What’s New in the 2012 NMTC Application?

The Community Development Financial Institutions (CDFI) Fund opened the 10th new markets tax credit (NMTC) allocation application round on Friday, July 13. This year, as with each allocation round, the CDFI Fund made several changes to the application and a number are worth noting.

My partner Brad Elphick, CPA, provided a summary of some of these changes for the next issue of the Novogradac Journal of Tax Credits. (For a more comprehensive discussion of the 2012 NMTC round, Novogradac & Company will host an NMTC application webinar on July 31.)

In the meantime, here is a sample of changes made in the 2012 allocation application:

Highlights of Changes from the 2012 Allocation Application

PART I: BUSINESS STRATEGY

• Question 16 of last year’s application was moved to 39(b). The question requires applicants to list how they would expect to apportion remaining tax credit equity after the seven-year compliance period amongst qualified active low-income community businesses (QALICBs), investors, the applicant or its affiliates.

PART II: COMMUNITY OUTCOMES

• The option to select Federal Economic Development Zones was eliminated from Question 25 in the list of areas that are to be served by the applicant.

PART III: MANAGEMENT CAPACITY

• Question 34(e) has been changed. On the 2011 application, it asked about whether the applicant expected to achieve profitability in the next three years. In the 2012 application, the CDFI Fund has eliminated that topic and Question 34(e) asks applicants to complete Table D2, which requires the projected income and operating expenses of the applicant.

PART IV: CAPITALIZATION STRATEGY

• Question 39(c) has been added and focuses on where profits from any NMTC activities would go.

EXHIBITS AND TABLES

• Table A5 is a new table and allows the applicant to provide information about its track record of financing activities that would not qualify as QLICI activities.

This summary includes a just few highlights of the overall changes made to the 2012 allocation application. Members of the NMTC Working Group were provided with a list of all changes, a redline comparison of the 2011 and 2012 applications, a QEI issuance calculator and other related resources. To learn more about the benefits of Working Group membership, send an email to [email protected].