[Federal Register: December 6, 2006 (Volume 71, Number 234)]
[Notices]
[Page 70835-70846]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de06-126]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
New Markets Tax Credit Program
Funding Opportunity Title: Notice of Allocation Availability (NOAA)
Inviting Applications for the CY 2007 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
February 28, 2007. Paper applications must be postmarked on or before
February 28, 2007 (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 January 12, 2007 (see Section III. of this NOAA
for more details).
Executive Summary: This NOAA is issued in connection with the
calendar year 2007 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 private investment capital that,
in turn, will facilitate economic and community development in Low-
Income Communities. Through this NOAA, the Fund announces the
availability of $3.9 billion of NMTC authority, which includes $3.5
billion authorized by the Act and $400 million authorized by the Gulf
Opportunity Zone (GO Zone) Act of 2005 (Pub. L. 109-135) for allocation
[[Page 70836]]
to CDEs seeking to finance redevelopment and recovery in the Hurricane
Katrina GO Zone.
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 changes: As noted above, this NOAA contains
application information related to the allocation of NMTCs pursuant to
both the Act and the GO Zone Act. Accordingly, this NOAA is different
from the CY 2006 NOAA in that this NOAA contains GO Zone application
information that was used for the allocation of CY 2006 GO Zone NMTC
authority, as set forth in the Amendment of Notice of Allocation
Availability for the CY 2006 Allocation Round of the NMTC Program,
published in the Federal Register on March 10, 2006 (71 FR 12423),
herein updated for the CY 2007 allocation round.
B. Program guidance and regulations: This NOAA provides guidance
for the application and allocation of NMTCs for the fifth 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, notices and other
publications; and (iii) the application and related materials for this
fifth 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 regulations.
II. Allocation Information
A. Allocation amounts: Pursuant to the Act, 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 for the $3.5
billion. In addition, pursuant to the GO Zone Act, the Fund expects
that it may allocate to CDEs the authority to issue to their investors
up to the aggregate amount of $400 million in equity as to which NMTCs
may be claimed for investments made in the GO Zone. The Fund
anticipates that, under this NOAA, it will not issue more than $100
million in tax credit allocation authority per GO Zone allocation
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 the $150 million cap (or $100 million cap,
in the case of a GO Zone allocation), 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 the
applicable cap; 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 for both the $3.5 billion in general NMTC allocation
authority and the $400 million in GO Zone allocation authority (see
Section V.(C) for additional information regarding GO Zone
eligibility). Applicants must indicate in the application materials
whether they are applying for general NMTC allocation authority, GO
Zone allocation authority, or both.
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
January 12, 2007. 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
website on or before 5 p.m. ET on January 12, 2007. 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 February 28, 2007. 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 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 February 15, 2007, it has: (i) Issued and received funds in-hand
(the term ``funds in-hand'' does not include committed funding) from
its investors for at least 80 percent of its Qualified Equity
Investments relating to its CY 2001-2002 NMTC Allocation; or (ii)
issued and received funds in-hand from its investors for at least 60
percent of its Qualified Equity Investments and that
[[Page 70837]]
100 percent of its total CY 2001-2002 NMTC Allocation has been
exchanged for funds in-hand 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 February 15, 2007, it has: (i) Issued and received funds in-hand
from its investors for at least 60 percent of its Qualified Equity
Investments relating to its CY 2003-2004 NMTC Allocation; or (ii)
issued and received funds in-hand from its investors for at least 50
percent of its Qualified Equity Investments and that at least 80
percent of its total CY 2003-2004 NMTC Allocation has been exchanged
for funds in-hand 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,
2007, it has: (i) Issued and received funds in-hand 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 funds in-hand
from its investors for at least 40 percent of its Qualified Equity
Investments and that at least 80 percent of its total CY 2005 NMTC
Allocation has been exchanged for funds in-hand from, or has been
committed by, its investors. A prior Allocatee in the fourth round of
the NMTC Program (CY 2006) 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, 2007, it has: (i) Issued and received
funds in-hand from its investors for at least 50 percent of its
Qualified Equity Investments relating to its CY 2006 NMTC Allocation;
or (ii) issued and received funds in-hand from its investors for at
least 20 percent of its Qualified Equity Investments and that at least
60 percent of its total CY 2006 NMTC Allocation has been exchanged for
funds in-hand from, or has been committed by, its investors. Fourth
round Allocatees that received GO Zone allocations are not required to
meet the above Qualified Equity Investment issuance and commitment
thresholds with regard to the GO Zone NMTCs. 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.
Notwithstanding the above, if an applicant has received an
allocation in multiple allocation rounds of the NMTC Program, the
applicant shall be deemed to be eligible to apply for a NMTC Allocation
pursuant to this NOAA if the applicant can demonstrate that, as of
11:59 p.m. ET on February 15, 2007, it has issued and received funds
in-hand from its investors for at least 70 percent of its Qualified
Equity Investments relating to its cumulative allocation amounts from
prior NMTC Program rounds (CY 2002-2006), exclusive of GO Zone
allocations received by allocatees under the CY 2006 allocation round.
For purposes of this section of the NOAA, the Fund will only count
as ``issued'' those Qualified Equity Investments that have been
finalized 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 funds in-
hand. 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 February 15, 2009. The
applicant will be required, upon notification from the Fund, to submit
adequate documentation to substantiate the required issuances of and
commitments for Qualified Equity Investments.
(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 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,
[[Page 70838]]
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 2005 or 2006 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 2005 or 2006 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. For the
purpose of calculating ``undisbursed funds'', the Fund will only take
into consideration Fund awards for which there is an Assistance
Agreement or Award Agreement between the awardee and the Fund that has
not been closed out or terminated 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 February 26, 2007
(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 February 26, 2007 until
after the funding application deadline of February 28, 2007.
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(s). The
Subsidiary transferee(s) 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. Any transfer 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 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
[[Page 70839]]
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; (ii) whether the
applications submitted by separate entities contain significant
narrative, textual or other similarities, and (iii) 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 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
[[Page 70840]]
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 February 14, 2007. 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
February 28, 2007. Electronic applications cannot be transmitted or
received after 5 p.m. ET on February 28, 2007. 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 March 5, 2007. 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 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 February 28, 2007. Paper applications postmarked after this
deadline 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 a 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 Fund will give
five (5) additional points
[[Page 70841]]
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 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
[[Page 70842]]
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 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 in Phase 2 as in Phase 1. 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 2004 and 2005).
C. GO Zone Review and Selection Process
The GO Zone is defined in the Gulf Opportunity Zone Act of 2005 as
``that portion of the Hurricane Katrina disaster area determined by the
President to warrant individual or individual and public assistance
from the Federal Government under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act by reason of Hurricane Katrina''
(Pub. L. 109-135, Section 101). The Hurricane Katrina Disaster Area is
defined as ``an area with respect to which a major disaster has been
declared by the President before September 14, 2005, under section 401
of such Act by reason of Hurricane Katrina'' (Pub. L. 109-135, Section
101).
In order to be considered for any portion of the $400 million of
special GO Zone allocation authority, an Applicant (GO Zone Applicant)
must: (i) Meet the minimum threshold scoring criteria outlined under
Phase I in Section B above; (ii) indicate its intent to apply as a GO
Zone Applicant in the designated section of the CY 2007 NMTC
application; and (iii) have a significant mission of recovery and
development in the GO Zone. In order to demonstrate a ``significant
mission of recovery and development in the GO Zone,'' a CDE must, at a
minimum: (i) Include the GO Zone within its particular geographic
service area; and (ii) demonstrate to the satisfaction of the Fund that
it has significant resources in the GO Zone to support its recovery and
redevelopment efforts and that it has a significant track record of
providing financing and related services in the GO Zone. GO Zone
Applicants must answer specified application questions pertaining to,
among other things: (i) The extent to which the applicant has
significant resources in the GO Zone to support its recovery and
redevelopment efforts; (ii) the applicant's track record of providing
financing and related services in the GO Zone; and (iii) the extent to
which the applicant will commit to dedicating a significant percentage
of a NMTC allocation to areas designated by FEMA as having suffered
flooding and/or severe or catastrophic damage as a result of Hurricane
Katrina.
After the Fund has made its final allocation determinations for the
$3.5 billion allocation authority, it will make final allocation
determinations for the GO Zone allocation authority, with first
priority given to organizations that were not selected to receive an
allocation under the initial $3.5 billion of allocation authority.
Within the category of GO Zone Applicants, awards will be provided in
rank order of score, with priority given to those applicants that
demonstrate the strongest significant mission of recovery and
redevelopment of the GO Zone and commit to dedicating a significant
percentage of their allocations to serve those areas designated by FEMA
as having suffered flooding and/or severe or catastrophic damage in the
wake of Hurricane Katrina. If GO Zone allocation authority is still
available, the Fund may provide additional GO Zone allocation authority
to eligible applicants that were selected to receive an allocation from
the initial $3.5 billion, provided the Fund determines that they have
the capacity to administer additional allocation authority in the GO
Zone. Unallocated GO Zone allocation authority, if any, may be carried
over into future NMTC allocation rounds, pursuant to IRC 45D(f)(3).
D. 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 February 26, 2007. The Fund will not
respond to reporting or compliance phone calls or e-mail inquiries that
are received after 5 p.m. ET on February 26, 2007 until after the
funding application deadline of February 28, 2007.
E. 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
[[Page 70843]]
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 adversely affects an applicant's
eligibility for an award, 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 (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
Fund's 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
adversely affects the Allocatee's eligibility for an award, 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
[[Page 70844]]
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 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 2005 or
2006 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
2005 or 2006 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
[[Page 70845]]
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.
GO Zone Allocation Agreement Terms: All CDEs that are awarded GO
Zone allocation authority are required, as a condition of their
Allocation Agreements with the CDFI Fund, to invest 100 percent of the
QLICIs from the GO Zone allocation in the GO Zone. In addition, GO Zone
CDEs are required to maintain accountability to the GO Zone through
their advisory or governing board representation. Additional terms and
conditions for GO Zone allocation authority will be set forth in the
Allocation Agreements.
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 February 26, 2007. The Fund will not respond
to phone calls or e-mails concerning the application that are received
after 5 p.m. ET on February 26, 2007 until after the allocation
application deadline of February 28, 2007. 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.
VIII. Information Sessions
In connection with this NOAA, the Fund intends to broadcast one or
more no fee, interactive video teleconference information sessions.
Registration will be required, as the video teleconference information
sessions will be broadcast to secured federal facilities. The video
teleconference information sessions will be produced in Washington, DC,
and will be downlinked via satellite to local federal venues 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.
[[Page 70846]]
Dated: November 24, 2006.
Arthur A. Garcia,
Director, Community Development Financial Institutions Fund.
[FR Doc. E6-20669 Filed 12-5-06; 8:45 am]
BILLING CODE 4810-70-P