Funding Opportunity Title: Notice of Allocation Availability (NOAA); Inviting Applications for the Calendar Year (CY) 2014 Allocation Round of the…
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Funding Opportunity Title: Notice of Allocation Availability (NOAA); Inviting Applications for the Calendar Year (CY) 2014 Allocation Round of the New Markets Tax Credit (NMTC) Program
Citation: "79 FR 46503"
"Notices"
DATES: Electronic applications must be received by
Announcement Type: Announcement of NMTC allocation availability.
Executive Summary: This NOAA is issued in connection with the CY 2014 allocation round (Allocation Round) of the New Markets Tax Credit (NMTC) Program, as initially 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), Division A, section 102 of the Tax Relief and Health Care Act of 2006 (Pub. L. 109-432), section 733 of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Pub. L. 111-312), and the American Taxpayer Relief Act of 2012 (the Act). Through the NMTC Program, the
In this NOAA, the
I. Allocation Availability Description
A. Programmatic Changes From CY 2013 Allocation Round
1. Allocation amounts: As described in Section IIA, the
2. Prior QEI Issuance Requirements: In order to be eligible to apply for NMTC allocations in this Allocation Round, as described in Section III.A.2(a), Applicants that have received NMTC allocation awards in previous rounds are required to meet minimum
B. Program guidance and regulations: This NOAA provides guidance for the application and allocation of NMTCs for this Allocation Round of the NMTC Program and should be read in conjunction with: (i) Guidance published by the
II. Allocation Information
A. Allocation amounts: Pursuant to the Act, the
B. Types of awards: NMTC Program awards are made in the form of allocations of tax credit investment authority.
C. Allocation Agreement: Each Allocatee under this NOAA must sign an Allocation Agreement, which must be countersigned by the
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 investment authority.
1. CDE certification: For purposes of this NOAA, the
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, it must submit its request for such change to the
2. Prior awardees or Allocatees: Applicants must be aware that success in a prior application or allocation round of any of the
(a) Prior Allocatees and
An Allocatee in the CY 2009 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
An Allocatee in the CY 2010 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
An Allocatee in the CY 2011 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
An Allocatee (with the exception of a Rural CDE Allocatee) in the CY 2012 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
An Allocatee (with the exception of a Rural CDE Allocatee) in the CY 2013 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
In addition to the requirements described above, an entity 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 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 multiple NMTC allocation awards between CY 2009 and CY 2013, the Applicant shall be deemed to be eligible to apply for a NMTC allocation pursuant to this NOAA if the Applicant is able to affirmatively demonstrate that, as of
For purposes of this section of the NOAA, the
The Applicant will be required, upon notification from the
Applicants should be aware that these QEI issuance requirements represent the minimum threshold requirements that must be met in order to submit an application for assistance under this NOAA. As stated in Section V.B.2 of this NOAA, the
Prior Allocatees that require any action by the
(b) Pending determination of noncompliance or default: If an Applicant is a prior awardee or Allocatee under any
Notwithstanding the above, any Applicant or Affiliate that is in default under Section 3.2 of its previously executed Allocation Agreement is deemed ineligible under this NOAA if: (i)
(c) Default status:
Further, the
(d) Undisbursed award funds:
For purposes of the calculation of undisbursed award funds for the BEA Program, only awards made to the Applicant (and any Affiliates) 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 2009, 2010, 2011 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 NI, 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
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 Round Allocation Application Q&A document, available on the
The "undisbursed award funds" calculation does not include: (i) NMTC allocation authority; (ii) any award funds for which the
(e) Contact the
The CDFI Fund will respond to Applicants' reporting, compliance or disbursement questions
3. Failure to accurately respond to a question in the Assurances and Certifications section of the application and submit the required written explanation: In its sole discretion, the
4. Entities that propose to transfer NMTCs to Subsidiaries: 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
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
The CDFI Fund strongly encourages a non-profit Applicant to submit a CDE certification application to the
5. Entities that submit applications together with Affiliates; applications from common enterprises: (a) As part of the allocation application review process, the
For purposes of this NOAA, in addition to assessing whether Applicants meet the definition of the term "Affiliate" found in the allocation application, the
(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
6. 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.
7. 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
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, except if necessary and at the request of the
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 except as outlined 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. Applications sent by facsimile or by 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
1. Electronic applications: Electronic applications must be submitted solely by using the
D. Application submission dates and times:
1. Application deadlines:
(a) Electronic applications: Must be received by
(b) Postmark: For purposes of this NOAA, the term "Postmark" is defined by 26 CFR 301.7502-1. In general, the
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
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
There are two parts to the substantive review process for each allocation application: Phase 1 and Phase 2. In Phase 1, the
A. 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; 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; 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; how NMTCs will enable the Applicant to create additional value to its financing activities in Low-Income Communities; 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 extent that, among other things, it: (i) Has a track record of successfully deploying products and services similar to those it intends to provide 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 IRC SEC 45D(b)(1); (iv) in the case of an Applicant proposing to purchase loans from CDEs, the Applicant will require the CDE selling such loans to re-invest the proceeds of the loan sale to provide additional products and services to Low-Income Communities.
(b) Priority Points: In addition, as provided by IRC SEC 45D(f)(2), the
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; and (iv) 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: (a) It articulates how its strategy is likely to produce significant and measurable community development outcomes that would not be achieved without NMTCs; (b) it is working in particularly economically distressed or otherwise underserved communities; (c) its activities are part of a broader neighborhood revitalization strategy; (d) it ensures that an investment into a project or business is supported by and will be beneficial to the surrounding community; and (e) it is likely to engage in activities that will spur additional private capital investment.
3. Management Capacity (not scored in Phase 1): In assessing an Applicant's management capacity,
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) Deploying capital or technical assistance 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; has policies and systems in place to ensure ongoing compliance with NMTC Program requirements; has
4. Capitalization Strategy (Not scored in Phase 1): When assessing an Applicant's capitalization strategy,
An Applicant be evaluated more favorably under this section to the extent that: (a) It or its Controlling Entity is a prior Allocatee and has a superior track record in the past five years of raising Qualified Equity Investments or 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 a QALICB; (d) it is likely to secure capital to finance its cost of operations consistent with the Applicant's overall business strategy and timeline for making investments; and (e) 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
B. Review and selection process: All allocation applications will be reviewed for eligibility and completeness.
1. Phase 1: Reviewers will evaluate and score the Business Strategy and Community Outcomes sections of 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 scored section 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 two application scored sections) varies significantly from other reviewers' total base scores or section scores for such application, the
2. Phase 2: Once the
3. Late Reports: In the case of an Applicant or any Affiliates that has previously received an award or allocation from the
C. Allocations serving Non-Metropolitan counties: As provided for under Section 102(b) of the Tax Relief and Health Care Act of 2006 (P.L. 109-432), the
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
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 Phase 2 review pool that are Rural CDEs. If this objective is not achieved, the
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.
D. Questions: All outstanding reports or compliance questions should be directed to the
E. Right of rejection:
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 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, and markets served) set forth in the allocation application(s) related to such prior allocation(s).
The CDFI Fund reserves the right to reject an NMTC allocation application if information (including administrative errors or omission of information) comes to the attention of the
As a part of the substantive review process, the
The CDFI Fund reserves the right to conduct additional due diligence, as determined reasonable and appropriate by the
Each Applicant will be informed of the
The CDFI Fund further reserves the right to change its eligibility and evaluation criteria and procedures, if the
There is no right to appeal the
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
2. Pending determination of noncompliance or default: If an Allocatee is a prior awardee or Allocatee under any
3. Default status: If prior to entering into an Allocation Agreement through this NOAA: (i)
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
In addition to entering into an Allocation Agreement, each Applicant selected to receive a NMTC allocation must furnish to the
If an Allocatee identifies Subsidiary transferees, the
C. Fees:
D. Reporting:
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
A. Information technology support: Technical support can be obtained by calling (202) 653-0422 or by email at [email protected]. People who have visual or mobility impairments that prevent them from accessing the
B. Programmatic support: If you have any questions about the programmatic requirements of this NOAA, contact the
C. Administrative support: If you have any questions regarding the administrative requirements of this NOAA, contact the
D.
VIII. Information Sessions
In connection with this NOAA, the
Authority: 26 U.S.C. 45D; 31 U.S.C. 321; 26 CFR 1.45D-1.
Dated:
Deputy Director,
[FR Doc. 2014-18792 Filed 8-7-14;
BILLING CODE 4810-70-P
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