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New Markets Tax Credit Program (NMTC)

Opportunity for USA Community Development Entities to
Provide Tax Credits to Investors in Low-Income Communities

Agency Type:

Federal

Funding Source:

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United States Department of the Treasury - Community Development Financial Institutions Fund

Conf. Date:

09/16/19

LOI Date:

09/23/19

Deadline Date:

10/28/19 5:00 PM ET Receipt

Description:

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Opportunity for USA certified Community Development Entities to provide investors in low-income communities with tax credits. Funding is intended to encourage economic growth and community development. Uncertified applicants must submit a certification application prior to applying. These tax credits provide a credit against Federal income taxes for investors that make Qualified Equity Investments (QEIs) in certified financial intermediaries called “Community Development Entities (CDEs).”

Through the NMTC Program, the CDFI Fund allocates tax credit authority to Community Development Entities (CDEs) through a competitive application process. CDEs are financial intermediaries through which private capital flows from an investor to a qualified business located in a low-income community. CDEs use their authority to offer tax credits to investors in exchange for equity in the CDE. Using the capital from these equity investments, CDEs can make loans and investments to businesses operating in low-income communities on better rates and terms and more flexible features than the market.

The NMTC Program has supported a wide range of businesses including manufacturing, food, retail, housing, health, technology, energy, education, and childcare. Communities benefit from the jobs associated with these investments, as well as greater access to community facilities and commercial goods and services. 

The NMTC Program helps businesses with access to financing that is flexible and affordable. Investment decisions are made at the community level, and typically 94 to 96 percent of NMTC investments into businesses involve more favorable terms and conditions than the market typically offers. Terms can include lower interest rates, flexible provisions such as subordinated debt, lower origination fees, higher loan-to-values, lower debt coverage ratios and longer maturities.

The CDFI Fund awards a proportional amount of tax credits for investing in Non-Metropolitan Counties.

  • The number of Rural CDEs in the Awardee pool are proportional to the number of Rural CDEs that meet minimum scoring thresholds.
  • A goal to invest 20 percent of QLICIs made using QEI proceeds into Non-Metropolitan Counties. 

The NMTC Program provides an incentive for investment in “Low-Income Communities” (LICs). LICs are census

tracts:

  • Where the poverty rate is at least 20%; or
  • Where the median family income does not exceed 80% of the area median family income; or
  • Where the median family income does not exceed 85% of the area median family income provided the census tract is located in a high migration rural county; or
  • Where the census tract has a population of less than 2,000 and is contained within a Federally designated Empowerment Zone and is contiguous to at least one other LIC. 

Businesses not located in LICs but that otherwise serve Targeted Populations may also qualify for NMTC-enhanced loans/investment. Targeted Populations include Low-Income Persons (e.g. family income no greater than 80% of the applicable area median family income), to the extent the project is located in a census tract with a median family income at or below 120% of the median family income. Refer to IRS and CDFI Fund guidance for additional details.

GrantWatch ID#:

GrantWatch ID#: 146449

Estimated Total Program Funding:

$3,500,000,000

Estimated Size of Grant:

The CDFI Fund awards a tax credit allocation of $1 million to a CDE.

The CDE offers the tax credit to a single investor in exchange for a $1 million equity investment.
- Generates a $50,000 credit annually for the first three years;
- Generates a $60,000 credit annually for the final four years.

Total credit value over 7 years is $390,000.

Term of Contract:

The New Markets Tax Credit is taken over a 7-year period.

If awarded an NMTC allocation, CDEs must issue QEIs within 5 years of receiving an allocation.

Additional Eligibility Criteria:

CDEs or organizations with a pending CDE certification Application are eligible to apply for an NMTC allocation.

A Community Development Entity (CDE) is a domestic corporation or partnership that is an intermediary vehicle for the provision of loans, investments, or financial counseling in low-income communities. Certification as a CDE allows organizations to participate either directly or indirectly in the New Markets Tax Credit Program. Learn more about how to become certified as a CDE at the CDE Certification page: https://www.cdfifund.gov/programs-training/certification/cde/Pages/default.aspx

To be a Rural CDE, an organization must:

– Have a track record of at least 3 years of direct financing experience;
– Have dedicated at least 50 percent of its direct financing activities in the last 5 years to Non-Metropolitan Counties; and
– Commit that at least 50 percent of QLICIs will be directed to NonMetropolitan Counties.

NMTCs are awarded to CDEs, not to individuals or businesses.

Pre-proposal Conference:

The CDFI Fund will conduct two one-hour conference calls to answer application questions. Participants will be able to ask questions directly on the calls, or they may submit questions for consideration at least one business day in advance via a service request in the CDFI Fund's Award Management Information System known as AMIS. Please see below for the dates and times for each call.

- Thursday, September 12, 2019, 1:00 p.m. ET
- Monday, September 16, 2019, 2:00 p.m. ET

The dial-in number and passcodes are the same for both calls. The dial-in number is 1-888-324-3810 and the passcode is 6986823. No prior registration is necessary. Requests for reasonable accommodations under section 504 of the Rehabilitation Act should be directed to Jay Santiago at 202-653-0300 no later than 48 hours before the conference calls begin.

Pre-Application Information:

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.

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.

The CDFI Fund will provide programmatic and information technology support related to the Allocation Application between 9:00 am and 5:00 pm, Eastern Time, through 10/24/2019. The CDFI Fund will not respond to phone calls or e-mails concerning an Allocation Application submitted after 5:00 pm, Eastern Time, on 10/24/2019, until after the Allocation Application submission deadline specified in the NOAA.

Timeline:

- September 4, 2019 Allocation Round Opens
- September 6, 2019: NOAA Published
- September 23, 2019: Submission of CDE Certification Application
- October 7, 2019: Online Submission of Subsidiary CDE Certification Application for QEI Issuance and QLICI Requirements Deadline
- October 24, 2019: Last Day the CDFI Fund Will Answer Questions About the Application​
- October 28, 2019: ​Online Submission of Allocation Application
- January 31, 2020: QEI Issuance and QLICI Requirements Deadline for Prior Allocatees
- Anticipated Summer 2020: ​2019 NMTC Program Awards Announced

Step 1: Certification: https://www.cdfifund.gov/programs-training/Programs/new-markets-tax-credit/Pages/cde-certification-step.aspx#step1

Step 2: Application process: https://www.cdfifund.gov/programs-training/Programs/new-markets-tax-credit/Pages/apply-step.aspx#step21

Reference documents: https://www.cdfifund.gov/Documents/Forms/Reference%20Documents.aspx?FilterField1=CDFI_x0020_Program&FilterValue1=New%20Markets%20Tax%20Credit

Contact Information:

Before starting your grant application, please review the funding source's website listed below for updates/changes/addendums/conferences/LOIs.

AMIS application system: https://amis.cdfifund.gov/s/AMISHome

Questions regarding New Markets Tax Credit Program may be directed to the CDFI Fund by e-mail to cdfihelp@cdfi.treas.gov; or by phone to (202) 653-0421. Please note this is not a toll free number.

CDE Certification Help Desk Email
ccme@cdfi.treas.gov

IRS Contact (Jian Grant & James Holmes)
(202) 317-4137

URL for Full Text (RFP):

Geographic Focus:

USA: Alabama;   Alaska;   Arizona;   Arkansas;   California;   Colorado;   Connecticut;   Delaware;   Florida;   Georgia;   Hawaii;   Idaho;   Illinois;   Indiana;   Iowa;   Kansas;   Kentucky;   Louisiana;   Maine;   Maryland;   Massachusetts;   Michigan;   Minnesota;   Mississippi;   Missouri;   Montana;   Nebraska;   Nevada;   New Hampshire;   New Jersey;   New Mexico;   New York City;   New York;   North Carolina;   North Dakota;   Ohio;   Oklahoma;   Oregon;   Pennsylvania;   Rhode Island;   South Carolina;   South Dakota;   Tennessee;   Texas;   Utah;   Vermont;   Virginia;   Washington, DC;   Washington;   West Virginia;   Wisconsin;   Wyoming