94-457-325 Me. Code R. § 1

Current through 2024-51, December 18, 2024

Section 457-325-1 - DEFINITIONS

1. "Allocation Application" means the Authority's then current application for allocation of tax credit authority that is filed by a CDE with the Authority.

2. "Allocation Application fee" means a non-refundable fee of $1,000 that shall be included with the Allocation Application at the time of filing with the Authority.

3. "Annual Report fee" means a fee of $250 that shall be included with the annual report required of a CDE as set forth below in Section 6.

4. "Applicant" means a CDE that files an Allocation Application or Certification Application with the Authority as contemplated by 10 M.R.S.A. §1100-Z.

5. "CDE" means a Qualified Community Development Entity as defined by this Rule, or a subsidiary thereof that is also a Qualified Community Development Entity as defined by this Rule.

6. "CDFI Fund" means the U.S. Department of Treasury, Community Development Financial Institutions Fund.

7. "Certification Application" means the Authority's current application for certification of a qualified equity investment in a CDE.

8. "Certification Application Fee" means a non-refundable fee of $2,500 that shall be included with a Certification Application at the time of filing with the Authority.

9. "Code" means the United States Internal Revenue Code of 1986, as amended.

10. "Commissioner" means the Maine Commissioner of Administrative and Financial Services.

11. "Credit allowance date" means, with respect to any qualified equity investment, the date on which the investment is initially made in the CDE, and each of the successive six anniversary dates of that date thereafter, provided the investment is certified by the Authority as required by this Rule.

12. "Long-term debt security" means any debt instrument issued by a CDE, at par value or a premium, with an original maturity date of at least seven years from the date of its issuance, with no acceleration of repayment, amortization or prepayment features prior to its original maturity date. The CDE that issues the debt instrument may not make cash interest payments on the debt instrument during the period commencing with its issuance and ending on its final credit allowance date in excess of the cumulative operating income (as defined in the regulations adopted pursuant to the Code, Section 45D) of the CDE for the same period, prior to giving effect to interest expense on such debt instrument. This paragraph does not limit the holder's ability to accelerate payments on the debt instrument in situations when the CDE has defaulted on covenants designed to ensure compliance with 10 M.R.S.A. §1100-Z; 36 M.R.S.A. §191(2)(SS); 36 M.R.S.A. §2351; or the Code, Section 45D.

13. "Low-income community" has the same meaning as set forth in the Code, Section 45D.

14. "Non-metropolitan census tract" means a census tract located in a non-metropolitan county as defined by the CDFI Fund.

15. "Purchase price" means the amount of the investment in the CDE for the qualified equity investment.

16. "Qualified active low-income community business" or "QALICB" has the same meaning as set forth in the Code, Section 45D and regulations adopted thereunder, including 26 CFR Sec. 1.45D -1, but shall also include an entity which, for the most recent calendar year ending prior to the date of investment by the CDE, can demonstrate that 50% or more of its gross income was derived from business activities within, 50% or more of its tangible property was located within; or 50% or more of its services were performed within, a community in a municipality that according to statistics published by the Maine Department of Labor, experienced an unemployment rate greater than the state average, during such period. To the extent statistics are not reported for such municipality by the Maine Department of Labor, the rates of the Labor Market Area in which such municipality is located shall apply.

17. "Qualified community development entity" has the same meaning as set forth in the Code, Section 45D, except that the entity must have entered into or be controlled by or under the common control of an entity that has entered into an allocation agreement with the CDFI Fund with respect to credits authorized by the Code, Section 45D, and must be authorized to operate in the State.

18. "Qualified equity investment" or "QEI" means any equity investment in, or long-term debt security issued by, a CDE that:

A. Has at least 85 percent of its cash purchase price used by the issuer to make qualified low-income community investments in qualified active low-income community businesses located in the State by the second anniversary of the initial credit allowance date;

B. Is acquired after December 31, 2011 at its original issuance solely in exchange for cash; and

C. Is designated by the issuer as a qualified equity investment and is certified by the Authority pursuant to 10 M.R.S.A. §1100-Z(3)(G). "Qualified equity investment" includes any qualified equity investment that does not meet the provisions of 10 M.R.S.A. §1100-Z(3)(G) if the investment was a qualified equity investment in the hands of a prior holder. The CDE shall keep sufficiently detailed books and records with respect to the investments made with the proceeds of the qualified equity investments to allow the direct tracing of the proceeds into qualified low-income community investments in qualified active low-income community businesses in the State.

19. "Qualified low-income community investment" or "QLICI" means any capital or equity investment in, or loan to, any qualified active low-income community business in the State, made after the effective date of this rule, but on or before the effective date of any certification of the Authority under Section 5 of this Rule, so long as no more than 5% of such investment is used to:

(1) refinance costs, expenses or investments incurred or paid by the qualified active low-income community business or a related party, prior to the date of the qualified low-income community investment;

(2) make equity distributions from the qualified active low-income community business to its owners;

(3) acquire an existing Maine business or enterprise; or

(4) pay transaction fees. The maximum amount of qualified low-income community investments that may be made in any one project constructed, maintained or operated by the business on a collective basis with all of its affiliates, with the proceeds of qualified equity investments that have been certified under 10 M.R.S.A. §1100-Z(3)(G), is $10,000,000, whether made by one or several CDE's. Notwithstanding the foregoing, with respect to any one project constructed, maintained or operated by a business that is a manufacturing or value-added production enterprise that projects to create or retain in excess of 200 direct and indirect jobs as part of the project for which the investment is made, the maximum QLICI shall be $40,000,000. For the purposes of demonstrating the number of jobs the project will create or retain, the applicant may include direct operational employment of the QALICB, as well as the employment of businesses in the supply chain for such business, but shall not include any construction employment or induced employment caused by consumer spending by employees of the QALICB or its suppliers. The Application shall be accompanied by an IMPLAN study conducted by a qualified independent professional or other evidence in either case determined credible by the Authority. For the purposes of this section, the term "supply chain" means businesses that regularly provide goods or services, either directly, or indirectly through other entities, to the QALICB or to suppliers of the QALICB, for their business operations. For the purposes of this paragraph, with respect to projects to which the $10,000,000 limitation applies, the term "project" shall mean all land, buildings, structures, machinery and equipment located at the same location and constructed, maintained or operated by the qualified active low-income community business. For the purposes of this paragraph, with respect to projects to which the $40,000,000 limitation applies, the term "project" shall mean, and refer separately to, each manufacturing or value-added production facility which projects to create or retain more than 200 jobs, including the land, buildings, structures, machinery and equipment functionally related to, and integrated with, the manufacturing or production process conducted on the site of that facility. The term "project" shall not mean, and shall not refer separately to, the component pieces of an integrated manufacturing or production process conducted on the site of a particular facility.

94-457 C.M.R. ch. 325, § 1