[Federal Register: July 15, 2005 (Volume 70, Number 135)]
[Notices]
[Page 41075-41085]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy05-129]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
Notice of Allocation Availability (NOAA) Inviting Applications
for the CY 2006 Allocation Round of the New Markets Tax Credit Program
Announcement Type: Initial announcement of tax credit allocation
availability.
Dates: Electronic applications must be received by 5 p.m. ET on
September 21, 2005. Paper applications must be postmarked on or before
September 21, 2005 and received by 5 p.m. ET on September 30, 2005 (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
August 22, 2005 and received by 5 p.m. ET on August 30, 2005 (see
Section III. of this NOAA for more details).
Executive Summary: This NOAA is issued in connection with the
calendar year 2006 tax credit allocation round of the New Markets Tax
Credit (NMTC) Program, as authorized by Title I, subtitle C, section
121 of the Community Renewal Tax Relief Act of 2000 (the Act). Through
the NMTC Program, the Community Development Financial Institutions Fund
(the Fund) provides authority to CDEs to offer an incentive to
investors in the form of a tax credit over seven years, which is
expected to stimulate the provision of $15 billion in private
investment capital that, in turn, will facilitate economic and
community development in Low-
[[Page 41076]]
Income Communities. In this NOAA, the Fund addresses specifically how
an entity may apply to receive an allocation of NMTCs, the competitive
procedure through which NMTC Allocations will be made, and the actions
that will be taken to ensure that proper allocations are made to
appropriate entities.
I. Allocation Availability Description
A. Programmatic Improvements
In the substantive review process for applications submitted under
the third round of the NMTC Program, the Fund gave greater weight to
the elements contained in each application's Business Strategy and
Community Impact sections. The Fund will continue this same
programmatic focus in this NOAA. In order to reflect this emphasis, the
Fund has re-ordered the application sections and the corresponding NOAA
sections (as described in Section V.A. below) as follows: Business
Strategy, Community Impact, Management Capacity, and Capitalization
Strategy.
The Fund has modified certain eligibility requirements relating to
prior Allocatees planning to apply for an additional allocation in this
CY 2006 allocation round. These modifications generally require that
Allocatees demonstrate an increasing percentage of Qualified Equity
Investment issuances and/or commitments based on the allocation round
in which Allocatees received their prior allocation(s). These
requirements are more fully described in Section III.A.2. of this NOAA.
In the NOAA for the third allocation round, the Fund evaluated
whether applicants were common enterprises that, in fact or effect,
could be viewed as single entities. In this NOAA, the Fund clarifies
that Allocatees (or their Subsidiary Allocatees) are also prohibited
from forming common enterprises with other Allocatees (or their
Subsidiary Allocatees) in the same allocation round after the
submission of an allocation application to the Fund. This requirement
is necessary since most Allocatees do not form the Subsidiaries to
which they will transfer their NMTC Allocation until after receiving a
Notice of Allocation from the Fund.
This NOAA also contains two additional clarifications with respect
to the application review and selection process: (1) The Fund reserves
the right to take prior NMTC Allocation performance into consideration
in the case of applications submitted by entities that have, or whose
affiliates have, received allocations of NMTCs in prior allocation
rounds; and (2) the Fund reserves the right to reject an application if
it is incorrect in any material respect. These clarifications are more
fully described in Section V.B. of this NOAA.
B. Program Guidance and Regulations
This NOAA provides guidance for the application and allocation of
NMTCs for the fourth round of the NMTC Program and should be read in
conjunction with: (i) Guidance published by the 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; and (iii) the application and related materials for this
fourth NMTC Program allocation round. All such materials may be found
on the Fund's Web site at http://www.cdfifund.gov. The 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, the Act or the IRS final
regulations.
II. Allocation Information
A. Allocation Amounts
The 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 Sec.
45D(f)(1)(D). The Fund anticipates that, under this NOAA, it will not
issue more than $150 million in tax credit allocation authority per
applicant. The Fund, in its sole discretion, reserves the right to
allocate amounts in excess of or less than the anticipated maximum
allocation amount if the Fund deems it appropriate. In order to receive
an allocation in excess of $150 million, an applicant will likely need
to demonstrate, for example, that: (i) No part of its strategy can be
successfully implemented without an allocation in excess of $150
million; or (ii) its strategy will produce extraordinary community
impact. The 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.
B. Types of Awards
NMTC Program awards are made in the form of tax credit authority.
C. Notice of Allocation and Allocation Agreement
Each Allocatee under this NOAA must sign a Notice of Allocation and
an Allocation Agreement before the NMTC Allocation is effective. The
Notice of Allocation and the Allocation Agreement contain the terms and
conditions of the allocation. For further information, see Section VI.
of this NOAA.
III. Eligibility
A. Eligible applicants: IRC Sec. 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:
1. CDE certification: For purposes of this NOAA, the Fund will not
consider an application for an allocation of NMTCs unless: (a) The
applicant is certified as a CDE at the time the 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
August 22, 2005 and received by 5 p.m. ET on August 30, 2005.
Applicants for certification may obtain a CDE certification application
through the 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, but must register as a CDE on the Fund's Web site on or
before 5 p.m. ET on August 22, 2005. The Fund will not provide
allocations of NMTCs to applicants that are not certified as CDEs. See
Section IV.D.1.(c) of this NOAA for further requirements relating to
postmarks.
If an applicant that has already been certified as a CDE wishes to
change its designated CDE service area, it must submit its request for
such a change to the Fund; and said request must be received by the
Fund by 5 p.m. ET on September 21, 2005. The CDE service area change
request must be sent from the applicant's authorized representative and
include the applicable CDE control number, the revised service area
designation, and an updated accountability chart that reflects
representation from Low-Income Communities in the revised service area.
The service area change request must be
[[Page 41077]]
sent by e-mail to cdfihelp@cdfi.treas.gov or by facsimile to (202) 622-
7754.
2. Prior awardees or Allocatees: Applicants must be aware that
success in a prior round of any of the Fund's programs is not
indicative of success under this NOAA. Prior awardees of any component
of the Fund's Community Development Financial Institutions (CDFI)
Program, Bank Enterprise Award (BEA) Program, the Native Initiatives,
or any other Fund program and prior Allocatees under the NMTC Program
are eligible to apply under this NOAA, except as follows:
(a) Prior Allocatees and Qualified Equity Investment issuance
requirements: A prior Allocatee in the first round of the NMTC Program
(CY 2001-2002) is not eligible to receive a NMTC Allocation pursuant to
this NOAA unless the Allocatee can demonstrate that, as of 11:59 p.m.
ET on December 31, 2005, it has: (i) Issued and received cash from its
investors for at least 60 percent of its Qualified Equity Investments
relating to its CY 2001-2002 NMTC Allocation; or (ii) issued and
received cash from its investors for at least 50 percent of its
Qualified Equity Investments and that at least 80 percent of its total
CY 2001-2002 NMTC Allocation has been exchanged for cash from or has
been committed by its investors. A prior Allocatee in the second round
of the NMTC Program (CY 2003-2004) is not eligible to receive a NMTC
Allocation pursuant to this NOAA unless the Allocatee can demonstrate
that, as of 11:59 p.m. ET on December 31, 2005, it has: (i) Issued and
received cash from its investors for at least 50 percent of its
Qualified Equity Investments relating to its CY 2003-2004 NMTC
Allocation; or (ii) issued and received cash from its investors for at
least 40 percent of its Qualified Equity Investments and that at least
80 percent of its total CY 2003-2004 NMTC Allocation has been exchanged
for cash from or has been committed by its investors. A prior Allocatee
in the third round of the NMTC Program (CY 2005) is not eligible to
receive a NMTC Allocation pursuant to this NOAA unless the Allocatee
can demonstrate that, as of 11:59 p.m. ET on February 15, 2006, it has:
(i) Issued and received cash from its investors for at least 50 percent
of its Qualified Equity Investments relating to its CY 2005 NMTC
Allocation; or (ii) issued and received cash from its investors for at
least 20 percent of its Qualified Equity Investments and that at least
60 percent of its total CY 2005 NMTC Allocation has been exchanged for
cash from or has been committed by its investors. Further, an entity is
not eligible to receive a NMTC Allocation pursuant to this NOAA if
another entity that Controls the applicant, is Controlled by the
applicant or shares common management officials with the applicant (as
determined by the Fund) is a prior Allocatee and has not met the
requirements for the issuance and/or commitment of Qualified Equity
Investments as set forth above for the Allocatees in the prior
allocation rounds of the NMTC Program. In addition, if an applicant has
received an allocation in multiple allocation rounds of the NMTC
Program, the applicant will have to meet the requirements for the
issuance and/or commitment of Qualified Equity Investments as set forth
above for each allocation received.
For purposes of this section of the NOAA, the Fund will only count
as ``issued'' those Qualified Equity Investments that have been
recorded in the 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 Qualified Equity
Investment that they issue to an investor in exchange for cash. For
purposes of this section of the NOAA, ``committed'' Qualified Equity
Investments 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 Qualified Equity Investment; (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 December 31, 2008. The
applicant will be required, upon notification from the Fund, to submit
adequate documentation to substantiate the required issuances of and
commitments for Quality Equity Investments.
In addition, all requests for amendments to Allocation Agreements
needed for purposes of meeting the Qualified Equity Investment issuance
requirements set forth above, including requests to have Subsidiary
entities certified as CDEs and/or included in Allocation Agreements,
must be received by October 14, 2005. Allocation Agreement amendment
requests should be submitted by mail to the Fund's Grants Manager,
Community Development Financial Institutions Fund, 601 13th Street,
NW., Suite 200 South, Washington, DC 20005 or by e-mail to
cdfihelp@cdfi.treas.gov or grantsmanagement@cdfi.treas.gov with the
subject line: NMTC: Allocation Agreement Amendment Request. CDE
certification requests should be submitted in accordance with the
instructions provided in the CDE Certification Application. Requests
for Allocation Agreement amendments and CDE certifications received
after October 14, 2005 will not be processed until after December 31,
2005.
(b) Failure to meet reporting requirements: The Fund will not
consider an application submitted by an applicant if the applicant, or
an entity that Controls the applicant, is Controlled by the applicant
or shares common management officials with the applicant (as determined
by the Fund) is a prior Fund awardee or Allocatee under any Fund
program and is not current on the reporting requirements set forth in a
previously executed assistance, allocation or award agreement(s), as of
the application deadline of this NOAA. Please note that the Fund only
acknowledges the receipt of reports that are complete. As such,
incomplete reports or reports that are deficient of required elements
will not be recognized as having been received.
(c) Pending resolution of noncompliance: If an applicant is a prior
awardee or Allocatee under any Fund program and if: (i) It has
submitted complete and timely reports to the Fund that demonstrate
noncompliance with a previous assistance, award or Allocation
Agreement; and (ii) the Fund has yet to make a final determination as
to whether the entity is in default of its previous assistance, award
or Allocation Agreement, the Fund will consider the applicant's
application under this NOAA pending full resolution, in the sole
determination of the Fund, of the noncompliance. Further, if another
entity that Controls the applicant, is Controlled by the applicant or
shares common management officials with the applicant (as determined by
the Fund), is a prior Fund awardee or Allocatee and if such entity: (i)
Has submitted complete and timely reports to the Fund that demonstrate
noncompliance with a previous assistance, award or Allocation
Agreement; and (ii) the Fund has yet to make a final determination as
to whether the entity is in default of its previous assistance, award
or Allocation Agreement, the Fund will consider the applicant's
application under this NOAA pending full resolution, in the sole
determination of the Fund, of the noncompliance.
(d) Default status: The Fund will not consider an application
submitted by an
[[Page 41078]]
applicant that is a prior Fund awardee or Allocatee under any Fund
program if, as of the application deadline of this NOAA, the Fund has
made a final determination that such applicant is in default of a
previously executed assistance, allocation or award agreement(s) and
the Fund has provided written notification of such determination to
such applicant. Further, an entity is not eligible to apply for an
allocation pursuant to this NOAA if, as of the application deadline of
this NOAA, the Fund has made a final determination that another entity
that Controls the applicant, is Controlled by the applicant or shares
common management officials with the applicant (as determined by the
Fund): (i) Is a prior Fund awardee or Allocatee under any Fund program;
(ii) has been determined by the Fund to be in default of a previously
executed assistance, allocation or award agreement(s); and (iii) the
Fund has provided written notification of such determination to the
defaulting entity.
(e) Termination in default: The Fund will not consider an
application submitted by an applicant that is a prior Fund awardee or
Allocatee under any Fund program if: (i) Within the 12-month period
prior to the application deadline of this NOAA, the Fund has made a
final determination that such applicant's prior award or allocation
terminated in default of a previously executed assistance, allocation
or award agreement(s); (ii) the Fund has provided written notification
of such determination to such applicant; and (iii) the final reporting
period end date for the applicable terminated assistance, allocation or
award agreement(s) falls in such applicant's 2004 or 2005 fiscal year.
Further, an entity is not eligible to apply for an allocation pursuant
to this NOAA if: (i) Within the 12-month period prior to the
application deadline of this NOAA, the Fund has made a final
determination that another entity that Controls the applicant, is
Controlled by the applicant or shares common management officials with
the applicant (as determined by the Fund), is a prior Fund awardee or
Allocatee under any Fund program whose award or allocation terminated
in default of a previously executed assistance, allocation or award
agreement(s); (ii) the Fund has provided written notification of such
determination to the defaulting entity; and (iii) the final reporting
period end date for the applicable terminated assistance, allocation or
award agreement(s) falls in the defaulting entity's 2004 or 2005 fiscal
year.
(f) Undisbursed balances: The Fund will not consider an application
submitted by an applicant that is a prior Fund awardee under any Fund
program if the applicant has a balance of undisbursed funds (defined
below) under said prior award(s), as of the application deadline of
this NOAA. Further, an entity is not eligible to apply for an award
pursuant to this NOAA if another entity that Controls the applicant, is
Controlled by the applicant or shares common management officials with
the applicant (as determined by the Fund), is a prior Fund awardee
under any Fund program, and has a balance of undisbursed funds under
said prior award(s), as of the application deadline of this NOAA. In a
case where another entity that Controls the applicant, is Controlled by
the applicant or shares common management officials with the applicant
(as determined by the Fund), is a prior Fund awardee under any Fund
program, and has a balance of undisbursed funds under said prior
award(s), as of the application deadline of this NOAA, the Fund will
include the combined awards of the applicant and such affiliated
entities when calculating the amount of undisbursed funds.
For purposes of this section, ``undisbursed funds'' is defined as:
(i) In the case of a prior BEA Program award(s), any balance of award
funds equal to or greater than five (5) percent of the total prior BEA
Program award(s) that remains undisbursed more than three (3) years
after the end of the calendar year in which the Fund signed an award
agreement with the awardee; and (ii) in the case of a prior CDFI
Program or other Fund program award(s), any balance of award funds
equal to or greater than five (5) percent of the total prior award(s)
that remains undisbursed more than two (2) years after the end of the
calendar year in which the Fund signed an assistance agreement with the
awardee.
``Undisbursed funds'' does not include (i) tax credit allocation
authority made available through the NMTC Program; (ii) any award funds
for which the Fund received a full and complete disbursement request
from the awardee by the application deadline of this NOAA; and (iii)
any award funds for an award that has been terminated, expired,
rescinded or deobligated by the Fund.
(g) Contact the Fund: Accordingly, applicants that are prior
awardees and/or Allocatees under any other Fund program are advised to:
(i) Comply with the requirements specified in assistance, allocation
and/or award agreement(s), and (ii) contact the Fund to ensure that all
necessary actions are underway for the disbursement of any outstanding
balance of a prior award(s). All outstanding reports and compliance
questions should be directed to the Compliance Manager by e-mail at
cme@cdfi.treas.gov and all disbursement questions should be directed to
the Grants Manager by e-mail at grantsmanagement@cdfi.treas.gov. Both
the Compliance Manager and the Grants Manager can be reached by
telephone at (202) 622-8226; by facsimile at (202) 622-6453; or by mail
to CDFI Fund, 601 13th Street, NW., Suite 200 South, Washington, DC
20005. The Fund will respond to applicants' reporting, compliance or
disbursement questions between the hours of 9 a.m. and 5 p.m. ET,
starting the date of publication of this NOAA through September 19,
2005 (2 days before the application deadline). The Fund will not
respond to applicants' reporting, compliance or disbursement phone
calls or e-mail inquiries that are received after 5 p.m. ET on
September 19, 2005 until after the funding application deadline of
September 21, 2005.
3. Entities that propose to transfer NMTCs to Subsidiaries: Both
for-profit and non-profit CDEs may apply to the Fund for allocations of
NMTCs, but only a for-profit CDE is permitted to provide NMTCs to its
investors. A non-profit applicant wishing to apply for a NMTC
Allocation must demonstrate, prior to entering into an Allocation
Agreement with the Fund, that: (i) It controls one or more Subsidiaries
that are for-profit entities; and (ii) it intends to transfer the full
amount of any NMTC Allocation it receives to said Subsidiary. The
Subsidiary transferee should: (i) Submit a CDE certification
application to the Fund within 30 days after the non-profit applicant
receives a Notice of Allocation from the Fund; and (ii) must be
certified as a CDE prior to entering into an Allocation Agreement with
the Fund. The NMTC Allocation transfer must be pre-approved by the
Fund, in its sole discretion, and will be a condition of the Allocation
Agreement. A for-profit applicant that receives a NMTC Allocation may
transfer such NMTC Allocation to its for-profit Subsidiary or
Subsidiaries, provided that said Subsidiary transferees have been
certified as CDEs and such transfer is pre-approved by the Fund, in its
sole discretion. The transfer also will be a condition of the
Allocation Agreement.
An applicant wishing to transfer all or a portion of its NMTC
Allocation to a Subsidiary is not required to create the Subsidiary
prior to submitting a NMTC allocation application to the Fund. Rather,
the Fund will require each
[[Page 41079]]
applicant to indicate, in its NMTC allocation application, whether it
intends to transfer all or a portion of its NMTC Allocation to a
Subsidiary and its timeline for doing so. As stated above, in no
circumstance will the Fund authorize such a transfer until the Fund has
certified the Subsidiary transferee as a CDE.
4. Entities that submit applications together with Affiliates;
applications from common enterprises: (a) As part of the allocation
application review process, the Fund considers whether applicants are
Affiliates, as such term is defined in the allocation application. If
an applicant and its Affiliates wish to submit allocation applications,
they must do so collectively, in one application; an applicant and its
Affiliates may not submit separate allocation applications. If
Affiliated entities submit multiple applications, the Fund reserves the
right either to reject all such applications received or to select a
single application as the only one that will be considered for an
allocation.
For purposes of this NOAA, in addition to assessing whether
applicants meet the definition of the term ``Affiliate'' found in the
allocation application, the Fund will consider: (i) Whether the
activities described in applications submitted by separate entities
are, or will be, operated or managed as a common enterprise that, in
fact or effect, could be viewed as a single entity; and (ii) whether
the business strategies and/or activities described in applications
submitted by separate entities are so closely related that, in fact or
effect, they could be viewed as substantially identical applications.
In such cases, the Fund reserves the right either to reject all
applications received from all such entities or to select a single
application as the only one that will be considered for an allocation.
(b) Furthermore, an applicant that receives an allocation in this
allocation round (or its Subsidiary transferee) may not become an
Affiliate of or member of a common enterprise (as defined above) with
another applicant that receives an allocation in this allocation round
(or its Subsidiary transferee) at any time after the submission of an
allocation application under this NOAA. This prohibition, however,
generally does not apply to entities that are commonly Controlled
solely because of common ownership by Qualified Equity Investment
investors. This requirement will also be a term and condition of the
Allocation Agreement (see Section VI.B. of this NOAA and additional
application guidance materials on the Fund's Web site at http://www.cdfifund.gov
for more details).
5. Entities created as a series of funds: An applicant whose
business structure consists of an entity with a series of funds may
apply for CDE certification as a single entity, or as multiple
entities. If such an applicant represents that it is properly
classified for Federal tax purposes as a single partnership or
corporation, it may apply for CDE certification as a single entity. If
an applicant represents that it is properly classified for Federal tax
purposes as multiple partnerships or corporations, then it may submit a
single CDE certification application on behalf of the entire series of
funds, and each fund must be separately certified as a CDE. Applicants
should note, however, that receipt of CDE certification as a single
entity or as multiple entities is not a determination that an applicant
and its related funds are properly classified as a single entity or as
multiple entities for Federal tax purposes. Regardless of whether the
series of funds is classified as a single partnership or corporation or
as multiple partnerships or corporations, an applicant may not transfer
any NMTC Allocations it receives to one or more of its funds unless the
transfer is pre-approved by the Fund, in its sole discretion, which
will be a condition of the Allocation Agreement.
6. Entities that are BEA Program awardees: An insured depository
institution investor (and its Affiliates and Subsidiaries) may not
receive a NMTC Allocation in addition to a BEA Program award for the
same investment in a CDE. Likewise, an insured depository institution
investor (and its Affiliates and Subsidiaries) may not receive a BEA
Program award in addition to a NMTC Allocation for the same investment
in a CDE.
IV. Application and Submission Information
A. Address to request application package: Applicants may submit
applications under this NOAA either electronically or in paper form.
Shortly following the publication of this NOAA, the Fund will make
available the electronic allocation application on its Web site at
http://www.cdfifund.gov. The Fund will send application materials to
applicants that are unable to download them from the Web site. To have
application materials sent to you, contact the Fund by telephone at
(202) 622-6355; by e-mail at cdfihelp@cdfi.treas.gov; or by facsimile
at (202) 622-7754. These are not toll free numbers.
B. Application content requirements: Detailed application content
requirements are found in the application related to this NOAA.
Applicants must submit all materials described in and required by the
application by the applicable deadlines. Applicants will not be
afforded an opportunity to provide any missing materials or
documentation. Electronic applications must be submitted solely by
using the format made available at the Fund's Web site. Additional
information, including instructions relating to the submission of
signature forms and supporting information, is set forth in further
detail in the electronic application. An application must include a
valid and current Employer Identification Number (EIN) issued by the
Internal Revenue Service and assigned to the applicant and, if
applicable, its Controlling Entity; electronic applications without a
valid EIN are incomplete and cannot be transmitted to the Fund; paper
applications submitted without a valid EIN will be rejected as
incomplete and returned to the sender. For more information on
obtaining an EIN, please contact the Internal Revenue Service at (800)
829-4933 or http://www.irs.gov. An applicant may not submit more than
one application in response to this NOAA. In addition, as stated in
Section III.A.4 of this NOAA, an applicant and its Affiliates must
collectively submit only one allocation application; an applicant and
its Affiliates may not submit separate allocation applications. Once an
application is submitted, an applicant will not be allowed to change
any element of its application.
C. Form of application submission: Applicants may submit
applications under this NOAA either electronically or in paper form.
Applications sent by facsimile or by e-mail will not be accepted. In
order to expedite application review, the Fund expects applicants to
submit applications electronically (via an Internet-based application)
in accordance with the instructions provided on the Fund's Web site.
Submission of an electronic application will facilitate the processing
and review of applications and the selection of Allocatees; further it
will assist the Fund in the implementation of electronic reporting
requirements.
1. Electronic applications: Electronic applications must be
submitted solely by using the Fund's Web site and must be sent in
accordance with the submission instructions provided in the electronic
application form. Applicants need access to Internet Explorer 5.5 or
higher or Netscape Navigator 6.0 or higher, Windows 98 or higher (or
other
[[Page 41080]]
system compatible with the above Explorer and Netscape software) and
optimally at least a 56Kbps Internet connection in order to meet the
electronic application submission requirements. The Fund's electronic
application system will only permit the submission of applications in
which all required questions and tables are fully completed. Additional
information, including instructions relating to the submission of
signature forms and supporting information, is set forth in further
detail in the electronic application.
2. Paper applications: If an applicant is unable to submit an
electronic application, it must submit to the Fund a request for a
paper application using the NMTC Program Paper Application Submission
Form, and the request must be received by 5 p.m. ET on September 7,
2005. The NMTC Program Paper Application Submission Form may be
obtained from the Fund's Web site at http://www.cdfifund.gov or the form may be requested by e-mail to paper--request@cdfi.treas.gov or by
facsimile to (202) 622-7754. The completed NMTC Program Paper
Application Submission Form should be directed to the Fund's Chief
Information Officer and must be sent by facsimile to (202) 622-7754.
D. Application submission dates and times:
1. Application deadlines:
(a) Electronic applications must be received by 5 p.m. ET on
September 21, 2005. Electronic applications cannot be transmitted or
received after 5 p.m. ET on September 21, 2005. In addition, applicants
that submit electronic applications must separately submit (by mail or
other courier delivery service) an original signature page, and all
other required paper attachments. The original signature page and
additional documents must be postmarked on or before September 26, 2005
and received by 5 p.m. ET on October 3, 2005. See application
instructions, provided in the electronic application, for further
detail. Applications and other required documents and other attachments
postmarked or received after these dates and times will be rejected and
returned to the sender. If the original signature page is not
postmarked and received by the deadlines specified above, the
application will be rejected and returned to the sender. See Section
IV.D.1.(c) of this NOAA for further requirements relating to postmarks.
Additional deadlines (if any) relating to the submission of general
supporting documentation will be further detailed in the electronic
application. Please note that the document submission deadlines in this
NOAA and/or the allocation application are strictly enforced.
(b) Paper applications, including the requisite original signature
page, and all other required paper attachments must be postmarked on or
before September 21, 2005 and received by 5 p.m. ET on September 30,
2005. Paper applications postmarked or received after these deadlines
will not be accepted for consideration and will be returned to the
sender.
(c) For purposes of this NOAA, the term `` postmark'' is defined by
26 CFR 301.7502-1. In general, the Fund will require that the
postmarked document bear a postmark date that is on or before the
applicable deadline. The document must be in an envelope or other
appropriate wrapper, properly addressed as set forth in this NOAA and
delivered by the United States Postal Service or any other private
delivery service designated by the Secretary of the Treasury. For more
information on designated delivery services, please see IRS Notice
2002-62, 2002-2 C.B. 574.
E. Intergovernmental Review: Not applicable.
F. Funding Restrictions: For allowable uses of investment proceeds
related to an NMTC Allocation, please see 26 U.S.C. 45D and the final
regulations issued by the Internal Revenue Service (26 CFR 1.45D-1,
published on December 28, 2004) and related guidance. Please see
Section I., above, for the Programmatic Improvements of this NOAA.
G. Other Submission Requirements:
Addresses: Paper applications and the signature page and
attachments for electronic applications must be sent as directed in the
application materials to the Bureau of Public Debt, the application
intake coordinator for the Fund. Paper applications and the signature
page or attachments will not be accepted at the Fund's offices in
Washington, DC. Paper applications and signature pages or attachments
received in the Fund's offices will be rejected and returned to the
sender. Except for the signature page and attachments, electronic
applications must be submitted solely by using the Fund's Web site and
must be sent in accordance with the submission instructions provided in
the electronic application form.
V. Application Review Information
There are two parts to the substantive review process for each
allocation application--Phase 1 and Phase 2. In Phase 1, the Fund will
evaluate each application, assigning points and numeric scores with
respect to the criteria described below. In Phase 2, the Fund will rank
applicants in accordance with the procedures set forth below.
A. Criteria:
1. Business Strategy (25-point maximum). (a) In assessing an
applicant's business strategy, reviewers will consider, among other
things: the applicant's products, services and investment criteria; the
prior performance of the applicant or its Controlling Entity,
particularly as it relates to making similar kinds of investments as
those it proposes to make with the proceeds of Qualified Equity
Investments; the applicant's prior performance in providing capital or
technical assistance to disadvantaged businesses or communities; the
projected level of the applicant's pipeline of potential investments;
and the extent to which the applicant intends to make Qualified Low-
Income Community Investments in one or more businesses in which persons
unrelated to the entity hold a majority equity interest.
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 it: (i) Has a track record of successfully providing products and
services similar to those it intends to use with the proceeds of
Qualified Equity Investments; (ii) has identified, or has a process for
identifying, potential transactions; (iii) demonstrates a likelihood of
issuing Qualified Equity Investments and making the related Qualified
Low-Income Community Investments in a time period that is significantly
shorter than the 5-year period permitted under IRC Sec. 45D(b)(1); and
(iv) 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.
(b) Priority Points: In addition, as provided by IRC Sec.
45D(f)(2), the Fund will ascribe additional points to entities that
meet either or both of the statutory priorities. First, the Fund will
give up to five (5) additional points to any applicant that has a
record of having successfully provided capital or technical assistance
to disadvantaged businesses or communities. Second, the
[[Page 41081]]
Fund will give five (5) additional points to any applicant that intends
to satisfy the requirement of IRC Sec. 45D(b)(1)(B) by making
Qualified Low-Income Community Investments in one or more businesses in
which persons unrelated to an applicant (within the meaning of IRC
Sec. 267(b) or IRC Sec. 707(b)(1)) hold the majority equity interest.
Applicants may earn points for either or both statutory priorities.
Thus, applicants that meet the requirements of both priority categories
can receive up to a total of ten (10) additional points. A record of
having successfully provided capital or technical assistance to
disadvantaged businesses or communities may be demonstrated either by
the past actions of an applicant itself or by its Controlling Entity
(e.g., where a new CDE is established by a nonprofit corporation with a
history of providing assistance to disadvantaged communities). An
applicant that receives additional points for intending to make
investments in unrelated businesses and is awarded a NMTC Allocation
must meet the requirements of IRC Sec. 45D(b)(1)(B) by investing
substantially all of the proceeds from the aggregate amount of its
Qualified Equity Investments in unrelated businesses. The Fund will
factor in an applicant's priority points when ranking applicants during
Phase 2 of the review process, as described below.
2. Community Impact (25-point maximum). In assessing the impact on
communities expected to 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 and economic impacts 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
(e.g., 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 and economic
impacts that would not be achieved without NMTCs; and (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.
3. Management Capacity (25-point maximum). In assessing an
applicant's management capacity, reviewers will consider, among other
things, the qualifications of the applicant's principals, its board
members, its management team, and other essential staff or contractors,
with specific focus on: experience in deploying capital or technical
assistance, including activities similar to those described in the
applicant's business strategy; experience in raising capital; asset
management and risk management experience; experience with fulfilling
compliance requirements of other governmental programs, including other
tax programs; and the applicant's (or its Controlling Entity's)
financial health. Reviewers will also consider the extent to which an
applicant has protocols in place to ensure ongoing compliance with NMTC
Program requirements, and the level of involvement of community
representatives and other stakeholders in the design, implementation or
monitoring of an applicant's business plan and strategy. In the case of
an applicant (or any entity that Controls the applicant, is Controlled
by the applicant or shares common management officials with the
applicant (as determined by the Fund)) that has received a NMTC
Allocation from the Fund under a prior allocation round, reviewers will
consider the activities that have occurred to date with respect to the
prior allocation(s).
An applicant will generally score well under this section to the
extent that its management team or other essential personnel have
experience in: (a) Deploying capital or technical assistance in Low-
Income Communities, particularly those likely to be served by the
applicant with the proceeds of Qualified Equity Investments; (b)
raising capital, particularly from for-profit investors; (c) asset and
risk management; and (d) fulfilling government compliance requirements,
particularly tax program compliance. An applicant will also score well
to the extent it has policies and systems in place to ensure ongoing
compliance with NMTC Program requirements, and to the extent that Low-
Income Community stakeholders play an active role in designing or
implementing its business plan. In the case of an applicant (or any
entity that Controls the applicant, is Controlled by the applicant or
shares common management officials with the applicant (as determined by
the Fund)) that has received a NMTC Allocation from the Fund under a
prior allocation round, the applicant will score well to the extent it
can: (a) Demonstrate that substantial activities have occurred through
its prior allocation(s); and (b) substantiate a need for additional
allocation authority.
4. Capitalization Strategy (25-point maximum). In assessing an
applicant's capitalization strategy, reviewers will consider, among
other things: the extent to which the applicant has secured
investments, commitments to invest, or indications of interest in
investments from investors, 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 extent to which the
applicant identifies how existing investors will leverage their
investments in Low-Income Communities or how new investors will be
brought into such investments; 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 Qualified
Equity Investments at a level that exceeds the requirements of IRC
Sec. 45D(b)(1)(B), including the extent to which the applicant has
identified the financial resources outside of the NMTC investments
necessary to support its operations or finance its activities; 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 Qualified Equity
Investments 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 end
users; (d) it is likely to leverage other sources of funding in
addition to NMTC investor dollars; and (e) it intends to invest the
proceeds from the aggregate amount of its Qualified Equity Investments
at a level that exceeds the requirements of IRC Sec. 45D(b)(1)(B). 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 the investor and/or will target
its activities to areas of greater economic distress than those
currently targeted by the investor.
B. Review and selection process: All allocation applications will
be reviewed
[[Page 41082]]
for eligibility and completeness. The Fund may consult with the IRS on
the eligibility requirements under IRC Sec. 45D. To be complete, the
application must contain, at a minimum, all information described as
required in the application form. An incomplete application will be
rejected and returned to the sender. Once the application has been
determined to be eligible and complete, the Fund will conduct the
substantive review of each application in two parts (Phase 1 and Phase
2) in accordance with the criteria and procedures generally described
in this NOAA and the allocation application.
Phase 1: Fund reviewers will evaluate and score each application in
the first part of the review process. An applicant must exceed a
minimum overall aggregate base score threshold and exceed a minimum
aggregate section score threshold in each of the four application
sections (Business Strategy, Community Impact, Management Capacity, and
Capitalization Strategy) in order to advance from the first part of the
substantive review process. If, in the case of a particular
application, a reviewer's total base score or section score(s) (in one
or more of the four application sections), varies significantly from
the median of the reviewers' total base scores or section scores for
such application, the Fund may, in its sole discretion, obtain the
comments and recommendations of an additional reviewer to determine
whether the anomalous score should be replaced with the score of the
additional reviewer.
Phase 2: Once the Fund has determined which applicants have met the
required minimum overall aggregate base score and aggregate section
score thresholds, the Fund will rank applicants on the basis of their
combined scores in the Business Strategy and Community Impact sections
of the application and will make adjustments to each applicant's
priority points so that these points maintain the same relative weight
in the ranking of applicant scores. The Fund will award allocations in
the order of this ranking, subject to applicants' meeting all other
eligibility requirements; provided, however, that the Fund, in its sole
discretion, reserves the right to reject an application and/or adjust
award amounts as appropriate based on information obtained during the
review process.
In the case of an applicant (or any entity that Controls the
applicant, is Controlled by the applicant or shares common management
officials with the applicant (as determined by the Fund)) that has
previously received an award or allocation from the Fund through any
Fund program, the Fund will consider and will deduct points for the
applicant's (or any entity that Controls the applicant, is Controlled
by the applicant or shares common management officials with the
applicant (as determined by the Fund)) failure to meet the reporting
deadlines set forth in any assistance, award or Allocation Agreement(s)
with the Fund during the applicant's two complete fiscal years prior to
the application deadline of this NOAA (generally FY 2003 and 2004). All
outstanding reports or compliance questions should be directed to the
Compliance Manager by e-mail at cme@cdfi.treas.gov; by telephone at
(202) 622-8226; by facsimile at (202) 622-6453; or by mail to CDFI
Fund, 601 13th Street, NW., Suite 200 South, Washington, DC 20005. The
Fund will respond to reporting or compliance questions between the
hours of 9 a.m. and 5 p.m. ET, starting the date of the publication of
this NOAA through September 19, 2005. The Fund will not respond to
reporting or compliance phone calls or e-mail inquiries that are
received after 5 p.m. ET on September 19, 2005 until after the funding
application deadline of September 21, 2005.
The Fund reserves the right to reject any NMTC allocation
application in the case of a prior Fund awardee, if such applicant has
failed to comply with the terms, conditions, and other requirements of
the prior or existing assistance or award agreement(s) with the Fund.
The Fund reserves the right to reject any NMTC allocation application
in the case of a prior Fund Allocatee, if such applicant has failed to
comply with the terms, conditions, and other requirements of its prior
or existing Allocation Agreement(s) with the Fund. The Fund reserves
the right to reject any NMTC allocation application in the case of any
applicant, if an entity that Controls the applicant, is Controlled by
the applicant or shares common management officials with the applicant
(as determined by the Fund), has failed to meet the terms, conditions
and other requirements of any prior or existing assistance agreement,
award agreement or Allocation Agreement with the Fund.
The Fund reserves the right to reject any NMTC allocation
application in the case of a prior Fund Allocatee, if such applicant
has failed to use its prior NMTC allocation(s) in a manner that is
generally consistent with the business strategy (including, but not
limited to, the proposed product offerings and markets served) set
forth in the allocation application(s) related to such prior
allocation(s). The Fund also reserves the right to reject any NMTC
allocation application in the case of any applicant, if an entity that
Controls the applicant, is Controlled by the applicant or shares common
management officials with the applicant (as determined by the Fund), is
a prior Fund Allocatee and has failed to use its prior NMTC
allocation(s) in a manner that is generally consistent with the
business strategy set forth in the allocation application(s) related to
such prior allocation(s).
The Fund also reserves the right to reject a NMTC allocation
application if information (including administrative errors) comes to
the attention of the Fund that either adversely affects an applicant's
eligibility for an award, or adversely affects the Fund's evaluation or
scoring of an application, or indicates fraud or mismanagement on the
part of an applicant. If the Fund determines that any portion of the
application is incorrect in any material respect, the Fund reserves the
right, in its sole discretion, to reject the application.
As a part of the substantive review process, the Fund may permit
reviewer(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 Fund. At this point in the process,
an applicant may be required to submit additional information about its
application in order to assist the Fund with its final evaluation
process. Such requests must be responded to within the time parameters
set by the Fund. The selecting official(s) will make a final allocation
determination based on an applicant's file, including without
limitation, eligibility under IRC Sec. 45D, the reviewers' scores and
the amount of allocation authority available. In the case of applicants
(or any entity that Controls the applicant, is Controlled by the
applicant or shares common management officials with the applicant (as
determined by the Fund)) that are regulated by the Federal government
or a State agency (or comparable entity), the 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 any entity
that Controls the applicant, is Controlled by the applicant or shares
common management officials with the applicant
[[Page 41083]]
(as determined by the Fund)) that are also Small Business Investment
Companies, Specialized Small Business Investment Companies or New
Markets Venture Capital Companies, the Fund reserves the right to
consult with and take into consideration the views of the Small
Business Administration.
The Fund reserves the right to conduct additional due diligence, as
determined reasonable and appropriate by the Fund, in its sole
discretion, related to the applicant and its officers, directors,
owners, partners and key employees.
Each applicant will be informed of the Fund's award decision either
through a Notice of Allocation if selected for an allocation (see
Section VI.A. of this NOAA) or a declination letter, if not selected
for an allocation, which may be for reasons of application
incompleteness, ineligibility or substantive issues. All applicants
that are not selected for an allocation based on substantive issues
will likely be given the opportunity to obtain feedback on the
strengths and weaknesses of their applications. This feedback will be
provided in a format and within a timeframe to be determined by the
Fund, based on available resources.
The Fund further reserves the right to change its eligibility and
evaluation criteria and procedures, if the Fund deems it appropriate;
if said changes materially affect the Fund's award decisions, the Fund
will provide information regarding the changes through the Fund's Web
site.
There is no right to appeal the Fund's allocation decisions. The
Funds allocation decisions are final.
VI. Award Administration Information
A. Notice of Allocation
The Fund will signify its selection of an applicant as an Allocatee
by delivering a signed Notice of Allocation to the applicant. The
Notice of Allocation will contain the general terms and conditions
underlying the Fund's provision of an NMTC Allocation including, but
not limited to, the requirement that an Allocatee and the Fund enter
into an Allocation Agreement. The applicant must execute the Notice of
Allocation and return it to the Fund. By executing a Notice of
Allocation, the Allocatee agrees that, if prior to entering into an
Allocation Agreement with the Fund, information (including
administrative errors) comes to the attention of the Fund that either
adversely affects the Allocatee's eligibility for an award, or
adversely affects the Fund's evaluation or scoring of the Allocatee's
application, or indicates fraud or mismanagement on the part of the
Allocatee, the Fund may, in its discretion and without advance notice
to the Allocatee, terminate the Notice of Allocation or take such other
actions as it deems appropriate. Moreover, by executing a Notice of
Allocation, an Allocatee agrees that, if prior to entering into an
Allocation Agreement with the Fund, the Fund determines that the
Allocatee is not in compliance with the terms of any prior assistance
agreement, award agreement, and/or Allocation Agreement entered into
with the Fund, the Fund may, in its discretion and without advance
notice to the Allocatee, either terminate the Notice of Allocation or
take such other actions as it deems appropriate. The Fund reserves the
right, in its sole discretion, to rescind the allocation and the Notice
of Allocation if the Allocatee fails to return the Notice of
Allocation, signed by the authorized representative of the Allocatee,
along with any other requested documentation, by the deadline set by
the Fund.
1. Failure to meet reporting requirements: If an Allocatee, or an
entity that Controls the Allocatee, is Controlled by the Allocatee or
shares common management officials with the Allocatee (as determined by
the Fund) is a prior Fund awardee or Allocatee under any Fund program
and is not current on the reporting requirements set forth in the
previously executed assistance, allocation or award agreement(s), as of
the date of the Notice of Allocation, the Fund reserves the right, in
its sole discretion, to delay entering into an Allocation Agreement
and/or to impose limitations on an Allocatee's ability to issue
Qualified Equity Investments to investors until said prior awardee or
Allocatee is current on the reporting requirements in the previously
executed assistance, allocation or award agreement(s). Please note that
the Fund only acknowledges the receipt of reports that are complete. As
such, incomplete reports or reports that are deficient of required
elements will not be recognized as having been received. If said prior
awardee or Allocatee is unable to meet this requirement within the
timeframe set by the Fund, the Fund reserves the right, in its sole
discretion, to terminate and rescind the Notice of Allocation and the
allocation made under this NOAA.
2. Pending resolution of noncompliance: If an applicant is a prior
awardee or Allocatee under any Fund program and if: (i) It has
submitted complete and timely reports to the Fund that demonstrate
noncompliance with a previous assistance, award or Allocation
Agreement; and (ii) the Fund has yet to make a final determination as
to whether the entity is in default of its previous assistance, award
or Allocation Agreement, the 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 Qualified Equity
Investments to investors, pending full resolution, in the sole
determination of the Fund, of the noncompliance. Further, if another
entity that Controls the applicant, is Controlled by the applicant or
shares common management officials with the applicant (as determined by
the Fund), is a prior Fund awardee or Allocatee and if such entity: (i)
Has submitted complete and timely reports to the Fund that demonstrate
noncompliance with a previous assistance, award or Allocation
Agreement; and (ii) the Fund has yet to make a final determination as
to whether the entity is in default of its previous assistance, award
or Allocation Agreement, the 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 Qualified Equity
Investments to investors, pending full resolution, in the sole
determination of the Fund, of the noncompliance. If the prior awardee
or Allocatee in question is unable to satisfactorily resolve the issues
of noncompliance, in the sole determination of the Fund, the Fund
reserves the right, in its sole discretion, to terminate and rescind
the Notice of Allocation and the allocation made under this NOAA.
3. Default status: If, at any time prior to entering into an
Allocation Agreement through this NOAA, the Fund has made a final
determination that an Allocatee that is a prior Fund awardee or
Allocatee under any Fund program is in default of a previously executed
assistance, allocation or award agreement(s) and has provided written
notification of such determination to the Allocatee, the 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 Qualified Equity Investments to investors, until said prior
awardee or Allocatee has submitted a complete and timely report
demonstrating full compliance with said agreement within a timeframe
set by the Fund. Further, if at any time prior to entering into an
Allocation Agreement through this NOAA, the Fund has made a final
determination that another entity that Controls the Allocatee, is
Controlled by the applicant or shares
[[Page 41084]]
common management officials with the Allocatee (as determined by the
Fund), is a prior Fund awardee or Allocatee under any Fund program, and
is in default of a previously executed assistance, allocation or award
agreement(s) and has provided written notification of such
determination to the defaulting entity, the 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
Qualified Equity Investments to investors, until said prior awardee or
Allocatee has submitted a complete and timely report demonstrating full
compliance with said agreement within a timeframe set by the Fund. If
said prior awardee or Allocatee is unable to meet this requirement, the
Fund reserves the right, in its sole discretion, to terminate and
rescind the Notice of Allocation and the allocation made under this
NOAA.
4. Termination in default: If (i) within the 12-month period prior
to entering into an Allocation Agreement through this NOAA, the Fund
has made a final determination that an Allocatee that is a prior Fund
awardee or Allocatee under any Fund program whose award or allocation
was terminated in default of such prior agreement; (ii) the 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 2004 or
2005 fiscal year, the 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 Qualified Equity
Investments to investors. Further, if (i) within the 12-month period
prior to entering into an Allocation Agreement through this NOAA, the
Fund has made a final determination that another entity that Controls
the Allocatee, is Controlled by the Allocatee or shares common
management officials with the Allocatee (as determined by the Fund), is
a prior Fund awardee or Allocatee under any Fund program whose award or
allocation was terminated in default of such prior agreement; (ii) the
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
2004 or 2005 fiscal year, the 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 Qualified Equity
Investments to investors.
B. Allocation Agreement
Each applicant that is selected to receive a NMTC Allocation
(including the applicant's Subsidiary transferees) must enter into an
Allocation Agreement with the Fund. The Allocation Agreement will set
forth certain required terms and conditions of the NMTC Allocation
which may include, but not be limited to, the following: (i) The amount
of the awarded NMTC Allocation; (ii) the approved uses of the awarded
NMTC Allocation (e.g., loans to or equity investments in Qualified
Active Low-Income Businesses or loans to or equity investments in other
CDEs); (iii) the approved service area(s) in which the proceeds of
Qualified Equity Investments may be used; (iv) the time period by which
the applicant may obtain Qualified Equity Investments from investors;
(v) reporting requirements for all applicants receiving NMTC
Allocations; and (vi) a requirement to maintain certification as a CDE
throughout the term of the Allocation Agreement. If an applicant has
represented in its NMTC allocation application that it intends to
invest substantially all of the proceeds from its investors in
businesses in which persons unrelated to the applicant hold a majority
equity interest, the Allocation Agreement will contain a covenant
whereby said applicant agrees that it will invest substantially all of
said proceeds in businesses in which persons unrelated to the applicant
hold a majority equity interest.
In addition to entering into an Allocation Agreement, each
applicant selected to receive a NMTC Allocation must furnish to the
Fund an opinion from its legal counsel, the content of which will be
further specified in the Allocation Agreement, to include, among other
matters, an opinion that an applicant (and its Subsidiary transferees,
if any): (i) Is duly formed and in good standing in the jurisdiction in
which it was formed and/or operates; (ii) has the authority to enter
into the Allocation Agreement and undertake the activities that are
specified therein; (iii) has no pending or threatened litigation that
would materially affect its ability to enter into and carry out the
activities specified in the Allocation Agreement; and (iv) is not in
default of its articles of incorporation, bylaws or other
organizational documents, or any agreements with the Federal
government.
If an Allocatee identifies Subsidiary transferees, the Fund
reserves the right to require an Allocatee to provide supporting
documentation evidencing that it Controls such entities prior to
entering into an Allocation Agreement with the Allocatee and its
Subsidiary transferees. The Fund reserves the right, in its sole
discretion, to rescind its Notice of Allocation if the Allocatee fails
to return the Allocation Agreement, signed by the authorized
representative of the Allocatee, and/or provide the Fund with any other
requested documentation, within the deadlines set by the Fund.
C. Fees: The Fund reserves the right, in accordance with applicable
Federal law and if authorized, to charge allocation reservation and/or
compliance monitoring fees to all entities receiving NMTC Allocations.
Prior to imposing any such fee, the Fund will publish additional
information concerning the nature and amount of the fee.
D. Reporting: The Fund will collect information, on at least an
annual basis, from all applicants that are awarded NMTC Allocations
and/or are recipients of Qualified Low-Income Community Investments,
including such audited financial statements and opinions of counsel as
the Fund deems necessary or desirable, in its sole discretion. The Fund
will use such information to monitor each Allocatee's compliance with
the provisions of its Allocation Agreement and to assess the impact of
the NMTC Program in Low-Income Communities. The Fund may also provide
such information to the IRS in a manner consistent with IRC Sec. 6103
so that the IRS may determine, among other things, whether the
Allocatee has used substantially all of the proceeds of each Qualified
Equity Investment raised through its NMTC Allocation to make Qualified
Low-Income Community Investments. The Allocation Agreement shall
further describe the Allocatee's reporting requirements.
The Fund reserves the right, in its sole discretion, to modify
these reporting requirements if it determines it to be appropriate and
necessary; however, such reporting requirements will be modified only
after due notice to Allocatees.
VII. Agency Contacts
The Fund will provide programmatic and information technology
support related to the allocation application between the hours of 9
a.m. and 5 p.m. ET through September 19, 2005. The Fund will not
respond to phone calls or e-mails concerning the application that are
received after 5 p.m. ET on September 19, 2005 until after the
allocation application deadline of
[[Page 41085]]
September 21, 2005. Applications and other information regarding the
Fund and its programs may be obtained from the Fund's Web site at
http://www.cdfifund.gov. The Fund will post on its Web site responses
to questions of general applicability regarding the NMTC Program.
A. Information technology support: Technical support can be
obtained by calling (202) 622-2455 or by e-mail at
ithelpdesk@cdfi.treas.gov. People who have visual or mobility
impairments that prevent them from accessing the Low-Income Community
maps using the Fund's Web site should call (202) 622-2455 for
assistance. These are not toll free numbers.
B. Programmatic support: If you have any questions about the
programmatic requirements of this NOAA, contact the Fund's NMTC Program
Manager by e-mail at cdfihelp@cdfi.treas.gov, by telephone at (202)
622-6355, by facsimile at (202) 622-7754, or by mail at CDFI Fund, 601
13th Street, NW., Suite 200 South, Washington, DC 20005. These are not
toll-free numbers.
C. Administrative support: If you have any questions regarding the
administrative requirements of this NOAA, contact the Fund's Grants
Manager by e-mail at grantsmanagement@cdfi.treas.gov, by telephone at
(202) 622-8226, by facsimile at (202) 622-6453, or by mail at CDFI
Fund, 601 13th Street, NW., Suite 200 South, Washington, DC 20005.
These are not toll free numbers.
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 Fund's Office of Legal Counsel,
please refer to the document titled ``How to Request a Legal Review,''
found on the Fund's Web site at http://www.cdfifund.gov. Requests for
legal reviews must be received by the Fund no later than October 14,
2005.
VIII. Information Sessions
In connection with this NOAA, the Fund intends to broadcast a no
fee, interactive video teleconference information session on August 4,
2005, from 1 p.m. to 5 p.m. ET. Registration is required, as the video
teleconference information session will be broadcast to secured Federal
facilities. The video teleconference information session will be
produced in Washington, DC, and will be downlinked via satellite to
local Department of Housing and Urban Development offices in certain
cities. For further information on the video teleconference information
session, locations, or to register, please visit the Fund's Web site at
http://www.cdfifund.gov or call the Fund at (202) 622-9046.
Authority: 26 U.S.C. 45D; 31 U.S.C. 321; 26 CFR 1.45D-1.
Dated: July 5, 2005.
Owen M. Jones,
Acting Director, Community Development Financial Institutions Fund.
[FR Doc. 05-13591 Filed 7-14-05; 8:45 am]
BILLING CODE 4810-70-P