocate tax credit authority to any, all, or none of the entities that submit an application in response to this NOAA, and in any amount it deems appropriate.
A. Eligible applicants: IRC § 45D specifies certain eligibility requirements that each applicant must meet to be eligible to apply for an allocation of NMTCs. The following sets forth additional detail and certain additional dates that relate to the submission of applications under this NOAA for the $3.5 billion in general NMTC allocation authority.
1. CDE certification: For purposes of this NOAA, the CDFI Fund will not consider an application for an allocation of NMTCs unless: (a) The applicant is certified as a CDE at the time the CDFI Fund receives its NMTC Program allocation application; or (b) the applicant submits an application for certification as a CDE that is postmarked on or before June 22, 2011. Applicants for certification may obtain a CDE certification application through the CDFI Fund's Web site at http://www.cdfifund.gov. Applications for CDE certification must be submitted as instructed in the application form. An applicant that is a community development financial institution (CDFI) or a specialized small business investment company (SSBIC) does not need to submit a CDE certification application; however, it must register as a CDE on the CDFI Fund's Web site on or before 5 p.m. ET on June 22, 2011.
For purposes of this section of the NOAA, the CDFI Fund will only recognize as “issued” those QEIs that have been finalized in the CDFI Fund's Allocation Tracking System (ATS) by the deadlines specified above. Allocatees and their Subsidiary transferees, if any, are advised to access ATS to record each QEI that they issue to an investor in exchange for funds in-hand. For purposes of this section of the NOAA, “committed” QEIs are only those Equity Investments that are evidenced by a written, signed document in which an investor: (i) Commits to make an investment in the Allocatee in a specified amount and on specified terms; (ii) has made an initial disbursement of the investment proceeds to the Allocatee, and such initial disbursement has been recorded in ATS as a QEI; (iii) commits to disburse the remaining investment proceeds to the Allocatee based on specified amounts and payment dates; and (iv) commits to make the final disbursement to the Allocatee no later than October 14, 2013.
(a) Electronic applications: must be received by 5 p.m. ET on July 27, 2011. Electronic applications cannot be transmitted or received after 5 p.m. ET on July 27, 2011. In addition, applicants that submit electronic applications must separately submit supporting information (i.e., the applicant's authorized representative signature page, the Controlling Entity's representative signature page, investor letters and organizational charts) via their myCDFIFund account. The applicant's authorized representative signature page, the Controlling Entity's representative signature page, investor letters and organizational charts must be submitted on or before 11:59 p.m. ET on July 29, 2011. The CDFI Fund recommends that attachments have a size limit of 5 megabytes (MB). See application instructions, provided in the electronic application and the 2011 Allocation Application Q&A, for further detail. Applications and other required documents received after this date and time will be rejected. If the applicant's authorized representative signature page is not received by the deadline specified above, the CDFI Fund reserves the right to reject the application. Please note that the document submission deadlines in this NOAA and/or the allocation application are strictly enforced.
Under the Business Strategy criterion, an applicant will generally score well to the extent that it will deploy debt or investment capital in products or services which: (i) Are designed to meet the needs of underserved markets; (ii) are flexible or non-traditional in form and on better terms than available in the marketplace; and (iii) focus on customers or partners that typically lack access to conventional sources of capital. An applicant will also score well to the extent that, among other things, it: (i) Has a track record of successfully providing products and services similar to those it intends to use with the proceeds of QEIs; (ii) has identified, or has a process for identifying, potential transactions; (iii) demonstrates a likelihood of issuing QEIs and making the related QLICIs in a time period that is significantly shorter than the 5-year period permitted under IRC § 45D(b)(1); (iv) articulates a meaningful strategy for distributing any tax credit equity remaining at the end of the seven-year credit period and (v) in the case of an applicant proposing to purchase loans from CDEs, the applicant will require the CDE selling such loans to re-invest the proceeds of the loan sale to provide additional products and services to Low-Income Communities.
2. Community Impact (25-point maximum): In assessing the potential benefits to Low-Income Communities that may result from the applicant's proposed investments, reviewers will consider, among other things, the degree to which the applicant is likely to achieve significant and measurable community development outcomes in its Low-Income Communities, and whether the applicant is working in particularly economically distressed markets and/or in concert with Federal, state or local government or community economic development initiatives (i.e., Empowerment Zones, Enterprise Communities, and Renewal Communities). An applicant will generally score well under this section to the extent that: (a) It articulates how its strategy is likely to produce significant and measurable community development outcomes that would not be achieved without NMTCs; (b) it is working in particularly economically distressed or otherwise underserved communities and/or in concert with other Federal, State or local government or community economic development initiatives; and (c) it ensures that an investment into a project or business is supported by and beneficial to the surrounding community.
4. Capitalization Strategy (25-point maximum): When assessing an applicant's capitalization strategy, reviewers will consider, among other things: the key personnel of the applicant's (or Controlling Entity's) and their track record of raising capital, particularly from for-profit investors; the extent to which the applicant has secured investments, commitments to invest in NMTC, or indications of investor interest commensurate with its requested amount of tax credit allocations; the applicant's strategy for identifying additional investors, if necessary, including the applicant's (or its Controlling Entity's) prior performance with raising equity from investors, particularly for-profit investors; the distribution of the economic benefits of the tax credit; the extent to which the applicant intends to invest the proceeds from the aggregate amount of its QEIs at a level that exceeds the requirements of IRC § 45D(b)(1)(B) and the IRS regulations; the likelihood the applicant will raise sufficient capital to finance its cost of operations while charging reasonable fees; and the applicant's timeline for utilizing an NMTC Allocation.
An applicant will generally score well under this section to the extent that: (a) It has secured investor commitments, or has a reasonable strategy for obtaining such commitments; (b) its request for allocations is commensurate with both the level of QEIs it is likely to raise and its expected investment strategy to deploy funds raised with NMTCs; (c) it generally demonstrates that the economic benefits of the tax credit will be passed through to a QALICB; (d) it is likely to secure capital to finance its cost of operations and charge fees appropriate to the operational needs of the applicant; and (e) it intends to invest the proceeds from the aggregate amount of its QEIs at a level that exceeds the requirements of IRC § 45D(b)(1)(B) and the IRS regulations. In the case of an applicant proposing to raise investor funds from organizations that also will identify or originate transactions for the applicant or from affiliated entities, said applicant will score well to the extent that it will offer products with more favorable rates or terms than those currently offered by its investor(s) or Affiliated entities and/or will target its activities to areas of greater economic distress than those currently targeted by the investor or Affiliated entities.
C. Allocations serving Non-Metropolitan counties: As provided for under Section 102(b) of the Tax Relief and Health Care Act of 2006 (Pub. L. 109-432), the CDFI Fund shall ensure that non-metropolitan counties receive a proportional allocation of Qualified Equity Investments (QEIs) under the NMTC Program. To this end, the CDFI Fund will ensure that the proportion of allocatees that are Rural CDEs is, at a minimum, equal to the proportion of applicants in the Phase 2 review pool that are Rural CDEs. The CDFI Fund will also endeavor to ensure that 20 percent of the QLICIs to be made using QEI proceeds are invested in Non-Metropolitan counties. A Rural CDE is one that has over the past five years dedicated at least 50 percent of its activities to Non-Metropolitan counties and has committed that at least 50 percent of its NMTC activities will be conducted in such areas. Non-Metropolitan counties are counties not contained within a Metropolitan Statistical Area, as such term is defined in OMB Bulletin No. 99-04 (Revised Statistical Definitions of Metropolitan Areas (MAs) and Guidance on Uses of MA Definitions) and applied using 2000 census data.
As a part of the substantive review process, the CDFI Fund may permit the Allocation Recommendation Panel member(s) to make telephone calls to applicants for the sole purpose of obtaining, clarifying or confirming application information. In no event shall such contact be construed to permit an applicant to change any element of its application. Reviewers will not contact applicants without the prior approval of the CDFI Fund. At this point in the process, an applicant may be required to submit additional information about its application in order to assist the CDFI Fund with its final evaluation process. Such requests must be responded to within the time parameters set by the CDFI Fund. The selecting official(s) will make a final allocation determination based on an applicant's file, including, without limitation, eligibility under IRC § 45D, the reviewers' scores and the amount of allocation authority available. In the case of applicants (or Affiliates of applicants) that are regulated by the Federal government or a State agency (or comparable entity), the CDFI Fund's selecting official(s) reserve(s) the right to consult with and take into consideration the views of the appropriate Federal or State banking and other regulatory agencies. In the case of applicants (or Affiliates of applicants) that are also Small Business Investment Companies, Specialized Small Business Investment Companies or New Markets Venture Capital Companies, the CDFI Fund reserves the right to consult with and take into consideration the views of the Small Business Administration.
4. Termination in default: If (i) within the 12-month period prior to entering into an Allocation Agreement through this NOAA, the CDFI Fund has made a final determination that an Allocatee that is a prior CDFI Fund awardee or Allocatee under any CDFI Fund program whose award or allocation was terminated in default of such prior agreement; (ii) the CDFI Fund has provided written notification of such determination to such organization; and (iii) the final reporting period end date for the applicable terminated agreement falls in such organization's 2009 or 2010 fiscal year, the CDFI Fund reserves the right, in its sole discretion, to delay entering into an Allocation Agreement and/or to impose limitations on the Allocatee's ability to issue QEIs to investors. Furthermore, if (i) within the 12-month period prior to entering into an Allocation Agreement through this NOAA, the CDFI Fund has made a final determination that an Affiliate of the Allocatee is a prior CDFI Fund awardee or Allocatee under any CDFI Fund program whose award or allocation was terminated in default of such prior agreement; (ii) the CDFI Fund has provided written notification of such determination to the defaulting entity; and (iii) the final reporting period end date for the applicable terminated agreement falls in such defaulting entity's 2009 or 2010 fiscal year, the CDFI Fund reserves the right, in its sole discretion, to delay entering into an Allocation Agreement and/or to impose limitations on the Allocatee's ability to issue QEIs to investors.
D. IRS support: For questions regarding the tax aspects of the NMTC Program, contact Branch Five, Office of the Associate Chief Counsel (Passthroughs and Special Industries), IRS, by telephone at (202) 622-3040, by facsimile at (202) 622-4753, or by mail at 1111 Constitution Avenue, NW., Attn: CC:PSI:5, Washington, DC 20224. These are not toll free numbers. E. Legal counsel support: If you have any questions or matters that you believe require response by the CDFI Fund's Office of Legal Counsel, please refer to the document titled “How to Request a Legal Review,” found on the CDFI Fund's Web site at http://www.cdfifund.gov.