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NMTC Working Group Update: May 2010

Published by Brad Elphick on Saturday, May 1, 2010

Journal cover May 2010   Download PDF

On April 7, the Community Development Financial Institutions (CDFI) Fund opened the 2010 round of the New Markets Tax Credit (NMTC) program by announcing the notice of allocation availability (NOAA) and releasing a copy of the application. I’m not sure there has been any NMTC application round that has been waited on with such anticipation. First, there is the delay in the start of the round due to the NMTC program not being extended by the end of 2009. Second, the CDFI Fund also accepted public comments on the application and was expected to make changes that were more substantial than in years past. Now the waiting is over and CDEs can begin the grueling process of assembling their applications. To help NMTC Working Group members with this task, they received the benefit of several tools to assist them with their application. These tools included a QEI issuance requirement calculator, a Word version of the application as well as an Excel version of the application tables, a Word comparison document of the 2009 and 2010 applications, a summary of the changes made to the 2010 application and an application checklist.

There are some changes to the 2010 application that are worth highlighting. First, in the 2010 NMTC Application Q&A released on April 19, the CDFI Fund changed the related party definition and provided updated guidance on the topic. As previous NMTC Working Group Updates have explained, the Working Group recommended changes to the CDFI Fund regarding the related party test; the group’s members believe these changes will improve the delivery of subsidy to the borrowers and low-income communities. At the time of this writing, the NMTC Working Group was analyzing the changes to determine the effects that the changes will have on applications; a detailed discussion of this new guidance will appear in the June issue of the Novogradac Journal of Tax Credits.

There are also a number of important deadlines set out in the NOAA.  First, in order to apply for NMTCs, an applicant must be a certified community development entity (CDE). For those who aren’t certified, a CDE application must have been filed by April 26. The NMTC allocation application is due by 5 p.m. EST on June 2. In previous years, investor letters, signature pages and organization charts had to be mailed within a few days after the application. This year, the CDFI Fund is requiring that the documents be uploaded by June 4 through an applicant’s myCDFIFund account. The CDFI Fund will provide programmatic and IT support related to the application during the open application period through 5 p.m. Eastern Time on May 31. However, it should be noted that May 31 is Memorial Day. We are recommending that all questions be submitted by Friday, May 28 because Memorial Day is a federal holiday.

Another important note about the 2010 round of NMTC applications is that the community impact section of the application has been completely revamped. For starters, all of the community impact tables have been removed. Also, in the narrative portion there appears to be more emphasis on the types of impacts and outcomes, including quality of jobs and the percentage of jobs that will be created or retained by low-income community residents and/or low-income persons.

Finally, there has been a reduction in the number of questions. In the past, the NMTC Working Group had commented on the redundancy inherent in some of the questions. It appears that the CDFI Fund has tried to address that redundancy through rearranging, combining and deleting specific questions.

As with any change to an application there will be new questions. The NMTC Working Group is gathering these questions from its members and periodically submitting them to the CDFI Fund for clarification. For example, there is a question regarding Question 29(b), which is new, and to what it extent it will be incorporated in the allocation agreement. The NMTC Working Group hopes to resolve these types of issues for its members during the application process.

The NMTC Working Group has also been focused on addressing issues surrounding the CDFI Fund’s Community Investment Impact System (CIIS). The NMTC Working Group plans on submitting comments to the CDFI Fund in response to a forthcoming request for public comments to address some of the issues outlined in the Government Accountability Office’s (GAO’s) most recent report on the NMTC program. One issue that concerns many CDEs and program reviewers is the duplicity of the data being collected from CDEs when more than one CDE is involved in the same project. The NMTC Working Group will provide its comments later this summer on this issue and others it has identified.

Do you have questions about technical program issues you are dealing with? Or are you concerned about what you should be prepared for based upon others’ experiences? Are you wondering if your project is the only one struggling with a technical issue and if you will ever get it resolved?  Join the NMTC Working Group today, get your questions answered, add your issues to the agenda and be part of a strong and active voice in the NMTC industry. Stay up-to-date on all comments submitted by the NMTC Working Group by visiting our web site: For more information or if you are interested in becoming a member, please send me an email at [email protected]

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