58658 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Notices 

8 17 CFR 200.30–3(a)(12). 

amount is set too low, the result could 

be that some members would have to 

submit a greater number of ‘‘do not 

exercise’’ instructions than they would 

have to submit if the threshold amount 

was set at a higher amount. However, 

the Commission is satisfied that by 

consulting with an industry advisory 

group, by surveying its clearing 

members, and by its analysis, OCC has 

made a reasoned determination in 

deciding to set the threshold amount for 

equity options in all account types at 

$.05. Furthermore, we note that OCC 

consulted with its clearing members to 

ensure that even those that did not 

actively support the proposed rule 

change would not be adversely affected 

in a significant manner by the new 

threshold amount. Accordingly, because 

the proposed rule change is designed to 

reduce the amount of processing 

required for in-the-money equity 

options, we find that it is designed to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and in 

particular Section 17A of the Act and 

the rules and regulations thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that the 

proposed rule change (File No. SR–

OCC–2006–05) be and hereby is 

approved. 

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.8

Nancy M. Morris, 

Secretary. 

[FR Doc. E6–16332 Filed 10–3–06; 8:45 am] 

BILLING CODE 8010–01–P 

SMALL BUSINESS ADMINISTRATION 

Notice of NMTC Pilot Loan Program 

AGENCY: U.S. Small Business 

Administration (‘‘SBA’’). 

ACTION: Notice. 

SUMMARY: SBA is creating the New 

Markets Tax Credit (NMTC) Pilot Loan 

Program. Under this program, certain 

Community Development Entities will 

be able to purchase a participation 

interest in up to 90% of a SBAExpress 

or CommunityExpress Section 7(a) 

guaranteed business loan as part of their 

investment in low-income communities 

under the New Markets Tax Credit 

Program administered by the U.S. 

Department of Treasury. SBA will use 

its authority under 13 CFR 120.3 to 

waive section 120.432(a) of SBA 

regulations for this pilot program. 

DATES: Effective date: The NMTC Pilot 

Loan Program will take effect on 

November 3, 2006. 

Expiration date: The NMTC Loan 

Pilot Program will expire on September 

30, 2011, unless extended by SBA. 

FOR FURTHER INFORMATION CONTACT: 

James W. Hammersley, Director, Loan 

Programs Division at 

james.hammersley@sba.gov. 

SUPPLEMENTARY INFORMATION: 

New Markets Tax Credit Program 

The New Markets Tax Credit (NMTC) 

Program permits taxpayers to receive a 

credit against Federal income taxes for 

making qualified equity investments in 

entities designated as Community 

Development Entities (CDEs) by the U.S. 

Department of Treasury’s Community 

Development Financial Institutions 

(CDFI) Fund. Substantially all of the 

qualified equity investment must in turn 

be used by the CDE to make ‘‘qualified 

low-income community investments,’’

as defined in § 45D(d)(1) of the IRS Tax 

Code (‘‘QLCI’’), which includes a loan 

made to a ‘‘qualified active low-income 

community business,’’ as defined in 

§ 45(d)(2) of the IRS Tax Code (‘‘QLCI 

loans’’). The credit provided to the 

investor totals 39% of the investment 

made by that investor, which may claim 

the credit against taxable income over a 

seven-year credit allowance period. In 

each of the first three years, the investor 

may claim five percent of the total 

amount of the NMTC; in the final four 

years, the investor may claim six 

percent annually. Investors may not 

redeem their investments in CDEs prior 

to the conclusion of the seven-year 

period. 

NMTCs are allocated annually by the 

CDFI Fund to CDEs under a competitive 

application process. These CDEs then 

offer the credits to taxable investors in 

exchange for stock or a capital interest 

in the CDEs. To qualify as a CDE, an 

entity must be a domestic corporation or 

partnership that: (1) Has a mission of 

serving, or providing investment capital 

for, low-income communities or lowincome persons; (2) maintains 

accountability to residents of lowincome communities through their 

representation on a governing board of 

or advisory board to the entity; and (3) 

has been certified as a CDE by the CDFI 

Fund. 

Throughout the life of the NMTC 

Program, the CDFI Fund is authorized to 

allocate up to $16 billion in NMTCs to 

CDEs. To date, the CDFI Fund has 

conducted four rounds of allocations 

and issued 233 awards totaling $12.1 

billion in allocation authority. The CDFI 

Fund plans to release its fifth annual 

NMTC Program Notice of Allocation 

Availability (NOAA) on December 1, 

2006. This NOAA will invite CDEs to 

compete for NMTC allocations in 

support of an aggregate amount of $3.9 

billion in qualified equity investments 

in CDEs. 

More information about the NMTC 

program, including the applicable 

statutes and regulations, is available at 

the CDFI Fund’s Web site at: http:// 

www.cdfifund.gov/what_we_do/ 

programs_id.asp?programID=5. 

SBA’s NMTC Pilot Loan Program 

SBA will implement a NMTC Pilot 

Loan Program on the effective date of 

this Notice. The pilot will encourage 

lenders, as defined in 13 CFR 120.10 

(‘‘Lenders’’), that participate in SBA’s 

7(a) guaranteed loan program to increase 

the amount of credit, equity and 

financial services they provide to 

entrepreneurs and small businesses 

located in urban and rural distressed 

communities (‘‘new markets’’), and 

support the President’s domestic 

economic priority of stimulating growth, 

investment and jobs in new markets, by 

increasing SBA’s support for the NMTC 

program. New markets are ‘‘low-income 

communities’’ as defined in § 45D(e) of 

the IRS Tax Code. 

As part of the pilot, SBA will use its 

authority under 13 CFR 120.3 to waive 

the regulation that states, ‘‘A Lender 

may not sell any of its interest in a 7(a) 

loan to a nonparticipating Lender.’’ 13 

CFR 120.432(a). This regulation requires 

that any holder of any portion of an 

SBA-guaranteed 7(a) loan, as defined in 

13 CFR 120.1 and 120.2(a) (‘‘7(a) loan’’), 

other than through a sale in the 

secondary market, must be a Lender. 

Waiver of this rule is necessary to allow 

CDEs that are not also Lenders to hold 

7(a) loans. Allowing CDEs to purchase 

and hold a portion of a 7(a) loan will 

enable CDEs with NMTC allocations to 

attract additional participation from 

Lenders to provide loans, as well as 

equity financing and financial services 

to entrepreneurs and small businesses 

in new markets. Under the pilot, only 

CDEs holding a NMTC allocation 

awarded by the CDFI Fund will be 

allowed to purchase portions of 7(a) 

loans. 

Through the pilot, SBA plans to test 

a process which permits CDEs to 

purchase a participation interest in 7(a) 

loans made by Lenders under either the 

SBAExpress or CommunityExpress 

programs, as a means of providing 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Notices 58659 

additional financing to businesses 

located in new markets. The CDEs 

would bring additional funds to various 

underserved business communities 

located in new markets. SBA hopes that 

such CDEs will also provide a package 

of services to borrowers, including 

mentoring, coaching and counseling to 

these businesses. 

Under SBA’s SBAExpress loan 

program, a Lender approved by SBA to 

make such loans makes a 7(a) loan to a 

small business using the Lender’s own 

processes, procedures, and forms. 

Certain types of loans are not eligible for 

the SBAExpress loan program. The 

maximum loan amount is $350,000, and 

the maximum SBA guaranty is 50% of 

the loan amount. More information 

about the SBAExpress program is 

available at: http://www.sba.gov/ 

financing/lendinvest/sbaexpress.html, 

or from any SBA district office. 

Although the maximum size of an 

SBAExpress loan is $350,000, 

SBAExpress loans that are larger than 

$150,000 will not be eligible for the 

NMTC Pilot Loan Program. 

Under SBA’s CommunityExpress 

program, a Lender approved by SBA to 

make such loans makes a 7(a) loan to a 

small business using Lender’s own 

processes, procedures, and forms. 

Borrowers must receive pre- and postloan closing technical and management 

assistance from local non-profit 

providers and/or from the Lender, with 

that assistance coordinated, arranged 

and, when necessary, paid for by the 

Lender. Certain types of loans are not 

eligible for the CommunityExpress 

program. The maximum loan amount is 

$250,000, and the SBA guaranty is up to 

85% of the loan amount for loans of 

$150,000 or less. More information 

about the CommunityExpress program 

is available at: http://www.sba.gov/ 

financing/lendinvest/comexpress.html. 

or from any SBA District Office. 

Although the maximum size of a 

CommunityExpress loan is $250,000, 

CommunityExpress loans that are larger 

than $150,000 will not be eligible for the 

NMTC Pilot Loan Program. 

Waiver 

Pursuant to 13 CFR 120.3, I am hereby 

waiving the requirement in 13 CFR 

120.432(a) on sales of participating 

interests in 7(a) loans to allow lenders 

to sell participating interests in 7(a) 

loans to CDEs. This waiver is needed in 

order for the NMTC Pilot Loan Program 

to function. 

Beginning on the effective date of the 

NMTC Program, CDEs that hold an 

NMTC allocation may acquire, hold and 

assign a portion of an eligible 

SBAExpress or CommunityExpress 7(a) 

loan notwithstanding the prohibition in 

13 CFR 120.432(a). 

In addition to the waiver of this 

regulation, SBA is implementing the 

following restrictions on Lenders and on 

the sale of 7(a) loans under this pilot: 

(a) Only new SBAExpress and 

CommunityExpress 7(a) loans made 

after the effective date of the pilot are 

eligible for the pilot. 

(b) Lenders must sign a Supplemental 

Lender Program Participation 

Agreement for the NMTC Pilot Loan 

Program in order to participate in this 

program. 

(c) The maximum loan size eligible 

for the pilot is $150,000. 

(d) Only 7(a) loans held in the 

portfolio of the originating Lender and 

made after the effective date of the pilot 

are eligible; 7(a) loans sold on the 

secondary market are not eligible. 

(e) The originating Lender must 

perform the initial underwriting for the 

7(a) loan, close the 7(a) loan, and retain 

all servicing responsibility for the 7(a) 

loan even after the Lender sells 

participation interests in such loan to 

CDEs, and perform liquidation of the 

loan unless it is not required to do so 

by SBA. 

(f) The originating Lender must retain 

at least 10% of the principal balance of 

the 7(a) loan, excluding any premium 

amount paid, throughout the entire term 

of the loan. The 10% of any loan 

retained by the Lender must be a 

portion of the unguaranteed interest. 

The Lender must continue to administer 

the loans during their entire term and 

remains responsible for all SBA 

requirements and fees. 

(g) A participation agreement, in a 

form that is acceptable to SBA, must be 

used by the originating Lender when a 

participation interest in a 7(a) loan is 

sold to a CDE and an agreement for 

assignment of a CDE-held participation 

interest, in a form that is acceptable to 

SBA, must be used by the CDE for all 

subsequent transfers of a participation 

interest. 

(h) CDEs purchasing any portion of a 

7(a) loan made under the pilot must 

have a NMTC allocation. 

(i) Purchasers of participation 

interests in loans will not be permitted 

any input into the closing, servicing or 

liquidation of the 7(a) loan, and Lenders 

must not allow any such input. 

(j) A CDE may sell its interest in a 7(a) 

loan made under the pilot only to either 

a Lender or to another CDE with a 

NMTC allocation. The CDE must use an 

assignment of participation interest 

form that is acceptable to SBA. 

(k) Small Business Investment 

Companies (SBICs) and New Market 

Venture Capital Companies (NMVCCs) 

are prohibited from participating in the 

pilot. 

(l) SBA’s waiver of its regulation for 

purposes of this pilot is based on a 

requirement that the SBAExpress and 

CommunityExpress 7(a) loans made by 

Lenders under this pilot also will 

qualify as QLCI loans under the IRS Tax 

Code and regulations governing the 

NMTC program. The originating Lender 

is responsible for meeting the eligibility 

criteria to qualify the 7(a) loan as a QLCI 

loan. However, CDEs and their investors 

bear the responsibility of demonstrating 

to the IRS the eligibility of the loan for 

NMTCs, and SBA makes no legal or tax 

representations and assumes no 

responsibility in this regard. 

If SBA does not make this program 

permanent or extend this pilot program 

beyond September 30, 2011, the CDE 

may continue to hold in its portfolio any 

participation interests in 7(a) loans until 

the loan is paid in full or the full NMTC 

is earned, whichever occurs first. If a 

CDE has fully earned its allocated 

NMTCs, but the 7(a) loan in which it 

holds a participation interest is still 

outstanding, the CDE may transfer its 

participation interest to either a Lender 

or to another CDE that holds an NMTC 

allocation. 

Steven C. Preston, 

Administrator. 

[FR Doc. 06–8497 Filed 10–3–06; 8:45 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

[Summary Notice No. PE–2006–32] 

Petitions for Exemption; Summary of 

Petitions Received 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of petitions for 

exemption received 

SUMMARY: Pursuant to FAA’s rulemaking 

provisions governing the application, 

processing, and disposition of petitions 

for exemption part 11 of Title 14, Code 

of Federal Regulations (14 CFR), this 

notice contains a summary of certain 

petitions seeking relief from specified 

requirements of 14 CFR. The purpose of 

this notice is to improve the public’s 

awareness of, and participation in, this 

aspect of FAA’s regulatory activities. 

Neither publication of this notice nor 

the inclusion or omission of information 

in the summary is intended to affect the 

legal status of any petition or its final 

disposition. 


rwilkins on PROD1PC63 with NOTICES