Case Style Telephone Discussion Guide - Investor

NewMarketsTaxCredit(NMTC)ProgramEvaluation

Investor
CaseStyleTelephoneDiscussionGuide
11/25/09


TheCommunityDevelopmentFinancialInstitutions(CDFI)FundoftheU.S.Departmentofthe
TreasuryisinterestedinunderstandingandarticulatingthebenefitsthattheNewMarketsTax
Credit(NMTC)Programmaybringtolowincomecommunities.Towardsthatend,theCDFI
FundhashiredtheUrbanInstitute,anonprofitpolicyresearchorganizationbasedin
Washington,DC,toconductanevaluationoftheNMTCProgram.
NMTCprojectswereselectedatrandomfromamongallNMTCprojectsfordatacollection
throughtelephoneinterviewswithkeystakeholders.Youoryourorganizationinvestedina
projectthatqualifiedforNMTCs.Theprimarygoalofthetelephonediscussionistolearnabout
yourexperienceswith(NAMEProject)thatusedNMTCs.Theinterviewincludesquestions
aboutyourdecisiontoinvestintheproject,andinvestmenttermsandcharacteristics.
Thistaskisneitheranauditnoranevaluationoftheprojectorofyouractivitiesbut,rather,a
sourceofadditionaldetailedinformationabouttheNMTCProgramthatwillassisttheCDFI
FundtobetterunderstandhowNMTCprojectsarestructured.Yourparticipationinthis
interviewisvoluntarybutverymuchappreciated,becauseitwillcontributetoabetter
understandingofhowtheNMTCsarebeingused.
Beassuredthatwewillfollowstrictrulestoprotectyourconfidentiality.Theinformationyou
providewillbecombinedwithinformationwereceivefromallotherswhoareinterviewed,and
neitheryourname,yourorganization’sname,noranyotheridentifyinginformationwillbe
passedalongtotheCDFIFundorothers,orcitedorreportedinanyway.TheCDFIFundwill
notknowwhoisparticipatingintheseinterviews.Ianticipatethatthecallwilllastabout30
minutesapproximately.Aswesynthesizeandanalyzetheinformationyoushare,itwouldhelp
ustorecordthiscall.Again,thisrecordingwouldonlybeusedbyusandnotsharedwith
anyoneelse.Wouldthatbealrightwithyou?Iverymuchappreciateyourcooperation.

ThissurveyhasbeenapprovedbytheOfficeofManagementandBudget,asrequiredbythePaperworkReductionActof
1995,underOMBcontrolnumberXXXXXXXX,whichexpiresonXX/XX/XXXX.Thetimetocompletethisinformation
collectionandanassociatedtelephoneinterviewisestimatedtobe1.25hours,includingtimetoreviewinstructions,
searchexistingdataresources,gatherneededdata,andcompletethesurveyandinterview.Ifyouhaveanycomments
concerningtheaccuracyofthetimeestimateorsuggestionsforimprovingthissurvey,pleasewritetoU.S.Departmentof
theTreasury,CommunityDevelopmentFinancialInstitutionsFund,XXXXXXXXX,Washington,DCXXXXX.

NMTC Evaluation
Investor Discussion Guide

______________________________________________________________________________
A.INVESTORBACKGROUND
x

Typeofinvestorentity

x

Investorentity’spriorexperienceoftheorganizationinmakinginvestmentsinlow
incomeorotherwiseunderserveddistricts,businesses,orcommunities

x

Investorentity’spriorinvestmentsinNMTCsorinothertypesoffederaltaxcredit
financing—suchaslowincomehousingtaxcredits(LIHTCs),historictaxcredits

x

Investorentity’sareasofspecialization(investmenttypes;typesofdeals;geographic
areas)

x

Respondent’sawarenessofNMTCsaspartofthefinancingpackagefor(NAMEProject)?

x

Respondent’sroleintheorganizationandextentoffocus/specializationincommunity
development

x

Relationship(ifany)betweeninvestorentityandtheCDE

x

(Ifnottheparentorsameentity):PriorloansorinvestmentswiththeCDEoritsparent

______________________________________________________________________________
B.INVESTMENTPROCESS/DECISIONS
x

Howinvestorentityfirstlearnedabout/becomeinvolvedin(NAMEProject)

x

(NAMEProject’s)similaritytootherinvestmentsmadebyinvestorentity

x

Extenttowhichinvestorentityandrespondentwereinvolvedintheidentificationof
(NAMEProject)asapossibleinvestment/project,andthedecisionastowhetherornotto
pursue(NAMEProject)
ż (Forrealestateprojects):Didthedeveloper,orthecommunity,consideralternative
locationsfor(NAMEProject)?

2

NMTC Evaluation
Investor Discussion Guide

ż Hadthedeveloperincurredanycostsconnectedwith(NAMEProject)priortothis
investment?
ż Whohelpedputtogetherthefinancialpackagefor(NAMEProject)?
x

Termsoftheinvestmentin(NAMEProject)
ż TotalamountofQEIforthisinvestor;
ż Anyotherinvestmentsbyinvestorentityin(NAMEProject)inadditiontoNMTC
financing
ż Expectedreturnsfromtheinvestment,includingfromtheproject(e.g.,returnon
equity)andfromthetaxcredit
ż Which,ifanyofthefollowing,applytotheinvestmentin(NAMEProject)?
ƒ

Returnofprincipal

ƒ

Sharingofcashflowfromoperations

ƒ

Refinancingorliquidationsforlendersprovidingdebtinaleveragemodel

ƒ

Interestrate

ƒ

Timingofpaymentsofinterestandreturnofamountinvested

ż GuaranteesrequiredbyinvestmententityfromtheCDEoranyoneelse
ż Fees,guarantees,orspecialcovenantsrequiredbytheinvestmententityfor(NAME
Project)beyondtypicalrequirementsfortheinvestmententity’sinvestments


C.ROLEOFNMTCsIN(NAME)PROJECT
x

Investmententity’swillingnesstoinvestin(NAMEProject)absentthetaxcredits

x

Changesinscopeornatureof(NAMEProject)betweeninitialconsiderationandthe
infusionofdebtand/orequitycapitalresultingfromtheissuanceofNMTCqualified
equityinvestments(QEIs)
3

NMTC Evaluation
Investor Discussion Guide

x

RoleofNMTCsinthefinancingpackagefor(NAMEproject)

x

Whatlikelywouldhavehappenedif(NAMEproject)hadnotreceivedNMTCs?

x

DidanyNMTCregulations(e.g.,recapture–the“substantiallyall”requirement;QALICB
criteria)influenceorimpedetheinvestmententity’sinterestin(NAMEProject)?

x

Profitabilityofthisinvestmentcomparedtosimilarkindsofprojectstheinvestment
entityhasinvestedin

x

Has/willinvestmentin(NAMEProject)played/playaroleintheinvestmententity’s(or
theinvestmententity’sparentorganization’s)decisiontodootherinvestmentssimilarto
(NAMEProject)?

____________________________________________________________________________
D.PROJECTSPECIFIC,INDIRECT,ANDCOMMUNITYLEVELOUTCOMES
x

Reports/informationreceivedbytheinvestmententityontheprogressoroutcomesof
(NAMEProject),andsource(s)andfrequencyofsuchinformation

x

Projectscheduleandfinancialperformance

x

Projectspecificoutcomes

x

Indirectoutcomes

x

Communityleveloutcomes

x

(NAMEProject’)contribution,ifany,tochangesinthesociodemographicsoreconomic
statusofthecommunity(e.g.,povertylevelormedianincome;racial/ethniccomposition;
ageandfamilystructuremix;educationlevel;employment,propertyvalues)




4