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Community Outcomes: An Important Part Of A Qualified NMTC Application

The review of an NMTC application is an arduous, painstakingly meticulous process. Two sections of the application are not only evaluated but scored, by reviewers. The sections that are both reviewed and scored include the “Business Strategy” and “Community Outcomes” sections of each application. In a past blog, we discussed the “Business Strategy” section and how to complete it so that it and your NMTC Application is highly qualified to receive an NMTC award.

Community Outcomes has always been a significant section of the application since the inception of the program. Simply, it addresses the impact of the project on the community. Older applications included a section entitled “Community Impact.” This section requires more diligence to articulate what projects will be in the CDE’s pipeline.

In “Community Outcomes,” the CDFI Fund first looks to see that the applicant’s methods are clear and sound. In turn, the Fund looks at the metrics that support these methods. Metrics from a third party are more valuable than any that are derived from the applicant’s track record. Showing more than one level of impact is valuable. Some outcomes may not always be obvious to a CDE and its partners.

It’s important for CDEs to understand their projected outcomes and to articulate their track records for achieving similar effect projects. How a CDE’s track record compares with its projected outcomes is of critical importance. Some secondary impacts of the project may be overlooked. Unfortunately, any outcome that is difficult to quantify is often overlooked in this situation.

While job and real estate production tend to be among the most commonly measured outputs and outcomes of community and economic development programs, the following outcomes are also very relevant: (1) creation of amenities, services, and facilities; (2) support for small businesses and organizations; and (3) enhancement of local tax bases.

On a project-by-project basis, consideration is given to which, if any, of the following potential outputs or outcomes are associated with each early-year project: increased employment; developed real estate; improved environment; reduced neighborhood distress; increased community amenities, services, or facilities; new or expanded businesses; attraction of new investors; or provision of advantageous financing.

To receive a score in the highest range in each of the two scored sections for the CY 2020 application and receive the maximum Priority Points, an Applicant generally needed to demonstrate the following specific characteristics related to Community Outcomes:

1. Targeting Areas of Higher Distress (Question 24).

The Applicant must indicate that it will commit to providing at least 75% of its Qualified Low-Income Community Investments (QLICIs) in specified areas of severe distress and/or areas characterized by multiple indicators of distress. The Applicant also must show that its strategy for locating and prioritizing QLICIs in highly distressed communities is highly likely to be effective.

2. Community Development Outcomes (Question 25).

For each outcome selected in Question 25, the Applicant must show that its planned investments are likely to result in significant community outcomes that would clearly benefit Low-Income Persons and/or residents of Low-Income Communities (LICs). All the Applicant’s projected community outcomes must be quantified and supported by sound and clearly explained methods. The Applicant must demonstrate that it validated the reasonableness of the quantified projections with metrics obtained from or informed by third-party source(s), where required based on the outcomes selected. In addition, the Applicant must demonstrate a strong track record of achieving outcomes similar in type and quantity to the projected outcomes.

3. Tracking Community Outcomes (Question 25b).

The Applicant must describe a thorough track record and robust methodology for tracking all projected community outcomes.

4. Community Accountability and Involvement (Question 26).

The Applicant must demonstrate that proposed investments are supported by and beneficial to the communities it serves by outlining an effective process, including a significant role for LIC representatives on its Advisory and/or Governing Board, to ensure planned investments align with LIC priorities. The Applicant also must show an extensive track record of project-specific community engagement in past investment decisions and how its proposed investments will contribute to broader (local, regional, or state-wide) community or economic development strategies or plans.

5. Other Community Benefits (Question 27).

The Applicant must demonstrate a high likelihood that its proposed investments will result in additional non-NMTC related private investment in LICs beyond the initial NMTC investment, as supported by specific track record examples of financing catalytic projects that have spurred additional private investment.

Let’s Work Together to Develop our Communities

If you want to learn more about NMTCs, contact Savage & Associates at 215.880.9441 in Philadelphia, or 202.817.3941 in Washington D.C. to arrange a consultation. Dionne Savage can assist you to gain access to the benefits provided by the New Markets Tax Credits, Low-Income Housing Tax Credits, C-PACE, Historic Tax Credits, and other vital economic development tools that benefit local communities throughout the United States. Visit our website at Savage & Associates 24 hours a day, seven days a week for more information.