[Federal Register Volume 62, Number 65 (Friday, April 4, 1997)]
[Notices]
[Pages 16461-16464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8784]


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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund


Notice of Funds Availability (NOFA) Inviting Applications for the 
Community Development Financial Institutions (CDFI) Program--
Intermediary Component

AGENCY: Community Development Financial Institutions Fund, Department 
of the Treasury.

ACTION: Notice of Funds Availability (NOFA) inviting applications.

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SUMMARY: The Community Development Banking and Financial Institutions 
Act of 1994 (12 U.S.C. 4701 et seq.) (hereafter referred to as the 
``Act'') provides authority for the Community Development Financial 
Institutions Fund (hereafter referred to as ``the Fund'') to select and 
provide assistance to eligible applicants under the Community 
Development Financial Institutions (``CDFI'') Program. The revised 
interim rule (12 CFR part 1805), published elsewhere in this issue of 
the Federal Register, provides guidance on the contents of necessary 
application materials and program requirements. This Notice is in 
connection with two

[[Page 16462]]

competitive rounds of a new intermediary component of the CDFI Program. 
This intermediary component will provide financial assistance to CDFIs 
that provide financing primarily to other CDFIs and/or to support the 
formation of CDFIs. The Fund currently anticipates making awards of 
between $5.0 million and $7.5 million in appropriated funds pursuant to 
this Notice. Also being published elsewhere in this issue of the 
Federal Register is a separate Notice in connection with the core 
component of the CDFI Program, with respect to which the Fund intends 
to make available up to $32.5 million in appropriated funds.

DATES/TWO ROUNDS: Applications may be submitted at any time after April 
4, 1997. Applications will be evaluated competitively for the 
intermediary component in two separate rounds. For the first round, the 
deadline for receipt of an application is 6 p.m. Eastern Standard Time 
on Friday, May 16, 1997. For the second round, the deadline for receipt 
of an application is 6 p.m. Eastern Standard Time on Friday, June 20, 
1997. Applications received after the deadline for the first round but 
before the deadline for the second round will be considered as part of 
the second round. Applications received after the deadline for the 
second round will not be accepted and will be returned to the sender. 
An applicant may apply in each round. Applications sent to the Fund by 
facsimile will not be accepted.
    The Fund anticipates making available at least $5 million in 
appropriated funds pursuant to this Notice. If less than $2.5 million 
in appropriated funds is awarded in the first round, the amount of 
available funds for the second round will be $5 million less the amount 
awarded in the first round. If $2.5 million or more is awarded during 
the first round, the amount of available funds for the second round 
will be $2.5 million. As of the date of this Notice, for the two rounds 
combined, the Fund intends to award no more than $7.5 million in 
appropriated funds. The Fund reserves the right to award higher or 
lower amounts in each round, and for the two rounds combined, than the 
amounts described above, depending on the quality of applications 
received in each round.
    The anticipated maximum aggregate award per applicant under this 
Notice (i.e. for both rounds combined) is $1.25 million. However, the 
Fund, in its sole discretion, reserves the right to award amounts in 
excess of $1.25 million for an applicant(s) if it deems it appropriate.

ADDRESSES: Applications must be sent to: The Community Development 
Financial Institutions Fund, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220.

FOR FURTHER INFORMATION CONTACT: The Community Development Financial 
Institutions Fund, U.S. Department of the Treasury, 1500 Pennsylvania 
Avenue, NW., Washington, DC 20220, (202) 622-8662. (This is not a toll 
free number.) If you have any questions about the regulations, this 
Notice or the application packet, you may call or write to the Fund at 
the above telephone number or address, or you may send questions by 
facsimile to (202) 622-7754. To request an application packet, please 
send by facsimile a written request which includes the name of the 
requester, organization, mailing address, telephone number and 
facsimile number. Requests for an application packet should be sent by 
facsimile to (202) 622-2599, which is the facsimile number being used 
to receive requests for an application packet.

SUPPLEMENTARY INFORMATION:

I. Background

    Credit and investment capital are essential ingredients in creating 
and retaining jobs, developing affordable housing, starting or 
expanding businesses, revitalizing neighborhoods, and empowering 
people. As a key urban and rural policy initiative, the CDFI Program is 
facilitating the creation of a national network of financial 
institutions that are specifically dedicated to community development. 
This strategy will build strong institutions that make loans and 
investments and provide services to economically distressed investment 
areas and disadvantaged targeted populations. This Notice is in 
connection with a new intermediary component of the CDFI Program.
    Elsewhere in this issue of the Federal Register, the Fund is 
publishing a new Notice of Funds Availability for financial and 
technical assistance to CDFIs pursuant to the direct funding approach 
used in the first round. That separate Notice is in connection with the 
core component of the CDFI Program, and the Fund anticipates that for 
the foreseeable future, the Fund will devote the great bulk of the 
financial assistance available for the CDFI Program to this core 
component. In the separate Notice for the core component, the Fund is 
making available up to $32.5 million in appropriated funds.
    The Fund also recognizes that to address the diverse needs and take 
full advantage of the enormous potential of the growing CDFI industry, 
it is important that the Fund be on the cutting edge of innovation by 
expanding the tools it utilizes to assist CDFIs. This Notice in 
connection with an intermediary component of the CDFI Program is one 
part of a broader effort to develop and make available such new tools.
    The Fund recognizes that there are in existence certain 
intermediary CDFIs, and others may be created over time, that focus 
their financing activities primarily on financing other CDFIs. Such 
institutions may have knowledge and capacity to develop and implement a 
specialized niche or niches in their financing of CDFIs and/or CDFIs in 
formation. The Fund believes that providing financial assistance to 
such intermediaries can be an effective way to expand its support of 
the CDFI industry. To illustrate the concept of an intermediary CDFI 
with a few examples, an intermediary may have a specialized niche or 
niches focusing on financing a specific type or types of CDFIs, 
providing small amounts of capital per CDFI, financing CDFIs with 
specialized risk levels, or financing institutions seeking to become 
CDFIs. By providing financial assistance to specialized intermediaries, 
the Fund believes it can leverage the expertise of such intermediaries 
and strengthen the Fund's capacity to support the development and 
enhancement of the CDFI industry. This Notice invites applications from 
CDFIs, and organizations seeking to become CDFIs, that are or plan to 
become such a specialized intermediary, focusing on providing loans to 
or investments in other CDFIs and/or to support the formation of CDFIs. 
This Notice is not intended and should not be construed to allow an 
applicant to file a joint application on behalf of a group of other 
CDFIs, but rather to provide financial assistance to intermediaries who 
have criteria for financing, in arms length transactions, other CDFIs 
and/or to support the formation of CDFIs.
    This Notice implements the intermediary component by using two 
competitive rounds. This should expedite the ability of intermediary 
CDFIs to provide financing to other CDFIs, and should assist the 
ability of the intermediary component of the CDFI Program to work 
effectively with the core component in a mutually supportive manner. 
Many CDFIs will be facing the decision of whether they should devote 
the substantial time and effort necessary to prepare an application, 
due by June 20, 1997, in response to the core component Notice

[[Page 16463]]

published elsewhere in this issue of the Federal Register. Given what 
is expected to be the highly competitive nature of the core component 
round, many CDFIs may decide not to apply for the core component, but 
instead to concentrate on seeking assistance from an intermediary.
    The Fund believes, however, that there may be some intermediary 
organizations that wish to apply for assistance in response to this 
intermediary component Notice, that will need more time to submit a 
quality application than is provided by the May 16, 1997, deadline for 
the first round. Such organizations may apply in the second round by 
the June 20, 1997, deadline.

II. Eligibility

    An applicant for assistance pursuant to this Notice must meet the 
eligibility requirements set forth in Sec. 1805.200. In addition, 
pursuant to Sec. 1805.200(a)(3), this Notice is limited to applicants 
that satisfy the following requirements: (1) The applicant's financings 
(loans and/or development investments) must primarily focus on 
financing other CDFIs and/or supporting the formation of CDFIs; and (2) 
if the applicant is not a CDFI at the time of application, the 
application shall include a realistic plan for the applicant to become 
a CDFI within one year of the date on which the Fund approves the 
applicant for financial assistance (which period may be extended at the 
sole discretion of the Fund). In no event will the Fund disburse 
assistance to the applicant until the applicant can be certified as a 
CDFI.

III. Types of Assistance

    An applicant may submit an application for financial assistance in 
the form of an equity investment, loan, or grant (or a combination of 
these financial assistance instruments). Applicants for financial 
assistance shall indicate the dollar amount, form, terms, and 
conditions of assistance requested. The Fund will not accept 
applications for technical assistance pursuant to this Notice.
    Since an intermediary that is selected pursuant to this Notice must 
be a CDFI when funded, its predominant business activity must be the 
provision of loans and/or development investments. Thus, even if an 
intermediary applicant receives a grant from the Fund, the Fund will 
normally expect that the intermediary will use such grant to enhance 
its ability to make loans and/or development investments in CDFIs or to 
support the formation of CDFIs. However, the Fund will consider 
requests by an intermediary applicant to utilize Fund assistance to 
enhance the ability of the intermediary to make grants to CDFIs or to 
support the formation of CDFIs, as long as the intermediary applicant 
makes a persuasive case that using Fund assistance in this manner will 
further the purposes of the Act, and as long as the intermediary's 
predominant business activity will remain the provision of loans and/or 
development investments.

IV. Application Packet

    Except as described hereafter, an applicant shall submit the 
materials described in Sec. 1805.701 and the application packet. To 
facilitate coherence and avoid duplication, an applicant may present 
its application in an order and format that it believes to be the most 
appropriate, provided that the requested information is included and 
that an index is provided to assist the Fund in locating the items 
requested by Sec. 1805.701.
    If an applicant is currently certified as a CDFI, it may, at its 
option, submit a copy of the letter of certification in lieu of the 
information requested in Part III, A through H, of the application 
packet. However, an applicant should include in its application 
information that it believes is relevant to the substantive review of 
the application specified in Sec. 1805.802(b).
    Since the target markets served by an applicant pursuant to this 
Notice will depend on the target markets served by CDFIs funded by the 
applicant, the applicant need not fill out Part III, C. Map of 
Investment Area(s), D. Studies or Analyses of Unmet Needs, or L. Target 
Market Designation, or the Investment Area Designation Worksheet. 
Instead the applicant should describe its target markets, which 
description may be general in nature and may include target markets 
that are regional or national in scope. The application should include 
a general description and analysis of target markets served by CDFIs 
and/or CDFIs in formation which the applicant currently finances, and 
what changes in such target markets, if any, may be expected if the 
applicant receives financial assistance from the Fund. If applicable, 
the applicant should provide a list of CDFIs or CDFIs in formation that 
it has financed, and the amount and form of financing, over at least 
the last three years.

V. Matching Funds

    Applicants pursuant to this Notice may use for matching funds 
monies obtained or legally committed on or after January 1, 1996. 
Applicants selected to receive assistance under this Notice must have 
firm commitments for the matching funds required pursuant to 
Sec. 1805.600 by no later than August 31, 1997. The Fund may recapture 
and reprogram funds if an applicant fails to raise the required match 
by such date. The Fund reserves the right to extend such matching funds 
deadline for specific applicants selected for assistance if the Fund 
deems it appropriate.

VI. Selection Factors

    Applications will be selected on a competitive basis in accordance 
with criteria described in 12 CFR 1805.800 to 1805.802. The Fund has 
sole discretion in the selection of applications for assistance. 
Special emphasis is expected to be placed on:
    (1) The applicant's track record, financial strength, and current 
operations;
    (2) The capacity, skills, and experience of the management team;
    (3) The quality of the applicant's comprehensive business plan;
    (4) The likelihood that the applicant will be able to raise the 
required matching funds; and
    (5) The extent and nature of the potential community development 
impact that would be catalyzed by the Fund's assistance, relative to 
the amount of such assistance to be provided.
    The applicant's track record, financial strength, and current 
operations are important to the extent they may be suggestive about the 
prospects for success in the future. In the case of a young or start-up 
institution with no or a limited track record, extra emphasis will be 
placed on the capacity, skills, and experience of the applicant's 
management team and the quality of its comprehensive business plan.
    For the purposes of evaluating applications submitted pursuant to 
this Notice, the Fund will evaluate the extent to which provision of 
financial assistance by the Fund to an applicant is likely to add 
substantial benefits to the CDFI industry, above and beyond what the 
Fund can expect to accomplish with its core component. Thus an 
applicant having a specialized niche or niches is important. At the 
same time, the Fund is seeking to assist intermediaries whose potential 
customer base has broad applicability. For example, the Fund does not 
seek to provide financial assistance to an intermediary that has a 
narrow list of preselected CDFIs it wishes to finance. The Fund seeks 
to finance intermediaries that have a more open-ended potential 
applicant pool and

[[Page 16464]]

which will be making an independent evaluation of each application, 
based on criteria specified in the intermediary applicant's 
comprehensive business plan. Moreover, the Fund may give a preference 
to applicants that serve or expect to serve CDFIs or CDFIs in formation 
in a multi-state area or on a national basis, as opposed to a single 
state.

VII. Other Matters

    (a) Paperwork Reduction Act. The reader should refer to the revised 
interim rule (12 CFR part 1805) published separately in today's Federal 
Register for details on the information collection requirements of the 
rule and this Notice.
    (b) Environmental Impact. Pursuant to Treasury Directive 75-02, the 
Department of the Treasury has determined that implementation of the 
CDFI Program under the revised interim rule is categorically excluded 
from the National Environmental Policy Act of 1969 (42 U.S.C. 4332) and 
does not require an environmental review. The determination is 
available for public inspection between 9:30 a.m. and 4:30 p.m. 
weekdays at the office of the Fund.

    Authority: 12 U.S.C. 4703, 4717: Chapter X, Pub. L. 104-19, 
Stat. 237; 12 CFR 1805.700.
Kirsten S. Moy,
Director, Community Development Financial Institutions Fund.
[FR Doc. 97-8784 Filed 4-2-97; 1:09 pm]
BILLING CODE 4810-70-P