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Community Development Entity (CDE)

In order to receive an allocation under the NMTC Program, an organization must be certified as a CDE by the CDFI Fund. To qualify as a CDE, an organization must:

  • be a domestic corporation or partnership entity;
  • demonstrate a primary mission of serving, or providing investment capital for, low-income communities or low-income persons; and
  • maintain accountability to residents of low-income communities through representation on a governing or advisory board of the entity.

Qualified Equity Investment (QEI)

A taxpayer wishing to receive a New Markets Tax Credit must make a QEI in a CDE which has been granted an allocation of NMTCs. A QEI must be:

  • a cash investment in the CDE, and
  • substantially all of the cash must be used by the CDE to make Qualified Low Income Community Investments, and
  • the CDE must designate the investment as a QEI.

Qualified Low Income Community Investment (QLICI)

A QLICI is any investment (such as a loan or equity investment) made by a CDE in a Qualified Active Low Income Community Business.

Qualified Active Low Income Community Business (QALICB)

A QALICB is any corporation or partnership (for profit or not for profit) engaged in the active conduct of a qualified business in a Low Income Community meeting standards pertaining to gross income, use of property, and services performed. In most cases, an entity formed to own real estate in a Low Income Community will meet the standards for a QALICB.

Low Income Community (LIC)

A LIC refers to any census tract which has a poverty rate of at least 20% or a median family income which is 80% or less of the metropolitan area median family income. Other factors may come into play as well for certain census tracts. A map showing eligible census tracts in downtown Oklahoma City and downtown Tulsa can be found by clicking here.

New Markets Tax Credit (NMTC)

A NMTC investor receives a federal income tax credit equal to 39% of the total Qualified Equity Investment (QEI) made in a Community Development Entity (CDE). The Credit is realized over a seven-year period, 5% annually for the first three years and 6% annually in years 4-7.

New Markets Tax Credits
New Markets Redevelopment
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