6434 Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations 

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: Interim rule with request for 

public comment. 

SUMMARY: The Department of the 

Treasury is issuing an interim rule 

implementing the Capital Magnet Fund 

(CMF), administered by the Community 

Development Financial Institutions 

Fund (CDFI Fund). This interim rule 

incorporates updates to the definitions, 

requirements and parameters for CMF 

implementation and administration. In 

addition, sections of the CMF interim 

rule regarding certain definitions and 

project level requirements are revised in 

order to facilitate alignment with other 

federal housing programs and ease of 

administration. These revisions are 

modeled after the credit requirements 

for Low Income Housing Credits 

(LIHTCs) under section 42 of the 

Internal Revenue Code of 1986, as 

amended, and the program requirements 

of the HOME Investment Partnership 

Program (HOME Program) authorized 

under Title II of the Cranston-Gonzalez 

National Affordable Housing Act, as 

amended, and the HOME Program final 

rule published on July 24, 2013. 

This interim rule also reflects 

requirements set forth in a final rule, 

Uniform Administrative Requirements, 

Cost Principles and Audit Requirements 

for Federal Awards, adopted by the 

Department of the Treasury on 

December 19, 2014 (hereafter referred to 

as the Uniform Administrative 

Requirements). The Uniform 

Administrative Requirements constitute 

a government-wide framework for grants 

management codified by the Office of 

Management and Budget (OMB), 

combining several OMB grants 

management circulars aimed at reducing 

the administrative burden for 

Recipients, and reducing the risk of 

waste, fraud and abuse of Federal 

financial assistance. The Uniform 

Administrative Requirements establish 

financial, administrative, procurement, 

and program management standards 

with which Federal award-making 

programs, including those administered 

by the CDFI Fund, and Recipients must 

comply. Accordingly, this interim rule 

includes revisions necessary to 

implement the Uniform Administrative 

Requirements, as well as to make certain 

technical corrections and certain 

programmatic updates, as well as 

provide clarifying language to existing 

program requirements. 

DATES: Effective date: February 8, 2016. 

All comments must be written and must 

be received in the offices of the CDFI 

Fund on or before April 8, 2016. The 

compliance date requirements for the 

collection of information in § 1807.902 

is stayed indefinitely, pending Office of 

Management and Budget approval and 

assignment of an OMB control number. 

ADDRESSES: You may submit comments 

concerning this interim rule via the 

Federal e-Rulemaking Portal at http://

www.regulations.gov (please follow the 

instructions for submitting comments). 

All submissions must include the 

agency name and Regulatory 

Information Number (RIN) for this 

rulemaking. Information regarding the 

CDFI Fund and its programs may be 

obtained through the CDFI Fund’s Web 

site at http://www.cdfifund.gov. 

FOR FURTHER INFORMATION CONTACT: 

Marcia Sigal, CMF Program Manager, 

Community Development Financial 

Institutions Fund, at cdfihelp@

cdfi.treas.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, the appropriation to 

which was used to carry out a 

competitive grant program administered 

by the CDFI Fund. The mission of the 

CDFI Fund is to increase economic 

opportunity and promote community 

development investments for 

underserved populations and in 

distressed communities in the United 

States. Its long term vision is an 

America in which all people have 

access to affordable credit, capital and 

financial services. 

The Act requires Fannie Mae and 

Freddie Mac to set aside an amount 

equal to 4.2 basis points for each dollar 

of their unpaid principal balances of 

total new business purchases to be 

allocated to the Housing Trust Fund 

(administered by the Department of 

Housing and Urban Development) and 

the Capital Magnet Fund. The Act also 

provides the Federal Housing Finance 

Agency (FHFA) with the authority to 

temporarily suspend these allocations 

upon certain findings. On November 13, 

2008, the Director of the FHFA 

temporarily suspended the allocation of 

funds. On December 11, 2014, the 

Director of the FHFA terminated the 

temporary suspension of those 

allocations, directing Fannie Mae and 

Freddie Mac to begin setting aside and 

allocating funds to the Housing Trust 

Fund and the Capital Magnet Fund. 

Accordingly, the CDFI Fund is 

promulgating this revised interim rule 

in anticipation of future Capital Magnet 

Fund application rounds. 

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 Awards must 

be used to attract private financing for 

and increase investment in: (i) The 

Development, Preservation, 

Rehabilitation, and Purchase of 

Affordable Housing for primarily 

Extremely Low-, Very Low-, and LowIncome Families; and (ii) Economic 

Development Activities which, In 

Conjunction With Affordable Housing 

Activities will implement a Concerted 

Strategy to stabilize or revitalize a LowIncome Area or Underserved Rural 

Area. 

All capitalized terms herein are 

defined in the definitions section of the 

interim rule, as set forth in 12 CFR 

1807.104. 

II. Comments on the December 3, 2010, 

Interim Rule 

The comment period for the 

December 3, 2010, Interim Rule ended 

on February 1, 2011. The CDFI Fund 

received one written comment. The 

commenter asserted that the December 

3, 2010, Interim Rule did not allow 

market-based Section 8 vouchers to be 

used to satisfy CMF affordability 

requirements and that the interim rule 

should make clear that, in the event a 

tenant or a unit in a Multi-family 

housing project receives a Federal or 

State rental subsidy, the maximum rent 

that can be charged is the amount 

allowable under such program. The 

commenter suggested that the interim 

rule should provide for a rent floor of 

the project’s initial rents, in the event 

median incomes decrease. The 

commenter also suggested that the rent 

limitation should be adjusted by the 

number of bedrooms in the unit. 

In this revised interim rule (at 12 CFR 

1807.401(a) and (e)), the CDFI Fund 

incorporates the commenter’s 

suggestions regarding Federal or State 

rental subsidy and the creation of a rent 

floor for projects. The CDFI Fund also 

adopts the commenter’s suggestion that 

rent limitations be adjusted by the 


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number of bedrooms in the unit (12 CFR 

1807.401(a)). 

III. Summary of Changes 

Substantive revisions to the interim 

rule (meaning, revisions other than the 

insertion of new language that clarifies 

existing program requirements) fall 

generally into three categories: (i) 

Adoption of policy priorities, 

programmatic changes/clarifications, 

and technical corrections; (ii) alignment 

with the Uniform Administrative 

Requirements; and (iii) alignment with 

HOME Program requirements and with 

requirements to qualify for LIHTCs. 

Recent efforts supported by the White 

House Rental Housing Policy Working 

Group, which established joint working 

groups comprised of staff from the U.S. 

Department of Housing and Urban 

Development (HUD), the U.S. 

Department of Agriculture (USDA), and 

the U.S. Department of the Treasury 

have highlighted the need for alignment 

amongst federally subsidized affordable 

housing program requirements. The 

CDFI Fund has determined that 

Recipients’ use of CMF Awards better 

aligns with LIHTCs (as opposed to 

benefits under the HOME Program) in 

several key respects, specifically with 

regard to Project-level requirements. 

Thus, this interim rule incorporates 

some requirements to qualify for 

LIHTCs and removes certain 

requirements that, in the December 10, 

2010, CMF Program interim rule, were 

modeled after the HOME Program. 

A. Section 1807.101, Summary: 

‘‘Community Service Facilities’’ has 

been stricken as a stand-alone activity; 

instead, Community Service Facilities is 

embedded in the definition of Economic 

Development Activities. Per the 

Uniform Administrative Requirements, 

the use of the word ‘‘Awardee’’ is 

replaced with ‘‘Recipient,’’ and any 

reference to a CMF grant is replaced 

with ‘‘CMF Award’’ as defined in the 

definitions section, 12 CFR 1807.104. 

B. Section 1807.102, Relationship to 

other CDFI Programs: The requirement 

for a Certified CDFI to be an operating 

entity for three years prior to the 

application deadline has been deleted; 

instead, this subsection establishes that 

restrictions for using CMF Awards in 

conjunction with other CDFI Program 

awards will be set forth in the 

applicable notices of funds, guarantee, 

or allocation availability. 

C. Section 1807.104, Definitions: As 

noted above, the defined term 

‘‘Awardee’’ is deleted and replaced with 

the new defined term ‘‘Recipient.’’ The 

term ‘‘Applicant’’ is now defined. The 

term ‘‘CMF Award’’ is now defined. The 

term ‘‘Development’’ is revised to clarify 

that any combination of the listed 

activities that result in Affordable 

Housing is ‘‘Development.’’ The term 

‘‘Direct Administrative Expenses’’ is 

now defined. The definition of the term 

‘‘Economic Development Activity’’ is 

revised by striking ‘‘purchase’’; the term 

‘‘acquisition’’ is used instead. The term 

‘‘Effective Date’’ is now defined. 

‘‘Eligible Income’’ is revised to provide 

adjustments for Family size. ‘‘Eligible 

Project Costs’’ is revised to strike 

‘‘operations’’ as an eligible use of CMF 

Awards. ‘‘Extremely Low-Income’’ is 

revised to align with income limits 

published by HUD, including 

adjustments for Family size in the case 

of Homeownership. The defined term 

‘‘Family’’ or ‘‘Families’’ is revised by 

removing the income categories to 

describe the household. The defined 

term ‘‘Homeownership’’ is updated and 

restructured based on HOME Program 

regulations. The defined term 

‘‘Housing’’ is also revised to reflect 

HOME Program regulation updates. The 

defined term ‘‘Housing’’ is used in 

several places throughout the 

regulations to signify the intent of the 

defined term. Some of the structures 

and facilities excluded from the 

definition of Housing may meet the 

definition of Community Service 

Facilities. The term ‘‘In Conjunction 

With Affordable Housing Activities’’ has 

been modified in order to be consistent 

with standards in other CDFI Fund 

Programs that fund projects and 

activities based on proximity to 

intended beneficiaries and/or 

assessment of access to services for 

individuals intended to benefit from 

such programs (e.g., Healthy Foods 

Financing Initiative Financial 

Assistance under the CDFI Program). 

The term ‘‘Investment Period’’ is 

defined in § 1807.104. The term 

‘‘Leveraged Costs’’ is revised to clarify 

that such costs are limited to Affordable 

Housing Activities and Economic 

Development Activities that exceed the 

dollar amount of the CMF Award. ‘‘Loan 

Guarantee’’ is revised to clarify that a 

loan that is guaranteed with the CMF 

Award must be used for Affordable 

Housing Activities and/or Economic 

Development Activities. ‘‘Loan Loss 

Reserves’’ is revised to clarify that cash 

reserves set aside to cover losses must 

be for Affordable Housing Activities 

and/or Economic Development 

Activities. The term ‘‘Low-Income’’ is 

revised to align with income limits 

published by HUD, including 

adjustments for Family size in the case 

of Homeownership. In the case of rental 

Housing, ‘‘Low-Income’’ is revised to 

allow for circumstances in which the 

qualifying Family occupies a unit that 

has a Federal or State rental subsidy. 

The term ‘‘Non-Metropolitan Area’’ is 

revised to align with and accommodate 

the OMB definition, which is 

periodically updated. The term ‘‘NonRegulated CDFI’’ is deleted because it is 

not used in the interim rule. The term 

‘‘Operations’’ is deleted in § 1807.104 

since it is no longer an eligible activity 

in § 1807.301; a new term ‘‘Direct 

Administrative Expenses’’ is defined in 

§ 1807.104. A new term, ‘‘Payment’’ is 

defined to describe the transmission of 

CMF Award dollars from the CDFI Fund 

to the Recipient. ‘‘Preservation’’ is 

revised to specify that refinancing must 

extend the existing affordability and use 

restrictions on the property by a 

minimum of 10 years or as otherwise 

specified in the Assistance Agreement. 

‘‘Program Income’’ is defined to align 

with the Uniform Administrative 

Requirements. ‘‘Project’’ is defined to 

mean the Affordable Housing Activity 

and/or Economic Development Activity 

that is financed with a CMF Award. The 

term ‘‘Purchase’’ is revised to clarify 

that the purchasing Family and Singlefamily housing must meet the 

qualifications set forth in subparts D 

and E. ‘‘Underserved Rural Area’’ is 

restructured and revised to serve 

intended populations per the statute 

and allow the CDFI Fund to set forth an 

alternative definition of ‘‘Underserved 

Rural Area’’ for any given application 

round in the applicable NOFA and/or 

Assistance Agreement. ‘‘Uniform 

Administrative Requirements’’ is 

defined in § 1807.104 to reflect the 

Department of the Treasury’s 

codification of the Office of 

Management and Budget’s governmentwide framework for grants management. 

The definition of the term ‘‘Very LowIncome’’ is revised to align with income 

limits published by HUD, including 

adjustments for Family size in the case 

of Homeownership. 

D. Section 1807.107, Applicability of 

regulations for CMF awards: Section 

1807.107 was added to address the 

applicability of this rule to the FY 2010 

CMF application round and subsequent 

application rounds. The CDFI Fund has 

determined that this rule applies only to 

those CMF awards made pursuant to 

Notices of Funds Availability (NOFAs) 

published after the effective date of this 

interim rule, except for 

§ 1807.902(e)(1)(i) regarding audited 

financial statements of Nonprofit 

Organization Recipients. As indicated at 

2 CFR 200.110, the Uniform 

Administrative Requirements, subpart 

F—Audit Requirements applies to 

audits of Nonprofits of fiscal years 


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beginning on or after December 26, 

2014. 

E. Section 1807.200, Applicant 

eligibility: In § 1807.200(a)(1), the 

eligibility requirement that a certifiable 

CDFI can apply is deleted because the 

CDFI Fund has determined that most 

Applicants can meet the program’s 

eligibility requirements by being either 

a Certified CDFI or a Nonprofit 

Organization. The eligibility 

requirements for a Nonprofit 

Organization are revised in 

§ 1807.200(a)(2)(iii) to no longer allow 

an entity to demonstrate its principal 

purpose of development or management 

of affordable housing through its 

staffing. Section 1807.200(a)(2)(iii) also 

states that the applicable Notice of 

Funds Availability (NOFA) will indicate 

the percentage of a Nonprofit 

Organization Applicant’s assets that 

must be dedicated to the development 

or management of affordable housing. 

Section 1807.200(b) is also revised to 

reflect these eligibility modifications. 

F. Subpart C, Use of Funds/Eligible 

activities: Section 1807.300 is revised to 

clarify that Recipients must use their 

CMF Awards for the financing-related 

eligible activities set forth in § 1807.301 

to attract private capital and increase 

investment in those activities in 

§ 1807.300(a) and (b). Revisions to 

§ 1807.300(b) reinforce the requirement 

that when a Recipient undertakes 

Economic Development Activities In 

Conjunction With Affordable Housing 

Activities, the Recipient must track and 

report on such Affordable Housing 

Activities if it was financed with a CMF 

Award. Sections 1807.300 and 1807.301 

are revised by deleting ‘‘Community 

Service Facilities’’ as a stand-alone 

eligible activity; instead, ‘‘Community 

Service Facilities’’ is embedded in the 

definition of Economic Development 

Activities. As such, this term is deleted 

as a technical correction throughout the 

interim rule, when appropriate. Sections 

1807.301 and 1807.302 are revised to 

eliminate ‘‘operations’’ as an eligible 

activity. The content of former 

§ 1807.302(c) is now located in 

§ 1807.302(b); the content of 

§ 1807.302(d) is now located in 

§ 1807.302(c). New § 1807.302(d) and (e) 

are added to clarify certain tracking and 

repayment requirements for Recipients 

that use CMF Award for Loan 

Guarantees or Loan Loss Reserves. 

Section 1807.302(f) states that 

Recipients may not use more than five 

(5) percent of its CMF Award for Direct 

Administrative Expenses. Section 

1807.303 is added to address Program 

Income requirements. 

G. Subpart D, Qualification as 

Affordable Housing: Section 1807.400 is 

revised to indicate that the CDFI Fund 

may establish greater commitments for 

deeper income targeting attributable to 

Eligible Project Costs in the applicable 

NOFA and/or Assistance Agreement. 

Section 1807.401 is revised in order to 

make general program clarifications and 

establish certain program requirements, 

many of which align with the 

requirements of the LIHTC Program and 

the HOME Program. For example, 

language was added to § 1807.401 to 

allow the CDFI Fund to set forth in the 

applicable NOFA requirements for 

successful applicants to serve targeted 

incomes that exceed the requirements of 

§ 1807.401. The rent limitation in 

§ 1807.401(a) is revised to align with 

requirements to qualify for LIHTCs and 

to account for rental subsidies in each 

of the income categories. Section 

1807.401(c) and (e) are revised to align 

with requirements to qualify for 

LIHTCs. Section 1807.401(f) is revised 

to align with the HOME Program 

regulations’ elimination of the U.S. 

Census long form for annual income 

determinations. Thus, the content of the 

former § 1807.401(f)(2)(i) is deleted and 

the content of the former 

§ 1807.401(f)(2)(ii) is now located in 

§ 1807.401(f)(2)(i). Similarly, the content 

of the former § 1807.401(f)(2)(iii) has 

moved up and is now located in 

§ 1807.401(f)(2)(ii). Section 

1807.401(g)(2) is revised to clarify rent 

restrictions when rent is subject to IRC 

sections 42(g)(2) and 42(h)(6). Section 

1807.401(g)(3) is revised to clarify that 

any replacement unit must meet the 

affordability qualifications for the 

income category of the unit that is being 

replaced. Section 1807.402(a) and (b) 

are revised by replacing ‘‘acquisition’’ 

with ‘‘Purchase’’ to reflect the use of the 

new defined term. Section 

1807.402(a)(5) is revised to clarify that, 

in the event of resale of CMF-financed 

Single-family housing to a nonqualifying family before the 10-year 

affordability period ends, the Recipient 

must use an equivalent amount of the 

CMF Award used for the applicable 

Affordable Housing Activity, whether 

recouped or not, to finance additional 

Affordable Housing Activities for a 

qualifying Family in the same income 

category for Homeownership. 

H. Subpart E, Leveraging and 

Commitment Requirement: Section 

1807.500(b) is revised to include the 

Assistance Agreement as a source for 

the required percentage of Leveraged 

Costs that must be funded by nongovernmental sources. Section 

1807.500(a)(1) is deleted because 

‘‘operations’’ is no longer an eligible 

activity and defined term. Accordingly, 

the former § 1807.500(a)(2) is now 

§ 1807.500(b)(2) and former 

§ 1807.500(a)(3) is now 

§ 1807.500(b)(2)(ii). Section 

1807.500(b)(2)(iii) was added to address 

eligible Leveraged Costs for Economic 

Development Activities. The content of 

former § 1807.500(b) is deleted. Section 

1807.501(a) is revised and section 

1807.501(b) is added to account for the 

eligible activity ‘‘Purchase’’ to a 

qualifying Family, and § 1807.501(b)(3) 

is added to provide more accountability 

regarding Project Completion. Section 

1807.501(c) and (d) are added to align 

with the Uniform Administrative 

Requirements regarding Payments. 

Section 1807.503 is revised to include 

property standards necessary to ensure 

that CMF Awards are invested in 

structures and units that are sound, 

decent, safe and sanitary; such 

standards are largely adopted from the 

HOME Program and the requirements to 

qualify for LIHTCs. Section 

1807.503(a)(4) is added to address 

Project Completion in the case of 

Preservation. The content of the former 

§ 1807.503(b)(2) is now located in 

§ 1807.503(b)(2)(i) and a new 

§ 1807.503(b)(2)(ii) is added to address 

disaster mitigation in regards to Project 

Completion. Section 1807.503(b)(2)(iii) 

is added to address lead-based paint. 

The content of former § 1807.503(b)(3) is 

now moved to § 1807.503(b)(4) and 

incorporates recent HOME Program 

updates. Thus, § 1807.503(b)(3) contains 

new content regarding Rehabilitation 

standards. The content of former 

§ 1807.503(c) is moved to 

§ 1807.503(a)(3). 

I. Subpart F, Tracking Requirements: 

Section 1807.601 is renamed and 

revised to reflect that the Uniform 

Administrative Requirements apply to 

all CMF Awards and sets forth the CDFI 

Fund’s policy that indirect costs are not 

allowed. Section 1807.602 also 

establishes the circumstances in which 

a CMF Award loses its so-called 

‘‘Federal character.’’ Section 1807.602 is 

also revised to clarify that CMF Awards 

are Federal financial assistance for 

purposes of the applicability of Federal 

civil rights laws. 

J. Subpart H, Evaluation and 

Selection of Applications: In 

§ 1807.800(c)(3) ‘‘blight’’ is deleted as an 

ambiguous term. 

K. Subpart I, Terms and Conditions of 

Assistance: Section 1807.900(c) is 

revised to clarify statutory requirements 

regarding notice and hearing. To align 

with the Uniform Administrative 

Requirements, § 1807.901 

‘‘Disbursement of funds’’ is renamed 

‘‘Payment of funds’’ to reflect the 

transmission of CMF Award dollars 


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from the CDFI Fund to the Recipient as 

a ‘‘Payment.’’ Section 1807.902(d) and 

(e) are revised to accommodate the audit 

requirements of the Uniform 

Administrative Requirements. Pursuant 

to revised § 1807.902(e)(1), Nonprofit 

Organizations that are not required to 

have their financial statements audited 

pursuant to the Uniform Administrative 

Requirements may still be subject to 

additional audit requirements, which 

will be set forth in the applicable NOFA 

and Assistance Agreement. In addition, 

§ 1807.902(e)(2), ‘‘Performance Goal 

Reporting,’’ is renamed as ‘‘Annual 

Report’’ and revised to clarify and 

require the submission of performance 

and financial reporting in the form of an 

annual report, as further specified in the 

Assistance Agreement. Section 

1807.902(e)(3) is added to clarify the 

compliance requirements for Insured 

CDFIs, Depository Institution Holding 

Companies, and State-Insured Credit 

Unions. Section 1807.902(e)(4) is added 

to convey that any reports under 

§ 1807.902 may be subject to public 

inspection per the Freedom of 

Information Act. Section 1807.903 is 

revised to specify that in addition to all 

other Federal, state, and local laws, 

Recipients shall also comply with all 

applicable Federal environmental 

requirements. 

IV. Rulemaking Analysis 

A. Executive Order (E.O.) 12866 

It has been determined that this 

interim rule is not a significant 

regulatory action under Executive Order 

12866. Accordingly, a regulatory impact 

assessment is not required. 

B. Regulatory Flexibility Act 

Because no notice of proposed 

rulemaking is required under the 

Administrative Procedure Act (5 U.S.C 

553), or any other law, the Regulatory 

Flexibility Act does not apply. 

C. Paperwork Reduction Act 

The collections of information 

contained in this interim rule will be 

reviewed and approved by the Office of 

Management and Budget (OMB) in 

accordance with the Paperwork 

Reduction Act of 1995 and assigned the 

applicable, approved OMB Control 

Numbers associated with the CDFI Fund 

under 1559–XXXX. 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. This 

document restates the collections of 

information without substantive change. 

D. National Environmental Policy Act 

This interim rule has been reviewed 

in accordance with the CDFI Fund’s 

environmental quality regulations (12 

CFR part 1815), promulgated pursuant 

to the National Environmental 

Protection Act of 1969 (NEPA), which 

requires 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 

interim 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’s environmental quality 

regulations (12 CFR part 1815), neither 

an Environmental Assessment nor an 

Environmental Impact Statement is 

required. 

E. Administrative Procedure Act 

Because the revisions to this interim 

rule relate 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). 

F. Comment 

Public comment is solicited on all 

aspects of this interim rule. The CDFI 

Fund will consider all comments made 

on the substance of this interim rule, but 

it does not intend to hold hearings. 

G. 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 part 1807 is revised 

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 Recipient not instrumentality. 

1807.104 Definitions. 

1807.105 Waiver authority. 

1807.106 OMB control number. 

1807.107 Applicability of regulations for 

CMF Awards. 

Subpart B—Eligibility 

1807.200 Applicant eligibility. 

Subpart C—Eligible Purposes; Eligible 

Activities; Restrictions 

1807.300 Eligible purposes. 

1807.301 Eligible activities. 

1807.302 Restrictions on use of CMF 

Award. 

1807.303 Authorized uses of Program 

Income. 

Subpart D—Qualification as Affordable 

Housing 

1807.400 Affordable Housing—general. 

1807.401 Affordable Housing—Rental 

Housing. 

1807.402 Affordable Housing— 

Homeownership. 

Subpart E—Leveraged Costs; Eligible 

Project Costs; Commitment Requirements 

1807.500 Leveraged Costs; Eligible Project 

Costs. 

1807.501 Commitments; Payments. 

1807.502 CMF Award limits. 

1807.503 Projection Completion; Property 

standards. 

Subpart F—Tracking Funds; Uniform 

Administrative Requirements; Nature of 

Funds 

1807.600 Tracking funds. 

1807.601 Uniform Administrative 

Requirements. 

1807.602 Nature of funds. 

Subpart G—Notice of Funds Availability; 

Applications 

1807.700 Notice of funds availability. 

Subpart H—Evaluation and Selection of 

Applications 

1807.800 Evaluation and selection— 

general. 

1807.801 Evaluation of applications. 

Subpart I—Terms and Conditions of CMF 

Award 

1807.900 Assistance agreement. 

1807.901 Payment 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: 12 U.S.C. 4569. 

Subpart A—General Provisions 

§ 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. 

§ 1807.101 Summary. 

(a) Through the CMF, the CDFI Fund 

competitively awards 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 


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(2) Financing Economic Development 

Activities. 

(b) The CDFI Fund will select 

Recipients to receive CMF Awards 

through a merit-based, competitive 

application process. CMF Awards may 

only be used for eligible uses set forth 

in subpart C of this part. Each Recipient 

will enter into an Assistance Agreement 

that will require it to leverage the CMF 

Award amount and abide by other terms 

and conditions pertinent to any 

assistance received under this part. 

§ 1807.102 Relationship to other CDFI 

Fund programs. 

Restrictions on applying for, 

receiving, and using CMF Awards in 

conjunction with awards under other 

programs administered by the CDFI 

Fund (including, but not limited to, the 

Bank Enterprise Award Program, the 

CDFI Program, the CDFI Bond 

Guarantee Program, the Native 

American CDFI Assistance (NACA) 

Program, and the New Markets Tax 

Credit Program) are as set forth in the 

applicable Notice of Funds Availability, 

Notice of Guarantee Availability, or 

Notice of Allocation Availability. 

§ 1807.103 Recipient not instrumentality. 

No Recipient shall be deemed to be an 

agency, department, or instrumentality 

of the United States. 

§ 1807.104 Definitions. 

For the purpose of this part: 

Act means the Housing and Economic 

Recovery Act of 2008, as amended, 

Public Law 110–289, section 1131; 

Affiliate means any entity that 

Controls, is Controlled by, or is under 

common Control with, an entity; 

Affordable Housing means housing 

that meets the requirements set forth in 

subpart D of this part; 

Affordable Housing Activities means 

the Development, Preservation, 

Rehabilitation, and/or Purchase of 

Affordable Housing; 

Affordable Housing Fund means a 

revolving loan, grant or investment fund 

that is: 

(1) Managed by the Recipient; and 

(2) Uses its capital to finance 

Affordable Housing Activities; 

Applicant means any entity 

submitting an application for a CMF 

Award; 

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; 

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; 

Assistance Agreement means a 

formal, written agreement between the 

CDFI Fund and a Recipient, which 

agreement specifies the terms and 

conditions of assistance under this part; 

Capital Magnet Fund (or CMF) means 

the program authorized by the Act and 

implemented under this part; 

CMF Award means the financial 

assistance in the form of a grant made 

by the CDFI Fund to a Recipient 

pursuant to this part; 

Certified Community Development 

Financial Institution (or Certified CDFI) 

means an entity that has been 

determined by the CDFI Fund to meet 

the certification requirements set forth 

in 12 CFR 1805.201; 

Committed means that the Recipient 

is able to demonstrate, in written form 

and substance that is acceptable to the 

CDFI Fund, a commitment for use of 

CMF Award, as set forth in § 1807.501; 

Community Development Financial 

Institutions Fund (or CDFI Fund) means 

the Community Development Financial 

Institutions Fund, the U.S. Department 

of the Treasury, established pursuant to 

the Community Development Banking 

and Financial Institutions Act of 1994, 

as amended, 12 U.S.C. 4701 et seq.; 

Community Service Facility means the 

physical structure in which service 

programs for residents or service 

programs for the broader community 

(including, but not limited to, health 

care, childcare, educational programs 

including literacy and after school 

programs, job training, food and 

nutrition services, cultural programs, 

and/or social services) operate that, In 

Conjunction With Affordable Housing 

Activities, implements a Concerted 

Strategy to stabilize or revitalize a LowIncome Area or Underserved Rural 

Area; 

Concerted Strategy means a formal 

planning document that evidences the 

connection between Affordable Housing 

Activities and Economic Development 

Activities. 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; 

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; 

Depository Institution Holding 

Company means a bank holding 

company or a savings and loan holding 

company as each are defined in the 

Federal Deposit Insurance Act, 12 

U.S.C. 1813(w); 

Development means any combination 

of the following Project activities: 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 

resulting in Affordable Housing; 

Direct Administrative Expenses 

means direct costs incurred by the 

Recipient, related to the financing of the 

Project as described in 2 CFR 200.413 of 

the Uniform Administrative 

Requirements; 

Economic Development Activity 

means the development, preservation, 

acquisition and/or rehabilitation 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; 

Effective Date means the date that the 

Assistance Agreement is effective; such 

date is determined by the CDFI Fund 

after the Recipient has returned an 

executed, original Assistance 

Agreement, along with all required 

supporting documentation, including 

the opinion of counsel, if required; 

Eligible-Income means: 

(1) Having, in the case of owneroccupied Housing units, annual income 

not in excess of 120 percent of the area 

median income adjusted for Family size 

in the same manner as HUD makes these 

adjustments for its other published 

income limits; and 

(2) Having, in the case of rental 

Housing units, annual income not in 

excess of 120 percent of the area median 

income, adjusted for Family size in the 

same manner as HUD makes these 

adjustments for its published income 

limits; 

Eligible Project Costs means 

Leveraged Costs plus those costs funded 

directly by a CMF Award; 

Extremely Low-Income means: 

(1) Having, in the case of owneroccupied Housing units, income not in 

excess of 30 percent of the area median 


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income, adjusted for Family size, as 

determined by HUD, except that HUD 

may establish income ceilings higher or 

lower than 30 percent of the median for 

the area on the basis of HUD findings 

that such variations are necessary 

because of prevailing levels of 

construction costs or fair market rents, 

or unusually high or low Family 

incomes and 

(2) Having, in the case of rental 

Housing units, income not in excess of 

30 percent of the area median income, 

adjusted for Family size, as determined 

by HUD, except that HUD may establish 

income ceilings higher or lower than 30 

percent of the median for the area on the 

basis of HUD findings that such 

variations are necessary because of 

prevailing levels of construction costs or 

fair market rents, or unusually high or 

low Family incomes; 

Family or Families means 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, including Puerto 

Rico, Guam, American Samoa, the U. S. 

Virgin Islands, and the Northern 

Mariana Islands); 

HOME Program means the HOME 

Investment Partnership Program 

established by 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.; 

Homeownership means ownership in 

fee simple title interest in one- to fourunit Housing or in a condominium unit, 

or equivalent form of ownership 

approved by the CDFI Fund. The 

Recipient must determine whether 

ownership or membership in a 

cooperative or mutual housing project 

constitutes Homeownership under State 

law. The ownership interest is subject to 

the following additional requirements: 

(1) Except as otherwise provided in 

paragraphs (1)(i), (ii), and (iii) of this 

definition, the land may be owned in fee 

simple or the homeowner may have a 

99-year ground lease; 

(i) For Housing located on Indian trust 

or restricted Indian lands, the ground 

lease must be for 50 years or more; 

(ii) For Housing located in Guam, the 

Northern Mariana Islands, the U. S. 

Virgin Islands, and American Samoa, 

the ground lease must be 40 years or 

more; 

(iii) For manufactured housing, the 

ground lease must be for a minimum 

period of 10 years or such other 

applicable time period regarding 

location set forth in this definition of 

Homeownership at the time of purchase 

by the homeowner; 

(2) Ownership interest may not 

merely consist of a right to possession 

under a contract for deed, installment 

contract, or land contract (pursuant to 

which the deed is not given until the 

final payment is made); 

(3) Ownership interest may only be 

subject to the restrictions on resale 

permitted under the Assistance 

Agreement and this part; mortgages, 

deeds of trust, or other liens or 

instruments securing debt on the 

property; or any other restrictions or 

encumbrances that do not impair the 

good and marketable nature of title to 

the ownership interest; 

Housing means Single-family 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) units that are small, freestanding, barrier-free, energy-efficient, 

removable, and designed to be installed 

adjacent to existing single-family 

dwellings. Housing does not include 

emergency shelters (including shelters 

for disaster victims) or facilities such as 

nursing homes, convalescent homes, 

hospitals, residential treatment 

facilities, correctional facilities, halfway 

houses, housing for students, or 

dormitories (including farmworker 

dormitories); 

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 et seq.; 

In Conjunction With Affordable 

Housing means: 

(1) Physically proximate to; and 

(2) Reasonably available to residents 

of Affordable Housing that is subject to 

Affordable Housing Activities. For a 

Metropolitan Area, In Conjunction With 

means located within the same census 

tract or within 1 mile of such Affordable 

Housing. For a Non-Metropolitan Area, 

In Conjunction With means located 

within the same county, township, or 

village, or within 10 miles of such 

Affordable Housing; 

Insured CDFI means a Certified CDFI 

that is an Insured Depository Institution 

or an Insured Credit Union; 

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.; 

Insured Depository Institution means 

any bank or thrift, the deposits of which 

are insured by the Federal Deposit 

Insurance Corporation as determined in 

12 U.S.C. 1813(c)(2); 

Investment Period means the period 

beginning with the Effective Date and 

ending on the fifth year anniversary of 

the Effective Date, or such other period 

as may be established by the CDFI Fund 

in the Assistance Agreement; 

Leveraged Costs means costs for 

Affordable Housing Activities and 

Economic Development Activities that 

exceed the dollar amount of the CMF 

Award, as further described in 

§ 1807.500; 

Loan Guarantee means the Recipient’s 

use of CMF Award to support 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. The proceeds of the loan 

that is guaranteed with the CMF Award 

must be used for Affordable Housing 

Activities and/or Economic 

Development Activities; 

Loan Loss Reserves means proceeds 

from the CMF Award that the Recipient 

will set aside in the form of cash 

reserves, or through accounting-based 

accrual reserves, to cover losses on 

loans, accounts, and notes receivable for 

Affordable Housing Activities and/or 

Economic Development Activities, or 

for related purposes that the CDFI Fund 

deems appropriate; 

Low-Income means: 

(1) Having, in the case of owneroccupied Housing units, income not in 

excess of 80 percent of area median 

income, adjusted for Family size, as 

determined by HUD, except that HUD 

may establish income ceilings higher or 

lower than 80 percent of the median for 

the area on the basis of HUD findings 

that such variations are necessary 

because of prevailing levels of 

construction costs or fair market rents, 

or unusually high or low Family 

incomes; and 

(2) Having, in the case of rental 

Housing units, income not in excess of 

80 percent of area median income, 

adjusted for Family size, as determined 

by HUD, except that HUD may establish 

income ceilings higher or lower than 80 

percent of the median for the area on the 

basis of HUD findings that such 

variations are necessary because of 

prevailing levels of construction costs or 

fair market rents, or unusually high or 

low Family incomes; 

Low-Income Area or 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 


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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 NonMetropolitan Area median Family 

income or the national NonMetropolitan Area median Family 

income, whichever is greater; 

Low Income Housing Credits (or 

LIHTCs) means credits against income 

tax under section 42 of the Internal 

Revenue Code of 1986, as amended, 26 

U.S.C. 42; 

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) 

and Executive Order 10253 (3 CFR, 

1949–1953 Comp., p. 758), as amended; 

Multi-family housing means 

residential properties consisting of five 

or more dwelling units, such as a 

condominium unit, cooperative unit, 

apartment, or townhouse; 

Non-Metropolitan Area means 

counties that are designated as NonMetropolitan Counties by the Office of 

Management and Budget (OMB) 

pursuant to 44 U.S.C. 3504(e) and 31 

U.S.C. 1104(d) and Executive Order 

10253 (3 CFR, 1949–1953 Comp., p. 

758), as amended, and as made available 

by the CDFI Fund for a specific 

application funding round; 

Nonprofit Organization means any 

corporation, trust, association, 

cooperative, or other organization that 

is: 

(1) Designated as a nonprofit or notfor-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; 

Participating Jurisdiction means a 

jurisdiction designated by HUD as such 

under the HOME Program in accordance 

with the requirements of 24 CFR 92.105; 

Payment means the transmission of 

CMF Award dollars from the CDFI Fund 

to the Recipient; 

Preservation means: 

(1) Activities to refinance, with or 

without Rehabilitation, Single-family 

housing or Multi-family housing (rental) 

mortgages that, at the time of 

refinancing, are subject to affordability 

and use restrictions under the LIHTC 

statute or under State or Federal 

affordable housing programs, including 

but not limited to, the HOME Program, 

properties with Federal project-based 

rental assistance, or the USDA rental 

housing programs, hereinafter referred 

to as ‘‘similar State or Federal affordable 

housing programs,’’ where such 

refinancing has the effect of extending 

the term of any existing affordability 

and use restrictions on the properties by 

a minimum 10 years or as otherwise 

specified in the Assistance Agreement; 

(2) Activities to refinance and acquire 

Single-family housing or Multi-family 

housing that, at the time of refinancing 

or acquisition, were subject to 

affordability and use restrictions under 

similar State or Federal affordable 

housing programs or under the LIHTC 

statute, by the former tenants of such 

properties, where such refinancing has 

the effect of extending the term of any 

existing affordability and use 

restrictions on the properties by a 

minimum 10 years or as otherwise 

specified in the Assistance Agreement; 

(3) Activities to refinance the 

mortgages of owner-occupied, Singlefamily 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 existing 

affordability and use restrictions on the 

properties by a minimum 10 years or as 

otherwise specified in the Assistance 

Agreement; 

(4) Activities to acquire Single-family 

housing or Multi-family housing, with 

or without Rehabilitation, with the 

commitment to subject the properties to 

the affordability qualifications set forth 

in subpart D of this part; or 

(5) Activities to refinance, with or 

without Rehabilitation, Single-family 

housing or Multi-family housing, with 

the commitment to subject the 

properties to the affordability 

qualifications set forth in subpart D of 

this part; 

Program Income means gross income, 

as further described in 2 CFR part 1000; 

Project means the Affordable Housing 

Activity and/or Economic Development 

Activity that is financed with the CMF 

Award; 

Project Completion means that all of 

the requirements set forth at § 1807.503 

for a Project have been met; 

Purchase means to provide direct 

financing to a Family for purposes of 

Homeownership. Before the Recipient 

provides any financing to a Family for 

Homeownership purposes, the 

Recipient must verify that the Family 

and the Single-family housing meet the 

qualifications set forth in subparts D 

and E of this part; 

Recipient means an Applicant 

selected by the CDFI Fund to receive a 

CMF Award pursuant to this part; 

Rehabilitation means any repairs and/ 

or capital improvements that contribute 

to the long-term preservation, current 

building code compliance, habitability, 

sustainability, or energy efficiency of 

Affordable Housing; 

Revolving Loan Fund means a pool of 

funds managed by the Applicant or the 

Recipient wherein repayments on loans 

for Affordable Housing Activities or 

Economic Development Activities are 

used to refinance additional loans; 

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 Recipient 

with other lenders (e.g., participation 

loans); 

Service Area means the geographic 

area in which the Applicant proposes to 

use the CMF Award, and the geographic 

area approved by the CDFI Fund in 

which the Recipient must use the CMF 

Award as set forth in its Assistance 

Agreement; 

Single-family housing means a one- to 

four-Family residence, a condominium 

unit, a cooperative unit, a combination 

of manufactured housing and lot, or a 

manufactured housing lot; 

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 U.S. Virgin Islands, 

American Samoa, the Trust Territory of 

the Pacific Islands, and any other 

territory of the United States; 

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; 

Subsidiary means any company that 

is owned or Controlled directly or 

indirectly by another company; 

Underserved Rural Area means: 

(1) A Non-Metropolitan Area that: 

(i) Qualifies as a Low-Income Area; 

and 

(ii) Is experiencing economic distress 

evidenced by 30 percent or more of 

resident households with one or more of 

these four housing conditions in the 

most recent census for which data are 

available: 

(A) Lacking complete plumbing; 

(B) Lacking complete kitchen; 

(C) Paying 30 percent or more of 

income for owner costs or tenant rent; 

or 

(D) Having more than 1 person per 

room; 

(2) An area as specified in the 

applicable NOFA and/or Assistance 

Agreement; 

Uniform Administrative Requirements 

means the Uniform Administrative 


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Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

(2 CFR part 1000); 

Very Low-Income means: 

(1) Having, in the case of owneroccupied Housing, income not greater 

than 50 percent of the area median 

income with adjustments for Family 

size, as determined by HUD, except that 

HUD may establish income ceilings 

higher or lower than 50 percent of the 

median for the area on the basis of HUD 

findings that such variations are 

necessary because of prevailing levels of 

construction costs or fair market rents, 

or unusually high or low Family 

incomes; and 

(2) Having, in the case of rental 

Housing, income not greater than 50 

percent of the area median income, with 

adjustments for Family size, as 

determined by HUD, except that HUD 

may establish income ceilings higher or 

lower than 50 percent of the median for 

the area on the basis of HUD findings 

that such variations are necessary 

because of prevailing levels of 

construction costs or fair market rents, 

or unusually high or low Family 

incomes. 

§ 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. 

§ 1807.106 OMB control number. 

The OMB control number for the CMF 

Award application is 1559–0036. The 

compliance date requirements for the 

collection of information in § 1807.902 

is stayed indefinitely, pending Office of 

Management and Budget approval and 

assignment of an OMB control number. 

§ 1807.107 Applicability of regulations for 

CMF Awards. 

As of February 8, 2016, the 

regulations of this part are applicable for 

CMF Awards made pursuant to Notices 

of Funds Availability published after 

February 8, 2016. 

Subpart B—Eligibility 

§ 1807.200 Applicant eligibility. 

(a) General requirements. An 

Applicant will be deemed eligible to 

apply for a CMF Award if it is: 

(1) A Certified 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 1805.201, 

(ii) A Certified CDFI that has been in 

existence as a legally formed entity as 

set forth in the applicable Notice of 

Funds Availability (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 boardapproved documents, that the 

development or management of 

affordable housing are among its 

principal purposes; and 

(iii) Can demonstrate that a certain 

percentage, set forth in the applicable 

NOFA, of the Applicant’s 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 paragraph (a)(2) of this 

section 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 

paragraph (a)(1) of this section, the CDFI 

Fund will verify that the Applicant is a 

Certified CDFI during the application 

eligibility review. 

Subpart C—Eligible Purposes; Eligible 

Activities; Restrictions 

§ 1807.300 Eligible purposes. 

Each Recipient must use its CMF 

Award for the eligible activities 

described in § 1807.301 so long as such 

eligible activities increase private 

capital for and increase investment in: 

(a) Development, Preservation, 

Rehabilitation, and/or Purchase of 

Affordable Housing for primarily 

Extremely Low-Income, Very LowIncome, and Low-Income Families; and/ 

or 

(b) Economic Development Activities. 

(1) Economic Development Activity 

must support Affordable Housing; 

(2) The Recipient may undertake 

Economic Development Activity In 

Conjunction With Affordable Housing 

Activities that are undertaken by parties 

other than the Recipient; 

(3) If the Recipient uses its CMF 

Award to fund an Economic 

Development Activity In Conjunction 

With Affordable Housing Activity, it 

must track the resulting Affordable 

Housing, as set forth in subpart D of this 

part, to the extent the Affordable 

Housing was financed by the CMF 

Award. For the purposes of meeting the 

10-year affordability period 

requirement, Recipients are not required 

to track Affordable Housing that was 

financed by sources other than the CMF 

Award. 

§ 1807.301 Eligible activities. 

The Recipient must use its CMF 

Award to finance and support 

Affordable Housing Activities and/or 

Economic Development Activities 

through the following eligible activities: 

(a) To capitalize 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; 

(e) To make Risk-Sharing Loans; and 

(f) To provide Loan Guarantees. 

§ 1807.302 Restrictions on use of CMF 

Award. 

(a) The Recipient may not use its CMF 

Award 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) The Recipient shall not use the 

CMF Award to finance or support 

Projects that include: 

(1) 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; or 

(2) Farming activities (within the 

meaning of Internal Revenue Code (IRC) 

section 2032A(e)(5)(A) or (B)), if, as of 

the close of the taxable year of the 


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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. 

(c) In any given application round, no 

more than 30 percent of a CMF Award 

may be used for Economic Development 

Activities. 

(d) Any Recipient that uses its CMF 

Award for a Loan Guarantee or Loan 

Loss Reserves must ensure the 

underlying loan(s) are made to support 

Affordable Housing Activities and 

Economic Development Activities. The 

Affordable Housing resulting from the 

Recipient’s Loan Guarantee or Loan 

Loss Reserve shall be tracked for 10 

years, as set forth in subpart D of this 

part. 

(e) If loans that are made pursuant to 

a Loan Guarantee or Loan Loss Reserves 

are repaid during the Investment Period, 

the Recipient must use the repaid funds 

for Loan Guarantees or Loan Loss 

Reserves targeted to the income 

population (Extremely Low-Income, 

Very Low-Income, Low-Income) set 

forth in the Recipient’s Assistance 

Agreement, for the duration of the 

Investment Period. 

(f) The Recipient may not use more 

than five (5) percent of its CMF Award 

for Direct Administrative Expenses. 

§ 1807.303 Authorized uses of Program 

Income. 

(a) Program Income earned in the 

form of principal and equity repayments 

must be used by the Recipient for the 

approved, eligible CMF Award uses as 

further set forth in the Assistance 

Agreement for the duration of the 

Investment Period. 

(b) Program Income earned in the 

form of interest payments, and all other 

forms of Program Income (except for 

that which is earned as described in 

paragraph (a) of this section, must be 

used by the Recipient as set forth in the 

Assistance Agreement and in 

accordance with 2 CFR part 1000. 

Subpart D—Qualification as Affordable 

Housing 

§ 1807.400 Affordable Housing—general. 

Each Recipient that uses its CMF 

Award for Affordable Housing Activities 

must ensure that 100 percent of Eligible 

Project Costs are attributable to 

Affordable Housing; meaning, that they 

comply with the affordability 

qualifications set forth in this subpart 

for Eligible-Income Families. Further, as 

a subset of said 100 percent, greater than 

50 percent of the Eligible Project Costs 

must be attributable to Affordable 

Housing that comply with the 

affordability qualifications set forth in 

this subpart for Low-Income, Very LowIncome, or Extremely Low-Income 

Families, or as further set forth in the 

applicable NOFA and/or Assistance 

Agreement. 

§ 1807.401 Affordable Housing—Rental 

Housing. 

To qualify as Affordable Housing, 

each rental Multi-family housing Project 

financed with CMF Award must have at 

least 20 percent of the units occupied by 

any combination of Low-Income, Very 

Low-Income, or Extremely Low-Income 

Families and must comply with the rent 

limits set forth herein. However, the 

CDFI Fund may require a greater 

percentage of the units per Project to be 

income-targeted and/or require a 

specific targeted income commitment in 

any given application round, as set forth 

in the NOFA and Assistance Agreement 

for that application round. 

(a) Rent limitation. The gross rent 

limits for Affordable Housing are 

determined under the provisions in IRC 

section 42(g)(2). In this determination, if 

this part imposes an income restriction 

on a unit that is greater than 60 percent 

of area median income, adjusted for 

Family size, then the provisions of IRC 

section 42(g)(2) are applied as if that 

income restriction on the unit satisfied 

IRC section 42(g)(1). The maximum rent 

is a rent that does not exceed: 

(1) For an Eligible-Income Family, 30 

percent of the annual income of a 

Family whose annual income equals 

120 percent of the area median income, 

with adjustments for number of 

bedrooms in the unit, as set forth in IRC 

section 42(g)(2). 

(2) For a Low-Income Family, 30 

percent of the annual income of a 

Family whose annual income equals 80 

percent of the area median income, with 

adjustments for number of bedrooms in 

the unit, as set forth in IRC section 

42(g)(2). If the unit or tenant receives 

Federal or State rental subsidy, and the 

Family pays as a contribution towards 

rent not more than 30 percent of the 

Family’s income, the maximum rent 

(i.e., tenant contribution plus rental 

subsidy) is the rent allowable under the 

Federal or State rental subsidy program; 

(3) For a Very Low-Income Family, 30 

percent of the annual income of a 

Family whose annual income equals 50 

percent of the area median income, with 

adjustments for number of bedrooms in 

the unit as described in paragraph (a) of 

this section. If the unit or tenant 

receives Federal or State rental subsidy, 

and the Family pays as a contribution 

towards rent not more than 30 percent 

of the Family’s income, the maximum 

rent (i.e., tenant contribution plus rental 

subsidy) is the rent allowable under the 

Federal or State rental subsidy program; 

or 

(4) For an Extremely Low-Income 

Family, 30 percent of the annual income 

of a Family whose annual income 

equals 30 percent of the area median 

income, with adjustments for number of 

bedrooms in the unit as described in 

paragraph (a) of this section. If the unit 

or tenant receives Federal or State rental 

subsidy, and the Family pays as a 

contribution toward rent not more than 

30 percent of the Family’s income, the 

maximum rent (i.e., tenant contribution 

plus rental subsidy) is the rent 

allowable under the Federal or State 

rental subsidy program. 

(b) Nondiscrimination against rental 

assistance subsidy holders. The 

Recipient 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 tenantbased assistance document. 

(c) Initial rent schedule and utility 

allowances. The Recipient shall ensure 

that utility allowances and submetering 

rules are consistent with regulations 

concerning utility allowances and 

submetering in buildings that are 

subject to gross rent restrictions under 

IRC section 42(g)(2). 

(d) Periods of affordability. Housing 

under this section 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. 

Other recordable mechanisms must be 

approved in writing and in advance by 

the CDFI Fund. The affordability 

restrictions may terminate upon 

foreclosure or transfer in lieu of 

foreclosure. However, 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 


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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. 

(e) Subsequent rents during the 

affordability period. Any increase in 

rent for a CMF-financed unit requires 

that tenants of those units be given at 

least 30 days prior written notice before 

the implementation of the rent increase. 

Regardless of changes in annual rents 

and in median income over time, the 

CMF rents for a Project are not required 

to be lower than the CMF rent limits for 

the Project in effect at the time when the 

Project is Committed for use. 

(f) Tenant income determination. (1) 

Each year during the period of 

affordability, the tenant’s income shall 

be re-examined; tenant income 

examination and verification is 

ultimately the responsibility of the 

Recipient. Annual income shall include 

income from all household members. 

The Recipient must require the Project 

owner to obtain information on rents 

and occupancy of Affordable Housing 

financed or assisted with a CMF Award 

in order to demonstrate compliance 

with this section. 

(2) One of the following two 

definitions of ‘‘annual income’’ must be 

used to determine whether a Family is 

income-eligible: 

(i) Adjusted gross income as defined 

for purposes of reporting under Internal 

Revenue Service (IRS) Form 1040 series 

for individual Federal annual income 

tax purposes; or 

(ii) ‘‘Annual Income’’ as defined at 24 

CFR 5.609 (except that when 

determining the income of a homeowner 

for an owner-occupied Rehabilitation 

Project, the value of the homeowner’s 

principal residence may be excluded 

from the calculation of Net Family 

Assets, as defined in 24 CFR 5.603). 

(3) Although either of the above two 

definitions of ‘‘annual income’’ is 

permitted, in order to calculate adjusted 

income, exclusions from income set 

forth at 24 CFR 5.611 shall be applied. 

(4) 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 section. 

(g) Over-income tenants. (1) CMFfinanced or assisted 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 no greater than 

the lesser of the amount payable by the 

tenant under State or local law or 30 

percent of the Family’s annual income, 

except if the gross rent of a unit is 

subject to the restrictions in IRC section 

42(g)(2) or the restrictions in an 

extended low-income housing 

commitment under IRC section 42(h)(6), 

then the tenants of that unit must pay 

rent governed by those restrictions. 

Tenants who no longer qualify as 

Eligible-Income are not required to pay 

rent in excess of the market rent for 

comparable, unassisted units in the 

neighborhood. 

(3) If the income of a tenant of a CMFfinanced or assisted unit no longer 

qualifies, the Recipient may designate 

another unit, within the CMF-financed 

or assisted Project, as a replacement unit 

that meets the affordability 

qualifications for the same income 

category as the original unit, as further 

set forth in the Recipient’s Assistance 

Agreement. If there is not an available 

replacement unit, the Recipient must fill 

the first available vacancy with a tenant 

that meets the affordability 

qualifications for the same income 

category of the original unit as necessary 

to maintain compliance with the CMF 

requirements and the Assistance 

Agreement. 

§ 1807.402 Affordable Housing— 

Homeownership. 

(a) Purchase with or without 

Rehabilitation. A Recipient that uses the 

CMF Award for the eligible activities set 

forth in § 1807.301 for Purchase must 

ensure the purchasing Family and 

Housing meets the affordability 

requirements of this subpart. 

(1) The Housing must be Singlefamily housing. 

(2) The Single-family 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 HUD and the applicable 

Participating Jurisdiction. 

(3) The Single-family housing must be 

purchased by a qualifying Family as set 

forth in § 1807.400. The Single-family 

housing must be the principal residence 

of the Family throughout the period 

described in paragraph (a)(4) of this 

section. 

(4) Periods of affordability. Singlefamily housing under this section must 

meet the affordability requirements for 

at least 10 years at the time of purchase 

by the Family. 

(5) Resale. To ensure that CMF 

Awards are being used for qualifying 

Families for the entire 10-year 

affordability period, recoupment and 

redeployment or resale strategies must 

be imposed by the Recipient. A 

recoupment strategy must ensure that, 

in the event the qualifying homeowner 

sells the Housing before the end of the 

10-year affordability period and the new 

homeowner does not meet the 

affordability qualifications set forth in 

§ 1807.400, an amount equal to the 

amount of the CMF Award investment 

in the Housing, whether recouped or 

not, is used to finance additional 

Affordable Housing Activities for a 

qualifying Family in the same income 

category for Affordable Housing 

Homeownership in the manner set forth 

in this section, except that the Housing 

must meet the affordability 

requirements only for the remaining 

duration of the affordability period. The 

Recipient may design and implement its 

own recoupment strategy. Deed 

restrictions, covenants running with the 

land, or other similar mechanisms may 

be used as the mechanism to impose a 

resale strategy. The Recipient shall 

report to the CDFI Fund the event of 

resale and/or recoupment and 

redeployment of the CMF Award, or an 

equivalent amount, in the manner 

described in the Assistance Agreement. 

The affordability restrictions may 

terminate upon occurrence of any of the 

following termination events: 

Foreclosure, transfer in lieu of 

foreclosure, or assignment of an FHAinsured mortgage to HUD. The Recipient 

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. If there is a sale of Singlefamily housing funded by a CMF Award 

prior to the completion of the 10-year 

affordability period, the Recipient must 

demonstrate that it placed into service 

Single-family housing targeting the 

same income population (i.e., Extremely 

Low-Income, Very Low-Income, LowIncome) as the original Single-family 

housing, as set forth in the Assistance 

Agreement, financed with an equivalent 

amount to the recouped portion of the 

CMF Award, that will be tracked for the 

duration of the affordability period of 

the original Single-family housing. 

(b) Rehabilitation not involving 

Purchase. Single-family housing that is 

currently owned by a qualifying Family, 

as set forth in § 1807.400, qualifies as 

Affordable Housing if it meets the 

requirements of this paragraph (b). 

(1) The estimated value of the Singlefamily housing, after Rehabilitation, 


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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 

(2) The Single-family housing is the 

principal residence of a qualifying 

Family as set forth in § 1807.400, at the 

time that the CMF Award is Committed 

to the Single-family housing. 

(3) Single-family housing under this 

paragraph (b) must meet the 

affordability requirements for at least 10 

years after Rehabilitation is completed 

or meet the resale provisions of 

paragraph (a)(5) of this section. 

(c) Ownership interest. The ownership 

in the Single-family housing assisted 

under this section must meet the 

definition of Homeownership as defined 

in § 1807.104. 

(d) New construction without 

Purchase. Newly constructed Singlefamily housing that is built on property 

currently owned by a Family that will 

occupy the Single-family 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-financed 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 this section. The 

Homeownership units are subject to a 

minimum period of affordability equal 

to the remaining affordability period. 

Subpart E—Leveraged Costs; Eligible 

Project Costs; Commitment 

Requirements 

§ 1807.500 Leveraged Costs; Eligible 

Project Costs. 

(a) Each CMF Award must result in 

Eligible Project Costs in an amount that 

equals at least 10 times the amount of 

the CMF Award or some higher 

standard established by the CDFI Fund 

in the Recipient’s Assistance 

Agreement. Such Eligible Project Costs 

must be for Affordable Housing 

Activities and Economic Development 

Activities, as set forth in the Assistance 

Agreement. 

(b) Leveraged Costs. (1) The 

applicable NOFA and/or the Assistance 

Agreement may set forth a required 

percentage of Leveraged Costs that must 

be funded by non-governmental sources. 

(2) The Recipient must report to the 

CDFI Fund all Leveraged Costs, with the 

following limitations: 

(i) No costs attributable to prohibited 

uses as set forth in § 1807.302(a) and (b) 

may be reported as Leveraged Costs; 

(ii) All Leveraged Costs attributable to 

Affordable Housing Activities must be 

for Affordable Housing, as set forth in 

§ 1807.401 or § 1807.402, and as further 

described in the Assistance Agreement; 

(iii) All eligible Leveraged Costs 

attributable to Economic Development 

Activities shall be described in the 

Assistance Agreement. 

(c) Recipients must report Leveraged 

Costs information through forms or 

electronic systems provided by the CDFI 

Fund. Consequently, Recipients must 

maintain appropriate documentation, 

such as audited financial statements, 

wire transfers documents, pro-formas, 

and other relevant records, to support 

such reports. 

§ 1807.501 Commitments; Payments. 

(a) The CMF Award must be 

Committed by the Recipient for use by 

the date designated in its Assistance 

Agreement. 

(b) The Recipient must evidence such 

commitment with a written, legally 

binding agreement to provide CMF 

Award proceeds to the qualifying 

Family, developer or project sponsor for 

a Project whose: 

(1) Construction can reasonably be 

expected to start within 12 months of 

the commitment agreement date; 

(2) Property title will be transferred 

within 6 months of the commitment 

agreement date; or 

(3) Construction schedule ensures 

Project Completion within 5 years of a 

date specified in the Assistance 

Agreement. 

(c) The CDFI Fund will make Payment 

of CMF Award based on a deployment 

schedule contained in the CMF Award 

application, in addition to any other 

documentation and/or forms that the 

CDFI Fund may require. 

(d) Upon receipt of CMF Award, the 

Recipient must make an initial 

disbursement of said CMF Award by the 

date designated in its Assistance 

Agreement. The CDFI Fund may make 

Payment of CMF Award in a lump sum 

or other manner, as determined 

appropriate by the CDFI Fund. The 

CDFI Fund will not provide any 

Payment until the Recipient has 

satisfied all conditions set forth in the 

applicable NOFA and Assistance 

Agreement. 

§ 1807.502 CMF Award limits. 

An eligible Applicant and its 

Subsidiaries and Affiliates may not be 

awarded more than 15 percent of the 

aggregate funds available for CMF 

Awards during any year. 

§ 1807.503 Project Completion; Property 

standards. 

(a) Upon Project Completion, the 

Project must be placed into service by 

the date designated in the Assistance 

Agreement. Project Completion occurs, 

as determined by the CDFI Fund, when: 

(1) All necessary title transfer 

requirements and construction work 

have been performed; 

(2) The property standards of 

paragraph (b) of this section have been 

met; and 

(3) The final drawdown of the CMF 

Award has been made to the project 

sponsor or developer; 

(4) When a CMF Award is used for 

Preservation, Project Completion occurs 

when the refinance and/or 

Rehabilitation is completed in addition 

to the requirements set forth in this 

paragraph (a). 

(b) By the Project Completion date, 

the Project must meet the requirements 

of this part, including the following 

property standards (which must be met 

for a period of at least 10 years after the 

Project Completion date): 

(1) Projects that are constructed or 

Rehabilitated with a CMF Award must 

meet all applicable State and local 

codes, Rehabilitation standards, 

ordinances, and zoning requirements at 

the time of Project Completion or, in the 

absence of a State or local building 

code, the International Residential Code 

or International Building Code (as 

applicable) of the International Code 

Council. 

(2) In addition, Projects must meet the 

following requirements: 

(i) Accessibility. The Project must 

meet all applicable accessibility 

requirements set forth at 24 CFR part 8, 

which implements section 504 of the 

Rehabilitation Act of 1973 (29 U.S.C. 

794), and Titles II and III of the 

Americans with Disabilities Act (42 

U.S.C. 12131–12189) implemented at 28 

CFR parts 35 and 36, as applicable. 

Multi-family housing, as defined in 24 

CFR 100.201, must also meet all 

applicable design and construction 

requirements set forth in 24 CFR 

100.205, which implements the Fair 

Housing Act (42 U.S.C. 3601–3619). 

(ii) Disaster mitigation. The Project 

must meet all applicable State and local 

codes, ordinances, or other disaster 

mitigation requirements (e.g., 

earthquake, hurricanes, flooding, wild 

fires), or other requirements as the 

Department of Housing and Urban 

Development has established in 24 CFR 

part 93. 

(iii) Lead-based paint. The Project 

must meet all applicable lead-based 

paint requirements, including those set 

forth in 24 CFR part 35. 


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(3) Rehabilitation standards. In 

addition, all Rehabilitation that is 

financed with a CMF Award must meet 

the following requirements: 

(i) For rental Housing, if the 

remaining useful life of one or more 

major systems is less than the 10-year 

period of affordability, the Recipient 

must ensure that, at Project Completion, 

the developer or Project sponsor 

establishes a replacement reserve and 

that monthly payments are made to the 

reserve that are adequate to repair or 

replace the systems as needed. Major 

systems include: Structural support; 

roofing; cladding and weatherproofing 

(e.g., windows, doors, siding, gutters); 

plumbing; electrical; heating, 

ventilation, and air conditioning. 

(ii) For Homeownership Single-family 

housing, the Recipient must ensure that, 

at Project Completion, the Housing is 

decent, safe, sanitary, and in good 

repair. The Recipient must ensure that 

timely corrective and remedial actions 

are taken by the Project owner to 

address identified life threatening 

deficiencies. 

(4) Manufactured housing. 

Construction of all manufactured 

housing must meet the Manufactured 

Home Construction and Safety 

Standards set forth in 24 CFR part 3280. 

These standards preempt State and local 

laws or codes, which are not identical 

to the Federal standards for the new 

construction of manufactured 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 a CMF Award must 

meet the requirements set out in 

paragraph (b)(1) of this section. 

Subpart F—Tracking Funds; Uniform 

Administrative Requirements; Nature 

of Funds 

§ 1807.600 Tracking funds. 

The Recipient shall develop and 

maintain an internal tracking and 

reporting system that ensures that the 

CMF Award is used in accordance with 

this part and the Assistance Agreement. 

§ 1807.601 Uniform Administrative 

Requirements. 

The Uniform Administrative 

Requirements apply to all CMF Awards. 

§ 1807.602 Nature of funds. 

CMF Awards are Federal financial 

assistance with regard to the application 

of Federal civil rights laws. CMF Award 

funds retain their Federal character 

until the end of the Investment Period. 

Subpart G—Notice of Funds 

Availability; Applications 

§ 1807.700 Notice of funds availability. 

Each Applicant must submit a CMF 

Award application in accordance with 

the applicable Notice of Funds 

Availability (NOFA) published in the 

Federal Register. The NOFA will advise 

prospective Applicants on how to 

obtain and complete an application and 

will establish deadlines and other 

requirements. The NOFA will specify 

application evaluation factors and any 

limitations, special rules, procedures, 

and restrictions for a particular 

application round. After receipt of an 

application, the CDFI Fund may request 

clarifying or technical information on 

the materials submitted as part of the 

application. 

Subpart H—Evaluation and Selection 

of Applications 

§ 1807.800 Evaluation and selection— 

general. 

Each Applicant will be evaluated and 

selected, at the sole discretion of the 

CDFI Fund, to receive a CMF Award 

based on a review process that will 

include a paper or electronic 

application, and may include an 

interview(s) and/or site visit(s), and that 

is intended to: 

(a) Ensure that Applicants are 

evaluated on a merit basis and in a fair 

and consistent manner; 

(b) Ensure that each Recipient can 

successfully meet its leveraging goals 

and achieve Affordable Housing 

Activity and Economic Development 

Activity impacts; 

(c) Ensure that Recipients 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 disinvestment; 

(4) Economic Development Activities 

that target Extremely Low-Income, Very 

Low-Income, and Low-Income Families 

within the Recipient’s Service Area; and 

(5) Any other criteria the CDFI Fund 

shall set forth in the applicable NOFA; 

and 

(d) Take into consideration other 

factors as set forth in the applicable 

NOFA. 

§ 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 

§ 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 a 

CMF Award to generate additional 

investments, including private sources 

of funding; 

(2) The need for affordable housing in 

the Applicant’s Service Area; 

(3) The ability of the Applicant to 

obligate amounts and undertake 

activities in a timely manner; and 

(4) In the case of an Applicant that 

has previously received assistance 

under any CDFI Fund program, 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. 

(c) The CDFI Fund may consider any 

other factors that it deems appropriate 

in reviewing an application, as set forth 

in the applicable NOFA, the application 

and related guidance materials. 

(d) 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. 

(e) Recipient selection. The CDFI 

Fund will select Recipients 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 

CMF Award 

§ 1807.900 Assistance agreement. 

(a) Each Applicant that is selected to 

receive a CMF Award must enter into an 

Assistance Agreement with the CDFI 


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Fund. The Assistance Agreement will 

set forth certain required terms and 

conditions for the CMF Award that may 

include, but are not limited to, the 

following: 

(1) The amount of the CMF Award; 

(2) The approved uses of the CMF 

Award; 

(3) The approved Service Area; 

(4) The time period by which the CMF 

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 pursuant 

to this part, the NOFA, and the 

Recipient’s application. 

(b) The Assistance Agreement shall 

provide that, in the event of fraud, 

mismanagement, noncompliance with 

the Act or these regulations, or 

noncompliance with the terms and 

conditions of the Assistance Agreement, 

on the part of the Recipient, the CDFI 

Fund, in its discretion, may make a 

determination to: 

(1) Require changes in the 

performance goals set forth in the 

Assistance Agreement; 

(2) Revoke approval of the Recipient’s 

application; 

(3) Reduce or terminate the CMF 

Award; 

(4) Require repayment of any CMF 

Award that have been paid to the 

Recipient; 

(5) Bar the Recipient from applying 

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 making a determination 

that the Recipient has failed to comply 

substantially with the Act or these 

regulations or an Assistance Agreement, 

the CDFI Fund shall provide the 

Recipient with reasonable notice and 

opportunity for hearing. 

§ 1807.901 Payment of funds. 

CMF Awards provided pursuant to 

this part may be provided in a lump 

sum payment or in some other manner, 

as determined appropriate by the CDFI 

Fund. The CDFI Fund shall not provide 

any Payment under this part until a 

Recipient has satisfied all conditions set 

forth in the applicable NOFA and 

Assistance Agreement. 

§ 1807.902 Data collection and reporting. 

(a) Data; General. The Recipient must 

maintain such records as may be 

prescribed by the CDFI Fund that are 

necessary to: 

(1) Disclose the manner in which the 

CMF Award 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 the CMF 

Award. 

(b) Customer profiles. The Recipient 

must compile such data on the gender, 

race, ethnicity, national origin, or other 

information on individuals that are 

benefiting from the CMF Award, as the 

CDFI Fund shall prescribe in the 

Assistance Agreement. Such data will 

be used to determine whether residents 

of the Recipient’s Service Area are 

adequately served and to evaluate the 

impact of the CMF Award. 

(c) Access to records. The Recipient 

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 the Treasury to 

ensure compliance with the 

requirements of this part and to evaluate 

the impact of the CMF Award. The 

United States Government, including 

the U.S. Department of the Treasury, the 

Comptroller General, and their duly 

authorized representatives, shall have 

full and free access to the Recipient’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 receive a 

CMF Award from the Recipient. 

(d) Retention of records. The 

Recipient shall comply with all 

applicable record retention 

requirements set forth in the Uniform 

Administrative Requirements (as 

applicable) and the Assistance 

Agreement. 

(e) Data collection and reporting—(1) 

Financial reporting, (i) All Nonprofit 

Organization Recipients that are 

required to have their financial 

statements audited pursuant to the 

Uniform Administrative Requirements, 

must submit their single-audits by a 

time set forth in the applicable NOFA or 

Assistance Agreement. Nonprofit 

Organization Recipients (excluding 

Insured CDFIs and State-Insured Credit 

Unions) that are not required to have 

financial statements audited pursuant to 

the Uniform Administrative 

Requirements, must submit to the CDFI 

Fund a statement signed by the 

Recipient’s authorized representative or 

certified public accountant, asserting 

that the Recipient is not required to 

have a single-audit pursuant to the 

Uniform Administrative Requirements 

as indicated in the Assistance 

Agreement. In such instances, the CDFI 

Fund may require additional audits to 

be performed and/or submitted to the 

CDFI Fund as stated in the applicable 

Notice of Funds Availability and 

Assistance Agreement. 

(ii) For-profit Recipients (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 Accountants 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) Annual report. (i) The Recipient 

shall submit a performance and 

financial report that shall be specified in 

the Assistance Agreement (annual 

report). The annual report consists of 

several components which may include, 

but are not limited to, a report on 

performance goals and measures, 

explanation of any Recipient 

noncompliance, and such other 

information as may be required by the 

CDFI Fund. The annual report 

components shall be specified and 

described in the Assistance Agreement. 

(ii) The CDFI Fund will use the 

annual report to collect data to assess 

the Recipient’s compliance with its 

performance goals and the impact of the 

CMF and the CDFI industry. 

(iii) The Recipient is responsible for 

the timely and complete submission of 

the annual report, even if all or a 

portion of the documents actually are 

completed by another entity. If such 

other entities are required to provide 

information for the annual report, or 

such other documentation that the CDFI 

Fund might require, the Recipient is 

responsible for ensuring that the 

information is submitted timely and 

complete. The CDFI Fund reserves the 

right to contact such other entities and 

require that additional information and 

documentation be provided. 

(iv) The CDFI Fund’s review of the 

compliance of an Insured CDFI, a 

Depository Institution Holding 

Company or a State-Insured Credit 

Union with the terms and conditions of 

its Assistance Agreement may also 

include information from the 

Appropriate Federal Banking Agency or 


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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations 6447 

Appropriate State Agency, as the case 

may be. 

(f) Public access. The CDFI Fund shall 

make reports described in this section 

available for public inspection after 

deleting or redacting any materials 

necessary to protect privacy or 

proprietary interests. 

§ 1807.903 Compliance with government 

requirements. 

In carrying out its responsibilities 

pursuant to an Assistance Agreement, 

the Recipient shall comply with all 

applicable Federal, State, and local 

laws, regulations, and ordinances, 

Uniform Administrative Requirements, 

and Executive Orders. Furthermore, 

Recipients must comply with the CDFI 

Fund’s environmental quality 

regulations (12 CFR part 1815) as well 

as all other Federal environmental 

requirements applicable to Federal 

awards. 

§ 1807.904 Lobbying restrictions. 

No CMF Award may be expended by 

a Recipient 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 are 

applicable to all Recipients and 

insiders. 

§ 1807.906 CDFI Fund deemed not to 

control. 

The CDFI Fund shall not be deemed 

to control a Recipient by reason of any 

CMF Award 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 CMF Award shall be limited to the 

amount of the CMF Award. 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. 

§ 1807.908 Fraud, waste and abuse. 

Any person who becomes aware of 

the existence or apparent existence of 

fraud, waste or abuse of a CMF Award 

should report such incidences to the 

Office of Inspector General of the U.S. 

Department of the Treasury. 

Mary Ann Donovan, 

Director, Community Development Financial 

Institutions Fund. 

[FR Doc. 2016–02132 Filed 2–3–16; 4:15 pm] 

BILLING CODE 4810–70–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2015–7483; Airspace 

Docket No. 15–AGL–23] 

Amendment of Class E Airspace for 

the Following Michigan Towns: 

Alpena, MI; and Muskegon, MI 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This action amends the legal 

description of the Class E surface area 

airspace and Class E airspace designated 

as an extension at Alpena County 

Regional Airport, Alpena, MI, and 

Muskegon County Airport, Muskegon, 

MI, eliminating the Notice to Airmen 

(NOTAM) part-time status, and updates 

the geographic coordinates of Muskegon 

County Airport, to coincide with the 

FAA’s aeronautical database. 

DATES: Effective 0901 UTC, March 31, 

2016. The Director of the Federal 

Register approves this incorporation by 

reference action under Title 1, Code of 

Federal Regulations, part 51, subject to 

the annual revision of FAA Order 

7400.9 and publication of conforming 

amendments. 

ADDRESSES: FAA Order 7400.9Z, 

Airspace Designations and Reporting 

Points, and subsequent amendments can 

be viewed online at http://www.faa.gov/ 

air_traffic/publications/. For further 

information, you can contact the 

Airspace Policy Group, Federal Aviation 

Administration, 800 Independence 

Avenue SW., Washington, DC 29591; 

telephone: 202–267–8783. The Order is 

also available for inspection at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of FAA 

Order 7400.9Z at NARA, call 202–741– 

6030, or go to http://www.archives.gov/ 

federal_register/code_of_federalregulations/ibr_locations.html. 

FAA Order 7400.9, Airspace 

Designations and Reporting Points, is 

published yearly and effective on 

September 15. 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey Claypool, Federal Aviation 

Administration, Operations Support 

Group, Central Service Center, 10101 

Hillwood Parkway, Fort Worth, TX 

76177; telephone (817) 222–5711. 

SUPPLEMENTARY INFORMATION: 

Authority for This Rulemaking 

The FAA’s authority to issue rules 

regarding aviation safety is found in 

Title 49 of the United States Code. 

Subtitle I, Section 106 describes the 

authority of the FAA Administrator. 

Subtitle VII, Aviation Programs, 

describes in more detail the scope of the 

agency’s authority. This rulemaking is 

promulgated under the authority 

described in Subtitle VII, Part A, 

Subpart I, Section 40103. Under that 

section, the FAA is charged with 

prescribing regulations to assign the use 

of airspace necessary to ensure the 

safety of aircraft and the efficient use of 

airspace. This regulation is within the 

scope of that authority as it amends 

controlled airspace at Alpena County 

Regional Airport, Alpena, MI, and 

Muskegon County Airport, Muskegon, 

MI. 

History 

In a review of the airspace, the FAA 

found the airspace for Alpena County 

Regional Airport, Alpena, MI, and 

Muskegon County Airport, Muskegon, 

MI, as published in FAA Order 7400.9Z, 

Airspace Designations and Reporting 

Points, does not require part time status. 

This is an administrative change 

removing the part time NOTAM 

information from the legal descriptions 

for the above airports. 

Class E airspace designations are 

published in paragraph 6002 and 6004, 

respectively, of FAA Order 7400.9Z 

dated August 6, 2015, and effective 

September 15, 2015, which is 

incorporated by reference in 14 CFR 

part 71.1. The Class E airspace 

designations listed in this document 

will be published subsequently in the 

Order. 

Availability and Summary of 

Documents for Incorporation by 

Reference 

This document amends FAA Order 

7400.9Z, Airspace Designations and 

Reporting Points, dated August 6, 2015, 

and effective September 15, 2015. FAA 

Order 7400.9Z is publicly available as 

listed in the ADDRESSES section of this 

document. FAA Order 7400.9Z lists 

Class A, B, C, D, and E airspace areas, 

air traffic service routes, and reporting 

points. 


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