The CDFI Fund has released a draft of the proposed allocation agreement for the 2015-2016 New Markets Tax Credit allocation round. A new section added to the allocation agreement provides a limitation on QLICI proceeds which are used to repay or refinance documented reasonable expenditures. This section ties into the guidance provided in the December 2015 FAQs which imposes on CDEs in the next round of allocation the responsibility to include covenants in financing documents imposing the restriction, confirm the reasonableness of expenses, trace the use of QLICI proceeds both and after closing and maintain documentation to trace the use of QLICI proceeds for inspection by the CDFI Fund.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.