2009 New Market Tax Credits Workshop Materials

Community Development Financial Institutions (CDFI) Fund New Markets Tax Credit Program FY 2009 Workshop January 2009

Presentation Roadmap ,[object Object],[object Object],[object Object],[object Object],[object Object]

CDFI Fund Mission and Background ,[object Object],[object Object],[object Object]

CDFI Fund Initiatives ,[object Object],[object Object],[object Object],[object Object]

NMTC Program Background ,[object Object],[object Object],[object Object],[object Object]

Overview of NMTC Program ,[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],Credit Amount

Example ,[object Object],[object Object],[object Object],[object Object]

What is a CDE? ,[object Object],[object Object],[object Object],[object Object]

What is a “Low-Income Community?” ,[object Object],[object Object],[object Object],[object Object],[object Object]

Low Income Communities (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Qualified Equity Investment (QEI) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Timing of Investments ,[object Object],[object Object],[object Object],[object Object]

CDE Use of NMTC Proceeds ,[object Object],[object Object],[object Object],At all times, 5% of the original QEI issue amount may be used for certain reserves by the CDE and count towards meeting the substantially-all requirement.

CDE Use of NMTC Proceeds (Cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Qualified Low-Income Community Investments (QLICIs) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Qualified Low-Income Community Investments (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Qualified Active Low Income Community Business (QALICB) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Qualified Active Low Income Community Business (QALICB) ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],Qualified Active Low Income Community Business (QALICB)

Qualified Active Low Income Community Business (QALICB) ,[object Object],[object Object],[object Object]

Ineligible Activities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Investing in Other CDEs ,[object Object],[object Object],[object Object],[object Object],All time limits must be met as if the CDE with the allocation directly made the QLICI. Investor $QEI Allocatee (CDE) CDE CDE CDE $QLICI $QLICI $QLICI QALICB

Purchasing Loans from Other CDEs ,[object Object],[object Object],[object Object],[object Object],CDEs may purchase loans  but not investments  from other CDEs if:

Financial Counseling and Other Services ,[object Object],[object Object],[object Object],[object Object],FCOS is “advice provided by the CDE relating to the organization or operation of a trade or business.”

Recapture ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],It is not an event of recapture if a CDE files for bankruptcy. An investor may continue to claim NMTCs.

Process Overview ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Summary Graphic Community Development Entity (For-profit only) Financial Counseling Investing in or Lending to CDEs CDFI Fund Private Investors Investing in or Lending to QALICBs Purchasing Loans from CDEs CDEs must make QLICIs within 12 months of receipt of Investor QEIs CDE must offer credits to investors within 5 years QEI must stay invested in CDE for 7 years

Why Become a CDE? ,[object Object],[object Object]

Timeframe to Apply for CDE Designation ,[object Object],[object Object],[object Object]

Certified CDFIs and SSBICs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

CDE Certification Criteria ,[object Object],[object Object],[object Object],[object Object]

Primary Mission Criteria ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Primary Mission Criteria (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Accountability Criteria ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Accountability Criteria ,[object Object],[object Object],[object Object],[object Object]

Accountability Criteria (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Who is Representative of LICs? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Who is not Representative? ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],NMTC Investment Authority Available Unallocated investment authority may be carried over from year to year through 2014. + $600 million GO Zone Combined for 2004 Round + $400 million GO Zone Includes 2001 Round

2009 Round Deadlines (Anticipated) Additional details to be addressed in NOAA April 10, 2009 Attachments and signature page must be postmarked on or before June 17, 2009 Date by which prior-year allocatees must issue the requisite percentage of QEIs March 3, 2009 CDE Certification Applications must be postmarked on or before April 6, 2009 Last day to contact the CDFI Fund Date Deadline April 8, 2009 Online Submission of Allocation Application January 2009 Release of NOAA and application materials

Who Can Apply? ,[object Object],[object Object],[object Object],[object Object]

Preparing for the Online Application ,[object Object],[object Object],[object Object],[object Object],[object Object],Application deadline: April 8, 2009 @ 5:00 PM ET

Review Criteria ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Applicants may earn an additional 10 “priority” points

[object Object],[object Object],[object Object],Priority Points

[object Object],[object Object],[object Object],[object Object],[object Object],Business Strategy

Business Strategy: Tips ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Community Impact To score favorably, an Applicant must demonstrate:

Community Impact: Tips ,[object Object],[object Object],[object Object],[object Object]

Management Capacity ,[object Object],[object Object],[object Object],[object Object],[object Object]

Capitalization Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Selection Process Peer Review Fund staff & external reviewers evaluate and score applications. Panel Review Applications that meet minimum scoring thresholds in each of the four major application sections are sent to a Fund panel for consideration. Selection of Applicants Selecting Official makes final determinations based upon panel recommendations. During Panel the CDFI Fund will review past transactions from Prior Allocatees . Adjustments may be made to the final pool to ensure proportional representation from CDEs serving Non-Metropolitan Counties.

Non-Metropolitan Counties ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Non-Metropolitan Counties ,[object Object],[object Object],[object Object],[object Object],[object Object]

Review Process Timeline Oct. 2009 Allocation Applications Due Peer Review Panel/Selecting Official Review Award Announcements Award Processing April 8, 2009 May – June 2009 July – Aug. 2009 Aug. – Sept. 2009

Awards to Date ,[object Object],[object Object],[object Object],[object Object]

$ Requested/$ Awarded Total-$30.4B 11.5% Award Rate 8.7% Award Rate Total- $22.9B Total-$28.3B 14.5% Award Rate ($ in Billions) Total-$27.9B 16% Award Rate Total-$21.3B 14% Award Rate

*Please note that the allocation amount represented in this chart does not total $3.5 billion awarded, since some allocatees are classified in more than one entity type category (e.g. some CDFIs are also counted as non-profits; some banks are also counted as publicly traded entities) and some allocatees do not fall under any of the categories identified. Sixth Round Allocatees* Award Amount by Entity Type

($ in Millions) Major Urban 50.6% Rural 25.6% Minor Urban 23.8% Market Served (6 th Round Allocatees) Estimated Use of NMTC Sixth Round

($ in Millions) Real Estate 52 % Loans/Investments Other CDEs 1 % Non-Real Estate Businesses 47 % Estimated Activities (6 th Round Allocatees)

Other Facts ,[object Object],[object Object],[object Object],[object Object],[object Object]

Activities to Date ,[object Object],[object Object],[object Object],[object Object],[object Object]

Sample Activities: ,[object Object],[object Object],[object Object],[object Object],[object Object]

Contact Information ,[object Object],[object Object],Program Support Ph: (202) 622-6355 (option 3) Fax: (202) 622-7754 Email: [email_address] Contact IRS at [email_address] For questions about IRS Regulations, eligibility of possible QLICI activities and other tax implications of the program: IT Support Ph: (202) 622-2455 Email: [email_address]

2009 New Market Tax Credits Workshop Materials

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2009 New Market Tax Credits Workshop Materials