[Federal Register Volume 84, Number 173 (Friday, September 6, 2019)]
[Notices]
[Pages 47060-47069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19203]
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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 Calendar Year (CY) 2019 Allocation
Round of the New Markets Tax Credit (NMTC) Program
Announcement Type: Announcement of NMTC Allocation availability.
DATES: Electronic applications must be received by 5:00 p.m. ET on
October 28, 2019. Applications sent by mail, facsimile, or other form
will not be accepted. Please note the Community Development Financial
Institutions Fund (CDFI Fund) will only accept applications and
attachments (e.g., the Controlling Entity's representative signature
page, investor letters, and organizational charts) in electronic form
(see Section IV.C of this NOAA for more details). Applications must
meet all eligibility and other requirements and deadlines, as
applicable, set forth in this NOAA. Any Applicant that is not yet
certified as a Community Development Entity (CDE) must submit an
application for CDE certification through the CDFI Fund's Awards
Management Information System (AMIS) on or before 5:00 p.m. ET on
September 23, 2019 (see Section III.A.1 of this NOAA for more details
on CDE certification).
Executive Summary: This NOAA is issued in connection with the CY
2019 allocation round (Allocation Round) of the New Markets Tax Credit
Program (NMTC Program), as authorized by Title I, subtitle C, section
121 of the Community Renewal Tax Relief Act of 2000 (Pub. L. 106-554)
as amended. (26 U.S.C. 45D). Through the NMTC Program, the CDFI 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 CDFI Fund announces the
availability of $3.5 billion of NMTC Allocation authority in this
Allocation Round.
In this NOAA, the CDFI Fund specifically addresses how a CDE 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 from the CY 2018 allocation round:
1. Prior QEI Issuance Requirements: Prior-year NMTC Allocatees will
be subject to minimum thresholds for Qualified Equity Investment (QEI)
issuance and closing of Qualified Low Income Community Investments
(QLICIs) with respect to their prior-year allocations. These thresholds
and deadlines have been revised in comparison to the CY 2018 NOAA. See
Section III.3 of this NOAA for additional details.
B. Program guidance and regulations: This NOAA describes
application and Allocation requirements for this Allocation Round of
the NMTC Program and should be read in conjunction with: (i) Guidance
published by the CDFI Fund on how an entity may apply to become
certified as a CDE (66 FR 65806, December 20, 2001); (ii) the final
NMTC Regulations issued by the Internal Revenue Service (the IRS) (26
CFR 1.45D-1, published on December 28, 2004), as amended and related
guidance, notices and other publications; and (iii) the application and
related materials for this Allocation Round. All such materials may be
found on the CDFI Fund's website at https://www.cdfifund.gov. The CDFI
Fund requires Applicants to review these documents. Capitalized terms
used, but not defined, in this NOAA have the respective meanings
assigned to them in the NMTC Program Allocation Application, Internal
Revenue Code (IRC) Sec. 45D or the IRS NMTC regulations. In the event
of any inconsistency between this NOAA, the Allocation Application, and
guidance issued by the CDFI Fund thereto, IRC Sec. 45D or the IRS NMTC
Regulations, the provisions of IRC Sec. 45D and the IRS NMTC
Regulations shall govern.
II. Allocation Information
A. Allocation amounts: Pursuant to the Protecting Americans from
Tax Hikes (PATH) Act of 2015, the CDFI Fund expects that it may
allocate to CDEs the authority to issue to their investors the
aggregate amount of $3.5 billion in equity as to which NMTCs
[[Page 47061]]
may be claimed, as permitted under IRC Sec. 45D(f)(1)(D). Pursuant to
this NOAA, the CDFI Fund anticipates that it will issue up to $100
million in tax credit investment authority per Allocatee. The CDFI
Fund, in its sole discretion, reserves the right to allocate amounts in
excess of or less than the anticipated maximum allocation amount should
the CDFI Fund deem it appropriate. The CDFI Fund reserves the right to
allocate NMTC authority to any, all, or none of the entities that
submit applications in response to this NOAA, and in any amounts it
deems appropriate.
B. Type of award: NMTC Program awards are made in the form of
allocations of tax credit investment authority.
C. Allocation Agreement: Each Allocatee must sign an Allocation
Agreement, which must be countersigned by the CDFI Fund, before the
NMTC Allocation is effective. The Allocation Agreement contains the
terms and conditions of the NMTC Allocation. For further information,
see Section VI of this NOAA.
III. Eligibility
A. Eligible Applicants: IRC Sec. 45D specifies certain eligibility
requirements that each Applicant must meet to be eligible to apply for
an allocation of NMTCs. The following sets forth additional detail and
certain additional dates that relate to the submission of applications
under this NOAA for the available NMTC Allocation authority.
The CDFI Fund will consider an Affiliate to be any entity that
meets the definition of Affiliate as defined in the NMTC Allocation
Application materials, or any entity otherwise identified as an
Affiliate by the Applicant in its NMTC Allocation Application
materials.
1. CDE certification: For purposes of this NOAA, the CDFI Fund will
not consider an application for an allocation of NMTCs unless: (a) The
Applicant is certified as a CDE at the time the CDFI Fund receives its
NMTC Program Allocation Application; or (b) the Applicant submits an
application for certification as a CDE through the AMIS on or before
5:00 p.m. ET on September 23, 2019. Applicants for CDE certification
may obtain information regarding CDE certification and the CDE
certification application process in AMIS on the CDFI Fund's website at
https://www.cdfifund.gov/programs-training/certification/cde/Pages/default.aspx. Applications for CDE certification must be submitted in
AMIS. Paper versions of the CDE certification application will not be
accepted.
The CDFI Fund will not provide NMTC allocation authority to
Applicants that are not certified as CDEs or to entities that are
certified as Subsidiary CDEs.
If an Applicant that has already been certified as a CDE wishes to
change its designated CDE Service Area for this allocation round, it
must submit its request for such change to the CDFI Fund, and the
request must be received by the CDFI Fund by 5:00 p.m. ET September 23,
2019. A request to change a CDE's Service Area must be submitted
through the AMIS as a Service Request. Such requests will need to
include, at a minimum, the applicable CDE control number, the revised
service area designation, and updated accountability information that
demonstrates that the CDE has the required representation from Low-
Income Communities in the revised Service Area.
2. As a condition of eligibility for this Allocation Round, the
Applicant will not be permitted to use the proceeds of Qualified Equity
Investments (QEIs) to make Qualified Low-Income Community Investments
(QLICIs) in Qualified Active Low-Income Community Businesses (QALICBs)
where QLICI proceeds are used, in whole or in part, to repay or
refinance a debt or equity provider whose capital was used to fund the
QEI, or are used to repay or refinance any Affiliate of such a debt or
equity provider, except where: (i) The QLICI proceeds are used to repay
or refinance documented reasonable expenditures that are directly
attributable to the qualified business of the QALICB, and such
reasonable expenditures were incurred no more than 24 months prior to
the QLICI closing date; or (ii) no more than five percent of the total
QLICI proceeds from the QEI are used to repay or refinance documented
reasonable expenditures that are directly attributable to the qualified
business of the QALICB. Refinance includes transferring cash or
property, directly or indirectly, to the debt or equity provider or an
Affiliate of the debt or equity provider.
3. Prior award recipients or Allocatees: Applicants must be aware
that success in a prior application or allocation round of any of the
CDFI Fund's programs is not indicative of success under this NOAA.
Prior award recipients of any CDFI Fund program are eligible to apply
under this NOAA, except as follows:
a. Prior Allocatees and Qualified Equity Investment (QEI) issuance
and Qualified Low Income Community Investment (QLICI) requirements: The
following describes the QEI issuance and QLICI requirements applicable
to prior Allocatees.
An Allocatee in the CY 2013 allocation round of the NMTC Program is
not eligible to receive an NMTC Allocation pursuant to this NOAA unless
the Allocatee is able to affirmatively demonstrate that, as of 11:59
p.m. ET on January 31, 2020, it has finalized 100 percent of its QEIs
under that allocation and used at least the percentage of those QEIs
designated Schedule 1, section 3.2(j) of its CY 2013 NMTC Allocation
Agreement to make QLICIs.
An Allocatee in the CY 2014 allocation round of the NMTC Program is
not eligible to receive a NMTC allocation pursuant to this NOAA unless
the Allocatee is able to affirmatively demonstrate that, as of 11:59
p.m. ET on January 31, 2020, it has finalized 90 percent of its QEIs
under that allocation and used at least the percentage of those QEIs
designated in Schedule 1, section 3.2(j) of its CY 2014 round NMTC
Allocation Agreement to make QLICIs.
An Allocatee in the CY 2015-16 combined allocation round of the
NMTC Program is not eligible to receive a NMTC Allocation pursuant to
this NOAA unless the Allocatee is able to affirmatively demonstrate
that, as of 11:59 p.m. ET on January 31, 2020, it has finalized at
least 80 percent of its QEIs under that allocation and used at least
the percentage of those QEIs designated in Schedule 1, section 3.2(j)
of its CY 2015-16 round NMTC Allocation Agreement to make QLICIs.
An Allocatee (with the exception of a Rural CDE Allocatee) in the
CY 2017 allocation round of the NMTC Program is not eligible to receive
a NMTC Allocation pursuant to this NOAA unless the Allocatee is able to
affirmatively demonstrate that, as of 11:59 p.m. ET on January 31,
2020, it has finalized at least 50 percent of its QEIs under that
allocation and used at least the percentage of those QEIs designated in
Schedule 1, section 3.2(j) of its CY 2017 round NMTC Allocation
Agreement to make QLICIs.
A prior Rural CDE Allocatee (as indicated in its CY 2017 Allocation
Agreement) awarded in the CY 2017 allocation 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 January 31, 2020, it has
finalized at least 30 percent of its QEIs under that allocation and
used at least the percentage of those QEIs designated in Schedule 1,
section 3.2(j) of its CY 2017 round NMTC Allocation Agreement to make
QLICIs.
[[Page 47062]]
An Allocatee (with the exception of a Rural CDE Allocatee) in the
CY 2018 allocation round of the NMTC Program is not eligible to receive
a NMTC Allocation pursuant to this NOAA unless the Allocatee is able to
affirmatively demonstrate that, as of 11:59 p.m. ET on January 31,
2020, it has finalized at least 30 percent of its QEIs under that
allocation and used at least the percentage of those QEIs designated in
Schedule 1, section 3.2(j) of its CY 2018 round NMTC Allocation
Agreement to make QLICIs. A Rural CDE Allocatee (as indicated in its
CY2018 Allocation Agreement) awarded in the CY 2018 Round is not
required to meet the above QEI issuance or QLICI thresholds with regard
to its CY 2018 NMTC Allocation award.
In addition to the requirements described above, a CDE is not
eligible to receive a NMTC Allocation pursuant to this NOAA if an
Affiliate of the Applicant is a prior Allocatee and has not met the
minimum QEIs issuance and QLICI thresholds as set forth above for
Allocatees in the prior allocation rounds of the NMTC Program.
For purposes of this section of the NOAA, the CDFI Fund will only
recognize as ``finalized'' those QEIs that have been properly reported
in AMIS Allocation Tracking System for Qualified Equity Investments
(AQEIs) by the deadlines specified above. Allocatees and their
Subsidiary Allocatees, if any, are advised to access AMIS to record
each QEI that they issue to an investor in exchange for cash.
Instructions on recording a QEI in AMIS is available at https://amis.cdfifund.gov/s/Training. Applicants may be required, upon
notification from the CDFI Fund, to submit adequate documentation to
substantiate the required QEI issuance and QLICI closings. To the
extent necessary, the CDFI Fund will request additional QLICI data from
Applicants during the application review process in order to determine
whether the above thresholds for closed QLICIs have been met by the
deadlines specified.
Any prior Allocatee that requires any action by the CDFI Fund
(i.e., 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 a Certification application for
subsidiary CDEs by 5:00 p.m. ET on October 7, 2019 and Allocation
Agreement amendment requests by no later than 5:00 p.m. ET on December
30, 2019 in order to guarantee that the CDFI Fund completes all
necessary approvals prior to 5:00 p.m. ET on January 31, 2020.
Applicants for CDE certification, including for Subsidiary CDE
certification, may obtain information regarding CDE certification and
the CDE certification application process in AMIS on the CDFI Fund's
website at https://www.cdfifund.gov. Applications for CDE certification
must be submitted in AMIS. Paper versions of the CDE certification
application will not be accepted.
b. Pending determination of noncompliance or default: If an
Applicant is a prior award recipient or Allocatee under any CDFI Fund
program and if: (i) It has submitted reports to the CDFI Fund that
demonstrate potential noncompliance with a previous assistance or award
agreement or default under a previous Allocation Agreement; and (ii)
the CDFI Fund has yet to make a final determination as to whether the
entity is in noncompliance with its previous assistance or award
agreement or in default of its previous Allocation Agreement, the CDFI
Fund will consider the Applicant's application under this NOAA pending
final determination of whether the entity is in noncompliance or
default, in the sole determination of the CDFI Fund. Further, if an
Affiliate of the Applicant is a prior CDFI Fund award recipient or
Allocatee and if such entity: (i) Has submitted reports to the CDFI
Fund that demonstrate potential noncompliance with a previous
assistance or award agreement or default under a previous Allocation
Agreement; and (ii) the CDFI Fund has yet to make a final determination
as to whether the entity is in noncompliance with its previous
assistance or award agreement, or in default of its previous Allocation
Agreement, the CDFI Fund will consider the Applicant's application
under this NOAA pending final determination of whether the entity is in
noncompliance or default, in the sole determination of the CDFI Fund.
c. Noncompliance or default status: The CDFI Fund will not consider
an application submitted by an Applicant that is a prior CDFI Fund
award recipient or Allocatee under any CDFI Fund program if, as of the
application deadline of this NOAA: (i) The CDFI Fund has made a final
determination that such Applicant is noncompliant with a previously
executed assistance or award agreement, or in default of a previously
executed Allocation Agreement; and (ii) the CDFI Fund has provided
written notification of such final determination to the Applicant; and
(iii) the default occurs during the time period beginning 12 months
prior to the application deadline and ending with the execution of the
CY 2019 Allocation Agreement. Further, the CDFI Fund will not consider
an application submitted by an Applicant with an Affiliate that is a
prior award recipient or Allocatee under any CDFI Fund Program if, as
of the application deadline of this NOAA: (i) The CDFI Fund has made a
final determination that such Affiliate is noncompliant with a
previously executed assistance or award agreement, or in default of a
previously executed Allocation Agreement; (ii) the CDFI Fund has
provided written notification of such final determination to the
Affiliate; and (iii) the default occurs during the time period
beginning 12 months prior to the application deadline and ending with
the execution of the CY 2019 Allocation Agreement;
d. Contact the CDFI Fund: Accordingly, Applicants that are prior
award recipients and/or Allocatees under any other CDFI Fund program
are advised to comply with the requirements specified in assistance,
allocation and/or award agreement(s). All outstanding reports and
compliance questions should be directed to the Office of Certification,
Compliance Monitoring, and Evaluation through a Service Request
initiated in AMIS. Requests submitted less than thirty calendar days
prior to the application deadline may not receive a response before the
application deadline.
The CDFI Fund will respond to Applicants' reporting, compliance or
disbursement questions Mondays through Fridays, between the hours of
9:00 a.m. and 5:00 p.m. ET, starting the date of publication of this
NOAA through October 24, 2019 (two business days before the application
deadline). The CDFI Fund will not respond to Applicants' reporting,
compliance, CDE certification, or disbursement phone calls or email
inquiries that are received after 5:00 p.m. ET on October 24, 2019,
until after the funding application deadline of October 28, 2019.
4. Failure to accurately respond to a question in the Assurances
and Certifications section of the application, submit the required
written explanation, or provide any updates: In its sole discretion,
the CDFI Fund may deem the Applicant's application ineligible, if the
CDFI Fund determines that the Applicant inaccurately responded to a
question and failed to submit a required written explanation,
accurately responded a question yet failed to submit a required written
explanation, or failed to notify the CDFI Fund of any changes to the
information submitted between the date of application and the date the
Allocatee executes the Allocation Agreement, with respect to the
Assurances and Certifications. In making this determination, the CDFI
[[Page 47063]]
Fund will take into consideration, among other factors, the materiality
of the question, the substance of any supplemental responses provided,
and whether the information in the Applicant's supplemental responses
would have a material adverse effect on the Applicant, its financial
condition or its ability to perform under an Allocation Agreement,
should the Applicant receive an allocation.
5. Entities that propose to transfer NMTCs to Subsidiary CDEs: Both
for-profit and non-profit CDEs may apply for NMTC Allocation authority,
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 CDFI Fund, that: (i) It controls one or more
Subsidiary CDEs that are for-profit entities; and (ii) it intends to
transfer the full amount of any NMTC Allocation it receives to said
Subsidiary CDEs.
An Applicant wishing to transfer all or a portion of its NMTC
Allocation to a Subsidiary CDE is not required to create the Subsidiary
prior to submitting a NMTC Allocation Application to the CDFI Fund.
However, the Subsidiary entities must be certified as CDEs by the CDFI
Fund, and enjoined as parties to the Allocation Agreement at closing or
by amendment to the Allocation Agreement after closing.
The CDFI Fund requires a non-profit Applicant to submit a CDE
Certification application to the CDFI Fund on behalf of at least one
for-profit Subsidiary within 60 days after the non-profit Applicant
receives notification from the CDFI Fund of its allocation award, as
such Subsidiary must be certified as a CDE prior to entering into an
Allocation Agreement with the CDFI Fund. The CDFI Fund reserves the
right to rescind the award if a non-profit Applicant that does not
already have a certified for-profit Subsidiary CDE fails to submit a
certification application for one or more for-profit Subsidiaries
within 60 days of the date it receives notification from the CDFI Fund
of its allocation award.
6. Entities that submit applications together with Affiliates;
applications from common enterprises:
a. As part of the Allocation Application review process, the CDFI
Fund will evaluate whether Applicants are Affiliates, as such term is
defined in the Allocation Application. If an Applicant and its
Affiliate(s) wish to submit Allocation Applications, they must do so
collectively, in one application; an Applicant and its Affiliate(s) may
not submit separate Allocation Applications. If Affiliated entities
submit multiple applications, the CDFI Fund will reject all such
applications received, except for those State-owned or State-controlled
governmental Affiliated entities. In the case of State-owned or State-
controlled governmental entities, the CDFI Fund may accept applications
submitted by different government bodies within the same State, but
only to the extent the CDFI Fund determines that the business
strategies and/or activities described in such applications, submitted
by separate entities, are distinctly dissimilar and/or are operated
and/or managed by distinctly dissimilar personnel, including staff,
board members and identified consultants. In such cases, the CDFI Fund
reserves the right to limit award amounts to such entities to ensure
that the entities do not collectively receive more than the $100
million cap. If the CDFI Fund determines that the applications
submitted by different government bodies in the same State are not
distinctly dissimilar and/or operated and/or managed by distinctly
dissimilar personnel, it will reject all such applications.
b. For purposes of this NOAA, the CDFI Fund will also evaluate
whether each Applicant is operated or managed as a ``common
enterprise'' with another Applicant in this Allocation Round using the
following indicia, among others: (i) Whether different Applicants have
the same individual(s), including the Authorized Representative, staff,
board members and/or consultants, involved in day-to-day management,
operations and/or investment responsibilities; (ii) whether the
Applicants have business strategies and/or proposed activities that are
so similar or so closely related that, in fact or effect, they may be
viewed as a single entity; and/or (iii) whether the applications
submitted by separate Applicants contain significant narrative, textual
or other similarities such that they may, in fact or effect, be viewed
as substantially identical applications. In such cases, the CDFI Fund
will reject all applications received from such entities.
c. Furthermore, an Applicant that receives an allocation in this
Allocation Round (or its Subsidiary Allocatee) 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 Allocatee) 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 CDFI Fund's website at https://www.cdfifund.gov for more
details).
7. Entities created as a series of funds: An Applicant whose
business structure consists of an entity with a series of funds must
apply for CDE certification for each fund. 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 must submit a CDE Certification application for
the Applicant and each fund it would like to participate in the NMTC
Program, 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 fund is a certified CDE that is a Subsidiary of the
Applicant, enjoined to the Allocation Agreement as a Subsidiary
Allocatee.
8. Entities that are Bank Enterprise Award Program (BEA Program)
award recipients: 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 CDFI Fund's
Awards Management Information System (AMIS). Following the publication
of this NOAA, the CDFI Fund will make the electronic Allocation
Application available on its website at https://www.cdfifund.gov.
B. Application content requirements: Detailed application content
[[Page 47064]]
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, except, if necessary and at the request of the CDFI
Fund. Electronic applications must be submitted solely by using the
format made available via AMIS. Additional information, including
instructions relating to the submission of supporting information
(e.g., the Controlling Entity's representative signature page,
Assurances and Certifications supporting documents, investor letters,
organizational charts), is set forth in further detail in the CY 2019
NMTC Application--AMIS Navigation Guide for this Allocation Round. An
application must include a valid and current Employer Identification
Number (EIN) issued by the Internal Revenue Service (IRS) and assigned
to the Applicant and, if applicable, its Controlling Entity. Electronic
applications without a valid EIN are incomplete and cannot be
transmitted to the CDFI Fund. For more information on obtaining an EIN,
please contact the IRS at (800) 829-4933 or www.irs.gov. Do not include
any personal Social Security Numbers as part of the application.
An Applicant may not submit more than one application in response
to this NOAA. In addition, as stated in Section III.A.6 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 except as outlined in Section III.A.6
above. 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 via AMIS, the CDFI Fund's
Award Management Information System. Applications and required
attachments sent by mail, facsimile, or email 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 CDFI Fund in the implementation of electronic reporting
requirements.
Electronic applications must be submitted solely by using the CDFI
Fund's website and must be sent in accordance with the submission
instructions provided in the CY 2019 NMTC Application--AMIS Navigation
Guide for this Allocation Rounds. AMIS 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 supporting information (e.g., the Controlling
Entity's representative signature page, Assurances and Certifications
supporting documents, investor letters, and organizational charts) is
set forth in further detail in the CY 2019 NMTC Application--AMIS
Navigation Guide for this Allocation Round.
D. Application submission dates and times:
1. Application deadlines:
a. Electronic applications must be received by 5:00 p.m. ET on
October 28, 2019. Electronic applications cannot be transmitted or
received after 5:00 p.m. ET on October 28, 2019. In addition,
Applicants must electronically submit supporting information (e.g., the
Controlling Entity's representative signature page, investor letters,
and organizational charts). The Controlling Entity's representative
signature page, Assurances and Certifications supporting documents,
investor letters, and organizational charts must be submitted on or
before 5:00 p.m. ET on October 28, 2019. For details, see the
instructions provided in the CY 2019 NMTC Application--AMIS Navigation
Guide for this Allocation Round on the CDFI Fund's website.
Applications and other required documents received after this date
and time will be rejected. Please note that the document submission
deadlines in this NOAA and/or the Allocation Application are strictly
enforced.
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 December 28, 2004 and as amended) and related guidance.
Please see Section I, above, for the Programmatic Changes of this NOAA.
G. Paperwork Reduction: Under the Paperwork Reduction Act (44
U.S.C. chapter 35), an agency may not conduct or sponsor a collection
of information, and an individual is not required to respond to a
collection of information, unless it displays a valid OMB control
number. Pursuant to the Paperwork Reduction Act, the application has
been assigned the following control number: 1559-0016.
V. Application Review Information
A. Review and selection process: All Allocation Applications will
be reviewed for eligibility and completeness. 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 CDFI 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.
In Phase 1, two reviewers will evaluate and score the Business
Strategy and Community Outcomes sections of each application. An
Applicant must exceed a minimum overall aggregate base score threshold
and exceed a minimum aggregate section score threshold in each scored
section in order to advance from the Phase 1 to the Phase 2 part of the
substantive review process. In Phase 2, the CDFI Fund will rank
Applicants and determine the dollar amount of allocation authority
awarded in accordance with the procedures set forth below.
B. Criteria:
1. Business Strategy (25-point maximum):
a. When assessing an Applicant's business strategy, reviewers will
consider, among other things: The Applicant's products, services and
investment criteria; a pipeline of potential business loans or
investments consistent with an Applicant's request for an NMTC
Allocation; 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 extent to
which the Applicant intends to make QLICIs in one or more businesses in
which persons unrelated to the entity hold a majority equity interest;
and the extent to which Applicants that otherwise have notable
relationships with the Qualified Active Low Income Community Businesses
(QALICBs) financed will create benefits (beyond those created in the
normal course of a NMTC transaction) to Low-Income Communities.
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 are flexible or non-traditional in form
and on better terms than available in the marketplace. An Applicant
will also score well to the
[[Page 47065]]
extent that, among other things: (i) It has identified a set of
clearly-defined potential borrowers or investees; (ii) it has a track
record of successfully deploying loans or equity investments and
providing services similar to those it intends to provide with the
proceeds of QEIs; (iii) its projected dollar volume of NMTC deployment
is supported by its track record of deployment; (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. If the Applicant (or its Affiliates) have notable
relationships with QALICBs, the Applicant will generally score well if
it quantifies how such relationships will create benefits (i.e., cost
savings, lower fees) for QALICBs, unaffiliated end-users such as tenant
businesses, or residents of Low-Income Communities.
b. Priority Points: In addition, as provided by IRC Sec.
45D(f)(2), the CDFI Fund will ascribe additional points to entities
that meet one or both of the statutory priorities. First, the CDFI 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 CDFI Fund will
give five (5) additional points to any Applicant that intends to
satisfy the requirement of IRC Sec. 45D(b)(1)(B) by making QLICIs in
one or more businesses in which persons unrelated (within the meaning
of IRC Sec. 267(b) or IRC Sec. 707(b)(1)) to an Applicant (and the
Applicant's subsidiary CDEs, if the Subsidiary Allocatee makes the
QLICI) hold the majority equity interest. Applicants may earn points
for one or both statutory priorities. Thus, Applicants that meet the
requirements of both priority categories can receive up to a total of
ten (10) additional points. A record of having successfully provided
capital or technical assistance to disadvantaged businesses or
communities may be demonstrated either by the past actions of an
Applicant itself or by its Controlling Entity (e.g., where a new CDE is
established by a nonprofit corporation with a history of providing
assistance to disadvantaged communities). An Applicant that receives
additional points for intending to make investments in unrelated
businesses and is awarded a NMTC Allocation must meet the requirements
of IRC Sec. 45D(b)(1)(B) by investing substantially all of the
proceeds from its QEIs in unrelated businesses. The CDFI Fund will
include an Applicant's priority points when ranking Applicants during
Phase 2 of the review process, as described below.
2. Community Outcomes (25-point maximum): In assessing the
potential benefits to Low-Income Communities that may result from the
Applicant's proposed investments, reviewers will consider, among other
things, the degree to which the Applicant is likely to: (i) Achieve
significant and measurable community development outcomes in its Low-
Income Communities; (ii) invest in particularly economically distressed
markets: (iii) Engage with local communities regarding investments;
(iv) the level of involvement of community representatives in the
Governing Board and/or Advisory Board in approving investment criteria
or decisions; and (v) demonstrate a track record of investing in
businesses that spur additional private capital investment in Low-
Income Communities.
An Applicant will generally score well under this section to the
extent that, among other things: (a) It will generate clear and well
supported community development outcomes; (b) it has a track record of
producing quantitative and qualitative community outcomes that are
similar to those projected to be achieved with an NMTC Allocation; (c)
it is working in particularly economically distressed or otherwise
underserved communities; (d) its activities are part of a broader
community or economic development strategy; (e) it demonstrates a track
record of community engagement around past investment decisions; (f) it
ensures that an NMTC investment into a project or business is supported
by and will be beneficial to Low-Income Persons and residents of Low-
Income Communities (LICs); and (g) it is likely to engage in activities
that will spur additional private capital investment.
C. Phase 2 Evaluation.
1. Application Ranking and Anomaly Reviews: Using the numeric
scores from Phase 1, Applicants are ranked on the basis of each
Applicant's combined scores in the Business Strategy and Community
Outcomes sections of the application plus one half of the priority
points. If, in the case of a particular application, a reviewer's total
base score or section score(s) (in one or more of the two application
scored sections) varies significantly from the other reviewer's total
base scores or section scores for such application, the CDFI Fund may,
in its sole discretion, obtain the evaluation and numeric scoring of an
additional third reviewer to determine whether the anomalous score
should be replaced with the score of the additional third reviewer.
2. Late Reports: In the case of an Applicant or any Affiliates that
has previously received an award or Allocation from the CDFI Fund
through any CDFI Fund program, the CDFI Fund will deduct points from
the Applicant's ``Final Rank Score'' for the Applicant's (or its
Affiliate's) failure to meet any of the reporting deadlines set forth
in any assistance, award or Allocation Agreement(s), if the reporting
deadlines occurred during the period from June 28, 2018 to the
application deadline in this NOAA (October 28, 2019).
3. Prior Year Allocatees: In the case of Applicants (or their
Affiliates) that are prior year Allocatees, the CDFI Fund will review
the activities of the prior year Allocatee to determine whether the
entity has: (a) Effectively utilized its prior-year Allocations in a
manner generally consistent with the representations made in the
relevant Allocation Application (including, but not limited to, the
proposed product offerings, QALICB type, fees and markets served); (b)
issued QEIs and closed QLICIs in a timely manner; and (c) substantiated
a need for additional allocation authority. The CDFI Fund will use this
information in determining whether to reject or reduce the allocation
award amount of its NMTC Allocation Application.
The CDFI Fund will award allocations in the order of the ``Final
Rank Score,'' subject to Applicants meeting all other eligibility
requirements; provided, however, that the CDFI 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.
4. Management Capacity: In assessing an Applicant's management
capacity, CDFI Fund will consider, among other things, the current and
planned roles, as well as qualifications of the Applicant's (and
Controlling Entity's, if applicable): Principals, board members,
management team, and other essential staff or contractors, with
specific focus on: experience in providing loans, equity investments or
financial counseling and other services, including activities similar
to those described in the Applicant's business strategy; asset
management and risk management experience; experience with fulfilling
compliance requirements of other governmental programs, including other
tax credit programs; and the Applicant's (or its Controlling Entity's)
financial health. CDFI Fund evaluators will also consider the extent to
which an Applicant has protocols in place to
[[Page 47066]]
ensure ongoing compliance with NMTC Program requirements and the
Applicant's projected income and expenses related to managing an NMTC
Allocation.
An Applicant will be generally evaluated more favorably under this
section to the extent that its management team or other essential
personnel have experience in: (a) Providing loans, equity investments
or financial counseling and other services in Low-Income Communities,
particularly those likely to be served by the Applicant with the
proceeds of QEIs; (b) asset and risk management; and (c) fulfilling
government compliance requirements, particularly tax credit program
compliance. An Applicant will also be evaluated favorably to the extent
it demonstrates strong financial health and a high likelihood of
remaining a going-concern; it clearly explains levels of income and
expenses; has policies and systems in place to ensure portfolio
quality, ongoing compliance with NMTC Program requirements; and, if it
is a Federally-insured financial institution, has its most recent
Community Reinvestment Act (CRA) rating as ``outstanding.''
5. Capitalization Strategy: When assessing an Applicant's
capitalization strategy, CDFI Fund will consider, among other things:
The key personnel of the Applicant (or Controlling Entity) and their
track record of raising capital, particularly from for-profit
investors; the extent to which the Applicant has secured investments or
commitments to invest in NMTC (if applicable), or indications of
investor interest commensurate with its requested amount of tax credit
Allocations, or, if a prior Allocatee, the track record of the
Applicant or its Affiliates in raising Qualified Equity Investments in
the past five years; the Applicant's strategy for identifying
additional investors, if necessary, including the Applicant's (or its
Controlling Entity's) prior performance with raising equity from
investors, particularly for-profit investors; the distribution of the
economic benefits of the tax credit; and 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 Sec.
45D(b)(1)(B) and the IRS regulations.
An Applicant will be evaluated more favorably under this section to
the extent that: (a) It or its Controlling Entity demonstrate a track
record of raising investment capital; (b) it has secured investor
commitments, or has a reasonable strategy for obtaining such
commitments, or, if it or its Affiliates is a prior Allocatee with a
track record in the past five years of raising Qualified Equity
Investments and; (c) it generally demonstrates that the economic
benefits of the tax credit will be passed through to a QALICB; and (d)
it intends to invest the proceeds from the aggregate amount of its QEIs
at a level that exceeds the requirements of IRC Sec. 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 be evaluated more favorably to the extent that it will
offer products with more favorable rates or terms than those currently
offered by its investor(s) or Affiliated entities and/or will target
its activities to areas of greater economic distress than those
currently targeted by the investor or Affiliated entities.
D. Allocations serving Non-Metropolitan counties: As provided for
under Section 102(b) of the Tax Relief and Health Care Act of 2006
(Pub. L. 109-432), the CDFI Fund shall ensure that Non-Metropolitan
counties receive a proportional allocation of QEIs under the NMTC
Program. The CDFI Fund will endeavor to ensure that 20 percent of the
QLICIs to be made using QEI proceeds are invested in Non-Metropolitan
counties. In addition, the CDFI Fund will ensure that the proportion of
Allocatees that are Rural CDEs is, at a minimum, equal to the
proportion of Applicants in the highly qualified pool that are Rural
CDEs. A Rural CDE is one that has a track record of at least three
years of direct financing experience, has dedicated at least 50 percent
of its direct financing dollars to Non-Metropolitan counties over the
past five years, and has committed that at least 50 percent of its NMTC
financing dollars with this Allocation will be deployed in such areas.
Non-Metropolitan counties are counties not contained within a
Metropolitan Statistical Area, as such term is defined in OMB Bulletin
No. 10-02 (Update of Statistical Area Definitions and Guidance on Their
Uses) and applied using 2010 census tracts.
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 available
allocation authority is fulfilled. Once these ``preliminary'' award
amounts are determined, the CDFI Fund will then analyze the Allocatee
pool to determine whether the two Non-Metropolitan proportionality
objectives have been met.
The CDFI 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 highly qualified pool that are Rural CDEs. If this objective is not
achieved, the CDFI Fund will provide awards to additional Rural CDEs
from the highly qualified pool, in descending order of their Final Rank
Score, until the appropriate percentage balance is achieved. In order
to accommodate the additional Rural CDEs in the Allocatee pool within
the available Allocation limitations, a formula reduction may be
applied as uniformly as possible to the allocation amount for all
Allocatees in the pool that have not committed to investing a minimum
of 20 percent of their QLICIs in Non-Metropolitan counties.
The CDFI Fund will then determine whether 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 CDFI 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
CDFI Fund will proceed with the Allocation process. However, if the
aggregate total is less than 20 percent of the QLICIs to be made by the
Allocatees, the CDFI Fund will consider requiring any or all of the
Allocatees to direct up to the ``maximum'' percentage of QLICIs that
the Allocatees indicated would be targeted to Non-Metropolitan
counties, taking into consideration their track record and ability to
deploy dollars in Non-Metropolitan counties. If the CDFI Fund cannot
meet the goal of 20 percent of QLICIs in Non-Metropolitan counties by
requiring any or all Allocatees to commit up to the maximum percentage
of QLICIs that they indicated would be targeted to Non-Metropolitan
counties, the CDFI Fund may add additional highly qualified Rural CDEs
(in descending order of final rank score) to the Allocatee pool. In
order to accommodate any additional Allocatees within the allocation
limitations, a formula reduction will be applied as uniformly as
possible, to the allocation amount for all Allocatees in the pool
[[Page 47067]]
that have not committed to investing a minimum of 20 percent of their
QLICIs in Non-Metropolitan counties.
E. Questions: All outstanding reports or compliance questions
should be directed to the Office of Certification, Compliance
Monitoring, and Evaluation through the submission of a Service Request
in AMIS or by telephone at (202) 653-0423. The CDFI Fund will respond
to reporting or compliance questions Mondays through Fridays, between
the hours of 9:00 a.m. and 5:00 p.m. ET, starting the date of the
publication of this NOAA through October 24, 2019. The CDFI Fund will
not respond to reporting or compliance phone calls or email inquiries
that are received after 5:00 p.m. ET on October 24, 2019 until after
the funding application deadline of October 28, 2019.
F. Right of rejection: The CDFI Fund reserves the right to reject
any NMTC Allocation Application in the case of a prior CDFI Fund award
recipient, 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 CDFI Fund. The CDFI Fund reserves the
right to reject any NMTC Allocation Application in the case of a prior
CDFI 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 CDFI Fund. The CDFI Fund reserves the
right to reject any NMTC Allocation Application in the case of any
Applicant, if an Affiliate of the Applicant has failed to meet the
terms, conditions and other requirements of any prior or existing
assistance agreement, award agreement or Allocation Agreement with the
CDFI Fund.
The CDFI Fund reserves the right to reject or reduce the allocation
award amount of any NMTC Allocation Application in the case of a prior
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, QALICB type, fees and markets served) set forth in the
Allocation Application(s) related to such prior Allocation(s) or such
Applicant has been found by the IRS to have engaged in a transaction or
series of transactions designed to achieve a result that is
inconsistent with the purposes of IRC Sec. 45D. The CDFI Fund also
reserves the right to reject or reduce the allocation award amount of
any NMTC Allocation Application in the case of an Affiliate of the
Applicant that is a prior Allocatee and 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, QALICB type, fees and markets served) set forth in the
Allocation Application(s) related to such prior NMTC Allocation(s) or
has been found by the IRS to have engaged in a transaction or series of
transactions designed to achieve a result that is inconsistent with the
purposes of IRC Sec. 45D.
The CDFI Fund reserves the right to reject an NMTC Allocation
Application if information (including, but not limited to,
administrative errors or omission of information) comes to the
attention of the CDFI Fund that adversely affects an Applicant's
eligibility for an award, adversely affects the CDFI Fund's evaluation
or scoring of an application, adversely affects the CDFI Fund's prior
determinations of CDE certification, or indicates fraud or
mismanagement on the part of an Applicant, its Affiliate(s), or the
Controlling Entity, if such fraud or mismanagement by the Affiliate(s)
or Controlling Entity would hinder the Applicant's ability to perform
under the Allocation Agreement. If the CDFI Fund determines that any
portion of the application is incorrect in any material respect, the
CDFI Fund reserves the right, in its sole discretion, to reject the
application.
As a part of the substantive review process, the CDFI Fund may
permit the Allocation Recommendation Panel member(s) to request
information from Applicants for the sole purpose of obtaining,
clarifying or confirming application information or omission of
information. In no event shall such contact be construed to permit an
Applicant to change any element of its application. At this point in
the process, an Applicant may be required to submit additional
information about its application in order to assist the CDFI Fund with
its final evaluation process. If the Applicant (or the Controlling
Entity or any Affiliate) has previously been awarded an NMTC
Allocation, the CDFI Fund may also request information on the use of
those NMTC Allocations, to the extent that this information has not
already been reported to the CDFI Fund. Such requests must be responded
to within the time parameters set by the CDFI Fund. The selecting
official(s) will make a final allocation determination based on an
Applicant's file, including, without limitation, eligibility under
IRCSec. 45D, the reviewers' scores and the amount of NMTC Allocation
authority available. The CDFI Fund reserves the right to reject any
NMTC Allocation Application if additional information is obtained that,
after further due diligence and in the discretion of the CDFI Fund,
would hinder the Applicant's ability to effectively perform under the
Allocation Agreement.
In the case of Applicants (or the Controlling Entity, or
Affiliates) that are regulated or receive oversight by the Federal
government or a State agency (or comparable entity), the CDFI Fund may
request additional information from the Applicant regarding Assurances
and Certifications or other information about the ability of the
Applicant to effectively perform under the Allocation Agreement. The
Allocation Recommendation Panel or selecting official(s) reserve(s) the
right to consult with and take into consideration the views of the
appropriate Federal banking and other regulatory agencies. In the case
of Applicants (or Affiliates of Applicants) that are also Small
Business Investment Companies, Specialized Small Business Investment
Companies or New Markets Venture Capital Companies, the CDFI Fund
reserves the right to consult with and take into consideration the
views of the Small Business Administration. An Applicant that is or is
Affiliated with an insured depository institution will not be awarded
an allocation if it has a composite rating of ``5'' on its most recent
examination, performed in accordance with the Uniform Financial
Institutions Rating System.
Furthermore, the CDFI Fund will not award an NMTC Allocation to an
Applicant that is an insured depository institution or is an Affiliate
of an insured depository institution, if during the time period
beginning with the application deadline and ending with the execution
of the CY 2019 Allocation Agreement; the Applicant received any of the
following:
1. CRA assessment rating of below ``Satisfactory'' on its most
recent examination,
2. A going concern opinion on its most recent audit; or
3. A Prompt Corrective Action directive from its regulator.
The CDFI Fund reserves the right to conduct additional due
diligence on all Applicants, as determined reasonable and appropriate
by the CDFI Fund, in its sole discretion, related to the Applicant,
Affiliates, the Applicant's Controlling Entity and the officers,
directors, owners, partners and key employees of each. This includes
the right to consult with the IRS if the Applicant (or the Controlling
Entity, or Affiliates) has
[[Page 47068]]
previously been awarded an NMTC Allocation.
Each Applicant will be informed of the CDFI Fund's award decision
through an electronic notification whether selected for an allocation
or not selected for an allocation, which may be for reasons of
application incompleteness, ineligibility, or substantive issues.
Eligible Applicants that are not selected for an allocation based on
substantive issues will likely be given the opportunity to receive
feedback on their applications. This feedback will be provided in a
format and within a timeframe to be determined by the CDFI Fund, based
on available resources.
The CDFI Fund further reserves the right to change its eligibility
and evaluation criteria and procedures, if the CDFI Fund deems it
appropriate. If said changes materially affect the CDFI Fund's award
decisions, the CDFI Fund will provide information regarding the changes
through the CDFI Fund's website.
There is no right to appeal the CDFI Fund's NMTC Allocation
decisions. The CDFI Fund's NMTC Allocation decisions are final.
VI. Award Administration Information
A. Allocation Award Compliance
1. Failure to meet reporting requirements: If an Allocatee, or an
Affiliate of an Allocatee, is a prior CDFI Fund award recipient or
Allocatee under any CDFI 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 the CDFI Fund provides
notification of an NMTC Allocation award or thereafter, the CDFI Fund
reserves the right, in its sole discretion, to reject the application,
delay entering into an Allocation Agreement, and/or impose limitations
on an Allocatee's ability to issue QEIs to investors until said prior
award recipient or Allocatee is current on the reporting requirements
in the previously executed assistance, allocation, or award
agreement(s). Please note that the automated systems the CDFI Fund uses
for receipt of reports submitted electronically typically acknowledges
only a report's receipt; such an acknowledgment does not warrant that
the report received was complete and therefore met reporting
requirements.
2. Pending determination of noncompliance or default: If an
Allocatee is a prior award recipient or Allocatee under any CDFI Fund
program and if: (i) It has submitted reports to the CDFI Fund that
demonstrate potential noncompliance with a previous assistance or award
agreement or a potential default under an Allocation Agreement; and
(ii) the CDFI Fund has yet to make a final determination as to whether
the entity is noncompliant with a previous assistance or award
agreement or is in default under a previous Allocation Agreement, the
CDFI Fund reserves the right, in its sole discretion, to delay entering
into an Allocation Agreement and/or to impose limitations on the
Allocatee's ability to issue Qualified Equity Investments to investors,
pending final determination of whether the entity is in noncompliance
or default, and determination of remedies, if applicable, in the sole
determination of the CDFI Fund. Further, if an Affiliate of an
Allocatee is a prior CDFI Fund award recipient or Allocatee and if such
entity: (i) Has submitted reports to the CDFI Fund that demonstrate
potential noncompliance under a previous assistance or award agreement
or potential default under a previous Allocation Agreement; and (ii)
the CDFI Fund has yet to make a final determination as to whether the
entity is in noncompliance under its previous assistance or award
agreement, or in default of its previous Allocation Agreement, the CDFI
Fund reserves the right, in its sole discretion, to delay entering into
an Allocation Agreement and/or to impose limitations on the Allocatee's
ability to issue QEIs to investors, pending final determination of
whether the entity is in noncompliance or default, and determination of
remedies, if applicable, in the sole determination of the CDFI Fund. If
the prior award recipient or Allocatee in question is unable to
satisfactorily resolve the issues of noncompliance or default, in the
sole determination of the CDFI Fund, the CDFI Fund reserves the right,
in its sole discretion, to terminate and rescind the award notification
made under this NOAA.
3. Determination of noncompliance or default status: If prior to
entering into an Allocation Agreement through this NOAA: (i) The CDFI
Fund has made a final determination that an Allocatee that is a prior
CDFI Fund award recipient or Allocatee under any CDFI Fund program is
(i) noncompliant with a previously executed assistance or award
agreement, or is in default of a previously executed Allocation
Agreement; (ii) the CDFI Fund has provided written notification of such
determination to such organization; and (iii) the noncompliance or
default occurs during the time period beginning 12 months prior to the
application deadline and ending with the execution of the CY 2019
Allocation Agreement, the CDFI Fund reserves the right, in its sole
discretion, to delay entering into an Allocation Agreement and/or to
impose limitations on the Allocatee's ability to issue QEIs to
investors, or to terminate and rescind the NMTC Allocation made under
this NOAA.
Furthermore, if prior to entering into an Allocation Agreement
through this NOAA: (i) The CDFI Fund has made a final determination
that an Affiliate of an Allocatee that is a prior CDFI Fund award
recipient or Allocatee under any CDFI Fund programs is in noncompliance
of a previously executed assistance or award agreement or in default of
a previously executed Allocation Agreement(s); (ii) the CDFI Fund has
provided written notification of such determination to such
organization; and (ii) the default occurs during the time period
beginning 12 months prior to the application deadline and ending with
the execution of the CY 2019 Allocation Agreement, the CDFI Fund
reserves the right, in its sole discretion, to delay entering into an
Allocation Agreement and/or to impose limitations on the Allocatee's
ability to issue QEIs to investors, or to terminate and rescind the
NMTC Allocation made under this NOAA.
B. Allocation Agreement: Each Applicant that is selected to receive
a NMTC Allocation (Allocatee) (including their Subsidiary Allocatees)
must enter into an Allocation Agreement with the CDFI 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, 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) commitments to specific ``innovative
activities'' discussed by the Allocatee in its Allocation Application;
(v) the time period by which the Allocatee may obtain QEIs from
investors; (vi) reporting requirements for the Allocatee; and (vii) a
requirement to maintain certification as a CDE throughout the term of
the Allocation Agreement. If an Allocatee 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 Allocatee hold a majority equity
[[Page 47069]]
interest, the Allocation Agreement will contain a covenant to that
effect.
In addition to entering into an Allocation Agreement, each
Allocatee must furnish to the CDFI Fund an opinion from its legal
counsel or a similar certification, the content of which will be
further specified in the Allocation Agreement, to include, among other
matters, an opinion that an Allocatee (and its Subsidiary Allocatees,
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 Allocatees, the CDFI 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 Allocatees. The CDFI Fund reserves the right, in its sole
discretion, to rescind its NMTC Allocation award if the Allocatee fails
to return the Allocation Agreement, signed by the authorized
representative of the Allocatee, and/or provide the CDFI Fund with any
other requested documentation, including an approved legal opinion,
within the deadlines set by the CDFI Fund.
C. Fees: The CDFI 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 CDFI Fund will
publish additional information concerning the nature and amount of the
fee.
D. Reporting: The CDFI Fund will collect information, on at least
an annual basis from all Allocatees and/or CDEs that are recipients of
QLICIs, including such audited financial statements and opinions of
counsel as the CDFI Fund deems necessary or desirable, in its sole
discretion. The CDFI Fund will require the Allocatee to retain
information as the CDFI Fund deems necessary or desirable and shall
provide such information to the CDFI Fund when requested 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 CDFI Fund may also provide such information to the IRS
in a manner consistent with IRC Sec. 6103 so that the IRS may
determine, among other things, whether the Allocatee has used
substantially all of the proceeds of each QEI raised through its NMTC
Allocation to make QLICIs. The Allocation Agreement shall further
describe the Allocatee's reporting requirements.
The CDFI 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 CDFI Fund will provide programmatic and information technology
support related to the Allocation Application Mondays through Fridays,
between the hours of 9:00 a.m. and 5:00 p.m. ET through October 24,
2019. The CDFI Fund will not respond to phone calls or emails
concerning the application that are received after 5:00 p.m. ET on
October 24, 2019 until after the Allocation Application deadline of
October 28, 2019. Applications and other information regarding the CDFI
Fund and its programs may be obtained from the CDFI Fund's website at
https://www.cdfifund.gov. The CDFI 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) 653-0422 or by submitting a Service Request
in AMIS. People who have visual or mobility impairments that prevent
them from accessing the Low-Income Community maps using the CDFI Fund's
website should call (202) 653-0422 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 CDFI Fund's NMTC
Program Manager by submitting a Service Request in AMIS; or by
telephone at (202) 653-0421. These are not toll-free numbers.
C. Administrative support: If you have any questions regarding the
administrative requirements of this NOAA, contact the CDFI Fund's NMTC
Program Manager by submitting a Service Request in AMIS, or by
telephone at (202) 653-0421. These are not toll free numbers.
D. IRS support: For questions regarding the tax aspects of the NMTC
Program, contact Jian Grant and James Holmes, Office of the Chief
Counsel (Passthroughs and Special Industries), IRS, by telephone at
(202) 317-4137, or by facsimile at (855) 591-7867. These are not toll
free numbers. Applicants wishing for a formal ruling request should see
IRS Internal Revenue Bulletin 2018-1, issued January 2, 2018.
VIII. Information Sessions
In connection with this NOAA, the CDFI Fund may conduct one or more
information sessions that will be produced in Washington, DC and
broadcast over the internet via webcasting as well as telephone
conference calls. For further information on these upcoming information
sessions, please visit the CDFI Fund's website at https://www.cdfifund.gov.
Authority: 26 U.S.C. 45D; 31 U.S.C. 321; 26 CFR 1.45D-1.
Jodie Harris,
Director, Community Development Financial Institutions Fund.
[FR Doc. 2019-19203 Filed 9-5-19; 8:45 am]
BILLING CODE 4810-70-P