,,ii #aahth ,,congress #ast ,session ,s4 #bifc ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,september #bh 7legislative day1 ,september #bb71 #bjbc,mr4 ,warner 7for himself1 ,mr4 ,wicker1 ,mr4 ,peters1 ,mrs4 ,hyde-,smith1 ,mr4 ,moran1 and ,mr4 ,van ,hollen7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide a credit for investment in ,community ,development ,financial ,institutions4 #a4 ,short title ,this ,act may be cited as the ,community ,development ,investment ,tax ,credit ,act of #bjbc4 #b4 ,community development financial institution investment tax credit 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de;,,bb4 ,community development financial institution investment tax credit 7a7 ,allowance of credit 7#a7 ,in general ,for purposes of section #ch1 in the case of a taxpayer who holds a qualified ,,cdfi investment on a credit allowance date of such investment which occurs during the taxable year1 the ,,cdfi investment credit determined under this section for such taxable year is an amount equal to the applicable percentage of the amount paid to the qualified community development financial institution for such investment at its original issue4 7#b7 ,applicable percentage ,for purposes of paragraph 7#a7-- 7,a7 ,in general ,the applicable percentage is-- 7i7 #c percent with respect to the first #aj credit allowance dates1 and 7ii7 #d percent with respect to the #aj credit allowance dates following the last credit allowance date to which clause 7i7 applies4 7,b7 ,increased amount for certain investments ,in the case of a qualified ,,cdfi investment which does not have a fixed term or duration1 the applicable percentage for any credit allowance date shall be increased by one percentage point4 7#c7 ,credit allowance date 7,a7 ,in general ,for purposes of paragraph 7#a71 the term credit allowance date means1 with respect to any qualified ,,cdfi investment-- 7i7 the date which is one year after the date on which such investment is initially made1 and 7ii7 each of the #ai anniversary dates of such date thereafter4 7,b7 ,limitation ,notwithstanding subparagraph 7,a71 a date shall not be treated as a credit allowance date with respect to any qualified ,,cdfi investment if such date occurs after any date on which-- 7i7 the financial institution in which such ,,cdfi investment is made ceases to be a qualified community development financial institution1 or 7ii7 such investment is redeemed1 repurchased1 or otherwise repaid by the qualified community development financial institution which issued such investment4 7b7 ,qualified ,,cdfi investment ,for purposes of this section-- 7#a7 ,in general ,the term qualified ,,cdfi investment means any investment in a qualified community development financial institution if-- 7,a7 such investment is acquired by the taxpayer at its original issue 7directly or through an underwriter7 solely in exchange for cash1 7,b7 such investment is in the form of-- 7i7 non-voting stock or an equity equivalent investment1 7ii7 an interest in an entity which is a partnership1 or 7iii7 an obligation described in section #bgi7;b77#b7 which has a term of #aj years or longer1 7,c7 such investment has not been designated as a qualified equity investment for purposes of section #de;,d1 and 7,d7 such investment is designated for purposes of this section by the qualified community development financial institution4 ,such term shall not include any investment issued by a qualified community development financial institution more than #e years after the date that such financial institution receives an allocation under subsection 7d77#c74 ,any allocation not used within such #e-year period may be reallocated by the ,secretary under subsection 7d74 7#b7 ,limitation ,the maximum amount of investments issued by a qualified community development financial institution which may be designated under paragraph 7#a77;,d7 by such financial institution shall not exceed the portion of the limitation amount allocated under subsection 7d7 to such financial institution4 7#c7 ,treatment of subsequent purchasers ,the term qualified ,,cdfi investment includes any investment which would 7but for paragraph 7#a77;,a77 be a qualified ,,cdfi investment in the hands of the taxpayer if such investment was a qualified ,,cdfi investment in the hands of a prior holder4 7#d7 ,redemptions ,a rule similar to the rule of section #abjb7;c77#c7 shall apply for purposes of this subsection4 7#e7 ,equity equivalent investment ,for purposes of this paragraph1 the term equity equivalent investment means an obligation of a qualified community development financial institution which-- 7,a7 is carried as an investment on the investor's balance sheet in accordance with ,generally ,accepted ,accounting ,principles1 7,b7 is not secured by any of the assets of the qualified community development financial institution1 7,c7 is fully subordinated to the right of repayment of all of the other creditors of the qualified community development financial institution1 7,d7 does not give the investor the right to accelerate payment unless the qualified community development financial institution ceases its normal operations1 7,e7 carries an interest rate or dividend that is not tied to any income received by the qualified community development financial institution1 and 7,f7 has an indeterminate maturity4 7c7 ,qualified community development financial institution ,for purposes of this section1 the term qualified community development financial institution means-- 7#a7 any community development financial institution 7as defined in section #ajc of the ,community ,development ,banking and ,financial ,institutions ,act of #aiid 7#ab ,u4,s4,c4 #dgjb771 or 7#b7 any partnership that is controlled1 for purposes of section #dhb1 or any investment vehicle the investment activities of which are otherwise substantially entirely managed and directed1 by one or more community development financial institutions 7as so defined74 7d7 ,national limitation on amount of investments designated 7#a7 ,in general ,there is an investment tax credit limitation for each calendar year4 ,such a limitation is-- 7,a7 #a1jjj1jjj1jjj for #bjbc1 7,b7 #a1ejj1jjj1jjj for #bjbd1 and 7,c7 #b1jjj1jjj1jjj for each year thereafter4 7#b7 ,inflation adjustment 7,a7 ,in general ,in the case of any calendar year after #bjbe1 the #b1jjj1jjj1jjj in paragraph 7#a77;,c7 shall be increased by an amount equal to-- 7i7 such dollar amount1 multiplied by 7ii7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjbd for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 7,b7 ,rounding ,if any increase determined under subparagraph 7,a7 is not a multiple of #a1jjj1jjj1 such increase shall be rounded to the nearest multiple of #a1jjj1jjj4 7#c7 ,allocation of limitation 7,a7 ,in general ,the limitation under paragraph 7#a7 shall be allocated by the ,secretary among qualified community development financial institutions selected by the ,secretary based on the following criteria3 7i7 ,financial and compliance performance4 7ii7 ,demonstrated ability to attract private capital4 7iii7 ,the diversity of business model types4 7iv7 ,the diversity of population density served4 7v7 ,impact generation capacity4 7vi7 ,the information contained in the investment plan described in subparagraph 7,b74 7vii7 ,whether the investment term will exceed #aj years4 7viii7 ,such other criteria as determined appropriate by the ,secretary4 7,b7 ,requirement to provide an investment plan ,an application submitted to the ,secretary under subparagraph 7,a7 shall include a plan that-- 7i7 describes how the qualified community development financial institution will expand or maintain its lending and investing activity in its target market as a result of qualified ,,cdfi investments1 and 7ii7 includes such other information as required by the ,secretary4 7#d7 ,carryover of unused limitation ,if the new investment tax credit limitation for any calendar year exceeds the aggregate amount allocated under paragraph 7#b7 for such year1 such limitation for the succeeding calendar year shall be increased by the amount of such excess4 7#e7 ,authorization of user fees 7,a7 ,in general ,the ,secretary may charge a user fee for a request for an allocation of the limitation under paragraph 7#c74 7,b7 ,use of fees ,any fees collected by the ,secretary pursuant to subparagraph 7,a7 may be used to contract with third parties to verify information relating to the qualification of an entity as a qualified community development financial institution4 7,c7 ,limitation ,the fee charged under subparagraph 7,a7 shall not exceed #j4je percent of the amount of the allocation requested4 7e7 ,regulations ,the ,secretary shall prescribe such regulations as may be appropriate to carry out this section1 including regulations-- 7#a7 which limit the credit under this section for investments which directly or indirectly receive a ,federal tax benefit 7including a credit under section #db or an exclusion from gross income under section #ajc71 7#b7 which prevent the abuse of the purposes of this section1 7#c7 which impose appropriate reporting requirements1 and 7#d7 which provide rules for allocations under subsection 7d77#c7 to persons that have been certified as emerging community development financial institutions under section #aje of the ,community ,development ,banking and ,financial ,institutions ,act of #aiid4 4 7b7 ,part of general business credit ,section #ch7;b7 of such ,code is amended by striking plus at the end of paragraph 7#dj71 by striking the period at the end of paragraph 7#da7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#db7 the ,,cdfi investment credit determined under section #de;,,bb7a74 4 7c7 ,conforming amendments 7#a7 ,section #de;,d7b77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of subparagraph 7,b71 by striking the period at the end of subparagraph 7,c7 and inserting 1 and1 and by adding at the end the following new subparagraph3 7,d7 such investment has not been designated as a qualified ,,cdfi investment for purposes of section #de;,,bb4 4 7#b7 ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following new item3 #de;,,bb4 ,community development financial institution investment tax credit4 4 7d7 ,effective date ,the amendments made by this section shall apply to investments made after the date of the enactment of this ,act4 #c4 ,community development equity funds ,section #aje of the ,community ,development ,banking and ,financial ,institutions ,act of #aiid 7#ab ,u4,s4,c4 #dgjd7 is amended by adding at the end the following3 7d7 ,community development equity funds 7#a7 ,definition ,in this subsection1 the term community development equity fund means a community development financial institution with a management entity that manages #a or more investment funds where a majority of both the number and dollar volume of financial products are equity or near equity investments in small businesses located in an investment area or small businesses majority owned by a targeted population4 7#b7 ,qualifications ,in an application for assistance under this subtitle1 an applicant that is a community development equity fund shall demonstrate1 to the satisfaction of the ,secretary1 that the current or proposed management team of the fund is qualified and has the knowledge1 experience1 and capability necessary for investing in the types of businesses contemplated by this ,act1 regulations implementing this ,act1 and the business plan of the fund4 7#c7 ,treatment ,the management entity of the community development equity fund and all of its current and future managed investment funds shall be treated as one community development financial institution1 regardless of the separation of the corporate structures1 if the management entity maintains control over the investment decisions of the managed funds and has not made changes to its management team without approval of the ,secretary4 4 #d4 ,emerging ,c,d,f,is ,section #aje of the ,community ,development ,banking and ,financial ,institutions ,act of #aiid 7#ab ,u4,s4,c4 #dgjd71 as amended by section #c of this ,act1 is amended by adding at the end the following3 7e7 ,emerging community development financial institutions 7#a7 ,in general ,an entity may submit to the ,fund an application to be certified as an emerging community development financial institution4 7#b7 ,business plan ,the application described in paragraph 7#a7 shall include a business plan that demonstrates that1 during the #ah-month period beginning on the date on which the business plan is approved1 the entity will meet the requirements of subparagraph 7,a7 of section #ajc7e7 or subsection 7d7 of this section4 4