Changes to the 2018 NMTC Application

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On Wednesday, the CDFI Fund opened the Calendar Year 2018 Round New Markets Tax Credit application. There are some significant differences between the 2017 and 2018 application. The Coalition compared the text of two applications and created a red-lined Word Document for your reference. If you are a member of the Coalition, you should have received it in a Policy Bulletin yesterday. If not, shoot us an email and we’ll get it to you.

Below are some of the most significant changes in the application organized by section.

Executive Summary/Intro/Assurances:

Assurances and Certifications: The applicant has 1,000 characters to explain why they checked a “false” box on any of the assurances and certifications.

Part I: Business Strategy

Projected Business Activities: Much of the project pipeline narrative moves into Table A5. In addition, the procedures for describing a general pipeline or sample pipeline were modified.

Innovative Uses of an NMTC Allocation: The definition of small QLICIs was increased from $2 million to $4 million: “Providing QLICIs where the total QLICIs received by the QALICB are $4 million or less;”

Part II: Community Outcomes

Note the change in the Tip at the beginning of Part II:
“The CDFI Fund does not expect that each and every investment will be in an area identified in Question #24.”

Community Outcomes – Prior Performance and Projections: In the 2017, the application included a tip that no longer appears in the 2018 application: “An Applicant may score higher to the extent that its projected activities will generate clear and well supported outcomes for the communities affected, not simply based on the sheer number of outcomes selected in Question #25.”

The major takeaway from the changes to this question and the deletion of several related Tips is that it may no longer be detrimental for applicants to check multiple boxes in this question. In fact, the FAQ lays this out explicitly:

70) Do the number of community outcomes selected in Question 25(a) affect how the Applicant will be evaluated?

No. The Applicant will not be evaluated simply on the sheer number of outcomes selected in Application Question 25(a). The Applicant should only select those community outcomes that directly apply to the investments described in Application Question 17 and listed in Table A5. Additionally, Applicants should select outcomes whereby they can:

confidently quantify the projected outcome

provide clear and sound methods,

demonstrate how the projected outcome will clearly benefit Low-Income Persons and residents of Low-Income Communities (LICs); and

describe how the projected quantity for each selected outcome compares to the quantities in its track record.

Community Accountability and Involvement: New question (26c): “Discuss the extent of the Applicant’s (or Controlling Entity’s) track record of making investments in projects that were part of a broader community or economic development strategy (e.g., neighborhood revitalization plan, county or state economic development plans, etc.). Provide 2- 3 examples. (Maximum Response Length: 3,000 characters)”

Tables

Table D2 (Fee Structure): The application asks for “an itemized list of the individual fees that represent the Fee Structure the Applicant (or Controlling Entity) anticipates will typically apply to investments closed with the requested NMTC Allocation and result in compensation to the Applicant (or Controlling Entity), its Affiliates or Unaffiliated Third-Parties.” Note: There are significant changes in this section.

Table D5: As noted above, this new table provides space for the input of your project pipeline.

As a reminder, you can find major changes to the Application FAQ highlighted in yellow.