- Community Development
CV typically follows the sequence described below to identify, structure, and close transactions. The time frame from initial intake to final closing can vary significantly based on the complexity of the project, availability of the non-NMTC financing sources, and other factors impacting project readiness.
1. Intake Application. All potential users of the program must complete our intake application. This application gathers key details on the proposed project such as:
2. Discussions with Project Sponsors. While CV receives some applications for NMTC assistance without having previously heard from the applicant, it is common for project sponsors to call with questions about the NMTC program. Because the NMTC program is complex and not right for every project, CV frequently meets with prospective applicants to discuss such issues as potential deal structure, availability of tax credits, eligibility, timing, and approval process.
3. Application Review/Screening. The intake applications are then reviewed to determine whether the proposed project appears to be a feasible NMTC transaction that fits with CV’s mission. This process is coordinated with other applications for local or state assistance that the project sponsors may have submitted, such as land sales, TIF, Class 6b, etc.
4. Underwriting/Structuring. CV then works with the applicant to determine in detail how the project financing will be structured. While NMTCs can be a powerful financing tool, they require careful structuring to be feasibly deployed. CV reviews these issues, and works with the project sponsor as needed to refine the deal structure and identify appropriate lenders and NMTC investors.
5. Advisory Board Review. CV’s Advisory Board meets at least quarterly to review proposed transactions and other CV business activity. Proposed transactions are presented to the Advisory Board in detail for review and comment. In particular, the Advisory Board focuses on the community benefits that will arise from proposed projects, as well as evidence of broad-based community support.
6. Governing Board Review. CV’s Governing Board generally meets after the Advisory Board to consider proposed transactions and other business activity. The Governing Board reviews the Advisory Board’s recommendations regarding proposed transactions, and formally votes on whether to approve CV’s participation in a project.
5.Term Sheet. CV issues term sheet-level commitments to project sponsors that are subject to final approval by CV’s Advisory and Governing Boards. These term sheets reserve a specified amount of NMTC allocation for the proposed project for a specific period of time. Because of the federal credit rate for NMTCs and prevailing NMTC investor pricing, the net NMTC capital can only represent at a maximum about 20% of the total funding for a project (see “Typical Transaction Structure” page above. Therefore, it is critical to identify and secure the balance of the financing sources for the project. CV can only issue these term sheets when the project has secured detailed term sheet-level commitments for all sources of financing needed to fund the entire project, with each source appropriately structured to fit with the NMTC transaction. CV also obtains a deposit at the time of term sheet execution.
8. Closing Process. CV then works with the project lender(s), NMTC investor, and borrower to draft and execute all the necessary documentation for financial closing.