CDFI Fund Opens Seventh Funding Round for New Markets Tax Credit Program

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Tax Credit Advisor, February 2009: The Community Development Financial Institutions (CDFI) Fund on 1/16/09 announced the opening of its seventh, last scheduled funding round for the federal new markets tax credit (NMTC) program, with some significant changes from previous rounds.

A total of $3.5 billion in NMTC equity investment authority is available nationally for allocation in the 2009 competition.

Under the NMTC program, organizations called community development entities (CDEs) compete for allocations of NMTC in periodic funding rounds. CDEs that win allocation awards raise capital from investors and deploy it, as Qualified Low-Income Community Investments (QLICIs), in eligible projects and activities that are in or benefit low-income communities.

In announcing the opening of the seventh funding round, CDFI Fund Director Donna Gambrell said, “The $3.5 billion of tax credit authority available in the fiscal year 2009 round is critically important to finance businesses and real estate developments, helping to stimulate economic growth and employment opportunities.”

Application, Other Deadlines

Applications for an allocation of new markets credits in the new funding round must be submitted electronically; the application deadline is 5 p.m. Eastern Time on 4/8/09. The deadline for contacting the CDFI Fund with any questions regarding completion or submission of the application is 5 p.m. ET on 4/6/09.

Applications may be submitted by CDEs and by organizations that by 3/3/09 (postmark date deadline) submit an application requesting certification as a CDE.

An applicant already certified as a CDE that wishes to change its designated CDE service area must submit a request for such a change to the CDFI Fund and have it received by the Fund by 5 p.m. ET on 4/8/09.

The CDFI Fund indicated that it expects to announce funding awards in October 2009. The Fund noted that there is no dollar limit on the size of allocation that applicants can request, but it said it doesn’t anticipate issuing more than making awards larger than $100 million to any single recipient. This anticipated maximum award size compares to $125 million for Round 6 and $150 million for Round 5.

Details on the seventh funding round are available in various documents, including a Notice of Allocation Availability (NOAA), 34-page question-and-answer document, and hard copy of the application, which are posted on the CDFI Fund’s Web site. (Go to http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=5#2)

The NOAA was published in the Federal Register on 1/22/09. (http://edocket.access.gpo.gov/2009/E9-1131.htm)

As in the previous round, applicants that have previously received an NMTC allocation (or whose affiliates have previously received an NMTC allocation) must demonstrate that they have issued a requisite minimum amount of qualified equity investments (QEIs) from their prior allocation(s) by a certain date in order to be eligible for a new allocation.

Rural Proportionality

As was the case for the first time in the sixth round, the CDFI Fund will take steps to assure proportionate allocations to rural areas in the seventh funding round. To do this, the Fund will ensure that (1) at least 20% of all QLICIs made from 2009 allocations are invested in non-metropolitan counties, and that (2) the proportion of awardees that are “Rural CDEs” is at least equal to proportion of applicants deemed eligible for Phase II of review that are Rural CDEs. A “Rural CDE” is a CDE that has historically dedicated at least 50% of its activities to non-metropolitan counties and has committed that at least 50% of its NMTC activities will target non-metropolitan counties.