[Federal Register Volume 74, Number 147 (Monday, August 3, 2009)]
[Notices]
[Pages 38482-38484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18525]


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DEPARTMENT OF THE TREASURY


Notice and Request for Comments

AGENCY: Community Development Financial Institutions Fund.

ACTION: Notice and request for comments.

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SUMMARY: The U.S. Department of the Treasury, as part of its continuing 
effort to reduce paperwork and respondent burden, invites the general 
public and other Federal agencies to take this opportunity to comment 
on proposed and/or continuing information collections, as required by 
the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 
3506(c)(2)(A)). Currently, the Community Development Financial 
Institutions Fund (the Fund) is soliciting comments concerning the 
``New Markets Tax Credit (NMTC) Program--Allocation Application'' 
(hereafter, the Application).

DATES: Written comments must be received on or before October 2, 2009 
to be assured of consideration.

ADDRESSES: Direct all comments to Matthew Josephs, NMTC Program 
Manager, Community Development Financial Institutions Fund, U.S. 
Department of the Treasury, 601 13th Street, NW., Suite 200 South, 
Washington, DC 20005, by e-mail to [email protected], or by 
facsimile to (202) 622-7754. Please note this is not a toll free 
number.

FOR FURTHER INFORMATION CONTACT: The Application and the NMTC Program 
Notice of Allocation Availability (NOAA) for the FY 2009 allocation 
round (74 FR 4077, January 22, 2009) may be obtained from the NMTC 
Program page of the Fund's Web site at http://www.cdfifund.gov. 
Requests for additional information should be directed to Matthew 
Josephs, NMTC Program Manager, Community Development Financial 
Institutions Fund, U.S. Department of the Treasury, 601 13th Street, 
NW., Suite 200 South, Washington, DC 20005, by e-mail to 
[email protected], or by facsimile to (202) 622-7754. Please note 
this is not a toll free number.

SUPPLEMENTARY INFORMATION: 
    Title: New Markets Tax Credit (NMTC) Program--Allocation 
Application.
    OMB Number: 1559-0016.
    Abstract: Title I, subtitle C, section 121 of the Community Renewal 
Tax Relief Act of 2000 (the Act), as enacted in the Consolidated 
Appropriations Act, 2001 (Pub. L. 106-554, December 21, 2000), amended 
the Internal Revenue Code (IRC) by adding IRC Sec.  45D and created the 
NMTC Program. The Department of the Treasury, through the Fund, 
administers the NMTC Program, which provides 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. In order to receive the tax credit, taxpayers make 
Qualified Equity Investments (QEIs) in Community Development Entities 
(CDEs): substantially all of the QEI proceeds must in turn be used by 
the CDE to provide investments in businesses and real estate 
developments in low-income communities.
    The tax credit provided to the investor totals 39 percent of the 
amount of the investment and is claimed over a seven-year period. In 
each of the first three years, the investor receives a credit equal to 
five percent of the total amount paid for the stock or capital interest 
at the time of purchase. For the final four years, the value of the 
credit is six percent annually. Investors may not redeem their 
investments in CDEs prior to the conclusion of the seven-year period 
without forfeiting any credit amounts they have received.
    The Fund is responsible for certifying organizations as CDEs, and 
administering the competitive allocation of tax credit authority to 
CDEs, which it does through annual allocation rounds. As part of the 
award selection process, all CDEs are required to prepare and submit 
the Application, which includes four key sections (Business Strategy; 
Community Impact; Management Capacity; and Capitalization Strategy). 
During the first phase of the review process, each Application is rated 
and scored independently by three different readers.
    In scoring each Application, reviewers rate each of the four 
evaluation sections as follows: Weak (0-5 points); Limited (6-10 
points); Average (11-15 points); Good (16-20 points); and Excellent 
(21-25 points). Applications can be awarded up to ten additional 
``priority'' points for demonstrating a track record of serving 
disadvantaged business and communities and/or for committing to make 
investments in projects owned by unrelated parties. If one or more of 
the three readers provides an anomalous score, and it is determined 
that such an anomaly would affect the outcome of the final awardee 
pool, then a fourth reviewer will score the Application, and the 
anomalous score would likely be dropped.

[[Page 38483]]

    Once all of the scores have been finalized, including anomaly score 
adjustments, those Applications that meet minimum aggregate scoring 
thresholds in each of the four major review sections (as well as a 
minimum overall scoring threshold) are eligible to be considered for an 
allocation. They are reviewed by an internal Fund panel, with a Lead 
Panelist making an award recommendation to a Panel Manager, and the 
Panel Manager making an award recommendation to the Selecting Official. 
If the Selecting Official's award recommendation varies significantly 
from the recommendation of the Panel Manager, then a Reviewing Official 
makes the final award determination. Awards are made, in descending 
order of the final rank score, until the available allocation authority 
for a given round is fully expended.
    Current Actions: Preparing for the upcoming FY 2010 NMTC Program 
allocation round.
    Type of Review: Extension.
    Affected Public: CDEs seeking NMTC Program allocation authority.
    Estimated Number of Respondents: 249.
    Estimated Annual Time per Respondent: 200 hours.
    Estimated Total Annual Burden Hours: 49,800 hours.
    Requests for Comments: Comments submitted in response to this 
notice will be summarized and/or included in the request for Office of 
Management and Budget approval. All comments will become a matter of 
public record and may be published on the Fund Web site at http://www.cdfifund.gov. Comments are invited on: (a) Whether the collection 
of information is necessary for the proper performance of the functions 
of the agency, including whether the information shall have practical 
utility; (b) the accuracy of the agency's estimate of the burden of the 
collection of information; (c) ways to enhance the quality, utility, 
and clarity of the information to be collected; (d) ways to minimize 
the burden of the collection of information on respondents, including 
through the use of technology; and (e) estimates of capital or start-up 
costs and costs of operation, maintenance, and purchase of services 
required to provide information.
    The Fund specifically requests comments concerning the Application, 
Application review process, and the following questions:
    1. Is the information that is currently collected by the 
Application necessary and appropriate for the Fund to consider for the 
purpose of making award decisions? Please consider each question and 
table in the Application. Are there questions or tables that are 
redundant and/or unnecessary? Should additional questions or tables be 
added to ensure collection of more relevant information?
    2. Are the thresholds contained in Question 17 of the Application 
appropriate, given current economic conditions? If not, what should the 
criteria include? Should the Fund provide a range of flexible product 
commitments based on a discount of interest rates below market as 
defined by basis point reductions (or other product flexibilities) or 
continue to present commitment options in percentage terms?
    3. A CDE is entitled to earn five ``priority points'' for 
committing to invest substantially all of its QEI proceeds in 
businesses in which persons unrelated to the CDE hold the majority 
equity interest (within the meaning of I.R.C. section 267(b) or 
707(b)(1)). With respect to the timing of this test, the CDFI Fund has 
determined that it is to be applied after the initial investment is 
made, and for the life of the seven-year compliance period (though an 
exception is permitted if events unforeseen at the time of the initial 
investment cause the CDE to have to subsequently take a controlling 
interest in the business). Is it appropriate that this test is applied 
after the investment is made, or should the CDFI consider applying this 
test before the investment is made? If the test is to be applied before 
the investment is made, then how should the Fund treat circumstances 
whereby the receipt of the QEI and the investment in the business is 
essentially a simultaneous transaction, particularly when the CDE may 
not have any owners identified prior to the QEI closing?
    4. The Application currently collects outcome information on the 
applicant's historic community impacts and projected economic 
development impacts in Table C1 and Table C2, respectively, and 
collects information on projected community development impacts in 
Question 30. Are there changes that should be made in the way projected 
economic development is currently measured? Are there other outcomes/
impacts for which the Fund should be collecting information to ensure 
effective use of the NMTC? Should the Fund have a greater focus on 
community development outcomes/impacts? Alternatively, should the Fund 
focus exclusively on economic development outcomes/impacts?
    5. Do Question 56 and Table F1 of the Application capture all 
sources of compensation and profits that the applicant and its 
affiliates receive in connection with NMTC transactions? How can 
collection of this information be improved? How should the Fund use 
this information? For example, should the Fund make the applicant's 
stated fees a specific condition of the Allocation Agreement, and 
should the Fund set limits on fees in the Allocation Agreement?
    6. In any given Application round, the Fund requires applicants 
that have received awards in previous rounds to demonstrate that they 
have been able to raise minimum threshold amounts of QEIs from their 
prior awards (see the 2009 NOAA for the current minimum threshold 
requirements). Are these current minimum threshold requirements 
sufficient? Should the Fund consider using different measurements, such 
as the amount of QEIs that have been deployed as investments in low-
income communities?
    7. The Fund generally caps award amounts to any one organization in 
a given round. In the 2009 Application round, this cap was set at $125 
million. Is this an appropriate amount? Should the Fund consider 
raising the cap significantly (e.g., to $250 million), and prohibit a 
CDE that receives such a large allocation award from applying again for 
an established period of time?
    8. In April 2009, the Government Accountability Office released a 
report titled: ``New Markets Tax Credit: Minority Entities Are Less 
Successful in Obtaining Awards than Non-Minority Entities'' (GAO-09-
536). Are there actions that the Fund should take in order to increase 
the number of minority CDE applicants and allocatees?
    9. Are there changes that can be made to the application process or 
elsewhere, that will increase the amount of Qualified Low-Income 
Community Investments that support activities that have not 
traditionally received large scale financing from NMTC investment 
proceeds (e.g., loans and investments for small business operations; 
loans to and investments in other CDEs, including CDFIs; purchase of 
loans from other CDEs; etc.)?
    10. Currently, the Fund uses economic distress factors from the 
most recent decennial census to qualify eligible census tracts and to 
verify, when applicable, that awardees are serving ``severely'' 
distressed communities. Are there other public sources of data on 
economic indicators (e.g., American Community Survey three- and five-
year estimates for poverty rate, area median income, and unemployment 
rate) that are updated

[[Page 38484]]

more frequently and readily available that the Fund should accept?

    Authority:  26 U.S.C. 45D; 31 U.S.C. 321; 26 CFR 1.45D-1.

    Dated: July 28, 2009.
Donna J. Gambrell,
Director, Community Development Financial Institutions Fund.
[FR Doc. E9-18525 Filed 7-31-09; 8:45 am]
BILLING CODE 4810-70-P