ReviewerTraining Presentation - Reviewer Recruitment · •Thank You for serving as a Reviewer for...
Transcript of ReviewerTraining Presentation - Reviewer Recruitment · •Thank You for serving as a Reviewer for...
COMMUNITY DEVELOPMENT
FINANCIAL INSTITUTIONS FUNDwww.cdfifund.gov
Reviewer Training Presentation2017 New Markets Tax Credit Program
PREPARED ON
June 20, 2017The CDFI Fund is an equal opportunity employer.
• Thank You for serving as a Reviewer for the 2017
Allocation Round of the New Markets Tax Credit
Program.
• Questions? Contact:
– NMTC staff for training and program related questions
– A contact list is provided on the last slide
– F2 Solutions for personnel matters
• Please have a copy of the 2017 Phase 1 Review
Form in front of you during this presentation.
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Welcome
• After completion of the independent study and
viewing this presentation, Reviewers will understand
the mechanics of the Phase 1 review process,
including:
– Roles and responsibilities
– Review criteria and guidelines
– Phase 1 Review Form questions
– Other sections of the Phase 1 Review Form
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Presentation Goals
1) Training Logistics & Legal Matters
2) Review Process and Phase 1 Review Form
3) Reviewer Tips and Schedule
4) Phase 1 Review Form – Business Strategy
5) Phase 1 Review Form – Community Outcomes
6) Summary Scoring Sheet & Panel Issues
7) Special Topics
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Presentation Roadmap
• All training will be completed remotely
• In accordance with the Phase 1 Reviewer Training Plan, at this point you should have reviewed:
– “2017 Introduction to the NMTC Program” Presentation Slides
– “2017 NMTC Program Application Roadmap” Presentation Slides
– 2017 NMTC Allocation Application (Applicant Information, Business Strategy and Community Outcomes sections only)
– 2017 NMTC Program Application FAQs (particularly Qs. 27, 34, 35, 51, 53, 54, 57, 65, 66, 67, 68, 72, and 73 as well supplemental FAQs A, B, and D)
– 2017 Phase 1 Review Form
– 2017 Phase 1 Review Form Calculations Worksheet
– Online Review Form Instructions
– Reviewer Tip Sheet: Panel Issues
• This presentation assumes you are already familiar with the content of these documents.
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Training Materials
• This training presentation is the final part of the
Independent Study portion. You will be required to
complete test questions following each section of this
presentation.
• You will have only 3 attempts to correctly answer all
of the test questions for each section.
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Training Logistics – Test Questions
• Make sure to read all elements of the Phase 1 Reviewer Training Plan
• Test questions after Section 1 will refer to these documents.
• If you have not done so already, stop this presentation and review these documents.
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Training Logistics –Test Questions
• You need to complete the presentation and all related test questions by August 15, 2017.
• You must complete the entire training program before you can access your assignments.
• A MANDATORY wrap-up conference call with NMTC staff will be scheduled by a Team Leader between August 15, 2017 and August 16, 2017.
• You will be compensated for 10 hours of training time.
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Training Logistics
• Please closely review the Conflict of Interest (COI) policy posted
in AMIS.
• Consistent with last year’s revisions to the COI policy, any
reviewer that assisted in the preparation (including preparing,
drafting, reviewing, collaborating or strategizing) of a 2017
NMTC application is banned from participating as a 2017 Phase
1 Reviewer.
• If you discover you have a conflict with an application assigned
to you, stop work on that application and immediately inform
your Team Leader, CDFI Fund Legal Counsel, and F2 Solutions.
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Legal Matters – Conflict of Interest
• Anonymity of application reviewers
– Do not communicate with other reviewers
• Confidentiality & non-disclosure agreement
– You agree not to disclose information learned during the review
process or any review materials to any third party.
– All review materials (electronic and paper) must be disposed of at
the end of the review process.
• Legal Counsel Contact: Melanie Lennon
(202) 653-0318
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Legal Matters – Other Items
1) Training Logistics & Legal Matters
2) Review Process and Phase 1 Review Form
3) Reviewer Tips and Schedule
4) Phase 1 Review Form - Business Strategy
5) Phase 1 Review Form – Community Outcomes
6) Summary Scoring Sheet & Panel Issues
7) Special Topics
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Presentation Roadmap
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Overview of Review Process
Phase 1: Peer ReviewExternal Reviewers evaluate applications.
Phase 2: Panel ReviewApplications that meet minimum scoring thresholds in
Business Strategy and Community Outcomes are sent to a CDFI Fund staff panel for consideration in rank order.
Selection of ApplicantsSelecting Official makes Award Determinations based upon
panel recommendations.
3 Stages of the Review Process
• Application Reviewers (You)
• Team Leader
– CDFI Fund staff or
– a Federal employee (from another agency)
• NMTC Program Manager
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Phase 1 Review Process – Key
Roles
Application Reviewer:
• On a timely basis, evaluate approximately 10-12 applications.
– Quality reviews and workload balance are both important! If you experience workload balance issues or extenuating circumstances affecting your working pace/quality, please contact your Team Leader for guidance.
– There may be opportunity for additional assignments for those who work ahead and receive positive feedback from their Team Leader.
• Evaluate applications based on the criteria in the review form as well as the guidance provided by the CDFI Fund in Reviewer training materials and by your Team Leader.
• Justify your selection for each question with brief, thoughtful, and substantive rationale.
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Phase I Review Responsibilities
Team Leaders:
• Ensure Reviewers complete reviews on schedule
• Monitor quality and ensure consistency with guidance
• Return reviews to Reviewer if quality or consistency issues
need to be addressed
• Respond to Reviewer questions and provide guidance as
needed on the Phase 1 Review Form
• Do not tell Application Reviewer which responses to select,
except where indicated in the guidance
• Serve as liaison to NMTC Program Manager
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Phase I Review Responsibilities
NMTC Program Manager:
• Enforces evaluation standards and procedures
• Fields technical inquiries from Team Leaders on
behalf of Reviewers
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Phase I Review Responsibilities
• The Phase 1 Review Form will be completed & submitted online through AMIS
• Please refer to the Online Review Form Instructions for details on accessing AMIS and navigating the Phase 1 Reviewer Form Scorecard
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Phase I Review Form
• Reviewers must select the appropriate response option for each
review question
• Review questions have a varying number of different response
options.
• Some review questions have a “Note” that directs the Reviewer to
consider certain elements when scoring the review question.
• Be sure to read all of the response options before selecting one.
• Select the response option to each question that best represents
your evaluation of the Applicant’s responses in the Application.
• Some review questions will be “Not Applicable (N/A)” for a
particular Applicant.
• For each review question, you must write a one or two sentence
justification explaining why you selected the response option for
that question.
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Phase 1 Review Form – Questions
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Phase I Review Form
Section Title
Sub-Section
Review Question
Justification
Note -Additional Guidance
Response Options
Please provide at least one sentence justification.
Business Strategy
Products, Services and Investment criteria (Qs. 14-16).
• Some review questions will be pre-populated from
responses in the Application.
• You must not change these selections and a justification
will be automatically generated.
• Pre-population is primarily related to:
– A review question being Not Applicable for a particular
Applicant, OR
– A review question being directly pre-populated based on
responses in the Application (e.g., Review Question 5).
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Phase I Review Form –
Question Pre-population
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Phase I Review Form –
Sample Pre-population
This review question was pre-populated based off of NMTC Allocation Application Data.
Pre-populated
Remember: Do NOT change pre-populated answers or justifications. If you believe the information is incorrect, please contact your Team Leader.
Applicant selected 0% in Q. 13(b)(iii)
1) Training Logistics & Legal Matters
2) Review Process and Introduction to Phase 1 Review
Form
3) Reviewer Tips and Schedule
4) Phase 1 Review Form - Business Strategy
5) Phase 1 Review Form – Community Outcomes
6) Summary Scoring Sheet & Panel Issues
7) Special Topics
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Presentation Roadmap
Getting Started:
• Review applications in specified order
• Preview/skim the application before you start answering
review form questions, so you get a sense of its overall
contents
• Ignore all attachments
• Contact your Team Leader if you have any questions or if
any issues affecting your work arise
• Remember, Application narratives and tables work
together
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Reviewers Tips
Evaluation:
• Read the Business Strategy and Community Outcomes sections of the Application before you begin your evaluation of each section
• Read each review question carefully
• Read any “Notes” under review questions for specific scoring guidance
• Carefully read all response options for each question before selecting one
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Reviewers Tips
Evaluation:
• Each review question refers to specific application questions. You may reference information from other parts of the Business Strategy and Community Outcomes sections when selecting ratings, if the information is directly related to that review question and not specifically evaluated in another review question.
– Be sure to explain in your justification comments
– If unsure, ask your Team Leader
• Only evaluate the Applicant on information presented in the Application
• Don’t change any information that’s been pre-populated in the review form
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Reviewers Tips
Explanation of Key Terms: Likelihood
• Many review questions (e.g., Review Question 4) ask the
Reviewer to determine the likelihood of a particular outcome or
expected result
• Definitions:
– Highly Likely: Reviewer feels near-certainty outcome or result will
occur
– Probably: Not as confident as “Highly Likely” but greater than 50%
that outcome or result will occur
– Possibly: Odds are 50/50 that outcome or result will occur
– Unlikely: Less than 50% chance outcome or result will occur
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Reviewers Tips
Explanation of Key Terms: Extent of Narrative
Quality
• Other review question types (e.g., Review Question 1) ask the
Reviewer to determine the extent to which specific items are
present and/or clearly explained in the application.
• Definitions:
– All : Reviewer feels that 100% of the requested information has
been provided and/or clearly explained by the applicant
– Most : Not as substantive as “All”, but more than 50% of the
requested information has been provided and/or clearly explained
by the applicant
– Some: The applicant provided information, but to a lesser degree
than the next best answer choice (e.g. “All” or “Most”)
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Reviewers Tips
Justification Comments:
• Address only the question/criteria being evaluated
• Do not compare Applicants
• Provide clear and substantive analysis
– Clearly identify the key factors that led you to the response option selected.
• For instance, if you selected “B. Probably”, you should provide evidence (i.e. missing information, inadequate supporting data, etc.) to validate why the information provided meets the criteria for your selection.
– Do not simply re-state items from the application. Focus on an ANALYSIS of the information provided
• Address any “Notes” associated with the review question.
• Write in complete sentences or bullet points
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Reviewers Tips
Here is an example of a good justification:
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Reviewers Tips
Justification: The Applicant provides a comprehensive track record and robust methodology for tracking most of the community outcomes it identified in Application Q. 25- Job Creation/Retention, Quality Jobs, Accessible Jobs, and Commercial Goods or Services to Low-Income Communities. However, the Applicant does not outline a track record or address methods for tracking community outcomes for Housing Units.
Here is an example of a bad justification:
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Reviewers Tips
Justification: The applicant’s proposed QLICIs are projected to serve 1000 students annually and 500 homeless individuals annually, therefore they are likely to achieve their projected outcomes.
Review Form Submission:
• Meet the deadlines contained in the delivery
schedule attached to the Training Plan
• Make sure all items are complete before submission
• Be on the lookout for comments from your Team
Leader
• Reviews returned to you by your Team Leader are
due for resubmission within 2 business days
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Reviewers Tips
Review Form Submission:
• If you know you will be unavailable for a period of time, inform
your Team Leader in advance. You may be able to work ahead.
• Team Leaders will try to either accept your review or return it
within two business days but this isn’t always possible. Please
be patient with us.
• Team Leaders will be taking extra time with the first few reviews
to correct errors and provide feedback. There may be more
significant corrections and comments at first.
• Based on your Team Leader’s assessment of your first few
reviews, additional reviews will be released.
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Reviewers Tips
1) Answer option selected inconsistent with narrative justification• Example: Reviewer selects “Highly Likely” for a review
question, but supporting justification indicates Reviewer had doubts about the information presented by the Applicant
2) Inadequate analysis in scoring justifications
3) Reviewer overlooks a question Note in the review form
4) Overlooking key facts• Example: The justification states a piece of information is
missing, when that information is located somewhere in the application
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Reviewers Tips –
Common Reasons for Returned Reviews
Here is the schedule for completing reviews. For an assignment to be
considered on-time it is due at 11:59 PM ET on the schedule bonus-
eligible due date.
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Schedule for Completing Reviews
** If assigned
Bonus Eligible Dates:
Application Assignment Group A Group B
1 Monday, August 21, 2017 Wednesday, August 23, 2017
2 Monday, August 28, 2017 Wednesday, August 30, 2017
3 Thursday, August 31, 2017 Tuesday, September 05, 2017
4 Wednesday, September 06, 2017 Thursday, September 07, 2017
5 Friday, September 08, 2017 Monday, September 11, 2017
6 Tuesday, September 12, 2017 Wednesday, September 13, 2017
7 Thursday, September 14, 2017 Friday, September 15, 2017
8 Monday, September 18, 2017 Tuesday, September 19, 2017
9 Wednesday, September 20, 2017 Thursday, September 21, 2017
10 Friday, September 22, 2017 Monday, September 25, 2017
11** Tuesday, September 26, 2017 Wednesday, September 27, 2017
12** Thursday, September 28, 2017 Friday, September 29, 2017
13** Monday, October 02, 2017 Tuesday, October 03, 2017
14** Wednesday, October 04, 2017 Thursday, October 05, 2017
1) Training Logistics & Legal Matters
2) Review Process and Phase 1 Review Form
3) Reviewer Tips and Schedule
4) Phase 1 Review Form – Business Strategy
5) Phase 1 Review Form – Community Outcomes
6) Summary Scoring Sheet & Panel Issues
7) Special Topics
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Presentation Roadmap
06/20/2017
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Phase 1 Review Form – Overview
Two sections of the NMTC Allocation Application are
evaluated by Phase 1 Reviewers:
(1) Business Strategy, including Priority Points
(2) Community Outcomes
The purpose of this section is to evaluate the Applicant’s
overall business strategy based on the following 5 sub-
sections.
(1) Products, Services, and Investment Criteria
(2) Projected Business Activities
(3) Prior Performance
(4) Prior Performance and Projected Business Activity
(5) Notable Relationships
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Phase 1 Review Form –
Business Strategy
Overview: Evaluate the financial products/services that the Applicant
intends to offer QALICBs or other CDEs.
• Please note:
– Financial products associated with the Leverage Model are often
structured with multiple financial notes (for instance, a Senior A
Note and a Subordinate B Note, etc.). In this case, you should
evaluate the financial notes collectively as a single financial
product.
– If using the Unleveraged Model, the financial product may only
have one financial note.
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(1) Products, Services, and
Investment Criteria
Question 1:
• You, as the reviewer, should be able to clearly understand the rates and terms for the products the Applicant intends to offer
• To score “A”, the Applicant must
– If the Applicant provides a range for any of the rates/terms (e.g., interest rates range from 2-4%) then the Applicant must specify the circumstances that would dictate the specific rates and terms to borrowers/investees AND
– For financial products structured with multiple financial notes, the Applicant must discuss the rates and terms of the financial notes on a blended basis
– Example: If a financial product is structured with an A Note with a 5% rate and a B Note with a 1% interest rate, the Applicant must discuss the blended interest rate for both the A and B notes
– Please review questions 34-36 in the 2017 NMTC Allocation Application FAQs document
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(1) Products, Services, and
Investment Criteria
• Question 2: If the Applicant did not compare the
rates, terms, and features of its products to what it
typically offers AND to similar financial products
offered by other financial institutions in the Applicant’s
service area, then the response must be “B” (No)
• Question 3: To score “A” Applicant must provide an
example from Q. 17(c) for each financial product it
intends to offer
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(1) Products, Services, and
Investment Criteria
• Question 4: will only be applicable if the
Applicant plans to invest or loan to other CDEs
• Question 5: pre-populated from the Applicant’s
response to Application Q. 15. DO NOT
CHANGE THIS RESPONSE.
• Question 6: will only be applicable if the
Applicant plans to purchase loans from other
CDEs.
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(1) Products, Services, and
Investment Criteria
In Application Q. 14 (b), Applicant provides a narrative description of the
financial product it intends to offer, characterized by subordinate debt with
interest rates ranging from 1-2%, Debt Service Coverage Ratios (DSCR)
as low as 1.1, and Loan-to-Value Ratios (LTVs) up to 100%. How would
you evaluate the Applicant in Q.3?
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Case Study: Products, Services,
and Investment Criteria
Justification: Applicant does not provide any comparison of what products the Applicant typically offers and what products are offered by other financial institutions in its service area.
Overview: Evaluate the Applicant’s projected business activities –
either a single or discrete number of investments OR a general
pipeline of investments.
• Questions 7-8: Mostly pre-populated N/A. Only evaluate if
“single or discrete investments” is selected by the Applicant.
• Questions 9-12: Only evaluated if “general pipeline” is
selected by the Applicant.
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(2) Projected Business Activities
• Question 9: Evaluate whether the Applicant
provides all necessary details for its overall
pipeline of activities.
• Question 10: Evaluate whether the Applicant
provides the necessary details for each
sample transaction in its pipeline.
• The necessary details the Applicant must
provide are listed in the Note before each
question.
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(2) Projected Business Activities
• Question 11: Evaluate whether or not the
details of the Applicant’s sample transactions
validate its deployment projections (Exhibit
A).
• Question 12: Evaluate the likelihood that the
Applicant’s business identification strategy
will yield the types of investments described
in its general pipeline.
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(2) Projected Business Activities
Overview: Evaluate the Applicant’s (or Controlling Entity’s) track
record providing direct and indirect financing.
• Please note:
– Direct financing activities are loans a/o equity investments that are financed
with the Applicant’s (or Controlling Entity’s) own at-risk capital. These
activities also include investments in other CDEs, purchasing loans from
other CDEs, and FCOS provided by the Applicant (or Controlling Entity).
– Indirect financing activities are loans a/o equity investments that are
financed by third-parties where the Applicant (or Controlling Entity)
participate, but had no capital at risk (e.g., loan packaging, project
development, etc.)
– DO NOT consider any financing activities closed after May 2nd, 2017 in your
evaluation of prior performance.
– Applicants were instructed not to include grants made to others as part of
their financing track record, so please disregard any grant-making activity in
your evaluation.
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(3) Prior Performance
• Question 13: Response choices include criteria for both direct and indirect financing activities.
– Carefully read the Phase 1 Review Form Calculations Worksheet to know where in Exhibit B to locate both direct and indirect financing.
– Ensure to select the highest response that aligns with the Applicant’s track record. For example, if the Applicant has less than 2 years of DIRECT financing activity, but 5 or more years of INDIRECT financing activity, then the score should be “B,” not “D.”
• Question 14: This question asks only about the Applicant’s DIRECT financing track record as presented in Tables B1-B3 and Application Question 19. DO NOT include financing in Table B4 and Application Question 20.
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(3) Prior Performance
• Question 15: Compare Applicant’s proposed QLICIs
and business/project types to determine if its track
record includes comparable financing activities
– Applicant’s Proposed QLICIs – See Application Question
13(b)
– Business/Project Type is the category of business(es) the
Applicant plans to invest in, such as community facilities,
retail, industrial, and mixed-use real estate, among others.
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(4) Prior Performance and
Projected Business Activity
An Applicant has a track record of providing FCOS to early childhood education
centers and community health centers. The Applicant’s pipeline consists of
providing debt financing for the development of new community health centers.
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Case Study: Prior Performance
and Projected Business Activity
Justification: The Applicant’s pipeline consists entirely of community health centers and the Applicant demonstrates a track record of serving community health centers. However, the Applicant does not show a track record of providing debt financing.
• Question 16: Compare projected deployment in Exhibit A (all tables) with financing track record (both DIRECT and INDIRECT financing) in Exhibit B.– Carefully read the notes before Q. 16 to know what you
should take into account for total projected deployment in Exhibit A.
– Calculate % to select the highest response that aligns with the Applicant’s track record.
– Formula: • Historical Financing Percentage =
Financial Track Record ÷ Projected Deployment
• (See Phase 1 Form Q. 16 Notes and the Phase 1 Reviewer Calculations Worksheet for more details)
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(4) Prior Performance and
Projected Business Activity
Justification: The Applicant’s track record of direct financing represents 30% ($18MM) of its $60MM total projected deployment in Exhibit A. However, the Applicant has a stronger track record of indirect financing that represents 70% ($42MM)of its projected deployment.
Total projected deployment in Exhibit A is $60MM. The Applicant has a
track record of $18MM in direct financing and $42MM in indirect financing
listed in Exhibit B.
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Case Study: Prior Performance
and Projected Business Activity
Overview: Evaluate if the Applicant will have a notable
relationship(s) in proposed investments and whether benefits will
be passed to unaffiliated end users
• “Added value” means that notable relationships will create
benefits for non-affiliated end-users. Consider the community
outcomes described in Q.25 of the Application when evaluating
notable relationships
• If Applicant answers “No” for Q. 23(a)-Q.23(e), select “A” for
Review Form Question 17
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(5) Notable Relationships
The Applicant indicates that it will act as a “Master Tenant” in some projects
for the purposes of twinning NMTCs and historic tax credits. In these
instances, the Applicant indicates that the dual subsidies are necessary for
the project to occur and deliver community benefits. The Applicant won’t
gain any material financial benefit by being “Master Tenant”.
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Case Study:
Notable Relationships
Justification: Notable relationship is a function of structuring the financing and does not create any material financial benefit for the Applicant or its Affiliates. Also, based on Q. 25, these projects will generate significant community outcomes, including quality jobs and healthcare services for LIPs.
• Applicants can earn up to 10 “bonus” points:
– Priority 1 (5 points): based on track record of serving
Disadvantaged Businesses and Communities (DBCs)
– Priority 2 (5 points): based on a commitment to invest in
unrelated entities (Application Question 22)
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Priority Points
Overview: Evaluate the number of years and percentage of dollar
volume of financing that has been provided to DBCs
• Please note:
– Track record of principals, board members, and other management
individuals are not relevant for this section
– If Exhibit B is Not Applicable or includes only zeros for direct
financing, then the response selection for Q. 18 must be “C” and Q.
19 must be “E.”
• Question 18: Be sure to include years of financing in all four
tables (B1-B4), both direct and indirect financing. Applicants
may take into account the narratives in Application Questions
Q.19 and Q.20.
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Priority Points 1:
Track Record of Serving DBCs
• Question 19:
– Formula (Exhibits B1-B4): % of DIRECT financing activities provided to DBCs = Totals to DBCs & Communities ÷ Totals (2012-2017)
– DO NOT include indirect financing in the calculation.
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Priority Points 1:
Track Record of Serving DBCs
Evaluation Elements:
• Based on application Q.22
• Applicant is automatically granted these Priority Points based on
its response
• Reviewer cannot alter score
• If you feel these points were erroneously claimed, you should
indicate this in the Panel Issues section of the review form
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Priority Points 2:
Investments in Unrelated Entities
1) Training Logistics & Legal Matters
2) Review Process and Phase 1 Review Form
3) Reviewer Tips and Schedule
4) Phase 1 Review Form - Business Strategy
5) Phase 1 Review Form – Community Outcomes
6) Summary Scoring Sheet & Panel Issues
7) Special Topics
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Presentation Roadmap
The purpose of this section is to evaluate the Applicant’s
strategy to generate community outcomes based on the
following 5 sub-sections.
(1) Targeting Areas of Higher Distress
(2) Community Outcomes
(3) Tracking Community Outcomes
(4) Community Accountability and Involvement
(5) Other Community Benefits
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Community Outcomes
Overview: Evaluate the Applicant’s strategy for prioritizing QLICIs
in areas of higher distress
• Question 20: Pre-populated based on Applicant’s response in the application
• Question 21: Consider the Applicant’s criteria for prioritizing QLICIs, given limited allocation
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(1) Targeting Areas of Higher
Distress
Overview: Evaluate the Applicant’s track record and projected
community outcomes.
• Please note:
– To facilitate a more in-depth review, individual community outcomes
listed in Q.25 have been grouped into 4 categories. Each category
is evaluated with a similar set of questions and all categories are
equally weighted when determining the overall section score.
– The CDFI Fund has no preference for one outcome over another
– Reviewers will only answer review questions for a category if the
Applicant has selected one or more outcomes in that category,
otherwise those review questions will be pre-populated N/A.
– Reviewers should collectively evaluate the outcomes if there is
more than one outcome selected in that category.
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(2) Community Outcomes
• Other important notes:– For Application Q. 25(a), Applicants that select (1) Job
Creation/Retention as an outcome are also required to
provide a response for both (2) Quality Jobs and (3)
Accessible Jobs
– For the other categories, it does not matter how many
outcomes they select
• For example, an Applicant should not be evaluated
differently whether it selects only one or all three Goods
and Services to Low-Income Communities Outcomes.
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(2) Community Outcomes
Four Community Outcome Categories:
1. Job-Related Community Outcomes– 1. Job Creation/Retention
– 2. Quality Jobs
– 3. Accessible Jobs
2. Goods and Services for Low-Income Communities– 4. Commercial Goods or Services
– 5. Healthy Food Financing
– 6. Community Goods or Services
3. Financing Minority Businesses and Housing Units– 7. Financing Minority Businesses
– 8. Housing Units
4. Additional Community Development Outcomes– 9. Flexible Lease Rates
– 10. Environmentally Sustainable Outcomes
– 11. & 12. Other
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(2) Community Outcomes
Questions 22, 29, 35, and 40: Did the Applicant quantify the projected outcomes.
Questions 23, 30, 36, and 41: Evaluate the methods used to estimate outcomes.
• A method is the procedure the Applicant used to obtain the numbers for quantifying its projections for each selected Community Outcome.
• Examples include: – Using XYZ economic impact modeling software to estimate the number of
construction jobs;
– Calculating projections (e.g. square feet, jobs, clients served) based on similar projects previously financed by the Applicant;
– Obtaining projected outcome data from the project sponsor or business;
– Analyzing QALICB financial projections to determine future lease rates to third-party tenants;
– or Evaluating the reduction in energy or water use based on the environmental features incorporated by the QALICB
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(2) Community Outcomes
Questions 24, 31, and 42: Evaluate the metrics used to estimate the outcomes.
• A metric is the numerical basis the Applicant used to validate the reasonableness of the quantified projections for each selected outcome.
• Applicants should include the source of the metric, even if it has been identified from a third-party source
• Metrics are not evaluated for Financing Minority Businesses and Housing Units
• Examples of metrics include: – X square feet of commercial real estate development results in the creation of Y full-
time construction jobs;
– Charter schools create X Full Time Equivalent jobs for every Y students;
– X full-time primary care doctors equals Y patient visits per year;
– X% reduction in rent for an early childhood education center results in Y number of additional children enrolled; OR
– X environmental remediation costs will result in Y square feet of reusable space in a LIC.
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(2) Community Outcomes
Using the actual jobs created from similar projects previously financed by the Applicant, the Applicant’s proposed pipeline projects are projected to create 400 jobs. Based on its track record, 4 jobs are created for every 1,000 square feet in new retail, 3 jobs per 1,000 square feet in new office space, and 1.5 jobs per 1,000 square feet in new industrial development.
• What is the method?
– Calculating the actual jobs created from similar projects previously financed by the Applicant
• What is the metric?
– 4 jobs for 1,000 sf retail, 3 jobs for 1,000 sf office, 1.5 jobs for 1,000 sf industrial
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Case Study: Methods/Metrics
An Applicant projects that the community health centers in its pipeline will
serve 50,000 LIP patients annually. To estimate this projection, the Applicant
provides a comprehensive explanation of how it conducted a market study that
evaluated the medical needs of the surrounding community for each center,
especially among LIPs who reside nearby.
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Case Study: Methods/Metrics
Justification: Applicant clearly explains how it used a market study of the medical needs of the surrounding LIC for each health center to make its projections.
Although the Applicant scored high on methods, same
is not true for metrics.
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Case Study: Methods/Metrics
Justification: Applicant does not indicate the metrics it used to validate the reasonableness of its projections for number of patients served by the new health centers.
Questions 25, 32, 37, and 43: Evaluate the likelihood that the
Applicant’s proposed QLICIs will generate the outcomes it has
proposed.
• Reviewers should refer to the Applicant’s proposed investments in
Application Q.17.
• Determine how likely the Applicant is to generate the proposed outcomes
based on the types of investments it has proposed.
• For instance, if the Applicant projects X number of LIP patients will
receive health care services, does it propose community health centers or
related investments in Question 17?
• Another example: If Applicant proposes the development of X number of
housing units as an outcome, does it propose mixed-use
commercial/residential or similar investments in Question 17?
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(2) Community Outcomes
For each outcome category, reviewers will evaluate if the
community outcomes will benefit Low-Income Persons or
Residents of Low-Income Communities.
• For Job-Related Community Outcomes:
– Will the created/retained jobs be quality jobs (Question 26)
• Quality jobs are jobs that provide living wages; benefits such as
health insurance or retirement plans; and/or opportunities for
training and advancement.
– Also, will the jobs be targeted and/or accessible to Low-
Income Persons (LIPs), residents of Low-Income
Communities (LICs), people with lower levels of education,
or people who face other barriers to employment (e.g. longer
term unemployed, ex-convicts, etc.) (Question 27)
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(2) Community Outcomes –
Benefits to LIPs and LICs
For Goods and Services for Low-Income Communities:
Question 33: Will projected outcomes increase the
provision and access of
– commercial goods or services,
• (e.g., restaurants, retail, pharmacies),
– fresh and healthy food options (e.g. grocery stores),
– and/or community goods or services
• (e.g., healthcare, social services, educational, cultural)
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(2) Community Outcomes –
Benefits to LIPs and LICs
• Using internal sq. footage projections and market studies, Applicant XYZ
projects that its Grocery Store pipeline project will serve 50,000 new LIPs
annually within a designated Food Desert. The applicant’s track record shows a
history of financing community centers and hospitals.
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Case Study: Community Outcomes
Benefits to LIPs and LICs
Justification: The applicant uses sound methods and metrics for its projected outcomes, but it does not have a history of making Healthy Food Financing Investments, more specifically grocery stores.
• For Financing Minority Businesses/Housing Units and Additional Community Development Outcomes:
– Question 38: Will the projected Financing Minority Businesses and Housing Units clearly benefit Low-Income Persons (LIPs) and/or residents of Low-Income Communities (LICs)?
– Question 44: Will the projected Additional Community Development outcomes clearly benefit Low-Income Persons (LIPs) and/or residents of Low-Income Communities (LICs)?
– Location in a LIC is NOT sufficient to demonstrate benefit to LIPs/LIC residents.
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(2) Community Outcomes –
Benefits to LIPs and LICs
For Question 38, examples of Financing Minority Businesses and Housing Units clearly benefiting LIPs and residents of LICs includes (but not limited to):
• Financing Minority Businesses – the business will employ LIPs and/or residents of the LIC AND/OR provide goods and services to LIPs and/or residents of LICs
• Housing Units – the project will result in affordable housing units for LIPs and/or LIC residents
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(2) Community Outcomes –
Benefits to LIPs and LICs
• Inadequate Versus Good Justification for Question 38
– Inadequate Justification: The new housing
development will likely benefit LIPs because it will be
located in a economically distressed neighborhood.
– Good Justification: The new housing development will
likely benefit LIPs because X% of the units will be set
aside for residents with incomes 80% or below the
AMI.
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(2) Community Outcomes –
Benefits to LIPs and LICs
For Question 44, examples of Additional Community Development Outcomes clearly benefiting LIPs and residents of LICs includes (but not limited to):
• Flexible Lease Rates – the project will provide reduced rent or lease payments charged to a community healthcare center serving LIPs and/or LIC residents.
• Environmentally Sustainable Outcomes – remediation of environmental contamination of project location will eliminate illness among LIPs and/or LIC residents; building a water treatment plant that provides clean and safe water for LIPs and/or LIC residents.
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(2) Community Outcomes –
Benefits to LIPs and LICs
• Inadequate Versus Good Justification for Question 44
– Inadequate Justification: The environmental brownfield
remediation will likely benefit LIPs because it will occur
within an economically distressed neighborhood that
has experienced persistent poverty.
– Good Justification: The environmental brownfield
remediation will likely benefit LIPs because it will
alleviate LIC environmental ailments by removing all
contaminants from the remediated area.
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(2) Community Outcomes –
Benefits to LIPs and LICs
Questions 28, 34, 39, and 45: Evaluate the Applicant’s
track record of producing similar community outcomes.
A similar track record should include:
• Outcomes that are similar in type (e.g., job creation,
community goods/services, flexible lease rates).
• Outcomes that are similar in quantity (e.g., number of jobs
created, square feet of community facilities, percent below
market rent).
– While outcomes with similar quantities are important, it is more
significant for you to establish whether or not the Applicant has
relevant experience generating those outcomes
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(2) Community Outcomes
• Question 46: Evaluate the Applicant’s ability
to effectively track ALL projected community
outcomes.– The Applicant’s response to application Q.25(b) should
address how it will track all outcomes selected in Q.25(a).
– In order to select “A”, the Applicant must describe BOTH its
methodology for tracking future projected outcomes AND its
track record of documenting similar outcomes in the past
• The Applicant must also address their tracking methods for all
selected outcomes to score “A.”
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(3) Tracking Community Outcomes
Overview: Evaluate the Applicant’s track record of community engagement and process for ensuring that future investments align with community priorities.
• Question 47: Evaluate the role of LIC Representatives on the Applicant’s Advisory and/or Governing Board in setting the Applicant’s investments parameters, formulating the Applicant’s pipeline of investments, and approving the Applicant’s investment decisions.
• Question 48: Evaluate the Applicant’s process for determining whether its investments align with community priorities. The following elements should be considered:
– The Role of LIC Representatives on the Advisory/Governing Board
– The Applicant’s process for analyzing potential benefits to DBCs
– The Applicant’s process for determining if investments align with community priorities
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(4) Community Accountability and
Involvement
Question 49: Applicants are expected to describe a track record of activities beyond simply consulting with its Advisory Board. Examples may include:
• Partnerships with local community or economic development entities
• Public hearings or community meetings
• Support from elected officials
• Community design charrettes
Note: Past community engagement activities must be clearly related to investment decisions when evaluating this question.
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(4) Community Accountability and
Involvement
• Question 50: Evaluate the extent to which the Applicant’s investments contribute to broader community and/or economic development strategies. Examples may include:
– Neighborhood revitalization plans
– Regional economic development strategic plans
– Rural county master plans
– DOES NOT INCLUDE a private facility expansion plan of a business (e.g., university capital improvement plan).
Note: Certain areas (e.g. rural or Tribal areas) or financing activities (Smaller QLICIs, non-Real Estate activities) may not have a formal plan or planning process. Nevertheless, if the Applicant plans to invest in these areas or activities, it can score highly if it discusses the other methods it used to ensure alignment with the community’s strategic priorities.
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(4) Community Accountability and
Involvement
Overview: Evaluate the likelihood that the Applicant’s investments will attract additional private investment or the ability of operating businesses financed to attract subsequent private investment after the initial QLICI is made.
• Questions 51-52: Additional private investment DOES NOT include how much private capital will be leveraged within the NMTC transaction structure or outside the structure during a simultaneous closing. Examples of additional private investment may include:
– X years after an NMTC investment made to an operating business, that business was able to raise private equity to fund a factory expansion.
– After an NMTC-funded project was completed, the owner of several adjoining properties financed façade improvements.
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(5) Other Community Benefits
1) Training Logistics & Legal Matters
2) Review Process and Phase 1 Review Form
3) Reviewer Tips and Schedule
4) Phase 1 Review Form - Business Strategy
5) Phase 1 Review Form – Community Outcomes
6) Summary Scoring Sheet & Panel Issues
7) Special Topics
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Presentation Roadmap
• In the Award Determination, reviewers provide:
– A final YES/NO award recommendation
– Award recommendation justification
• Reviewers DO NOT recommend specific award
amounts.
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Award Determination
• Aside from the evaluation criteria, you will also provide
information on the following factors that the CDFI Fund will
consider in Panel Phase (Phase 2) of review:
1. Ineligible or questionable QLICI activities
2. Adjustments to allowable QLICI activities
3. Erroneously claiming Priority 2 points
4. Other critical items
• NOTE: Panel issue comments do not factor into Phase 1
scoring.
• If you do not find any issues, simply mark “No”
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Panel Issues
• Does the Applicant’s business strategy include aspects
that are not clearly eligible per IRS regulations? Such as:
– Residential rental housing that is not part of a mixed-use
project
– Direct provision of individual consumer loans by the
Applicant (e.g., home mortgages)
• If yes:
– Provide a brief explanation
– List the question number where the ineligible activities
were referenced
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Panel Issues: (1) Ineligible or
Questionable QLICI Activities
• Were there activities checked in Q. 13(b) that you believe
the Applicant should be prohibited from doing?
• Were there activities that were NOT checked in Q. 13(b)
that you believe the Applicant should be allowed to do?
• If yes:
– Provide a brief explanation
– List the QLICI activities which should be removed and/or added
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Panel Issues: (2) Adjustments to
Allowable QLICI Activities
• Priority for investing in Unrelated entities is self-reported in
Q. 22
• You should notify the CDFI Fund if you feel that Q.22 was
answered incorrectly by the Applicant
• Example: An Applicant’s sole QLICI transaction will
capitalize a subsidiary entity.
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Panel Issues: (3) Erroneously
Claiming Priority 2 Points
• Do not use this area for general comments about the application
• Only address issues that were not included in other areas of the review form, which you think the CDFI Fund should consider – e.g.:
– Material concerns related to the Applicant’s ability to manage and/or raise QEIs for an NMTC allocation
– Other critical areas of concern not appropriately reflected in the scoring or in any of the other required fields
– You have concerns about any prior NMTC activities discussed in the application
– You have knowledge of information not presented by the Applicant in its application that may influence the CDFI Fund’s decision
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Panel Issues: (4) Other Critical
Issues
1) Training Logistics & Legal Matters
2) Overview of Review Process and Introduction to Phase 1 Review Form
3) Reviewer Tips and Schedule
4) Overview of Phase 1 Review Form - Business Strategy
5) Overview of Phase 1 Review Form – Community Outcomes
6) Summary Scoring Sheet & Panel Issues
7) Special Topics
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Presentation Roadmap
NMTC Investment Models
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Special Topics
NMTC Investment Structures -
Unleveraged Structure
CDE $1MM
QEI
QALICB
An Investor purchases the New Markets Tax Credits and funds the Qualified Equity Investment of $1 million dollars.
$390K$1MM
The CDFI Fund Awards an Allocation of New Markets Tax Credits to the CDE.
Fees, Costs, and
Expenses
$50K
$950KThe CDE provides a QLICI of $950K to the QALICB.
Investor
The CDE receives $50K to cover the fees, costs and expenses.
06/20/2017
NMTC Investment Structures -
Leveraged Structure
Investor
CDE $1MM
QEI
QALICB
$390K
The CDFI Fund Awards an Allocation of New Markets Tax Credits to the CDE.
Fees, Costs, and
Expenses
$50K
$950KThe CDE provides a QLICI of $950K to the QALICB.
Leverage Debt Provider
$312K
Investment Fund$1MM in Capital
$688K
$1MM
The difference between the $312K generated from the sale of the NMTCs and QEI of $1MM is provided as Leveraged Debt.
The CDE receives $50K to cover the fees, costs and expenses.
An Investor purchases the NMTCs. This assumes a credit price of 80¢.
06/20/2017
• The CDFI Fund does not have a preference for the Leveraged or Unleveraged Structure
• Not all Applicants will use the Leveraged Structure
• There are benefits to using either Structure (e.g., providing Qualified Businesses with access to below market rate capital in Low Income Communities, etc.)
• Applicants should not be scored differently based on the structure an Applicant intends to use
• Direct any questions about NMTC Investment Structures to your Team Leader
NMTC Investment Structures -
Notes
06/20/2017
CDFI Fund Contact Information
Name Email Phone
Christopher Allison [email protected] 202-653-0357
David Fleites [email protected] 202-653-0355
Joe Iannuzzi [email protected] 202-653-0358
Bob Ibanez [email protected] 202-653-0310
Rosa Martinez [email protected] 202-653-0311
Mia Sowell [email protected] 202-653-0356
Jason Penn [email protected] 202-653-0346
Joan Reid-Patrick [email protected] 202-653-0380
Adrian Russell [email protected] 202-653-0396
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