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According to the Guidance for the New Markets Tax Credits (NMTC) program found at 66 Fed. Reg. 21846 (May 1, 2001), the comprehensive investment plan (CIP) is a document that a community development entity (CDE) must include in its application for an allocation of NMTCs. This plan provides historical information and, at a minimum, a five-year investment strategy, with details about the following issues:

1. The applicant’s track record in making investments and promoting community development;
2. The applicant’s financial and operational capacity, including its ability to track NMTC investment proceeds;
3. The capacity, skills, and experience of its management team;
4. An analysis of its target market;
5. Its plan for raising capital with an NMTC allocation; and
6. Its strategy for using the proceeds from such an allocation, including its financial and community development underwriting criteria.

The CIP supports an applicant’s eligibility for the NMTC program in various ways. For instance, the CIP analyzes the applicant’s target market. Under NMTC program guidelines, the target market of any NMTC investment must involve low-income communities (LICs). LICs are census tracts that have any of the following characteristics:

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

NMTC investments may also serve other targeted populations, not in LICs, who are low-income. These persons have a family income of no greater than 80% of the applicable area median family income to the extent that the project is located in a census tract with a median family income at or below 120% of the median family income.

Furthermore, only CDEs may apply for NMTCs. In becoming CDEs, these organizations must demonstrate that they have a primary mission of serving or providing investment capital for low-income communities or people. They also must show that they maintain accountability to low-income communities through representation on the organization’s Governing Board or Advisory Board. These characteristics are some of the same characteristics that CDEs must describe in their CIP regarding their track record in making investments and promoting community development.

Let’s Get Together to Talk About Your Next Deal

Savage & Associates is an economic development law firm that provides clients with the legal and business insights to grow, revitalize, and build their communities. We use individualized strategies for our clients, ranging from large public companies to burgeoning entrepreneurs, to determine the best strategy for achieving their goals.

We are experienced in using New Markets Tax Credits, Low-Income Housing Tax Credits, C-PACE, Historic Tax Credits, and other investment options to help developers, investors, nonprofit organizations, and entrepreneurs change their communities. Our unique qualifications allow us to devise unique plans to carry out your objectives and work toward improving your communities. You can get started today by contacting our offices at 215.880.9441 in Philadelphia or 202.817.3941 in Washington, D.C. Set up a session with us to discuss your ideas and learn more about potential opportunities available to you. You can also find Savage & Associates online 24 hours a day, seven days a week, for more information about our services.

Rep. Maxine Waters, D-California, recently introduced H.R. 8833, the Making Communities Stronger Through the Community Reinvestment Act. The purpose of this legislation is to update the Community Reinvestment Act (CRA). As a result, the legislation may delay pending proposals by federal banking authorities to update current CRA regulations.

One emphasis of the revisions concerns banks’ CRA exams. The legislation would create mandatory advisory committees in each market where the bank is located, thus providing local communities greater input into CRA exams and activities. The number and location of these advisory committees depend on whether the bank has assets of more or less than $2 billion. Bank executives must meet with these committees quarterly and when a bank proposes certain transactions. At these meetings, the bank and the committees must address issues including credit and deposit needs of low and middle-income individuals, underserved communities, persons with disabilities, LBGTQ+ communities, and 27 specified racial and ethnic communities.

The bill also would require CRA exams to evaluate bank lending done in partnerships with nonbanks and fintechs. Banks also would receive credit for community service and charity work. However, banks with assets over $2 billion would not receive credit for these activities unless they comply with specific reporting requirements and the activities meet various criteria.

Another major focus of H.R. 8833 is to address so-called “redlining” by financial institutions to close racial wealth and homeownership gaps. The first section of the bill acknowledges that one reason for these disparities is historically unequal access to credit due to the racial composition of an area, as perpetuated by lenders. To that end, the bill would encourage lenders to offer mortgages of less than $100,000, primarily to low and moderate-income individuals. Banks also would have to better record data to identify existing discrimination or racial disparities. The legislation also creates a pathway to consider data concerning discrimination and racial discrimination on future CRA exams.

H.R. 8833 would expand the legal violations that could affect CRA ratings. For example, under the amended CRA, “any violation” of a federal or state law, no matter whether the violation is related to the extension of credit, would result in a negative mark on the lender’s CRA performance evaluation. In addition, any evidence of “discriminatory or other illegal credit practices” would result in negative consideration.

Allow Savage & Associates to Help You Develop Your Vision

We are an economic development law firm dedicated to offering complex and innovative legal and transactional advice to developers, investors, nonprofit organizations, entrepreneurs, and changemakers. We are not a traditional law firm. Instead, we are a small boutique law firm that focuses on what you need to develop the strategies necessary to impact communities.

We have worked with clients to obtain all types of tax credits and other government programs to finance the revitalization of communities. Savage & Associates has handled over a billion dollars in New Markets Tax Credit financing transactions and more than 300 commercial real estate closings. As a result, we know how to leverage the available tax credit tools to transform your communities.

Contact our offices by calling 215.880.9441 in Philadelphia or 202.817.3941 in Washington, D.C., to discuss your ideas. You also can find out more about our services online. We look forward to working with you to build your communities through traditional and alternative investment mechanisms based on your individual needs.

The New Markets Tax Credit (NMTC) program offers financing for projects for which traditional financing often is not an option. Generally, NMTC financing offers more flexible and creative terms. In contrast, traditional financing is limited to strict parameters and structures that may not meet the needs of the investors in these projects.

Investors Benefit from Tax Credits Over Seven Years

The biggest benefit for investors in NMTC programs is that they can claim tax credits against their federal tax obligations. The investors’ allotted tax credits equal 39% of the NMTC project over seven years. Traditional investments in such projects do not allow investors to claim these tax credits.

NMTCs Result in Investments in Low-Income Communities

NMTCs only are available for investments in qualifying low-income communities. In many cases, lenders and investors are wary of investing in projects located in these communities due to the level of risk involved. However, the benefits of the NMTC program outweigh the risks for investors and lenders.

NMTC Loans Have More Flexible Terms

The tax credits available due to the NMTC program provide a subsidy that can significantly reduce the interest rate for business loans or increase the business owner’s equity in the project. NMTC loans to these qualifying businesses often have more flexible terms than conventional loans, including decreased origination fees, longer interest-only payment periods, increased loan-to-value (LTV) ratios, decreased debt coverage ratios (DCR), and lengthier amortization periods.

NMTCs Can Combine with Other Financing Sources

Unlike many types of traditional financing, NMTCs can combine with many other sources of financing to fill in financing gaps where needed. As a result, investors have successfully used NMTCs in addition to historic rehabilitation tax credits, state NMTCs, and USDA loan programs, among others, to finance projects.

NMTCs Can Benefit Lenders

Using NMTCs, lenders can earn rates at or near market rates. They also can participate in transactions that would be unfeasible without NMTCs. Furthermore, lenders can help meet their Community Reinvestment Act (CRA) requirements by investing in CDEs for the purposes of the NMTC program.

We Can Work Together to Develop Communities

Savage & Associates is an economic development law firm providing sophisticated legal and business advice to clients interested in making significant changes in their communities. We advise developers, investors, nonprofit organizations, entrepreneurs, and anyone looking to effectuate change.

Contact our offices by calling 215.880.9441 in Philadelphia or 202.817.3941 in Washington, D.C., to discuss your ideas. You can also find Savage & Associates online 24 hours a day, seven days a week, to get more information about the innovative financial tools we can use to make your vision a reality. From New Markets Tax Credits to Historic Tax Credits, we can design the unique transaction best designed to achieve your objectives.

The Community Development Financial Institutions (CDFI) Fund recently published a Frequently Asked Questions (FAQs) document concerning the CDFI certification cure period that is currently in place. Along with the FAQs, the CDFI Fund published certification-related cure period worksheets.

The CDFI Fund previously announced a six-month blackout period beginning October 1, 2022, to prepare for a revised CDFI certification application and reporting requirements. During the blackout period, CDFIs must maintain their certification status in good standing.

CDFIs and Cure Periods for CDFI Certification

CDFIs in a cure period concerning their CDFI certification have failed to demonstrate that they meet one or more CDFI certification requirements. Therefore, they must take action to correct the deficiency or deficiencies that have placed them in the cure period.

The CDFI Fund recently sent general cure notifications to all CDFIs with similar deficiencies. Those notifications specify the issue or issues the CDFI must address and the deadlines for addressing and resolving those issues.

CDFI’s FAQs advise CDFIs in a cure period on how to resolve certification-related deficiencies generally. These CDFIs must submit certain documents concerning their cure requirements by the relevant deadlines. Failing to follow these CDFI Fund directives could result in losing their certifications.

Highlights of the CDFI Cure Period FAQs

The FAQs include general information about how CDFIs can determine what deficiencies they have, how to resolve them, and how long they have to resolve them, including how to:

Call Savage & Associates Today

If you want more information about NMTCS and similar opportunities available to you, call our offices at 215.880.9441 in Philadelphia or 202.817.3941 in Washington, D.C., and schedule a time to speak with us today. You also can find Savage & Associates online 24 hours a day, seven days a week, to learn more about our extensive range of services.

Dionne Savage is here to help you access the benefits of economic development tools such as New Markets Tax Credits, Low-Income Housing Tax Credits, C-PACE, and Historic Tax Credits. These programs can give you the resources to revitalize and build up communities across the United States. With our legal advice and your ideas, we can work to achieve your dreams for your community.

The Community Development Financial Institutions (CDFI) Fund has CDFI Information Mapping System v.4 (CIMS) available for use. Public members can access a limited version of CIMS4. Organizations applying for or receiving funds from CDFI can access a full version through their Awards Management Information System (AMIS) accounts. You can use CIMS4 to perform various functions related to various CDFI programs, including geocoding addresses, mapping census tracts, and counties, and determining the eligibility of census tracts and counties under various CDFI programs.

1. Create and Manage Target Market Maps  – CDFI must meet certain eligibility criteria, including serving one or more eligible Target Markets. CDFIs can apply to establish Target Markets based on either Investment Areas (IAs) or Low-Income Targeted Populations (LITP), or Other Targeted Populations (OTP). Applicants must create separate Target Market Maps for each of their Target Markets. Targeted Populations sharing the same geographic boundaries can share a map, but those that do not need separate maps. CDFIs can use CIMS4 to create new maps for Target Markets, edit existing Target Market Maps, or delete Maps that they no longer need.
2. Interface Information Entered in AMIS with Grants.gov – Some CDFI programs require applicants to submit their SF-424 program application via Grants.gov. AMIS interfaces with Grants.gov, downloads the application, and associates it with the applicant organization.
3. Create a Program Profile Specific to Each CDFI Fund Program – AMIS automatically creates a separate partial program profile for your organization for each CDFI Fund program. You then can edit your organizational data as needed in the profile for each program.
4. Assess the Program Eligibility of Investments, Lending and Financial and Development Services Activities in Specific Geographic Areas for CDFI Fund Programs – Users can access all eligibility data for all CDFI programs by census tract, including data based on the most recent five-year American Community Survey, and criteria based on prior census years. You also can access CDFI headquarters locations, Congressional Districts boundaries, and all census data.

Let’s Get Together to Talk About Your Next Deal

Savage & Associates is an economic development law firm that provides clients with the legal and business insights to grow, revitalize, and build their communities. We use individualized strategies for our clients, ranging from large public companies to burgeoning entrepreneurs, to determine the best strategy for achieving their goals.

We are experienced in using New Markets Tax Credits, Low-Income Housing Tax Credits, C-PACE, Historic Tax Credits, and other investment options to help developers, investors, nonprofit organizations, and entrepreneurs change their communities. Our unique qualifications allow us to devise unique plans to carry out your objectives and work toward improving your communities.

You can get started today by contacting our offices at 215.880.9441 in Philadelphia or 202.817.3941 in Washington D.C. Set up a session with us to discuss your ideas and learn more about the opportunities that may be available to you. You can also find Savage & Associates online 24 hours a day, seven days a week, for more information about our services.

U.S. Sens. Mark D. Warner (D-VA) and Mark Crapo (R-ID) recently announced the creation of the 14-member bipartisan Senate Community Development Finance Caucus (CDFC). The purpose of the CDFC is to support the missions of Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), which exist to increase lending in low and moderate-income (LMI) communities. CDFIs play a major role in bringing affordable credit to underserved communities, which typically are disadvantaged urban and rural communities nationwide.

Previously, Sen. Warner worked with Sen. Crapo and others to introduce the Jobs and Neighborhood Investment Act, a part of the larger December 2020 COVID relief package. This bill provided a $12 billion investment in CDFIs and MDIs, including $3 billion for grant funding and $9 billion for tier-one-capital investments.

In creating the CDFC, Sens. Warner and Crapo pointed out that although CDFIs are making a difference, they still lack the resources to fulfill their full potential. In addition to the legislation mentioned above, Congress allocated $9 billion in capital for long-term preferred stock and subordinated debt investments in CDFIs and MDIs through the Emergency Capital Investment Program. Furthermore, Congress awarded $1.25 billion in grants to 863 CDFIs to respond to the pandemic and $1.75 billion in grants and technical assistance to expand CDFI activities through the Rapid Response and Equitable Recovery Program. Still, when considering the awards available versus the awards requested in these and similar programs, the need dwarfs the available funds.

CDFC pledges to create a strategic, coordinated approach to increase opportunities for CDFIs. They are looking to coordinate and expand the private sector and government efforts to build on recent momentum by Congress in these funding initiatives by focusing on four key areas:

• Education of members and staff as to the challenges facing community-based lenders
• Coordination of regulatory and legislative bipartisan efforts related to CDFIs
• Legislation to further support CDFIs and MDIs
• Tracking of federal legislation and private sector commitments

Many organizations and financial institutions have enforced the CDFC, including the National Bankers Association, the Community Development Bankers Association, the Opportunity Finance Network, Inclusiv, the African-American Credit Union Coalition, the National Association of Latino Credit Unions and Professionals, the Local Initiatives Support Corporation, the American Bankers Association, the Hope Credit Union, MoFi, the Independent Community Bankers of America, the Northwest Native Development Fund, the Native CDFI Network, and the CDFI Coalition.

Allow Savage & Associates to Help You Develop Your Vision

We are an economic development law firm dedicated to offering complex and innovative legal and transactional advice to developers, investors, nonprofit organizations, entrepreneurs, and changemakers. We are not a traditional law firm. Instead, we are a small boutique law firm that focuses on what you need to develop the strategies necessary to impact communities.

We have worked with clients to obtain all types of tax credits and other government programs to finance the revitalization of communities. Savage & Associates has handled over a billion dollars in New Markets Tax Credit financing transactions and more than 300 commercial real estate closings. As a result, we know how to leverage the available tax credit tools to transform your communities.

Contact our offices by calling 215.880.9441 in Philadelphia or 202.817.3941 in Washington D.C. to discuss your ideas. You also can find out more about our services online. We look forward to working with you to build your communities through traditional and alternative investment mechanisms based on your individual needs.