[Federal Register: December 28, 2007 (Volume 72, Number 248)]
[Notices]
[Page 73976-73987]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de07-229]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
Funding Opportunity Title: Notice of Allocation Availability
(NOAA) Inviting Applications for the CY 2008 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 March
5, 2008. Applications sent by mail, facsimile or other form will not be
accepted. The Community Development Financial Institutions Fund (the
Fund) will not accept applications in paper form, other than the
assigned signature page and certain paper attachments (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 February 6, 2008
(see section III of this NOAA for more details).
Executive Summary: This NOAA is issued in connection with the
calendar year 2008 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 (Pub. L. 106-554)
and amended by section 221 of the American Jobs Creation Act of 2004
(Pub. L. 108-357), section 101 of the Gulf Opportunity Zone Act of 2005
(Pub. L. 108-357), and Division A, section 102 of the Tax Relief and
Health Care Act of 2006 (Pub. L. 109-432) (the Act). Through the NMTC
Program, the Fund provides authority to CDEs to offer an incentive to
investors in the form of tax credits 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 $3.5 billion of NMTC authority authorized by the Act.
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
1. Non-Metropolitan Counties. As provided by section 102(b)of the
Act, the Fund shall ensure that non-metropolitan counties receive a
proportional allocation of Qualified Equity Investments (QEIs) under
the NMTC Program.
To guide the Fund in implementing this requirement, on May 22,
2007, the Fund published in the Federal Register a Request for Public
Comments (72 FR 28766). Commentators were asked to consider a number of
issues:
(a) What outcome should be achieved? Commentators were asked to
consider, for example, whether a proportionate allocation of QEIs
should be provided: (i) To investors that reside in non-metropolitan
counties; (ii) to Allocatees that are headquartered in non-metropolitan
counties; (iii) to Allocatees that principally serve non-metropolitan
counties; or (iv) to finance Qualifying Low Income Community
Investments (QLICIs) in non-metropolitan counties.
(b) How to measure ``proportionality''? Should proportionality be
based upon, for example: (i) The total proportion of the U.S.
population residing in non-metropolitan counties; (ii) the total
proportion of NMTC-eligible census tracts that are located in non-
metropolitan areas; or (iii) the total proportion of applicants in a
given round that are principally serving, and/or headquartered in, non-
metropolitan counties? Also, to the extent that proportionality is
based upon QLICIs, should the Fund consider the total number of QLICIs
made, or the total dollar amount of those QLICIs?
(c) Should the Fund implement changes to its application review
process to achieve desired outcomes, including providing a new set of
priority points and/or re-ranking certain applicants?
(d) What compliance mechanisms are needed to ensure that desired
outcomes are achieved?
Commentators were nearly unanimous in the opinion that: (i) The
Fund should focus its efforts on ensuring that a proportional
allocation of QLICIs are made in non-metropolitan areas, and that the
location of the investor is not pertinent; (ii) the proportionality
test should be based upon the total dollar amount of QLICIs made,
rather than the total number of QLICIs made; and (iii) applicants
should be required to specify the percentage of investments they intend
to make in non-metropolitan areas, and then be held to achieving this
benchmark through their Allocation Agreements. The Fund has adopted all
three of these positions.
Commentators were divided with respect to the appropriate benchmark
for ensuring a proportional allocation of QLICIs in non-metropolitan
areas. Some suggested 17.4 percent, which is the proportion of the U.S.
population living in non-metropolitan counties according to the
Department of Agriculture's ``Beale Codes.'' Some commentators
suggested 21 percent, which is the proportion of the U.S. population
living in non-metropolitan counties according to the Department of
Agriculture's Economic Research Service. Some commentators suggested 25
percent, which is the percentage of NMTC eligible low-income census
tracts located in non-metropolitan counties. Some commentators
suggested 35 percent, as a means to make up for perceived ``under-
funding'' in prior NMTC Program allocation rounds.
[[Page 73977]]
The Fund has selected 20 percent as the appropriate benchmark for
ensuring a proportional allocation of QLICIs in non-metropolitan areas,
which approximates the percentage of the U.S. population that Fund data
indicates resides in non-metropolitan counties. To correct information
stated in the Request for Comments, the Fund currently relies upon the
1999 OMB definition of Non-Metropolitan counties [OMB Bulletin 99-04],
applied to the 2000 Census data, to determine NMTC Program eligibility.
This data is publicly available through the Fund's Mapping System
(CIMS). According to this data, 19.6 percent of the U.S. population
resides in non-metropolitan counties. The Fund believes that it is in
the best interest of the Fund, the Internal Revenue Service (IRS) and
NMTC Program users to set its benchmark based on this data, since this
is the data that currently feeds into Fund's compliance and monitoring
systems, as well as the data that NMTC Program users can readily access
to determine which counties qualify as non-metropolitan counties.
Commentators generally did not suggest that any special preference
or consideration should be given to a CDE solely because it is
headquartered in a non-metropolitan area. The Fund concurs with this
position.
Commentators were generally of the opinion that the Fund should
give special consideration (most notably, priority points) to CDEs that
demonstrate a track record of principally serving non-metropolitan
areas, and/or those that make a significant forward-looking commitment
to serving non-metropolitan areas. In addition, commentators generally
did not object to re-ranking lower scoring applicants, if necessary to
ensure that the proportional allocation is achieved.
While the Fund does not concur that priority points are the
preferred solution (since priority points alone may not guarantee the
desired outcome), the Fund has determined that special consideration
should be given to ``Rural CDEs''--those applicants that over the past
five years have dedicated at least 50 percent of their activities to
Non-Metropolitan counties and have committed that at least 50 percent
of their NMTC activities will be conducted in such areas should they
receive an allocation award. The Fund will ensure that the percentage
of allocatees that are Rural CDEs is not less than the percentage of
applicants deemed eligible for Phase 2 of the review process that are
Rural CDEs.
With respect to compliance, commentators generally agreed that
Allocatees should be held to their application commitments to invest in
non-metropolitan counties as a condition of their Allocation
Agreements. The Fund concurs. The Fund will ask each applicant to
indicate both a minimum and maximum percentage of its requested
allocation that it would commit to deploying in non-metropolitan
counties. Applicants will be held to a designated percentage (no less
than the stated minimum and no greater than the stated maximum) through
their Allocation Agreements.
In summary, and as further discussed in section V.C. of this
document, the Fund will ensure that the proportion of allocatees that
are Rural CDEs is, at a minimum, equal to the proportion of applicants
in the Phase 2 review pool that are Rural CDEs; and ensure that at
least 20 percent of the QLICIs made using QEI proceeds are invested in
Non-Metropolitan counties.
2. Allocation Amounts. As described in section IIA, the Fund
anticipates that it will not provide an allocation award of more than
$125 million per applicant. This limitation was set at $150 million
last year, but was reduced this year due, in part, to the lower
allocation authority available for distribution in this round.
B. Program guidance and regulations: This NOAA provides guidance
for the application and allocation of NMTCs for the sixth 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
sixth 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, IRC 45D 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 45D(f)(1)(D). The Fund anticipates
that, under this NOAA, it will not issue more than $125 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 the $125
million cap, 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 45D specifies certain eligibility
requirements that each applicant must meet to be eligible to apply for
an allocation of NMTCs. The following sets forth additional detail and
certain additional dates that relate to the submission of applications
under this NOAA for the $3.5 billion in general NMTC allocation
authority.
1. CDE certification: For purposes of this NOAA, the 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
February 6, 2008. 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 February 6, 2008. The Fund will not
provide allocations of NMTCs to applicants that are not certified as
[[Page 73978]]
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 March 5, 2008. 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 (QEI) issuance
requirements: The following describes the QEI issuance requirements
applicable to prior Allocatees, including those Allocatees that
received allocations pursuant to special allocation authority under the
Gulf Opportunity Zone Act of 2005 (``GO Zone Allocatees''). 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 June 13, 2008,
it has: (i) Issued and received funds in-hand (the term ``funds in-
hand'' does not include committed funding) from its investors for 100
percent of its QEIs relating to its CY 2001-2002 NMTC Allocation; or
(ii) issued and received funds in-hand from its investors for at least
75 percent of its QEIs and that 100 percent of its total CY 2001-2002
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 June 13, 2008, it has: (i) Issued and
received funds in-hand from its investors for at least 80 percent of
its QEIs relating to its CY 2003-2004 NMTC Allocation; or (ii) issued
and received funds in-hand from its investors for at least 60 percent
of its QEIs and that 100 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 June 13, 2008, it has: (i) Issued and received funds
in-hand from its investors for at least 60 percent of its QEIs relating
to its CY 2005 NMTC Allocation; or (ii) issued and received funds in-
hand from its investors for at least 50 percent of its QEIs 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 (with the exception of a GO Zone
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 June 13, 2008,
it has: (i) Issued and received funds in-hand from its investors for at
least 50 percent of its QEIs relating to its CY 2006 NMTC Allocation;
or (ii) issued and received funds in-hand from its investors for at
least 40 percent of its QEIs and that at least 80 percent of its total
CY 2006 NMTC Allocation has been exchanged for funds in-hand from, or
has been committed by, its investors. A prior GO Zone Allocatee in the
fourth round 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 June 13, 2008, it has issued and received funds in-hand from its
investors for at least 20 percent of its QEIs relating to its CY 2006
NMTC Allocation. A prior Allocatee (with the exception of a GO Zone
Allocatee) in the fifth round of the NMTC Program (CY 2007) 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 June 13, 2008,
it has: (i) Issued and received funds in-hand from its investors for at
least 50 percent of its QEIs 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 QEIs and that at least 60 percent of its total
CY 2007 NMTC Allocation has been exchanged for funds in-hand from, or
has been committed by, its investors. A prior GO Zone Allocatee in the
fifth round is not required to meet the above QEI 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 QEIs 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 June 13, 2008, it has issued and received funds in-
hand from its investors for at least 70 percent of its QEIs relating to
its cumulative allocation amounts from prior NMTC Program rounds (CY
2001-2007), exclusive of: (i) GO Zone allocations received by
Allocatees under the CY 2007 allocation round; and (ii) GO Zone
allocations received by Allocatees under the CY 2006 round, provided
that the Allocatee has issued and received funds in-hand from its
investors for at least 20 percent of its QEIs relating to its CY 2006
GO Zone allocation.
For purposes of this section of the NOAA, the Fund will only count
as ``issued'' those QEIs 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 QEI that they issue to an investor in
exchange for funds in-hand. For purposes of this section of the NOAA,
``committed'' QEIs are only those Equity Investments that are evidenced
by a written, signed document in which an investor: (i) Commits to make
an investment in the Allocatee in a specified amount and on specified
terms; (ii) has made an initial disbursement of the investment proceeds
to the Allocatee, and such initial disbursement has been recorded in
ATS as a QEI; (iii) commits to disburse the remaining investment
proceeds to the Allocatee based on specified amounts and payment dates;
and (iv) commits to make the final disbursement to the Allocatee no
later than June 13, 2010. The applicant will be required, upon
notification from the Fund, to submit adequate documentation to
substantiate the required issuances of and commitments for QEIs.
[[Page 73979]]
Prior Allocatees that require any action by the Fund (e.g.,
certifying a subsidiary entity as a CDE; adding a subsidiary CDE to an
Allocation Agreement; etc.) in order to meet the QEI issuance
requirements above must submit their requests by no later than March
28, 2008 in order to guarantee that the Fund completes all necessary
approvals prior to June 13, 2008. 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.
(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, allocation or award agreement(s);
and (iii) has been provided written notification of such default
determination by the Fund.
(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 2006 or 2007 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 2006 or 2007 fiscal
year.
(f) Undisbursed award funds: 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
award funds (defined below) under said prior award(s), as of the
applicable 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 award funds under said prior award(s), as of the
applicable 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 award funds under said prior award(s) as of the
applicable 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 award funds.
For purposes of the calculation of undisbursed award funds for the
BEA Program, only awards made to the Applicant (and any entity that
Controls the Applicant, is Controlled by the Applicant or shares common
management officials with the Applicant, as determined by the Fund)
three to five calendar years prior to the end of the calendar year of
the application deadline of this NOAA are included (``includable BEA
awards''). Thus, for purposes of this NOAA, undisbursed BEA Program
award funds are the amount of FYs 2003, 2004 and 2005 awards that
remain undisbursed as of the application deadline of this NOAA.
For purposes of the calculation of undisbursed award funds for the
CDFI Program and the Native Initiatives Funding Programs, only awards
made to the Applicant (and any entity that Controls the Applicant, is
Controlled by the Applicant or shares common management officials with
the Applicant, as determined by the Fund) two to five calendar years
prior to the end of the calendar year of the application deadline of
this NOAA are included (``includable CDFI/NI awards''). Thus, for
purposes of this
[[Page 73980]]
NOAA, undisbursed CDFI Program and NI awards are the amount of FYs
2003, 2004, 2005 and 2006 awards that remain undisbursed as of the
application deadline of this NOAA. To calculate total includable BEA/
CDFI/NI awards: amounts that are undisbursed as of the application
deadline of this NOAA cannot exceed five percent (5%) of the total
includable awards. Please refer to an example of this calculation in
the 2008 Allocation Application Q&A document, available on the Fund's
website.
The ``undisbursed award funds'' calculation does not include: (i)
Tax credit allocation authority made available through the New Market
Tax Credit (NMTC) Program; (ii) any award funds for which the Fund
received a full and complete disbursement request from the Awardee (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) by the applicable application deadline of this NOAA; (iii)
any award funds for an award that has been terminated in writing by the
Fund or deobligated by the Fund; or (iv) any award funds for an award
that does not have a fully executed assistance or award agreement. The
Fund strongly encourages Applicants requesting disbursements of
``undisbursed funds'' from prior awards to provide the Fund with a
complete disbursement request at least 30 business days prior to the
application deadline of this NOAA. An Applicant that is unsure about
the disbursement status of any prior award should contact the Fund's
Financial Manager via e-mail at CDFI.disburseinquiries@cdfi.treas.gov
for more information. Requests submitted less than thirty calendar days
prior to the application deadline may not receive a response before the
application deadline.
(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 March 3, 2008 (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 March 3, 2008 until
after the funding application deadline of March 5, 2008.
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 non-
profit applicant should submit a CDE certification application to the
Fund on behalf of the Subsidiary within 30 days after the non-profit
applicant receives a Notice of Allocation from the Fund; as such
Subsidiary 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 approved transfer
will be included in 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 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; to select a single
application as the only one that will be considered for an allocation;
and, in the event that an application is selected to receive an
allocation award, to deem certain activities ineligible.
(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 QEI 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).
[[Page 73981]]
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 must submit
applications electronically under this NOAA, through the Fund website.
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. Applications sent by mail, facsimile or other
form will not be accepted. The Fund will not accept applications in
paper form, other than the assigned signature page and certain paper
attachments, as specified below and in the application.
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 website. 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, it's Controlling Entity; electronic applications without a
valid EIN are incomplete and cannot be transmitted to the Fund. 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 only submit
applications under this NOAA electronically. Applications sent by
facsimile or by e-mail will not be accepted. 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 website 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 relating to
the submission of signature forms and supporting information, is set
forth in further detail in the electronic application.
D. Application Submission Dates and Times: 1. Application
Deadlines: (a) Electronic applications must be received by 5 p.m. ET on
March 5, 2008. Electronic applications cannot be transmitted or
received after 5 p.m. ET on March 5, 2008. 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 7, 2008. 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. If the original signature page is not postmarked by the
deadlines specified above, the application will be rejected. 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) 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: 1. Addresses: 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. The signature
[[Page 73982]]
page or attachments will not be accepted at the Fund's offices in
Washington, DC. Signature pages or attachments received in the Fund's
offices will be rejected. Except for the signature page and
attachments, electronic applications must be submitted solely by using
the Fund's website 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 QEIs; 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 (QLICIs) 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 QEIs;
(ii) has identified, or has a process for identifying, potential
transactions; (iii) demonstrates a likelihood of issuing QEIs and
making the related QLICIs in a time period that is significantly
shorter than the 5-year period permitted under IRCSec. 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 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 to any applicant that intends to satisfy the
requirement of IRC 45D(b)(1)(B) by making QLICIs in one or more
businesses in which persons unrelated (within the meaning of IRC 267(b)
or IRC 707(b)(1)) to an applicant (or the applicant's subsidiary CDEs)
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 45D(b)(1)(B) by investing substantially all of the proceeds from
its QEIs 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 QEIs; (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
[[Page 73983]]
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 QEIs at a level
that exceeds the requirements of IRC 45D(b)(1)(B) and the IRS
regulations, 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 QEIs it is likely to
raise and its expected investment strategy to deploy funds raised with
NMTCs; (c) it generally demonstrates that the economic benefits of the
tax credit will be passed through to 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 QEIs at a level that exceeds the requirements of IRC 45D(b)(1)(B)
and the IRS regulations. In the case of an applicant proposing to raise
investor funds from organizations that also will identify or originate
transactions for the applicant or from affiliated entities, said
applicant will score well to the extent that it will offer products
with more favorable rates or terms than those currently offered by 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 for eligibility and completeness. The Fund may consult with
the IRS on the eligibility requirements under IRC 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. 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.
1. 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.
2. 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 ``Final Rank Score,''
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. 3.
Outstanding Reports. 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 2006 and 2007).
C. Allocations serving Non-Metropolitan counties. As discussed in
Part I, the Fund will ensure that the proportion of allocatees that are
Rural CDEs is, at a minimum, equal to the proportion of applicants in
the Phase 2 review pool that are Rural CDEs; and ensure that at least
20 percent of the QLICIs to be made using QEI proceeds are invested in
Non-Metropolitan counties. As stated earlier, a Rural CDE is one that
has over the past five years dedicated at least 50 percent of its
activities to Non-Metropolitan counties and has committed that at least
50 percent of its NMTC activities will be conducted in such areas. Non-
Metropolitan counties are counties not contained within a Metropolitan
Statistical Area, as such term is defined in OMB Bulletin No. 99-04
(Revised Statistical Definitions of Metropolitan Areas (MAs) and
Guidance on Uses of MA Definitions) and applied using 2000 census data.
The Fund will not make changes with respect to the initial Phase 1
review and scoring process in order to achieve these outcomes. Rather,
adjustments will be made during the Phase 2 review process, as needed.
Applicants that meet the minimum scoring thresholds will be
advanced to Phase 2 review and will be provided with ``preliminary''
awards, in descending order of Final Rank Score, until the $3.5 billion
in allocation authority is expended. Once these ``preliminary'' award
amounts are determined, the Fund will then analyze the allocatee pool
to determine whether the two Non-Metropolitan
[[Page 73984]]
proportionality objectives have been met.
The Fund will first examine the ``preliminary'' awards and
allocatees to determine whether the percentage of allocatees that are
Rural CDEs is, at a minimum, equal to the percentage of applicants in
the Phase 2 review pool that are Rural CDEs. If this objective is not
achieved, the Fund will provide awards to additional Rural CDEs from
the Phase 2 pool, in descending order of their Final Rank Score, until
the appropriate percentage balance is achieved. In order to accommodate
the additional allocatees within the $3.5 billion allocation
limitations, a formula reduction will be applied uniformly to the
allocation amount for all allocatees in the pool.
The Fund will then ensure that the pool of allocatees will, in the
aggregate, invest at least 20 percent of their QLICIs (as measured by
dollar amount) in Non-Metropolitan counties. The Fund will first apply
the ``minimum'' percentage of QLICIs that allocatees indicated in their
applications would be targeted to Non-Metropolitan areas to the total
allocation award amount of each allocatee (less whatever percentage the
allocatee indicated would be retained for non-QLICI activities), and
total these figures for all allocatees. If this aggregate total is
greater than or equal to 20 percent of the QLICIs to be made by the
allocatees, then the pool is considered balanced and the Fund will
proceed with the allocation process. If, however, the aggregate total
is less than 20 percent of the QLICIs to be made by the allocatees, the
Fund will consider requiring any or all of the Allocatees to direct up
to the ``maximum'' percentage of QLICIs that they indicated would be
targeted to Non-Metropolitan counties; taking into consideration their
track record and ability to deploy dollars in Non-Metropolitan
counties.
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 March 3, 2008. The Fund will not
respond to reporting or compliance phone calls or e-mail inquiries that
are received after 5 p.m. ET on March 3, 2008 until after the funding
application deadline of March 5, 2008.
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 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 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
[[Page 73985]]
materially affect the Fund's award decisions, the Fund will provide
information regarding the changes through the Fund's website.
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
previously executed assistance, allocation or award agreement(s), as of
the date of the Notice of Allocation or thereafter, 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 QEIs 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 QEIs 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 QEIs 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 QEIs
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 2006 or
2007 fiscal year,
[[Page 73986]]
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 QEIs 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 2006 or 2007 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 QEIs 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 are not 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 QEIs may be used, including the dollar amount
of QLICIs that must be invested in Non-Metropolitan counties; (iv) the
time period by which the applicant may obtain QEIs 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 the jurisdiction(s) in which it 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 QLICIs, 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 6103 so that the IRS may
determine, among other things, whether the Allocatee has used
substantially all of the proceeds of each QEI raised through its NMTC
Allocation to make QLICIs. 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 March 3, 2008. The Fund will not respond to
phone calls or e-mails concerning the application that are received
after 5 p.m. ET on March 3, 2008 until after the allocation application
deadline of March 5, 2008. 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 website 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 website 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
[[Page 73987]]
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 conduct multiple
information sessions around the country at locations to be announced as
well as an information session that will be produced in Washington, DC
and broadcast over the internet via webcasting. For further information
on these upcoming information sessions, 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: December 19, 2007.
Donna Gambrell,
Director, Community Development Financial Institutions Fund.
[FR Doc. E7-25145 Filed 12-27-07; 8:45 am]
BILLING CODE 4810-70-P