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What Role Does the Comprehensive Investment Plan Play in a CDE’s NMTC Application?

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.

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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.