Latest News
December 2010 CDF provides $11.2 million in New Markets Tax Credits to Radio Flyer to help rehabilitate and reconfigure a 68,000 sq.....
Read more >

	CDF Funding Parameters The Closing Process General Compliance Requirements

The Closing Process

CDF developed a formal project intake application in 2007, and follows the sequence described below to identify, structure, and close transactions:

1. Pre-Application Discussions with Project Sponsors. While CDF 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 relatively new and specialized, CDF frequently meets with prospective applicants to discuss such issues as potential deal structure, eligibility, timing, and approval process.

2. Intake Application. All potential users of the program must complete CDF’s intake application, which is available online at the Department of Community Development web page. This application gathers key details on the proposed project such as:
   1. Eligibility to participate in NMTC program
   2. Project location and evidence of site control
   3. Anticipated community benefits (jobs creation/retention, services, etc)
   4. Available financing sources
   5. Need for NMTC assistance
   6. Project timing

3. Application Review/Screening. The intake applications are then reviewed by HED to determine whether the proposed project appears to be a feasible NMTC transaction that fits with CDF’s mission. This process is coordinated with other applications for City assistance the project sponsors may have submitted, such as land sales, TIF, Class 6b, etc.

4. Underwriting/Structuring. CDF 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. CDF reviews these issues, and works with the project sponsor as needed to refine the deal structure and identify appropriate lenders and NMTC investors.

5. Term Sheet. CDF issues term sheet-level commitments to project sponsors that are subject to final approval by CDF’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, NMTC benefits can only represent at a maximum about 25% of the total funding for a project. Therefore, it is critical to identify and secure the balance of the financing sources for the project. CDF can only issue these term sheets when the project has secured detailed term sheet-level commitments, appropriately structured for an NMTC transaction, from:
   1. All lenders to the transaction
   2. Other providers of funding, if applicable (e.g. grants, TIF, etc)
   3. NMTC equity investor

6. Advisory Board Review. CDF’s Advisory Board meets at least quarterly to review proposed transactions and other CDF 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 community support, such as:
   1. Community meeting(s)
   2. Aldermanic support letter

7. Governing Board Review. CDF’s Governing Board generally meets two weeks 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 CDF’s participation in a project.

8. Closing Process. CDF then works with the project lender(s), NMTC investor, and borrower to draft and execute all the necessary documentation for financial closing.

© 2006-2009 Chicago Development Fund - All Rights Reserved | View Site Map
Website Design by Blue Daring | experts in the art of information consumption