[Federal Register: March 6, 2009 (Volume 74, Number 43)]
[Notices]
[Page 9869-9871]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06mr09-75]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
Capital Magnet Fund
AGENCY: Community Development Financial Institutions Fund, U.S.
Department of the Treasury.
ACTION: Request for public comment.
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SUMMARY: This notice invites comments from the public on issues
regarding how the Community Development Financial Institutions (CDFI)
Fund should design, implement, and administer the Capital Magnet Fund,
as set forth in Section 1339 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (the Act), which was added
through Section 1131(b) of the Housing and Economic Recovery Act of
2008. All materials submitted will be available for public inspection
and copying.
DATES: All comments and submissions must be received by May 5, 2009.
ADDRESSES: Comments may be sent by mail to: Deputy Director of Policy
and Programs, CDFI Fund, U.S. Department of the Treasury, 601 13th
Street, NW., Suite 200 South, Washington, DC 20005; by e-mail to
cdfihelp@cdfi.treas.gov; or by facsimile at (202) 622-7754. Please note
this is not a toll free number.
FOR FURTHER INFORMATION CONTACT: Information regarding the CDFI Fund
and the Capital Magnet Fund may be downloaded from the CDFI Fund's Web
site at http://www.cdfifundgov.
SUPPLEMENTARY INFORMATION: The Capital Magnet Fund was established
through the Housing and Economic Recovery Act of 2008, which added
Section 1339 of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (the Act), 12 U.S.C. 4569. Through the Capital
Magnet Fund, the CDFI Fund will carry out a competitive grant program
for CDFIs and nonprofit organizations (if one of their principal
purposes is the development or management of affordable housing) to
attract private capital for and increase investment in the development,
preservation, rehabilitation, and purchase of affordable housing for
primarily extremely low-, very low-, and low-income families; and
economic development activities or community service facilities (such
as day care centers, workforce development centers, and health care
clinics) which in conjunction with affordable housing activities will
implement a concerted strategy to stabilize or revitalize a low-income
area or underserved rural area. Section 1339 established the Capital
Magnet Fund as a program that will be administered by the CDFI Fund.
The CDFI Fund invites and encourages comments and suggestions
germane to the mission, purpose, and implementation of the Capital
Magnet Fund. The CDFI Fund is particularly interested in comments in
the following areas:
Eligible Use of Funds
Section 1339(c) of the Act states that Capital Magnet Fund grants
shall be used to attract private capital for and increase investment
in: (a) The development, preservation, rehabilitation, or purchase of
affordable housing for primarily extremely low-, very low-, and low-
income families; and (b) economic development activities or community
service facilities, such as daycare centers, workforce development
centers, and health care clinics, which in conjunction with affordable
housing activities implement a concerted strategy to stabilize or
revitalize a low-income area or underserved rural area. Section 1339(f)
of the Act states that grant amounts awarded from the Capital Magnet
Fund may be used in furtherance of the purposes above, including for
the following eligible uses:
(1) To provide loan loss reserves;
(2) To capitalize a revolving loan fund;
(3) To capitalize an affordable housing fund;
(4) To capitalize a fund to support economic development activities
or community service facilities, as described in Section 1339(c)(2) of
the Act; and
(5) For risk-sharing loans.
The CDFI Fund welcomes comments on issues relating to the
eligibility of certain activities, particularly with respect to the
following questions:
(a) What definition should the CDFI Fund use to assess what
constitutes ``affordable housing?'' What affordability thresholds or
restrictions (if any) should the Fund require, and for how long a
period should these be in place?
(b) How should ``primarily'' be defined, as such term is used in
Section 1339(c)(l)? What are the appropriate minimum levels of
targeting that each project should be required to achieve (e.g., 50
percent of housing units are affordable to low-income persons, 20
percent of housing units are available to extremely low-income persons,
etc.)?
(c) How should ``preservation'' be defined, as such term is used in
Section 1339(c)(1)? Should it include the re-financing of single- or
multi-family mortgages as eligible activities?
(d) How should ``rehabilitation'' be defined, as such term is used
in Section 1339(c)(1)?
(e) Capital Magnet Fund grants may be used to finance economic
development activities and/or community service facilities ``in
conjunction with affordable housing activities.''
(i) What restrictions (if any) should the CDFI Fund place on the
percentage of award dollars that an awardee may apply towards economic
development activities and/or community service facilities (e.g., no
more than 20 percent of a total award)?
(ii) Should the CDFI Fund support economic development activities/
community service facilities in conjunction with affordable housing
activities financed by sources other than
[[Page 9870]]
Capital Magnet Fund grants (e.g., Low-Income Housing Tax Credits; Hope
VI; or private sources) or solely in conjunction with Capital Magnet
Fund grants?
(iii) How should the CDFI Fund define ``in conjunction with''? For
example, does this mean on the same premises, in a separate property
adjoining the premises, contiguous to or within the census tract where
the premises is located, or within a certain distance from the
premises? (iv) How should the CDFI Fund define ``concerted strategy''?
Eligible Grantees
Section 1339(e) of the Act states that Capital Magnet Fund grants
may only be made to: (a) A CDFI that has been certified by the CDFI
Fund; or (b) a nonprofit organization having as one of its principal
purposes the development or management of affordable housing. How
should the CDFI Fund define ``principal purpose,'' with respect to
determining whether one of an entity's principal purposes is the
development or management of affordable housing?
Applications
The CDFI Fund welcomes comments pertaining to the content of the
application materials, the timing of award rounds, and the application
scoring and review protocols particularly with respect to the following
questions:
(a) Are there other competitive award programs, Federal or
otherwise, upon which the CDFI Fund should model the Capital Magnet
Fund's application scoring and review protocols?
(b) Should the CDFI Fund divide applicants among different pools so
that they compete only among organizations at the same capacity level
(similar to the Core and SECA designations for the CDFI Program)?
(c) Should the CDFI Fund accept applications on an annual basis or
more often (e.g., twice a year)?
(d) Section 1339(j)(2)(D)(ii) requires ``a prioritization of
funding based upon:
(1) The ability to use such funds to generate additional
investments;
(2) Affordable housing need (taking into account the distinct needs
of different regions of the country); and
(3) Ability to obligate amounts and undertake activities so funded
in a timely manner.'' With respect to this particular requirement:
(i) How should the CDFI Fund quantify each of the three priority
factors? For each of the three factors, what should applicants be
required to present and/or address as part of their application
materials?
(ii) Should this prioritization be incorporated into the standard
scoring of the application (e.g., by weighting certain questions more
heavily) or should there be separate ``priority points'' specific to
each of the three criteria?
Geographic Diversity
Section 1339(h)(2)(A) of the Act states: ``The Secretary of the
Treasury shall seek to fund activities in geographically diverse areas
of economic distress, including metropolitan and undeserved rural areas
in every State.'' Section 1 339(h)(2)(B) provides that objective
criteria of economic distress may include:
(1) The percentage of low-income families or the extent of poverty;
(2) The rate of unemployment or underemployment;
(3) The extent of blight and disinvestment;
(4) Projects that target extremely low-, very low-, and low-income
families in or outside a designated economic distress area; or
(5) Any other criteria designated by the Secretary of the Treasury.
The CDFI Fund welcomes comments on issues relating to geographic
diversity, particularly with respect to the following questions:
(a) What objective criteria of economic distress should the CDFI
Fund adopt?
(1) If the percentage of low-income families is selected as an
objective criterion of economic distress, what is the appropriate
minimum level (e.g., census tracts where the median family income is at
or below 80 percent of the applicable area median family income)?
(2) If poverty rate is selected as an objective criterion of
economic distress, what is the appropriate minimum level (e.g., census
tracts with at least a 20 percent poverty rate)?
(3) If unemployment or underemployment is selected as an objective
criterion of economic distress, what is the appropriate minimum level
(e.g., census tracts with an unemployment rate at least 1.5 times the
national average)?
(4) If ``blight'' or ``disinvestment'' is selected as an objective
criterion of economic distress, how should they be defined?
(5) Are there additional criteria of distress, other than those
specifically listed in Section 1339(h)(2)(B), that the CDFI Fund should
consider? For example, is there a measure specific to housing that
should be considered (e.g., the ratio of renters to homeowners in a
community; percentage of vacant properties in a community; or
percentage of substandard properties in a community)?
(6) Are there special populations facing economic distress or with
high housing needs that the Fund should consider? Are there particular
measures that should not be used because they may inadvertently
disadvantage certain populations? If so, provide examples of particular
households or communities that would not qualify under specific
definitions.
(b) How should the CDFI Fund define ``rural areas''? For example,
is a rural area any census tract that is not located in a metropolitan
statistical area (MSA)? Respondents should discuss how a particular
definition would enable the program to best ensure funding to people in
rural areas, and discuss whether there are particular measures that
should not be used because they may inadvertently disadvantage certain
populations (i.e., provide examples of particular households or
communities that would not qualify under specific definitions).
(c) Should the CDFI Fund ensure that, in any given award round,
there is a project located in every state? Should the CDFI Fund ``skip
over'' otherwise higher rated applicants to ensure that this geographic
diversity goal is met?
(d) Section 1339(j)(2)(D)(i) of the Act requires that ``funds be
fairly distributed to urban, suburban, and rural areas.'' How can the
CDFI Fund best achieve this outcome?
Leverage of Funds
Section 1339(h)(3) of the Act states: ``Each grant from the Capital
Magnet Fund awarded under this section shall be reasonably expected to
result in eligible housing, or economic and community development
projects that support or sustain an affordable housing project funded
by a grant under this section whose aggregate costs total at least 10
times the grant amount.''
The CDFI Fund welcomes comments regarding how applicants would be
able to demonstrate a leveraging ratio of 10:1 of ``total aggregate
costs,'' particularly with respect to the following questions:
(a) What documentation should be required to demonstrate a
leveraging ratio of 10:1 of ``total aggregate costs''?
(b) How should this 10:1 standard be measured (e.g., on a project-
by-project basis for each project funded, or on a collective basis for
all projects financed)?
(c) Is there a timing consideration as to when the CDFI Fund should
release its award dollars (e.g., not until all other sources of
financing have been secured)?
[[Page 9871]]
Commitment for Use Deadline
Section 1339(h)(4) of the Act states: ``Amounts made available for
grants under this section shall be committed for use within 2 years of
the date of such allocation.'' The CDFJ Fund welcomes comments
regarding how the term ``committed'' should be defined, and how it can
be verified, for the purposes of this requirement.
Prohibited Uses
Section 1339(h)(5)-(6) of the Act lists prohibited uses with
respect to grants awarded under this program.
Are there any additional prohibitions or limitations that should be
applied? For example, there are no stated limitations regarding the
portions of Capital Magnet Fund grants that may be retained by the
awardee to cover operating costs. Should the CDFJ Fund permit a set
portion of awards to cover operating costs? If so, what percentage of
the funds should be allowed? Should awardees be restricted in the level
of fees they charge to sub recipients/end-users?
Accountability of Recipients and Grantees
Section 1339(h)(8) of the Act provides for accountability standards
with respect to tracking the use of award dollars, as well as remedies
in the event that an awardee misuses funds.
The CDFI Fund welcomes comments on how to administer awards and
monitor the deployment of funds awarded under the Capital Magnet Fund,
particularly with respect to the following questions:
(a) What documentation should be required to demonstrate that funds
awarded under the Capital Magnet Fund have been committed?
(b) What types of documentation should be required to demonstrate
completion of projects?
(c) What types of documentation should be required to demonstrate
satisfaction of the affordability requirement related to housing
developed, preserved, rehabilitated, or purchased with the support of
Capital Magnet Fund awards?
(d) What support, if any, would applicants and awardees like to see
from the CDFI Fund at the post-award stage?
(e) What specific industry standards for impact measures (units
produced, percentage of units affordable to low-income persons; time to
complete; etc.) should the CDFI Fund adopt for evaluating and
monitoring projects funded under the Capital Magnet Fund?
General Comments
The Fund is interested in comments regarding the types of
affordable housing projects or activities for which applicants
anticipate applying under the Capital Magnet Fund. Please detail the
specific activity (development, preservation, rehabilitation, purchase,
etc.), the populations served by this activity, the applicant's role in
the activity, the sources of finance used to complete each activity,
and the preferred time frame of grants received under the Capital
Magnet Fund.
Authority: 12 U.S.C. 4569.
Dated: February 27, 2009.
Donna J. Gambrell.
Director, Community Development Financial Institutions Fund.
[FR Doc. E9-4648 Filed 3-5-09; 8:45 am]
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