[Federal Register Volume 75, Number 49 (Monday, March 15, 2010)]
[Proposed Rules]
[Pages 12408-12421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5026]
[[Page 12407]]
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Part IV
Department of the Treasury
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Community Development Financial Institutions Fund
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12 CFR Part 1807
Capital Magnet Fund; Proposed Rule; Notice of Funds Availability;
Notice
Federal Register / Vol. 75, No. 49 / Monday, March 15, 2010 /
Proposed Rules
[[Page 12408]]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
12 CFR Part 1807
RIN 1559-AA00
Capital Magnet Fund
AGENCY: Community Development Financial Institutions Fund, Department
of the Treasury.
ACTION: Notice of proposed rulemaking with request for public comment.
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SUMMARY: The Department of the Treasury is issuing this proposed
rulemaking, and requesting comment on this proposed rule, for the
implementation of the Capital Magnet Fund (CMF), administered by the
Community Development Financial Institutions Fund (CDFI Fund), U.S.
Department of the Treasury. The mission of the CDFI Fund is to increase
the capacity of financial institutions to provide capital, credit and
financial services in underserved markets. Its long-term vision is an
America in which all people have access to affordable credit, capital
and financial services. The CMF was established through the Housing and
Economic Recovery Act of 2008, which added section 1339 to the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992.
DATES: Comment due date: Comments on this proposed rulemaking must be
received in the offices of the CDFI Fund on or before May 14, 2010.
ADDRESSES: All comments concerning this proposed rule should be
addressed to the Capital Magnet Fund Manager, Community Development
Financial Institutions Fund, Department of the Treasury, 601 13th
Street, NW., Suite 200 South, Washington, DC 20005; by e-mail to
[email protected]; or by facsimile at (202) 622-7754. Comments
will be made available for public review on the CDFI Fund's Web site at
http://www.cdfifund.gov.
Comments may also be submitted and viewed through the Federal e-
Rulemaking Portal, http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Jeffrey C. Berg, Legal Counsel,
Community Development Financial Institutions Fund, at (202) 622-8662
(This is not a toll free number). Information regarding the CDFI Fund
and the CMF may be downloaded from the CDFI Fund's Web site at http://www.cdfifund.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Capital Magnet Fund (CMF) was established through the Housing
and Economic Recovery Act of 2008 (the Act), Public Law 110-289,
section 1131, as a trust fund whose appropriation will be used to carry
out a competitive grant program administered by the CDFI Fund. Through
the CMF, the CDFI Fund is authorized to make financial assistance
grants to certified Community Development Financial Institutions
(CDFIs) and Nonprofit Organizations (if one of their principal purposes
is the Development or management of Affordable Housing). CMF grants
must be used to attract financing for and increase investment in: (i)
The Development, Preservation, Rehabilitation, and Purchase of
Affordable Housing for primarily Extremely Low-, Very Low-, and Low-
Income Families; and (ii) 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. This proposed
rulemaking creates the requirements and parameters for CMF
implementation and administration including, among others, application
eligibility, application review, award selection, Assistance
Agreements, eligible uses of award dollars and related funds, Awardee
reporting, and compliance monitoring.
On March 6, 2009, the CDFI Fund published in the Federal Register a
Request for Public Comment, 74 FR 9869, seeking responses to specific
questions regarding CMF design, implementation, and administration. The
CDFI Fund seeks public comment on this entire proposed rule and the
specific questions below. All capitalized terms are defined in the
definition section of the proposed rule, as set forth in 12 CFR
1807.104.
1. This proposed rule currently defines Economic Development
Activities as `the Development, Preservation, Rehabilitation, or
Purchase of Community Service Facilities and/or other physical
structures in which neighborhood-based businesses operate which, In
Conjunction With Affordable Housing Activities, implements a Concerted
Strategy to stabilize or revitalize a Low-Income Area or Underserved
Rural Area'. Is this an appropriate definition? Should it be expanded
to include working capital loans to businesses? Should refinancing of
existing loans be a permissible activity?
2. Should physical proximity be necessary to meet the requirement
that Economic Development Activities or Community Service Facilities
financed In Conjunction with Affordable Housing Activities implement a
Concerted Strategy to stabilize or revitalize a Low-Income Area or
Underserved Rural Area? If physical proximity is necessary, what is the
best measure of being ``physically proximate'' with respect to projects
undertaken in urban areas, and with respect to projects undertaken in
rural areas?
3. The eligibility requirements for Applicants are set forth in 12
CFR 1807.200. Is an eligibility requirement that 33 percent of the
Applicant's resources (measured by staff time and/or budget) be
dedicated to Affordable Housing appropriate (12 CFR
1807.200(a)(2)(iii))? If not, what is the appropriate percentage of
activities, and how should this be measured?
4. The proposed rule in 12 CFR 1807.302 sets forth a number of
restrictions on use of CMF award funds. Are there suggested
restrictions that will prevent the CMF from financing predatory lending
practices that should be included in this section? Is the use
restriction that no more than 30% of an Awardee's CMF award can be used
for Economic Development Activities and Community Service Facilities
appropriate (12 CFR 1807.302(d))? If not, what is the appropriate
percentage?
5. Is the Affordable Housing qualification that requires a minimum
of 20 percent of units in multi-family rental housing projects financed
with a CMF award be occupied by Low-Income, Very Low-Income, or
Extremely Low-Income Families appropriate (12 CFR 1807.401)? If not,
what is the appropriate percentage?
6. As set forth in 12 CFR 1807.400 et seq., Affordable Housing is
subject to a 10-year affordability requirement that begins at Project
Completion? Is this 10-year affordability requirement appropriate? How
should this be measured with respect to funds that are deployed,
returned to the Awardee, and reinvested during the life of the
Assistant Agreement (e.g., in the case of CMF awards that are used to
establish a revolving loan fund)?
7. The proposed rule sets forth record data collection and record
retention requirements in 12 CFR 1807.902. What documentation should
Awardees be required to retain to demonstrate compliance with (i) the
affordability qualification requirements in 12 CFR 1807.400 et seq. and
(ii) the leveraging, commitment and Project Completion
[[Page 12409]]
requirements in 12 CFR 1807.500 et seq.?
Simultaneously published with this proposed rule is the Notice of
Funds Availability (NOFA) inviting applications for the FY 2010 funding
round of the CMF.
II. Responses to the Request for Public Comment (March 6, 2009)
The CDFI Fund received comments from 22 organizations in response
to the Request for Public Comment (RPC) that was published in the
Federal Register on March 6, 2009 (74 FR 9869). The following
discussion summarizes the comments and the CDFI Fund's responses, many
of which have been incorporated in the proposed rule. Discussion is
generally in the order in which the questions were posed in the RPC.
A. Eligible Use of Funds
(1) What definition should the CDFI Fund use to assess what
constitutes ``affordable housing?'' What affordability thresholds or
restrictions (if any) should the CDFI Fund require, and for how long a
period should these be in place?
The majority of the commentators supported the imposition of
affordability thresholds and restrictions compatible with the Low
Income Housing Tax Credit (LIHTC) Program, authorized under the Tax
Reform Act of 1986, I.R.C. section 42, and the HOME Investment
Partnership Program (HOME Program), authorized under title II of the
Cranston-Gonzalez National Affordable Housing Act, as amended, 42
U.S.C. 12701 et seq., administered by the U.S. Department of Housing
and Urban Development (HUD). Some commentators suggested that the CDFI
Fund allow a percentage of CMF funds to be used under a modified
version of these affordability thresholds in order to support workforce
housing for moderate-income families. Commentators suggested that the
affordability requirements should be imposed for a duration ranging
from 10 to 50 years.
CDFI Fund response: The income requirements for the CMF are set
forth in the Definitions section of the proposed rule at 12 CFR
1807.104(v), (hh), and (ddd); the CMF affordability requirements (12
CFR 1807.400 et seq.) are based generally on the affordability
qualifications for rental and homeownership properties under the HOME
Program regulations set forth at 24 CFR 92.252-92.255. The
affordability requirements for CMF-funded housing units apply without
regard to the term of any loan or mortgage or the transfer of
ownership; they must be imposed by deed restrictions, covenants running
with the land, or other recordable mechanisms approved, in writing and
in advance, by the CDFI Fund (12 CFR 1807.401(d) and 1807.402(a)(5)).
CMF-funded housing units must meet the affordability requirements for a
period of not less than 10 years, beginning after completion of project
construction and at initial occupancy (12 CFR 1807.401(d) and
1807.402).
(2) Section 1131 of the Act, referencing section 1339(c) of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992,
requires that CMF grants must be used to attract private capital for
and increase investment in ``the development, preservation,
rehabilitation, or purchase of affordable housing for primarily
extremely low-, very low-, and low-income families.'' How should
``primarily'' be defined? What are the appropriate minimum levels of
targeting that each project should be required to achieve?
Several commentators proposed that ``primarily'' should mean: (i)
At least 50 percent of units in a housing project that is funded, in
whole or in part, with CMF funding, or (ii) 50 percent of costs
directly traced to CMF funding in a given project. Several commentators
suggested deeper income targeting.
CDFI Fund Response: The proposed rule adopts the comment that
``primarily'' means, with respect to Affordable Housing Activities
financed with CMF funding, that greater than 50 percent of the Eligible
Project Costs must be attributable to the support of housing units that
meet the affordability standards (12 CFR 1807.400).
(3) How should ``preservation'' be defined, as such term is used in
section 1131 of the Act, referencing section 1339(c)(1) of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992? Should
it include the re-financing of single- or multi-family mortgages as
eligible activities?
Many commentators suggested broad and inclusive definitions of
these terms. Commentators suggested definitions of preservation that
included restoration of deteriorated properties, preventing troubled
properties from default, refinancing of single-family and multi-family
mortgages, and preservation of expiring-use properties with
restrictions on tenant income and affordability under other federal
programs that are coming to an end. Some commentators proposed using
existing LIHTC or HUD definitions of preservation.
CDFI Fund Response: The CDFI Fund has adopted the definition of
Preservation that is set forth in the proposed rule at 12 CFR
1807.104(rr).
(4) How should ``rehabilitation'' be defined, as such term is used
in section 1131 of the Act, referencing section 1339(c)(1) of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992?
Commentators suggested that ``rehabilitation'' be broadly defined
to include promoting habitability, energy efficiency, and building code
compliance of housing units. Commentators also suggested a minimum
rehabilitation cost of approximately $6,000 per unit.
CDFI Fund Response: The CDFI Fund has adopted the definition of
Rehabilitation that is set forth in the proposed rule at 12 CFR
1807.104(uu).
(5) CMF grants may be used to finance 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.
(a) 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?
Many commentators proposed that the CDFI Fund place no restrictions
on the amount of CMF funding provided for economic development
activities and/or community service facilities in conjunction with
affordable housing activities. Others suggested that CMF grantees be
allowed to apply 25 to 30 percent of their award to this use.
CDFI Fund Response: To ensure that the limited CMF funding is most
efficiently targeted to Affordable Housing Activities, an Awardee may
use no more than 30 percent of CMF funding for Economic Development
Activities and/or Community Service Facilities, as set forth in the
proposed rule, 12 CFR 1807.302(d).
(b) Should the CDFI Fund support economic development activities/
community service facilities in conjunction with affordable housing
activities financed by sources other than CMF grants or solely in
conjunction with CMF grants?
Many commentators proposed that economic development activities
and/or community service facilities should be allowed to be undertaken
in conjunction with affordable housing activities that are financed
with or without CMF funding.
[[Page 12410]]
CDFI Fund Response: The proposed rule adopts this suggestion at 12
CFR 1807.300.
(c) How should the CDFI Fund define ``in conjunction with''?
Several commentators suggested that ``in conjunction with'' should
be defined as including activities that are on the same site as or
adjacent to the site of affordable housing. Others suggested a broader
definition, to allow for proximate activities that are not physically
adjacent to the affordable housing activities.
CDFI Fund Response: The proposed rule defines In Conjunction With
to require that Economic Development Activities and/or Community
Service Facilities must be physically proximate to Affordable Housing,
and reasonably available to residents of Affordable Housing (12 CFR
1807.104(aa)).
(d) How should the CDFI Fund define ``concerted strategy''?
Most commentators suggested that applicants identify some type of
formal planning document to illustrate the connection between the
affordable housing and proposed economic development activities or
community service facilities, such as a local government's
comprehensive housing development plan or a HUD-approved HOPE VI
Program redevelopment plan, pursuant to section 803 of the National
Affordable Housing Act, 42 U.S.C. 8012.
CDFI Fund Response: The proposed rule definition of Concerted
Strategy (12 CFR 1807.104(p)) adopts this suggestion, requiring that,
if the Economic Development Activity or Community Service Facility is
not located on the same premises or immediately adjacent to the
Affordable Housing, the Economic Development Activities/Community
Service Facilities and the Affordable Housing must be included together
in a planning document describing the community revitalization strategy
for the area. Such documents may include, but are not limited to, a
comprehensive, consolidated, or redevelopment plan, or some other local
or regional planning document adopted or approved by the jurisdiction.
B. Eligible Grantees
Section 1131 of the Act, referencing section 1339(e) of the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 states
that a CMF grant may only be made to: (i) A CDFI that has been
certified by the CDFI Fund; or (ii) 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?
For purposes of defining ``nonprofit organization'' in section
1339(e) of the Act, several commentators suggested automatic
eligibility for certain types of organizations, such as community
housing development organizations (CHDOs) as defined by HUD under the
HOME Program, 24 CFR 92.2, and rural housing developers under the U.S.
Department of Agriculture (USDA) section 523 Program, 7 CFR part 3551.
For purposes of defining ``principal purpose,'' a number of
commentators proposed that 20 percent of the applicant's financial
resources should be dedicated to affordable housing. Several
commentators suggested a mission test, based on the applicant's bylaws
or recognition by the Internal Revenue Service (IRS) that the applicant
meets a tax-exempt purpose under I.R.C. section 501(c)(3); others
recommended a track record test. Some suggested that a track record
test could prevent desired activities in traditionally underserved
areas.
CDFI Fund Response: For purposes of CMF applicant eligibility, the
proposed rule at 12 CFR 1807.200(a) states that affordable housing
development and/or management requirements will be set forth in the
applicable NOFA that is published for each CMF funding round, and will
comprise track record and resource dedication criteria.
C. Applications
(1) Are there other competitive award programs, federal or
otherwise, upon which the CDFI Fund should model the CMF's application
scoring and review protocols?
A few commentators suggested model programs such as the CDFI
Program and HUD's Community Development Block Grant (CDBG) Program,
authorized under the Housing and Community Development Act of 1974, 42
U.S.C. 5301 et seq.
CDFI Fund Response: The CMF application evaluation and selection
protocols described in the proposed rule (12 CFR 1807.800 et seq.), are
generally modeled on existing CDFI Fund award programs.
(2) Should the CDFI Fund divide applicants among different pools so
that they compete only among organizations that have the same capacity
level?
Most commentators recommended that CMF applications should not be
divided into different pools based upon applicant capacity levels.
CDFI Fund Response: The proposed rule adopts this recommendation
(12 CFR 1807.800 et seq.), thereby maintaining a single applicant pool
in order to ensure that the highest qualified organizations receive
funding and to ensure the efficiency of the application process.
(3) Should the CDFI Fund accept applications on an annual basis or
more often (e.g., twice a year)?
Commentators recommended an annual CMF application round.
CDFI Fund Response: Given the anticipated cycle of annual
appropriation of CMF funding, the CDFI Fund will implement an annual
funding round, subject to funding availability. Application
requirements will be set forth in the NOFA that will be published for
each funding round.
(4) Section 1131 of the Act, referencing section 1339(j)(2)(D)(ii)
of the Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 requires ``a prioritization of funding based upon: (I) The
ability to use such funds to generate additional investments; (II)
affordable housing need (taking into account the distinct needs of
different regions of the country); and (III) ability to obligate
amounts and undertake activities so funded in a timely manner.'' 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? 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?
Many commentators provided specific suggestions on priority points,
including deeper affordability targeting, targeting disaster areas,
projects with guaranteed financing, workforce housing, rehabilitation
or repair projects, projects in strong job areas or near good schools,
manufactured housing, projects involving partnerships with state and
local agencies, and rural projects, among others.
CDFI Fund Response: For the three priority factors specified in the
Act, the CDFI Fund will not create separate priority points to be
assigned for each. Rather, specific questions will be asked in the
application to illustrate the applicant's strengths in each of the
three areas, which will then be given weight in the application review
process.
D. Geographic Diversity
Section 1131 of the Act, referencing section 1339(h)(2)(A) of the
Federal Housing Enterprises Financial Safety
[[Page 12411]]
and Soundness Act of 1992 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 1339(h)(2)(B) provides a list of characteristics that
objective criteria of economic distress may include:
(1) What objective criteria of economic distress should the CDFI
Fund adopt based upon the language in section 1339(h)(2)(B)?
Many commentators proposed both place- and person-based indicators
to allow for funding to projects that seek to de-concentrate poverty.
Some commentators suggested utilizing existing CDFI Fund indicators.
CDFI Fund Response: In the CMF funding application, the CDFI Fund
will set forth distress indicators that are the same or similar to
those used in other CDFI Fund programs: Low-Income communities (less
than 80 percent of area median income); high-poverty communities
(poverty rate of 20 percent or greater); high unemployment rate (1.5
times the national average). In addition, the CMF application design
will be sensitive to varying housing need in different communities,
such as rural areas, high cost areas, and areas of revitalization or
housing displacement by allowing for the use of readily available
housing-specific measures such as housing vacancy rates, proportion of
sub-standard or demolished housing, concentration of foreclosures, or
changes in property values. As suggested by commentators, in measuring
distressed communities, the CDFI Fund will allow consideration of the
level of need in the population served.
(2) 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)?
For purposes of defining rural, several commentators suggested
using the USDA Rural Housing definition set forth in Section 520 of the
Housing Act of 1949, 42 U.S.C. 1441.
CDFI Fund Response: The proposed rule adopts a definition of Non-
Metropolitan Area, which includes rural areas, at 12 CFR 1807.104(mm)
and a definition of Underserved Rural Area at 12 CFR 1807.104(ccc).
(3) Should the CDFI Fund ensure that, in any given award round,
there is a CMF-funded project located in every state? Should the CDFI
Fund ``skip over'' otherwise higher rated applicants to ensure that
this geographic diversity goal is met? Section 1131 of the Act,
referencing section 1339(j)(2)(D)(i) of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 requires that ``funds be
fairly distributed to urban, suburban, and rural areas.'' How can the
CDFI Fund best achieve this outcome?
Generally, commentators did not support skipping highly rated
applicants to achieve geographic diversity. Some commentators suggested
giving preferences to areas or even states with particularly high
levels of economic distress.
CDFI Fund Response: As suggested by commentators, due in part to
funding limitations and the unforeseeability of the applicant pool, the
CDFI Fund will not likely be able to ensure that there is a CMF-funded
project in every state. However, the CMF application will require
applicants with national service areas to indicate the states in which
they are most likely to provide Affordable Housing financing with CMF
funding. The CDFI Fund reserves the right to adjust award decisions to
ensure that the goal of geographic diversity is met.
Regarding urban, suburban, and rural distribution of awards, the
CDFI Fund will incorporate an approach similar to the New Markets Tax
Credit (NMTC) Program, requiring CMF applicants to indicate minimum and
maximum commitments to invest in rural areas. Based on this
information, the CDFI Fund will attempt to ensure that at least 20
percent of CMF funding is invested in rural communities.
E. Leverage of Funds
(1) Section 1131 of the Act, referencing section 1339(h)(3) of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
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.'' What
documentation should be required to demonstrate a leveraging ratio of
10:1 of ``total aggregate costs''?
Most commentators suggested that the leveraging requirement is a
reporting requirement, not an application or award requirement. As
such, they proposed that the application should not require any
documentation, but should instead utilize projections. One commentator
proposed requiring conditional letters of commitment to help ensure
that leveraging will be met.
CDFI Fund Response: In the CMF application, the CDFI Fund will
require projections of leveraging, but will not require documentation.
Once CMF funds have been committed to projects, information will be
self-reported by the awardee through a standard system developed and
managed by the CDFI Fund. Awardees will be required to retain
appropriate documentation, such as audited financial statements, wire
transfer documents, pro-formas, etc., and will be subject to periodic
CDFI Fund audits to support their reports under the proposed rule, 12
CFR 1807.902.
(2) 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)?
Many commentators proposed that leverage should be measured on a
portfolio or collective basis; one commentator proposed that the
requirement should be measured for each project.
CDFI Fund Response: The CDFI Fund notes that the statutory
requirement is that CMF funds 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 CMF grant
whose aggregate costs total at least 10 times the CMF grant amount. The
proposed rule adopts a 10 multiplier standard or some other standard
set forth in an Awardee's Assistance Agreement that must be measured as
Leveraged Costs on a collective basis for all projects financed (12 CFR
part 1807.500).
(3) Is there a timing consideration as to when the CDFI Fund should
release CMF award dollars (e.g., not until all other sources of
financing have been secured)?
Most commentators proposed that, since the CMF funding will
constitute a small portion of overall project costs, the funding should
be released upon closing of the assistance agreement.
CDFI Fund Response: The CDFI Fund has adopted this suggestion at 12
CFR 1807.901, with CMF funding released as a lump sum payment, or in
another manner determined appropriate by the CDFI Fund, after the
Assistance Agreement is executed.
F. Commitment for Use Deadline
Section 1131 of the Act, referencing section 1339(h)(4) of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
states: ``Amounts made available for grants under this section shall be
committed for use within 2 years of the date of such allocation.'' How
should the term ``committed'' be defined, and how it can
[[Page 12412]]
be verified, for the purposes of this requirement?
Several commentators suggested using HUD's HOME Program
regulations, 24 CFR 92.2, to define the term ``committed.'' Others
suggested that a legally binding agreement should constitute commitment
for use.
CDFI Fund Response: As described in the proposed rule at 12 CFR
part 1807, subpart C (Use of Funds/Eligible Activities), the CDFI Fund
will require all Awardees to allocate CMF funding for a specific
eligible purpose, and to be able to demonstrate that these funds are so
designated. Similar to HUD's HOME Program regulations at 24 CFR 92.2,
CMF funds for Affordable Housing Activities, Economic Development
Activities or Community Service Facilities must be Committed for use
within two years of the effective date of an Awardee's Assistance
Agreement. The proposed rule adopts a definition of Committed as set
forth in 12 CFR 1807.104(m).
G. Prohibited Uses
Section 1131 of the Act, referencing section 1339(h)(5)-(6)) of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
lists prohibited uses with respect to grants awarded under this
program. Are there any additional prohibitions or limitations that
should be applied?
Commentators did not propose additional specific prohibitions of
CMF funding. Some commentators suggested that the CDFI Fund place a
limitation of 10 to 15 percent on the amount of a CMF award that could
be used for the awardee's operation costs.
CDFI Fund Response: The proposed rule states that the applicable
NOFA will set forth the limitation on the amount of a CMF award that
can be used for Operations (12 CFR 1807.302(b)) as well as other
limitations, including a 30 percent limitation on use of an Awardee's
CMF funding for Economic Development Activities and Community Service
Facilities (12 CFR 1807.302(d)); and a requirement that 100 percent of
Eligible Project Costs must be attributable to housing units that meet
the affordability qualifications set forth in 12 CFR 1807.400 for
families whose annual income does not exceed 120 percent of the median
income for the area, as determined by HUD.
H. Accountability of Recipients and Grantees
(1) What requirements should be imposed to implement Section 1131
of the Act, referencing section 1339(h)(8)) of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 which 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?
Commentators proposed various forms of documentation to illustrate
completion of projects and satisfaction of affordability requirements
and restrictions, including certificates of occupancy, closing
documentation, and deeds and covenants.
CDFI Fund Response: The CDFI Fund has adopted a definition of
Project Completion at 12 CFR 1807.104(ss) that applies when (i) All
necessary title transfer requirements and construction work have been
performed; (ii) the project complies with specified property standards;
and (iii) the final drawdown has been disbursed for the project.
Awardees will be required to report their compliance with CMF
affordability requirements and to maintain adequate records to
demonstrate compliance to the CDFI Fund during any audits that are
undertaken by the CDFI Fund (12 CFR 1807.902).
(2) 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 CMF?
Commentators proposed various standards for impact measurements,
including using the CDFI Fund's existing Community Investment Impact
System (CIIS) and measures applied under USDA's Guaranteed Rural Rental
Housing Program, 42 U.S.C. 1490p-2, as well as individual measurements
such as affordable units produced, energy efficiency, cost per unit,
length of time for development, project location, and others.
CDFI Fund Response: CMF awardees will be required to report on the
impacts of their use of CMF funds and any Leverage Costs as set forth
in 12 CFR 1807.902(e). The specific impact measures will be
incorporated into the Assistance Agreement as described at 12 CFR
1807.900, and may include metrics such as the number of Affordable
Housing units produced (including how many are affordable to Low-, Very
Low- and Extremely Low-Income families), the ratio of leverage produced
by the CMF award, and the deployment rate of CMF awards, among other
measures.
III. Rulemaking Analysis
Executive Order (E.O.) 12866
It has been determined that this proposed rule is not a significant
regulatory action under Executive Order 12866. Accordingly, a
regulatory impact assessment is not required.
Regulatory Flexibility Act
This proposed rule has been reviewed with regard to the
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601-612. The
undersigned has determined and certified by signature of this document
that this proposed rule will not have a significant economic impact on
a substantial number of small entities. The CDFI Fund anticipates that
a large number of applicants under this proposed rule will be certified
CDFIs that have received funding under the CDFI Fund's programs or
other similar federal government programs. Thus, awardees will be
familiar with the types of reporting requirements that the CMF will
require and most will have the necessary processes in place to
participate in the CMF, regardless of their size. Many, if not all,
applicants will be reporting on information and activities for which
they report for other federal or state programs. Thus, this proposed
rule will not impose a significant increase in reporting,
recordkeeping, or other compliance burdens on a substantial number of
small entities that would have a negative impact on either small or
large entities in an economic way.
Paperwork Reduction Act
The collection of information contained in this proposed rule has
been previously reviewed and approved by the Office of Management and
Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 and
assigned OMB Control Number 1559-0036. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a valid control number assigned by OMB.
National Environmental Policy Act
This proposed rule has been reviewed in accordance with 12 CFR part
1815. The CDFI Fund's Environmental Regulations under the National
Environmental Protection Act of 1969 (NEPA) require that the CDFI Fund
adequately consider the cumulative impact proposed activities have upon
the human environment. It is the determination of the CDFI Fund that
the proposed rule does not constitute a major Federal action
significantly affecting the quality of the human environment and, in
accordance with the NEPA and the CDFI Fund Environmental Quality
Regulations, 12 CFR part 1815, neither an Environmental Assessment nor
an
[[Page 12413]]
Environmental Impact Statement is required.
Administrative Procedure Act
Because this proposed rule relates to loans and grants, notice and
public procedure and a delayed effective date are not required pursuant
to the Administrative Procedure Act, 5 U.S.C. 553(a)(2).
Catalogue of Federal Domestic Assistance Number
Capital Magnet Fund--21.011.
List of Subjects in 12 CFR Part 1807
Community development, Grant programs--housing and community
development, Reporting and record keeping requirements.
For the reasons set forth in the preamble, 12 CFR chapter XVIII is
proposed to be amended by adding part 1807 to read as follows:
PART 1807--CAPITAL MAGNET FUND
Subpart A--General Provisions
Sec.
1807.100 Purpose.
1807.101 Summary.
1807.102 Relationship to other CDFI Fund programs.
1807.103 Awardee not instrumentality.
1807.104 Definitions.
1807.105 Waiver authority.
1807.106 OMB control number.
Subpart B--Eligibility
1807.200 Applicant eligibility.
Subpart C--Use of Funds/Eligible Activities
1807.300 Purposes of grants.
1807.301 Eligible activities.
1807.302 Restrictions on use of assistance.
Subpart D--Qualification as Affordable Housing
1807.400 Affordable Housing--General.
1807.401 Affordable Housing--Rental Housing.
1807.402 Affordable Housing--Homeownership.
Subpart E--Leveraging and Commitment Requirement.
1807.500 Leveraging costs--general.
1807.501 Commitment for use.
1807.502 Assistance limits.
1807.503 Projection completion.
Subpart F--Tracking Requirements
1807.600 Tracking funds--general.
1807.601 Nature of funds.
Subpart G--Applications for Assistance
1807.700 Notice of Funds Availability.
1807.701 Application contents.
Subpart H--Evaluation and Selection of Applications
1807.800 Evaluation and selection--general.
1807.801 Evaluation of Applications.
Subpart I--Terms and Conditions of Assistance
1807.900 Assistance Agreement.
1807.901 Disbursement of funds.
1807.902 Data collection and reporting.
1807.903 Compliance with government requirements.
1807.904 Lobbying restrictions.
1807.905 Criminal provisions.
1807.906 CDFI Fund deemed not to control.
1807.907 Limitation on liability.
1807.908 Fraud, waste and abuse.
Authority: Housing and Economic Recovery Act of 2008, Pub. L.
110-289, section 1131
Subpart A--General Provisions
Sec. 1807.100 Purpose.
The purpose of the Capital Magnet Fund (CMF) is to attract private
capital for and increase investment in Affordable Housing Activities
and related Economic Development Activities and Community Service
Facilities.
Sec. 1807.101 Summary.
(a) Through the CMF, the CDFI Fund will competitively award grants
to CDFIs and qualified Nonprofit Organizations to leverage dollars for:
(1) The Development, Preservation, Rehabilitation or Purchase of
Affordable Housing primarily for Low-Income Families; and
(2) Financing Economic Development Activities or Community Service
Facilities.
(b) The CDFI Fund will select Awardees to receive financial
assistance grants through a merit-based, competitive application
process. Financial assistance grants that are awarded through the CMF
may only be used for eligible uses set forth in Subpart C. Each Awardee
will enter into an Assistance Agreement which will require it to
leverage the CMF grant amount and abide by other terms and conditions
pertinent to any assistance received under this part.
Sec. 1807.102 Relationship to other CDFI Fund programs.
A Certified CDFI will automatically be deemed to meet the eligible
entity requirements, provided that it has been in business as an
operating entity for a period of at least three years prior to the
application deadline.
Sec. 1807.103 Awardee not instrumentality.
No Awardee shall be deemed to be an agency, department, or
instrumentality of the United States.
Sec. 1807.104 Definitions.
For the purpose of this part:
(a) Act means the Housing and Economic Recovery Act of 2008, as
amended, Pub. L. No. 110-289, section 1131;
(b) Affiliate means, any entity that Controls, is Controlled by, or
is under common Control with, an entity;
(c) Affordable Housing means rental or for-sale single-family or
multi-family housing that meets the requirements set forth in Subpart D
of this part;
(d) Affordable Housing Activities means the Development,
Preservation, Rehabilitation, or Purchase of Affordable Housing;
(e) Affordable Housing Fund means a loan fund, managed by the
Awardee, whose capital is used to finance Affordable Housing
Activities;
(f) Appropriate Federal Banking Agency has the same meaning as in
section 3 of the Federal Deposit Insurance Act, 12 U.S.C. 1813(q), and
includes, with respect to Insured Credit Unions, the National Credit
Union Administration;
(g) Applicant means any entity submitting an application for
assistance under this part;
(h) Appropriate State Agency means an agency or instrumentality of
a State that regulates and/or insures the member accounts of a State-
Insured Credit Union;
(i) Assistance Agreement means a formal, written agreement between
the CDFI Fund and an Awardee which specifies the terms and conditions
of assistance under this part;
(j) Awardee means an Applicant selected by the CDFI Fund to receive
assistance pursuant to this part;
(k) Capital Magnet Fund (or CMF) means the program authorized by
section 1131 of the Act, Public Law No. 110-289, and implemented under
this part;
(l) Certified Community Development Financial Institution (or
Certified CDFI) means an entity that has been determined by the CDFI
Fund to meet the eligibility requirements set forth in 12 CFR Part
1805.201;
(m) Committed means that the Awardee is able to demonstrate, in
written form and substance that is acceptable to the CDFI Fund, a
Commitment for Use pursuant to Sec. 1807.501;
(n) Community Development Financial Institutions Fund (or CDFI
Fund) means the Community Development Financial Institutions Fund, an
office of the U.S. Department of Treasury, established under the
Community Development Banking and Financial Institutions Act of 1994,
as amended, 12 U.S.C. 4701 et seq.;
(o) Community Service Facility means the physical structure in
which community-based programs (including,
[[Page 12414]]
but not limited to, health care, childcare, educational, cultural, and/
or social services) operate which, In Conjunction With Affordable
Housing Activities, implements a Concerted Strategy to stabilize or
revitalize a Low-Income Area or Underserved Rural Area;
(p) Concerted Strategy means a formal planning document that
evidences the connection between Affordable Housing Activities and
Economic Development Activities or Community Service Facilities. Such
documents include, but are not limited to, a comprehensive,
consolidated, or redevelopment plan, or some other local or regional
planning document adopted or approved by the jurisdiction;
(q) Control means:
(1) Ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of Voting Securities of any company,
directly or indirectly or acting through one or more other persons;
(2) Control in any manner over the election of a majority of the
directors, trustees, or general partners (or individuals exercising
similar functions) of any company; or
(3) The power to exercise, directly or indirectly, a controlling
influence over the management, credit or investment decisions, or
policies of any company;
(r) Depository Institution Holding Company means a bank holding
company or a savings and loan holding company as defined in section 3
of the Federal Deposit Insurance Act, 12 U.S.C. 1813(w)(1);
(s) Development means land acquisition, demolition of existing
facilities, and construction of new facilities, which may include site
improvement, utilities development and rehabilitation of utilities,
necessary infrastructure, utility services, conversion, and other
related activities;
(t) Economic Development Activity means the Development,
Preservation, Rehabilitation, or Purchase of Community Service
Facilities and/or other physical structures in which neighborhood-based
businesses operate which, In Conjunction With Affordable Housing
Activities, implements a Concerted Strategy to stabilize or revitalize
a Low-Income Area or Underserved Rural Area;
(u) Eligible Project Costs means Leverage Costs plus those costs
funded directly by a CMF award, exclusive of Operations;
(v) Extremely Low-Income means
(1) In the case of owner-occupied housing units, income not in
excess of 30 percent of the area median income and
(2) In the case of rental housing units, income not in excess of 30
percent of the area median income, with adjustments for smaller and
larger families, as determined by HUD;
(w) HOME Program means the HOME Investment Partnership Program set
forth in the HOME Investment Partnerships Act under title II of the
Cranston-Gonzalez National Affordable Housing Act, as amended, 42
U.S.C. 12701 et seq.;
(x) Homeownership means ownership in fee simple title or a 99-year
leasehold interest in a one- to four-unit dwelling or in a condominium
unit, or equivalent form of ownership (which shall include cooperative
housing and mutual housing project). For purposes of housing located on
trust or restricted Indian lands, homeownership includes leases of 50
years. The ownership interest may be subject only to the following:
(1) Restrictions on resale permitted under the Assistance
Agreement;
(2) Mortgages, deeds of trust, or other liens or instruments
securing debt on the property; or
(3) Any other restrictions or encumbrances that do not impair the
good and marketable nature of title to the ownership interest.
(y) Housing means single- and multi-family residential units,
including, but not limited to, manufactured housing and manufactured
housing lots, permanent housing for disabled and/or homeless persons,
transitional housing, single-room occupancy housing, and group homes.
Housing also includes elder cottage housing opportunity (ECHO), 24 CFR
92.258;
(z) HUD means the Department of Housing and Urban Development
established under the Department of Housing and Urban Development Act
of 1965, 42 U.S.C. 3532-3537;
(aa) In Conjunction With means physically proximate to Affordable
Housing and reasonably available to residents of Affordable Housing.
For a Metropolitan Area, In Conjunction With means located within the
same census tract. For a Non-Metropolitan Area, In Conjunction With
means located within the same county, township, or village;
(bb) Insured CDFI means a Certified CDFI that is an Insured
Depository Institution or an Insured Credit Union;
(cc) Insured Credit Union means any credit union, the member
accounts of which are insured by the National Credit Union Share
Insurance Fund by the National Credit Union Administration pursuant to
authority granted in 12 U.S.C. 1783 et seq.;
(dd) Insured Depository Institution means any bank or thrift, the
deposits of which are insured by the Federal Deposit Insurance
Corporation, 12 U.S.C. 1813(c)(2);
(ee) Leveraged Costs means those costs as described in 12 CFR
1807.500;
(ff) Loan Guarantee means an agreement to indemnify the holder of a
loan all or a portion of the unpaid principal balance in case of
default by the borrower;
(gg) Loan Loss Reserves means funds that the Applicant or Awardee
will set aside in the form of cash reserves, or through accounting-
based accrual reserves, to cover losses on loans, accounts, and notes
receivable, or for related purposes that the CDFI Fund deems
appropriate;
(hh) Low-Income means
(1) In the case of owner-occupied housing units, income not in
excess of 80 percent of area median income and
(2) In the case of rental housing units, income not in excess of 80
percent of area median income, with adjustments for smaller and larger
families, as determined by HUD;
(ii) Low-Income Area (LIA) means a census tract or block numbering
area in which the median income does not exceed 80 percent of the
median income for the area in which such census tract or block
numbering area is located. With respect to a census tract or block
numbering area located within a Metropolitan Area, the median family
income shall be at or below 80 percent of the Metropolitan Area median
family income or the national Metropolitan Area median family income,
whichever is greater. In the case of a census tract or block numbering
area located outside of a Metropolitan Area, the median family income
shall be at or below 80 percent of the statewide Non-Metropolitan Area
median family income or the national Non-Metropolitan Area median
family income, whichever is greater;
(jj) Low-Income Families means those households that reside within
the boundaries of the United Sates (which shall encompass any State of
the United States, the District of Columbia or any territory of the
United States, Puerto Rico, Guam, American Samoa, the Virgin Islands,
and the Northern Mariana Islands) meeting the criteria as set forth in
Sec. 1807.104(hh);
(kk) Low Income Housing Tax Credit Program or LIHTC Program means
the program as set forth under Title I of the U.S. Housing Act of 1937,
as amended, 42 U.S.C. 1437 et seq.;
(ll) Metropolitan Area means an area designated as such by the
Office of Management and Budget pursuant to 44 U.S.C. 3504(e) and 31
U.S.C. 1104(d)
[[Page 12415]]
and Executive Order 10253 (3 CFR, 1949-1953 Comp., p. 758), as amended;
(mm) Non-Metropolitan Area means a county or adjacent counties not
contained within either a Consolidated Metropolitan Statistical Area
(CMSA) or a Primary Metropolitan Statistical Area (PMSA), as such areas
are defined in OMB Bulletin No. 99-04, with respect to the most recent
decennial census. Non-Metropolitan Counties can be identified in the
CDFI Fund's mapping system (CIMS), and are also listed on the CDFI
Fund's Web site;
(nn) Nonprofit Organization means any corporation, trust,
association, cooperative, or other organization that is
(1) Designated as a nonprofit or not-for-profit entity under the
laws of the organization's State of formation and
(2) Exempt from Federal income taxation pursuant to the Internal
Revenue Code of 1986;
(oo) Non-Regulated CDFI means any entity meeting the eligibility
requirements described in 12 CFR 1805.200 which is not a Depository
Institution Holding Company, Insured Depository Institution, or Insured
Credit Union;
(pp) Operations means all allowable expenses as defined by Office
of Management and Budget (OMB) Circular A-122, ``Cost Principles For
Non-Profit Organizations,'' and OMB Circular A-87, ``Cost Principles
for State, Local, and Indian Tribal Governments,'' incurred by the
Awardee in the administration, operation, and implementation of a CMF
award;
(qq) Participating Jurisdiction means a jurisdiction designated by
HUD, as a participating jurisdiction under the HOME Program in
accordance with the requirements of 24 CFR 92.105;
(rr) Preservation means:
(1) Activities to refinance, with or without Rehabilitation,
single-family or multi-family rental property mortgages that, at the
time of refinancing, are subject to affordability and use restrictions
under State or federal affordable housing programs, including but not
limited to, the HOME Program, the LIHTC Program, the Section 8 Tenant-
Based Assistance and the Section 8 Rental Voucher programs (24 CFR part
982), or the Section 515 Rural Rental Housing program (7 CFR Part
3560), hereinafter referred to as ``similar State or federal affordable
housing programs,'' where such refinancing has the effect of extending
the term of any affordability and use restrictions on the properties;
(2) Activities to refinance and acquire single-family or multi-
family properties that, at the time of refinancing or acquisition, were
subject to affordability and use restrictions under similar State or
Federal affordable housing programs, by the former tenants of such
properties, where such refinancing has the effect of extending the term
of any affordability and use restrictions on the properties; or
(3) Activities to refinance the mortgages of single-family, owner-
occupied housing that at the time of refinancing are subject to
affordability and use restrictions under similar State or Federal
affordable housing programs, where such refinancing has the effect of
extending the term of any affordability and use restrictions on the
properties;
(ss) Project Completion means that all of the requirements set
forth at 12 CFR 1807.503 for a project supported by a CMF award have
been met;
(tt) Purchase means to acquire ownership in fee simple title or a
99-year leasehold interest in a one-to-four unit dwelling or in a
condominium unit, through an exchange of money;
(uu) Rehabilitation means any repairs and/or capital improvements
that contribute to the long-term preservation, current building code
compliance, habitability, sustainability, energy efficiency of
affordable housing;
(vv) Revolving Loan Fund means a pool of funds managed by the
Applicant or Awardee wherein repayments on Affordable Housing
Activities loans, Economic Development Activities loans and/or
Community Services Facilities loans are used to finance additional
loans;
(ww) Risk-Sharing Loan means loans for Affordable Housing
Activities and/or Economic Development Activities in which the risk of
borrower default is shared by the Applicant or Awardee with other
lenders (e.g., participation loans);
(xx) Service Area means the geographic area in which the Applicant
proposes to use CMF funding, and the geographic area approved by the
CDFI Fund in which the Awardee shall use CMF funding as set forth in
its Assistance Agreement;
(yy) Single-family housing means a one- to four-family residence,
condominium unit, cooperative unit, combination of manufactured housing
and lot, or manufactured housing lot;
(zz) State means the States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Island, Guam, the Virgin Islands, American Samoa, the
Trust Territory of the Pacific Islands, and any other territory of the
United States;
(aaa) State-Insured Credit Union means any credit union that is
regulated by, and/or the member accounts of which are insured by, a
State agency or instrumentality;
(bbb) Subsidiary means any company which is owned or Controlled
directly or indirectly by another company;
(ccc) Underserved Rural Area means a Non-Metropolitan Area that:
(1) Qualifies as a Low-Income Area;
(2) Is experiencing housing stress evidenced by 30 percent or more
of resident households with one or more of these housing conditions in
the last decennial census:
(i) Lacked complete plumbing,
(ii) Lacked complete kitchen,
(iii) Paid 30 percent or more of income for owner costs or rent, or
(D) had more than 1 person per room; or
(3) Is remote-rural county consisting of a Non-Metropolitan Area
that is also not adjacent to a Metropolitan Area;
(ddd) Very Low-Income means
(1) In the case of owner-occupied housing units, income not greater
than 50 percent of the area median income; and
(2) In the case of rental housing units, income not greater than 50
percent of the area median income, with adjustments for smaller and
larger families, as determined by HUD.
Sec. 1807.105 Waiver authority.
The CDFI Fund may waive any requirement of this part that is not
required by law upon a determination of good cause. Each such waiver
shall be in writing and supported by a statement of the facts and the
grounds forming the basis of the waiver. For a waiver in an individual
case, the CDFI Fund must determine that application of the requirement
to be waived would adversely affect the achievement of the purposes of
the Act. For waivers of general applicability, the CDFI Fund will
publish notification of granted waivers in the Federal Register.
Sec. 1807.106 OMB control number.
The collection of information requirements in this part have been
approved by the Office of Management and Budget and assigned OMB
control number 1559-0036.
Subpart B--Eligibility
Sec. 1807.200 Applicant eligibility.
(a) General requirements. An Applicant will be deemed eligible for
a CMF award if it is:
(1) A Certified or certifiable CDFI. An entity may meet the
requirements described in this paragraph (a)(1) if it is:
(i) A Certified CDFI, as set forth in 12 CFR Part 1805.201, that
has been in existence as a legally formed entity as set forth in the
Notice of Funds
[[Page 12416]]
Availability (NOFA) for the applicable funding round; or
(ii) A certifiable CDFI that has been in existence as a legally
formed entity as set forth in the NOFA for the applicable round and,
although not yet certified as a CDFI, has submitted a complete CDFI
certification application as of the date set forth in the applicable
NOFA; or
(2) A Nonprofit Organization having as one of its principal
purposes the development or management of affordable housing. An entity
may meet the requirements described in this paragraph (a)(2) if it:
(i) Has been in existence as a legally formed entity as set forth
in the applicable NOFA;
(ii) Demonstrates, through articles of incorporation, by-laws, or
other board-approved documents, that the development or management of
affordable housing are among its principal purposes; and
(iii) Can demonstrate that at least one-third of the Applicant's
resources (either as a portion of total staffing or as a portion of
total assets) are dedicated to the development or management of
affordable housing.
(b) Eligibility verification. An Applicant shall demonstrate that
it meets the eligibility requirements described in Sec. 1807.200(a)(2)
above by providing information described in the application, NOFA, and/
or supplemental information, as may be requested by the CDFI Fund. For
an Applicant seeking eligibility under subsection 1 of this Subpart,
the CDFI Fund will verify that the Applicant is a Certified CDFI during
the application eligibility review. For an Applicant seeking
eligibility under subsection 2 of this Subpart, the CDFI Fund, in its
sole discretion, shall determine whether the Applicant has satisfied
said requirements.
Subpart C--Use of Funds/Eligible Activities
Sec. 1807.300 Purposes of grants.
The CDFI Fund may provide financial assistance grants to
organizations described under Subpart B of this part for the purpose of
attracting private capital for and increase investment in:
(a) The Development, Preservation, Rehabilitation, or Purchase of
Affordable Housing for primarily Extremely Low-Income, Very Low-Income;
and Low-Income families; and
(b) Economic Development Activities or Community Services
Facilities. With respect to an Economic Development Activity or
Community Service Facility funded with a CMF grant, the Affordable
Housing that it is In Conjunction With may be financed by sources other
than the CMF grant.
Sec. 1807.301 Eligible activities.
Grants awarded under this part shall be used by an Awardee to
support Affordable Housing Activities, Economic Development Activities
or Community Service Facilities, including the following eligible uses:
(a) To provide Loan Loss Reserves;
(b) To capitalize a Revolving Loan Fund;
(c) To capitalize an Affordable Housing Fund;
(d) To capitalize a fund to support Economic Development Activities
or Community Service Facilities;
(e) For Risk-Sharing Loans;
(f) For Loan Guarantees; and
(g) For the Awardee's Operations.
Sec. 1807.302 Restrictions on use of assistance.
(a) An Awardee's activities under Part 1807.301 shall not include
the use of CMF for the following:
(1) Political activities;
(2) Advocacy;
(3) Lobbying, whether directly or through other parties;
(4) Counseling services (including homebuyer or financial
counseling);
(5) Travel expenses;
(6) Preparing or providing advice on tax returns;
(7) emergency shelters (including shelters for disaster victims);
(8) Nursing homes;
(9) Convalescent homes;
(10) Residential treatment facilities;
(11) Correctional facilities; or
(12) Student dormitories.
(b) An Awardee may use up to a percentage of CMF award for
Operations as specified in the applicable NOFA.
(c) An Awardee shall not use CMF award to support projects that:
(1) Consist of the operation of any private or commercial golf
course, country club, massage parlor, hot tub facility, suntan
facility, racetrack or other facility used for gambling, or any store
the principal business of which is the sale of alcoholic beverages for
consumption off premises;
(2) Consist of farming (within the meaning of I.R.C. section
2032A(e)(5)(A) or (B)) if, as of the close of the taxable year of the
taxpayer conducting such trade or business, the sum of the aggregate
unadjusted bases (or, if greater, the fair market value) of the assets
owned by the taxpayer that are used in such a trade or business, and
the aggregate value of the assets leased by the taxpayer that are used
in such a trade or business, exceeds $500,000.
(d) In any given funding round, no more than 30 percent of an
Awardee's CMF award may be used for purposes described in Sec.
1807.300(b).
Subpart D--Qualification as Affordable Housing
Sec. 1807.400 Affordable Housing--general.
Each Awardee that uses CMF funding to support Affordable Housing
Activities shall ensure that 100 percent of Eligible Project Costs are
attributable to housing units that meet the affordability
qualifications set forth below for families whose annual income does
not exceed 120 percent of the median income for the area, as determined
by HUD. In addition, greater than 50 percent of the Eligible Project
Costs must be attributable to housing units that meet the affordability
qualifications set forth below for either Low-Income, Very Low-Income,
or Extremely Low-Income Families.
Sec. 1807.401 Affordable Housing--Rental Housing.
To qualify as Affordable Housing, a multi-family rental housing
project financed with a CMF award must have at least 20 percent of the
housing units occupied by Low-Income, Very Low-Income, or Extremely
Low-Income Families and must comply with the rent limits set forth
herein.
(a) Rent limitation. The maximum rent that is deemed to be
affordable under the CMF is a rent that does not exceed 30 percent of
the family's annual income.
(b) Nondiscrimination against rental assistance subsidy holders.
The Awardee shall require that the owner of a rental unit cannot refuse
to lease the unit to a Section 8 Program certificate or voucher holder
(24 CFR Part 982, Section 8 Tenant-Based Assistance: Unified Rule for
Tenant-Based Assistance under the Section 8 Rental Certificate Program
and the Section 8 Rental Voucher Program) or to the holder of a
comparable document evidencing participation in a HOME tenant-based
rental assistance program because of the status of the prospective
tenant as a holder of such certificate, voucher, or comparable HOME
tenant-based assistance document.
(c) Initial rent schedule and utility allowances. The Awardee shall
ensure that the housing adheres to the applicable Participating
Jurisdiction's maximum monthly allowances for utilities and services
(excluding telephone). If the Participating Jurisdiction's allowances
have not been determined or are otherwise unavailable, the Awardee
shall rely upon the utility and services allowances established by the
applicable city,
[[Page 12417]]
county or State public housing authority.
(d) Periods of Affordability. Housing under Sec. 1807.401 must
meet the affordability requirements for not less than 10 years,
beginning after Project Completion and at initial occupancy. The
affordability requirements apply without regard to the term of any loan
or mortgage or the transfer of ownership and must be imposed by deed
restrictions, covenants running with the land, or other recordable
mechanisms, except that the affordability restrictions may terminate
upon foreclosure or transfer in lieu of foreclosure. Other recordable
mechanisms must be approved in writing and in advance by the CDFI Fund.
The affordability restrictions shall be revived according to the
original terms if, during the original affordability period, the owner
of record before the foreclosure, or deed in lieu of foreclosure, or
any entity that includes the former owner or those with whom the former
owner has or had family or business ties, obtains an ownership interest
in the project or property.
(e) Subsequent rents during the affordability period. Any increase
in rent for a CMF-funded unit requires that tenants of those units be
given at least 30 days prior written notice before the implementation
of the rent increase.
(f) Tenant income determination. (1) Each year during the period of
affordability the tenant's income shall be re-examined; tenant income
examination is the responsibility of the Awardee. Annual income shall
include income from all household members.
(2) One of the following two definitions of ``annual income'' must
be used to determine whether a family is income eligible:
(i) Annual income as reported under the Census long-form for the
most recent available decennial Census. This definition includes:
(A) Wages, salaries, tips, commissions, etc.;
(B) Self-employment income from owned non-farm business, including
proprietorships and partnerships;
(C) Farm self-employment income;
(D) interest, dividends, net rental income, or income from estates
or trusts;
(E) Social Security or railroad retirement;
(F) Supplemental Security Income, Aid to Families with Dependent
Children, or other public assistance or public welfare programs;
(G) Retirement, survivor, or disability pensions;
(H) Any other sources of income received regularly, including
Veterans' (VA) payments, unemployment compensation, and alimony; and
(I) Any other sources of income the CDFI Fund may deem appropriate;
or
(ii) Adjusted gross income as defined for purposes of reporting
under Internal Revenue Service (IRS) Form 1040 series for individual
Federal annual income tax purposes.
(3) The CDFI Fund reserves the right to deem certain government
programs, under which a Low-Income family is a recipient, as income
eligible for purposes of meeting the tenant income requirements under
this subsection.
(g) Over-income tenants. (1) CMF-funded units continue to qualify
as Affordable Housing despite a temporary noncompliance caused by
increases in the incomes of existing tenants if actions satisfactory to
the CDFI Fund are being taken to ensure that all vacancies are filled
in accordance with this section until the noncompliance is corrected.
(2) Tenants whose incomes no longer qualify must pay rent equal to
the lesser of the amount payable by the tenant under State or local law
or 30 percent of the family's annual income, except that tenants of
units that have been allocated low-income housing tax credits by a
housing credit agency pursuant to section 42 of the Internal Revenue
Code of 1986, I.R.C. section 42, must pay rent governed by section 42.
Tenants who no longer qualify as Low-Income are not required to pay as
rent an amount that exceeds the market rent for comparable, unassisted
units in the neighborhood.
Sec. 1807.402 Affordable Housing--Homeownership.
(a) Acquisition with or without rehabilitation. Housing that is for
Homeownership purchase must meet the affordability requirements of this
subsection.
(1) The housing must be Single-family housing;
(2) The housing must meet the following standards:
(i) Housing costs should fall within a front-end ratio of 28
percent of household income and a back-end ratio of 36 percent of
household income. The front-end ratio is a percentage comparing a Low-
Income borrower's total monthly cost to buy a property (mortgage
principal and interest, insurance, and real estate taxes) to the
borrower's monthly income before deductions. The back-end ratio is a
percentage comparing a Low-Income borrower's total monthly debt
payments (mortgage, real estate taxes and insurance, car loans, and
other consumer loans) to the borrower's gross monthly income; or
(ii) Housing price does not exceed 95 percent of the median
purchase price for the area as used in the HOME Program and as
determined by the applicable Participating Jurisdiction.
(3) The housing must be purchased by a qualifying family as set
forth in Sec. 1807.400. The housing must be the principal residence of
the family throughout the period described in paragraph (a)(4) of this
section.
(4) Periods of Affordability. Housing under this subsection must
meet the affordability requirements for at least 10 years at the time
of purchase by the homeowner.
(5) Resale. To ensure affordability, resale requirements must be
imposed by the owner of the housing. Resale requirements must ensure
that, if the housing does not continue to be the principal residence of
the original qualifying family for the duration of the period of
affordability, the housing is made available for subsequent purchase
only to a buyer whose family meets the requirements in Sec. 1807.400
and who will use the property as their principal residence. The resale
requirement must also ensure that the price at resale provides the
original CMF-funded owner a fair return on investment (including the
homeowner's investment and any capital improvement) and ensure that the
housing will remain affordable to a reasonable range of qualifying
families. Deed restrictions, covenants running with the land, or other
similar mechanisms must be used as the mechanism to impose the resale
requirements. The affordability restrictions may terminate upon
occurrence of any of the following termination events: foreclosure,
transfer in lieu of foreclosure or assignment of an FHA-insured
mortgage to HUD. The Awardee may use purchase options, rights of first
refusal or other preemptive rights to purchase the housing before
foreclosure to preserve affordability. The affordability restrictions
shall be revived according to the original terms if, during the
original affordability period, the owner of record before the
termination event, obtains an ownership interest in the housing.
(b) Rehabilitation not involving acquisition. Housing that is
currently owned by a qualifying family, as set forth in Sec. 1807.400,
qualifies as Affordable Housing if it meets the requirements of this
subsection.
(1) The housing is as follows:
(i) The estimated value of the housing, after Rehabilitation, does
not exceed 95 percent of the median purchase price for the area, as
used in the HOME Program and as determined by the applicable
Participating Jurisdiction; or
[[Page 12418]]
(ii) Housing costs should fall within a front-end ratio of 28
percent of household income and a back-end ratio of 36 percent of
household income. The front-end ratio is a percentage comparing a Low-
Income borrower's total monthly cost to buy a property (mortgage
principal and interest, insurance, and real estate taxes) to the
borrower's monthly income before deductions. The back-end ratio is a
percentage comparing the Low-Income borrower's total monthly debt
payments (mortgage, real estate taxes and insurance, car loans, and
other consumer loans) to the borrower's gross monthly income.
(2) The housing is the principal residence of a qualifying family
as set forth in Sec. 1807.400, at the time that CMF funding is
Committed to the housing.
(3) Housing under this subsection must meet the affordability
requirements for at least 10 years after Rehabilitation is completed.
(c) Ownership interest. The ownership in the housing assisted under
this section must meet the definition of ``Homeownership'' as defined
in Sec. 1807.104(x).
(d) New construction without acquisition. Newly constructed housing
that is built on property currently owned by a family which will occupy
the housing upon completion, qualifies as Affordable Housing if it
meets the requirements under paragraph (a) of this section.
(e) Converting rental units to Homeownership units for existing
tenants. CMF-funded rental units may be converted to Homeownership
units by selling, donating, or otherwise conveying the units to the
existing tenants to enable the tenants to become homeowners in
accordance with the requirements of Sec. 1807.402. The Homeownership
units are subject to a minimum period of affordability equal to the
remaining affordability period.
Subpart E--Leveraging and Commitment Requirement
1807.500 Leveraged costs--general.
(a) Each CMF grant is expected to result in Eligible Project Costs
that total at least 10 times the grant amount. Such costs may be for
activities that include Affordable Housing Activities, Economic
Development Activities, or Community Service Facilities. Thus, an
Awardee shall demonstrate that it leveraged its CMF award at least 10
times the CMF grant amount or some other standard established by the
CDFI Fund in the Awardee's Assistance Agreement. Leveraged Costs are
costs that exceed the dollar amount of the Awardee's CMF contribution
to each CMF-funded activity. However, the applicable NOFA may set forth
a required percentage of Leveraged Costs that must be attributable to
non-governmental sources. An Awardee may report to the CDFI Fund all
Leveraged Costs, with the following limitations:
(1) No costs attributable to Operations may be reported as
Leveraged Costs.
(2) No costs attributable to prohibited uses as identified in Sec.
1807.302(a) and (c) may be reported as Leveraged Costs.
(3) All costs attributable to Affordable Housing Activities
reported as Leveraged Costs must be for housing units that qualify as
Affordable Housing under Sec. 1807.401 or Sec. 1807.402 for families
whose annual income does not exceed 120 percent of the median income
for the area, as determined by HUD.
(b) Awardees shall self-report leveraging information through forms
or electronic systems developed by the CDFI Fund, subject to audit
requirements set forth herein. Consequently, Awardees shall maintain
appropriate documentation, such as audited financial statements, wire
transfers documents, pro-formas, and other relevant records, to support
its reports.
Sec. 1807.501 Commitment for use.
(a) CMF awards shall be Committed for use within two years of the
effective date of the Awardee's Assistance Agreement. An Awardee shall
demonstrate that its CMF award is Committed by having executed a
written, legally binding agreement under which CMF assistance will be
provided to the developer or project sponsor for an identifiable
project under which:
(1) Construction can reasonably be expected to start within 12
months of the agreement date; or
(2) Property title will be transferred within six months of the
agreement date.
(b) An Awardee shall make an initial disbursement of its CMF award
for Affordable Housing Activities, Economic Development Activities or
Community Service Facilities within three years of the effective date
of its Assistance Agreement.
Sec. 1807.502 Assistance limits.
An eligible Applicant and its Subsidiaries and Affiliates may not
be awarded more than 15 percent of the aggregate funds available for
CMF grants during any funding year.
Sec. 1807.503 Project completion.
Once a CMF-funded project has been completed, it must be placed
into service within five years of the effective date of an Awardee's
Assistance Agreement. Project Completion occurs, as determined by the
CDFI Fund, when:
(a) All necessary title transfer requirements and construction work
have been performed;
(b) The project complies with the requirements of this part,
including the following property standards (these property standards
must be complied with at the time of Project Completion and maintained
for a period of at least 10 years thereafter):
(1) Housing that is constructed or rehabilitated with CMF funding
must meet all applicable local codes, rehabilitation standards,
ordinances, and zoning ordinances at the time of project completion. In
the absence of a local code for new construction or rehabilitation,
such housing must meet, as applicable: One of three model codes
(Uniform Building Code (ICBO), National Building Code (BOCA), Standard
(Southern) Building Code (SBCCI)); or the Council of American Building
Officials (CABO) one or two family code; or the Minimum Property
Standards (MPS) in 24 CFR 200.925 or 200.926. Newly constructed housing
must meet the current edition of the Model Energy Code published by the
Council of American Building Officials.
(2) The housing must meet the accessibility requirements at 24 CFR
part 8, which implement Section 504 of the Rehabilitation Act of 1973
(29 U.S.C. 794) and covered multifamily dwellings, as defined at 24 CFR
100.201, must also meet the design and construction requirements at 24
CFR 100.205, which implement the Fair Housing Act (42 U.S.C. 3601-
3619).
(3) Construction of all manufactured housing must meet the
Manufactured Home Construction and Safety Standards established in 24
CFR Part 3280. These standards pre-empt State and local codes covering
the same aspects of performance for such housing. The installation of
all manufactured housing units must comply with applicable State and
local laws or codes. In the absence of such laws or codes, the
installation must comply with the manufacturer's written instructions
for installation of manufactured housing units. Manufactured housing
that is rehabilitated using CMF funds must meet the requirements set
out in paragraph (b)(1) of this section; and
(c) The final drawdown has been disbursed for the project.
[[Page 12419]]
Subpart F--Tracking Requirements
Sec. 1807.600 Tracking funds--general.
An Awardee receiving a CMF award shall develop and maintain a
system to ensure that its CMF award is used in accordance with this
part, the Act, its Assistance Agreement, and any requirements or
conditions under which such amounts were awarded. Thus, an Awardee may
create a separate account or accounting code for CMF activities.
Sec. 1807.601 Nature of funds.
A CMF award shall be considered Federal financial assistance in
regards to applying Federal civil rights laws.
Subpart G--Applications for Assistance
Sec. 1807.700 Notice of Funds Availability.
Each Applicant shall submit an application for funding under this
part in accordance with the regulations in this Subpart. The applicable
NOFA will advise potential Applicants on how to obtain and complete an
application and will establish deadlines and other requirements. The
NOFA will specify any limitations, special rules, procedures, and
restrictions for a particular funding round. After receipt of an
application, the CDFI Fund may request clarifying or technical
information on the materials submitted as part of such application.
Subpart H--Evaluation and Selection of Applications
Sec. 1807.800 Evaluation and selection--general.
Applicants will be evaluated and selected, at the sole discretion
of the CDFI Fund, to receive assistance based on a review process that
may include an interview(s) and/or site visit(s) intended to:
(a) Ensure that Applicants are evaluated on a merit basis and in a
fair and consistent manner;
(b) Ensure that each Awardee can successfully meet its leveraging
goals and achieve Affordable Housing Activity, Community Service
Facility and/or Economic Development Activity impacts;
(c) Ensure that Awardees represent a geographically diverse group
of Applicants serving Metropolitan Areas and Underserved Rural Areas
across the United States that meet criteria of economic distress, which
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) Economic Development Activities or Community Service Facilities
that target Extremely Low-Income, Very Low-Income, and Low-Income
families within the Awardee's Service Area; or
(5) Any other criteria the CDFI Fund shall set forth in the
applicable NOFA; and
(d) Take into consideration other factors as described in the
applicable NOFA.
Sec. 1807.801 Evaluation of applications.
(a) Eligibility and completeness. An Applicant will not be eligible
to receive a CMF award if it fails to meet the eligibility requirements
described in Sec. 1807.200 and in the applicable NOFA, or if the
Applicant has not submitted complete application materials. For the
purposes of this paragraph (a), the CDFI Fund reserves the right to
request additional information from the Applicant, if the CDFI Fund
deems it appropriate.
(b) Substantive review. In evaluating and selecting applications to
receive assistance, the CDFI Fund will evaluate the Applicant's
likelihood of success in meeting the factors set forth in the
applicable NOFA, including but not limited to:
(1) The Applicant's ability to use CMF funding to generate
additional investments;
(2) The need for affordable housing in the Applicant's market; and
(3) The ability of the Applicant to obligate amounts and undertake
activities in a timely manner. In the case of an Applicant that has
previously received assistance under any CDFI Fund program, the CDFI
Fund will also consider the Applicant's level of success in meeting its
performance goals, reporting requirements, and other requirements
contained in the previously negotiated and executed assistance,
allocation or award agreement(s) with the CDFI Fund, any undisbursed
balance of assistance, and compliance with applicable federal laws. The
CDFI Fund may consider any other factors, as it deems appropriate, in
reviewing an application, as set forth in the applicable NOFA.
(c) Consultation with appropriate regulatory agencies. In the case
of an Applicant that is a federally regulated financial institution,
the CDFI Fund may consult with the Appropriate Federal Banking Agency
or Appropriate State Agency prior to making a final award decision and
prior to entering into an Assistance Agreement.
(d) Awardee selection. The CDFI Fund will select CMF Awardees based
on the criteria described in paragraph (b) of this section and any
other criteria set forth in this part or the applicable NOFA.
Subpart I--Terms and Conditions of Assistance
Sec. 1807.900 Assistance Agreement.
(a) Each Applicant that is selected to receive a CMF award must
enter into an Assistance Agreement with the CDFI Fund. The Assistance
Agreement will set forth certain required terms and conditions of the
Assistance Agreement which may include, but are not limited to, the
following:
(1) The amount of the award;
(2) The approved uses of the award;
(3) The approved Service Area in which the award may be used; (4)
the time period by which the award proceeds must be Committed;
(5) The required documentation to evidence Project Completion; and
(6) Performance goals that have been established by the CDFI Fund
based upon the Awardee's application.
(b) The Assistance Agreement shall provide that in the event of
fraud, mismanagement, noncompliance with the Act or the CDFI Fund's
regulations; or noncompliance with the terms and conditions of the
Assistance Agreement on the part of the Awardee; the CDFI Fund, in its
discretion, may:
(1) Require changes in the performance goals set forth in the
Assistance Agreement;
(2) Revoke approval of the Awardee's Application;
(3) Reduce or terminate the Awardee's assistance;
(4) Require repayment of any assistance that has been distributed
to the Awardee;
(5) Bar the Awardee from reapplying for any assistance from the
CDFI Fund; or
(6) Take such other actions as the CDFI Fund deems appropriate or
as set forth in the Assistance Agreement.
(c) Prior to imposing any sanctions pursuant to this section or an
Assistance Agreement, the CDFI Fund shall, to the maximum extent
practicable, provide the Awardee with written notice of the proposed
sanction and an opportunity to comment. Nothing in this section,
however, shall provide an Awardee the right to any formal or informal
hearing or comparable proceeding not otherwise required by law.
Sec. 1807.901 Disbursement of funds.
Assistance provided pursuant to this part may be provided in a lump
sum or in some other manner, as determined appropriate by the CDFI
Fund. The CDFI Fund shall not provide any assistance under this part
until an
[[Page 12420]]
Awardee has satisfied all conditions set forth in the applicable NOFA
and Assistance Agreement.
Sec. 1807.902 Data collection and reporting.
(a) Data--General. An Awardee shall maintain such records as may be
prescribed by the CDFI Fund that are necessary to:
(1) Disclose the manner in which CMF funding is used, including
providing documentation to demonstrate Project Completion;
(2) Demonstrate compliance with the requirements of this part and
the Assistance Agreement; and
(3) Evaluate the impact of CMF funding.
(b) Customer profiles. An Awardee shall compile such data on the
gender, race, ethnicity, national origin, or other information on
individuals that utilize its products and services as the CDFI Fund
shall prescribe in an Assistance Agreement. Such data will be used to
determine whether residents of the Awardee's Service Area are
adequately served and to evaluate the impact of CMF funding.
(c) Access to records. An Awardee must submit such financial and
activity reports, records, statements, and documents at such times, in
such forms, and accompanied by such reporting data, as required by the
CDFI Fund or the U.S. Department of Treasury to ensure compliance with
the requirements of this part and to evaluate the impact of CMF
funding. The United States Government, including the U.S. Department of
Treasury, the Comptroller General, and their duly authorized
representatives, shall have full and free access to the Awardee's
offices and facilities and all books, documents, records, and financial
statements relating to use of Federal funds and may copy such documents
as they deem appropriate and audit or provide for an audit at least
annually. The CDFI Fund, if it deems appropriate, may prescribe access
to record requirements for entities that are borrowers of, or that
receive investments from, an Awardee.
(d) Retention of records. An Awardee shall comply with all record
retention requirements as set forth in OMB Circular A-110 (as
applicable).
(e) Data collection and reporting. (1) Financial Reporting: (i) All
Non-Profit Awardees (excluding Insured CDFIs and State-Insured Credit
Unions) must submit to the CDFI Fund financial statements that have
been reviewed by an independent certified public accountant in
accordance with Statements on Standards for Accounting and Review
Services, issued by the American Institute of Certified Public
Accountants by a time set forth in the applicable Notice of Funding
Availability or Assistance Agreement (audited financial statements can
be provided by the due date in lieu of reviewed statements, if
available). Non-Profit Awardees (excluding Insured CDFIs and State-
Insured Credit Unions) that are required to have their financial
statements audited pursuant to OMB Circular A-133 Audits of States,
Local Governments and Non-Profit Organizations, must also submit their
A-133 audited financial statements by a time set forth in the
applicable NOFA or Assistance Agreement. Non-Profit Awardees (excluding
Insured CDFIs and State-Insured Credit Unions) that are not required to
have financial statements audited pursuant to OMB Circular A-133,
Audits of States, Local Governments and Non-Profit Organizations, must
submit to the CDFI Fund a statement signed by the Awardee's authorized
representative or certified public accountant, asserting that the
Awardee is not required to have a single audit pursuant OMB Circular A-
133.
(ii) For-profit Awardees (excluding Insured CDFIs and State-Insured
Credit Unions) must submit to the CDFI Fund financial statements
audited in conformity with generally accepted auditing standards as
promulgated by the American Institute of Certified Public by a time set
forth in the applicable NOFA or Assistance Agreement.
(iii) Insured CDFIs are not required to submit financial statements
to the CDFI Fund. The CDFI Fund will obtain the necessary information
from publicly available sources. State-Insured Credit Unions must
submit to the CDFI Fund copies of the financial statements that they
submit to the Appropriate State Agency.
(2) Performance Goal Reporting: Performance goals and measures that
are specific to the Awardee's application for funding shall be met as
set forth in its Assistance Agreement. Awardees shall submit data and
information to the CDFI Fund regarding achievement of these Performance
Goals as described in the Assistance Agreement.
(f) Availability of referenced publications. The publications
referenced in this section are available as follows:
(1) OMB Circulars may be obtained from the Office of
Administration, Publications Office, 725 17th Street, NW., Room 2200,
New Executive Office Building, Washington, DC 20503 or on the Internet
(http://www.whitehouse.gov/omb/grants_circulars/); and
(2) General Accounting Office materials may be obtained from GAO
Distribution, 700 4th Street, NW., Suite 1100, Washington, DC 20548.
Sec. 1807.903 Compliance with government requirements.
In carrying out its responsibilities pursuant to an Assistance
Agreement, the Awardee shall comply with all applicable Federal, State,
and local laws, regulations, and ordinances, OMB Circulars, and
Executive Orders.
1807.904 Lobbying restrictions.
No assistance made available under this part may be expended by an
Awardee to pay any person to influence or attempt to influence any
agency, elected official, officer or employee of a State or local
government in connection with the making, award, extension,
continuation, renewal, amendment, or modification of any State or local
government contract, grant, loan or cooperative agreement as such terms
are defined in 31 U.S.C. 1352.
1807.905 Criminal provisions.
The criminal provisions of 18 U.S.C. 657 regarding embezzlement or
misappropriation of funds is applicable to all Awardees and Insiders.
Sec. 1807.906 CDFI Fund deemed not to control.
The CDFI Fund shall not be deemed to control an Awardee by reason
of any assistance provided under the Act for the purpose of any
applicable law.
1807.907 Limitation on liability.
The liability of the CDFI Fund and the United States Government
arising out of any assistance to an Awardee in accordance with this
part shall be limited to the amount of the investment in the Awardee.
The CDFI Fund shall be exempt from any assessments and other
liabilities that may be imposed on controlling or principal
shareholders by any Federal law or the law of any State. Nothing in
this section shall affect the application of any Federal tax law.
Sec. 1807.908 Fraud, waste, and abuse.
Any person who becomes aware of the existence or apparent existence
of fraud, waste or abuse of assistance provided under this part should
report such incidences to the Office of Inspector General of the U.S.
Department of the Treasury.
[[Page 12421]]
Dated: March 4, 2010.
Donna J. Gambrell,
Director, Community Development Financial Institutions Fund.
[FR Doc. 2010-5026 Filed 3-12-10; 8:45 am]
BILL CODE 4810-70-P