Dear Ms. Reed:
On May 22, 2007, the Community Development Financial Institutions (CDFI) Fund of the Department of Treasury solicited public comments to help the CDFI Fund develop a policy to implement the statutory requirement of the Tax Relief and Health Care Act of 2006 (P.L. 109-
432) to ensure that, for purposes of the New Markets Tax Credit (NMTC) program, non metropolitan counties receive a proportional allocation of Qualified Equity Investments (QEIs). While the comment period closed July 6, 2007, the CDFI Fund offered to receive our comments past this date. Please follow whatever procedures are appropriate to make this document available for public review.
Congress created the NMTC program in 2000 to create a new financing instrument for low income rural and urban communities. A recent GAO report notes that, to date, NMTC investment totals over $7.7 billion. However, data collected from the CDFI through Fiscal Year 2005 shows only 10.38% of the total NMTC proceeds were invested in rural low-income communities. Therefore, two years ago, the Committee included language to require a proportional allocation of QEIs to non-metropolitan counties which ultimately passed into law as part of the Tax Relief and Health Care Act of 2006 (P.L. 109-432).
It was our intent to direct a greater share of NMTC financing to non-metropolitan communities such that the ultimate beneficiaries are individuals and businesses in rural areas. We recognize that the CDFI Fund does not allocate QEIs to geographic areas but rather allocates credits to CDEs which then issue qualified low-income community investments (QLICIs) in low income communities. The rule established by the CDFI should ensure a proportional share of dollars as measured through QLICIs is delivered to non-metropolitan communities.
The CDFI solicited comments regarding the proper interpretation of the word proportional. The notice offered a potential definition that would ensure 25% of the allocatees predominantly serve non-metropolitan areas. To achieve true proportionality in the NMTC program, it seems
25% should be treated as a floor, not a ceiling. Congress has created set-asides in other programs, but declined to do so in the NMTC program.
We appreciate your prompt attention in this matter and look forward to working with you to ensure a proportional share of NMTC financing is delivered to rural areas. Please contact [staff]
if you have any questions.
Sincerely,
Max Baucus, Chairman Charles Grassley, Ranking Member
Source: Ranking Member’s News
