Our New Market Tax Credit Services for CDEs

NMTC financing permits a “qualified community development entity” (a “CDE”)  to provide substantial community impact to low-income communities and low-income persons.  Additionally, over the 7-year NMTC compliance period, CDEs typically receive fees between 6% and 8% of their NMTC allocation award.  Typical NMTC allocation awards are between $5 million and $80 million.  Therefore, fees can be between a range of $600,000 to $800,000 and a range of $4.8 million to $6.8 million, respectively.

Community Reinvestment Associates is a national boutique tax credit consulting firm. We work closely with our clients (and their principals and affiliates) to (a) qualify as, and apply to be, a CDE; and (b) draft, review, and apply for a NMTC allocation award from the CDFI Fund.

For several years, we have reviewed NMTC allocation applications on behalf of the CDFI Fund. Thus, we are able to draft NMTC allocation applications that are well-written, persuasive, and effective in securing a NMTC allocation award.

Generally, all of our fees are contingent upon our client receiving a NMTC allocation award.  The scope of our services are tailored to the particular needs of our clients, the nature and degree of which can vary.  Accordingly, our contingent fees vary depending on the nature and degree of our services.

Upon engagement, we will promptly provide or otherwise assist each client with the following:

• if applicable, organize a new entity for purposes of qualifying as a CDE which will be the applicant (the “Applicant”) submitting any of NMTC allocation application, including (a) drafting and filing articles of organization; (b) drafting partnership agreements or limited liability company agreements, as applicable (including provisions necessary for qualification as a CDE and other CDFI Fund requirements); (c) applying for a federal tax identification number; and (d) other related organizational work;
• draft all necessary authorizing consents, resolutions, and certifications as required for facilitating all of the transactions contemplated by the NMTC allocation award applications;
• complete the online application to the CDFI Fund requesting designation of the Applicant as a CDE (as well as provide necessary research to determine qualification of governing or advisory board members, as applicable, as representative of low-income communities and/or low-income persons);
• underwrite the Applicant’s pipeline of projects (as well as differential innovative financings thereof);
• assist in identifying other projects and Borrowers that may be included in the NMTC allocation application;
• provide advice and guidance as well as draft and complete answers to each NMTC allocation award application, which consists of the four sections relating to the:
  • financial products, pipeline of projects, and business strategy of the client;
  • qualification and quantification of community impact of such projects and the client’s track record for similar types of impacts;
  • management capacity of the CDE in various areas of expertise and experience; and
  • strategy to raise equity and debt required to deploy the NMTC allocation award;

  

  • file the NMTC allocation application online (and all required documents) with the CDFI Fund;
  • assist with any questions or concerns raised by the CDFI Fund during its review of the NMTC allocation application;
  • assist in negotiating any NMTC allocation award agreement with the CDFI Fund;
  • draft CDFI required opinions, consents and resolutions required for the NMTC allocation award;
  • assist with organizing and qualifying additional sub-subsidiary CDEs to facilitate each NMTC financing with each Borrower;
  • assist in underwriting NMTC financing in compliance with the NMTC program (including drafting community benefit agreements);
  • otherwise assist with customary post-NMTC allocation award matters through the date of the unwind of last NMTC financing at the end of the 7-year NMTC recapture period; and
  • as otherwise provided in our Consulting Agreement.