5790 Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules and Regulations 

DEPARTMENT OF THE TREASURY 

Community Development Financial 

Institutions Fund 

12 CFR Part 1806 

RIN 1505–AA91 

Bank Enterprise Award Program 

AGENCY: Community Development 

Financial Institutions Fund, Department 

of the Treasury. 

ACTION: Interim rule with request for 

comment. 

SUMMARY: The Department of the 

Treasury is issuing an interim rule 

implementing the Bank Enterprise 

Award (BEA) Program administered by 

the Community Development Financial 

Institutions Fund (Fund). The mission 

of the CDFI Fund is to increase the 

capacity of financial institutions to 

provide capital, credit and financial 

services in underserved markets. Its 

long-term vision is an America in which 

all people have access to affordable 

credit, capital and financial services. 

The purpose of the BEA Program is to 

provide an incentive to insured 

depository institutions to increase their 

activities in the form of loans, 

investments, services, and technical 

assistance, within Distressed 

Communities and provide financial 

assistance to Community Development 

Financial Institutions (CDFIs) through 

grants, stock purchases, loans, deposits, 

and other forms of financial and 

technical assistance. This interim rule: 

amends and simplifies select 

application requirements, and adds the 

requirement that BEA award funds be 

used for BEA Qualified Activities. 

DATES: Interim rule effective January 30, 

2009; comments must be received on or 

before March 2, 2009. 

ADDRESSES: You may send hard copy 

comments concerning this interim rule 

to the Depository Institutions Program 

Advisor, Community Development 

Financial Institutions Fund, Department 

of the Treasury, 601 13th Street, NW., 

Suite 200 South, Washington, DC 20005. 

You may also send us comments by email to cdfihelp@cdfi.treas.gov, with the 

subject heading ‘‘BEA Program 

Comments’’. When sending comments 

by e-mail, please use an ASCII file 

format and provide your full name and 

mailing address. Comments may be 

inspected at the above address 

weekdays between 9:30 a.m. and 4:30 

p.m. Other information regarding the 

Fund and its programs may be obtained 

through the Fund’s Web site at http:// 

www.cdfifund.gov. 

FOR FURTHER INFORMATION CONTACT: 

Jodie Harris, Depository Institutions 

Program Advisor, Community 

Development Financial Institutions 

Fund, at (202) 622–4499. (This is not a 

toll free number.) 

SUPPLEMENTARY INFORMATION: 

I. Background 

Through the Bank Enterprise Award 

(BEA) Program, the Community 

Development Financial Institutions 

Fund (the Fund) seeks to: strengthen 

and expand the financial and 

organizational capacity of CDFIs; 

provide financial incentives to insured 

depository institutions to increase their 

lending and services in Distressed 

Communities; and increase the flow of 

private capital into Low- and ModerateIncome areas. Applicants participate in 

the BEA Program through a competitive 

process, which evaluates applications 

based on the value of their increases in 

certain Qualified Activities. BEA 

Program Awardees receive award 

proceeds only after successful 

completion of the specified Qualified 

Activities. On February 4, 2003, the 

Fund published in the Federal Register 

an interim regulation (62 FR 64439) 

implementing the BEA Program (the 

current rule). 

II. Summary of Changes 

Revised Definitions for Categories of 

Qualified Activities: The interim rule 

updates the definition of Affordable 

Housing Development Loans 

(§ 1806.103(b)); Affordable Housing 

Loans (§ 1806.103(c)), and Home 

Improvement Loans (§ 1806.103(ee)); 

Commercial Real Estate Loans 

(§ 1806.103(l)); and Small Business 

Loans (§ 1806. 103(oo)) to include the 

requirement that the borrower and/or 

entity financed be located in a 

Distressed Community (§ 1806.103(t)). 

Affordable Housing Development Loans 

are loans related to the development of 

residential real property that are 

affordable to Low- and ModerateIncome Eligible Residents. Affordable 

Housing Loan means origination of a 

loan to finance the purchase or 

improvement of the borrower’s primary 

residence, and that is secured by such 

property, where such borrower is a Lowand Moderate-Income individual and an 

Eligible Resident. Home Improvement 

Loans mean advances of funds, either 

unsecured or secured by a one-to-four 

family residential property, the 

proceeds of which are used to improve 

the borrower’s primary residence where 

the borrower is an Eligible Resident. 

Commercial Real Estate Loans are loans 

secured by real estate and used to 

finance the acquisition or rehabilitation 

of a building in a Distressed 

Community, or the acquisition, 

construction and or development of 

property in a Distressed Community, 

used for commercial purposes. Small 

Business Loan means an origination of 

a loan used for commercial or industrial 

activities (other than an Affordable 

Housing Finance Loan, Affordable 

Housing Development Loan, 

Commercial Real Estate Loan, Home 

Improvement Loan) to a business or 

farm that meets the size eligibility 

standards of the Small Business 

Administration’s Development 

Company or Small Business Investment 

Company programs (13 CFR 121.301) 

and is located in a Distressed 

Community. 

Award Agreement; Sanctions: Section 

1806.300(a) of the interim rule provides 

that a BEA Program Award recipient 

shall comply with performance goals 

that have been established by the Fund. 

Such performance goals will include the 

requirement that an Awardee use its 

BEA Program Award for Qualified 

Activities under the BEA Program. 

III. Rulemaking Analysis 

Executive Order (E.O.) 12866 

It has been determined that this 

regulation is not a significant regulatory 

action as defined in Executive Order 

12866. Therefore, a Regulatory 

Assessment is not required. 

Regulatory Flexibility Act 

Because no notice of proposed 

rulemaking is required for this interim 

rule, the provisions of the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.) do 

not apply. 

Paperwork Reduction Act 

The collections of information 

contained in this interim rule have been 

previously reviewed and approved by 

OMB in accordance with the Paperwork 

Reduction Act of 1995 and assigned 

OMB Control Number 1559–0005. 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. Comments 

concerning suggestions for reducing the 

burden of collections of information 

should be directed to the Deputy 

Director for Policy and Programs, 

Community Development Financial 

Institutions Fund, 601 13th Street, NW., 

Suite 200 South, Washington, DC 20005, 

and to the Office of Management and 

Budget, Attention: Desk Officer for the 

Department of the Treasury, Office of 


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Information and Regulatory Affairs, 

Washington, DC 20503. 

National Environmental Policy Act 

Pursuant to Treasury Directive 75–02 

(Department of the Treasury 

Environmental Quality Program), the 

Department has determined that these 

interim regulations are categorically 

excluded from the National 

Environmental Policy Act and do not 

require an environmental review. 

Administrative Procedure Act 

The Fund is promulgating this interim 

rule without opportunity for prior 

public comment pursuant to the 

Administrative Procedure Act (APA), 5 

U.S.C. 553, because the BEA Program 

involves grants and is thereby exempt 

from the procedural requirements of the 

APA pursuant to 5 U.S.C. 553(a)(2). The 

Fund also believes that an immediate 

effective date is necessary for the 

convenience of the persons affected. 

Specifically, an immediate effective date 

will minimize the risk of confusion on 

the affected community by ensuring that 

there will be a single and uniform 

regulation in effect during the 

Assessment Period for the upcoming 

round of the BEA Program. 

Comment 

Public comment is solicited on all 

aspects of this interim regulation. The 

Fund will consider all comments made 

on the substance of this interim 

regulation, but does not intend to hold 

hearings. 

Catalog of Federal Financial Assistance 

Number 

Bank Enterprise Award Program— 

21.021. 

List of Subjects in 12 CFR Part 1806 

Banks, banking, Community 

development, Grant programs—housing 

and community development, Reporting 

and recordkeeping requirements, 

Savings associations. 

■ For the reasons set forth in the 

preamble, 12 CFR Part 1806 is revised 

to read as follows: 

PART 1806—BANK ENTERPRISE 

AWARD PROGRAM 

Sec. 

Subpart A—General Provisions 

1806.100 Purpose. 

1806.101 Summary. 

1806.102 Relationship to other Community 

Development Financial Institutions 

Programs. 

1806.103 Definitions. 

1806.104 Waiver authority. 

1806.105 OMB control number. 

Subpart B—Awards 

1806.200 Community eligibility and 

designation. 

1806.201 Measuring and reporting 

Qualified Activities. 

1806.202 Estimated award amounts. 

1806.203 Selection Process, actual award 

amounts. 

1806.204 Applications for Bank Enterprise 

Awards. 

Subpart C—Terms and Conditions of 

Assistance 

1806.300 Award Agreement; sanctions. 

1806.302 Compliance with government 

requirements. 

1806.303 Fraud, waste and abuse. 

1806.304 Books of account, records and 

government access. 

1806.305 Retention of records. 

Authority: 12 U.S.C. 1834a, 4703, 4703 

note, 4713, 4717; 31 U.S.C. 321. 

Subpart A—General Provisions 

§ 1806.100 Purpose. 

The purpose of the Bank Enterprise 

Award Program is to provide financial 

assistance to Community Development 

Financial Institutions, and provide an 

incentive for insured depository 

institutions to increase their activities in 

Distressed Communities. 

§ 1806.101 Summary. 

(a) Under the Bank Enterprise Award 

Program, the Fund makes awards to 

selected Applicants that: 

(1) Increase their investments in or 

other support of Community 

Development Financial Institutions; 

(2) Increase lending and investment 

activities within Distressed 

Communities; or 

(3) Increase the provision of certain 

services and assistance. 

(b) Distressed Communities must 

meet minimum geographic, poverty and 

unemployment criteria. 

(c) Applicants are selected to 

participate in the program through a 

competitive application process. 

Awards are based on increases in 

Qualified Activities that are carried out 

by the Applicant during an Assessment 

Period. Bank Enterprise Awards are 

distributed after successful completion 

of projected Qualified Activities and 

must be used for BEA Qualified 

Activities. All awards shall be made 

subject to the availability of funding. 

§ 1806.102 Relationship to other 

Community Development Financial 

Institutions Programs. 

Prohibition against double funding. A 

BEA Applicant may not submit as 

Qualified Activities any transactions 

funded with award proceeds from 

another Fund program. 

§ 1806.103 Definitions. 

For purposes of this part the following 

terms shall have the following 

definitions: 

(a) Act means the Community 

Development Banking and Financial 

Institutions Act of 1994, as amended (12 

U.S.C. 4701 et seq.); 

(b) Affordable Housing Development 

Loan means origination of a loan to 

finance the acquisition, construction, 

and/or development of single- or multifamily residential real property, where 

at least sixty percent of the units in such 

property are affordable, as may be 

defined in the applicable NOFA, to 

Low- and Moderate-Income Eligible 

Residents. 

(c) Affordable Housing Loan means 

origination of a loan to finance the 

purchase or improvement of the 

borrower’s primary residence, and that 

is secured by such property, where such 

borrower is a Low- and ModerateIncome Eligible Resident. Affordable 

Housing Loan may also refer to second 

(or otherwise subordinated) liens or 

‘‘soft second’’ mortgages, and other 

similar types of down payment 

assistance loans but may not necessarily 

be secured by such property originated 

for the purpose of facilitating the 

purchase or improvement of the 

borrower’s primary residence, where 

such borrower is a Low- and ModerateIncome Eligible Resident. 

(d) Applicant means any insured 

depository institution (as defined in 

section 3(c)(2) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813)) that is 

applying for a Bank Enterprise Award; 

(e) Appropriate Federal Banking 

Agency has the same meaning as in 

section 3 of the Federal Deposit 

Insurance Act (12 U.S.C. 1813); 

(f) Assessment Period means an 

annual or semi-annual period specified 

in the applicable Notice of Funds 

Availability in which an Applicant will 

carry out, or has carried out, Qualified 

Activities; 

(g) Award Agreement means a formal 

agreement between the Fund and an 

Awardee pursuant to § 1806.300; 

(h) Awardee means an Applicant 

selected by the Fund to receive a Bank 

Enterprise Award; 

(i) Bank Enterprise Award (or BEA 

Program Award) means an award made 

to an Applicant pursuant to this part; 

(j) Bank Enterprise Award (or BEA) 

Program means the program authorized 

by section 114 of the Act and 

implemented under this part; 

(k) Baseline Period means an annual 

or semi-annual period specified in the 

applicable NOFA in which an Applicant 

has previously carried out Qualified 

Activities; 


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(l) Commercial Real Estate Loan 

means an origination of a loan (other 

than an Affordable Housing 

Development Loan or Affordable 

Housing Loan) that is secured by real 

estate and used to finance the 

acquisition or rehabilitation of a 

building in a Distressed Community, or 

the acquisition, construction and/or 

development of property in a Distressed 

Community, used for commercial 

purposes; 

(m) Community Development Entity 

(or CDE) means any Qualified 

Community Development Entity that 

meets the requirements set forth at 

Internal Revenue Code (IRC) § 45D(c) 

and that has been certified as such by 

the Fund; 

(n) Community Development 

Financial Institution (or CDFI) means an 

entity that has been certified as a CDFI 

by the CDFI Fund as of the date 

specified in the applicable NOFA. 

(o) Community Services means the 

following forms of assistance provided 

by officers, employees or agents 

(contractual or otherwise) of the 

Applicant: 

(1) Provision of technical assistance 

and financial education to Eligible 

Residents regarding managing their 

personal finances; 

(2) Provision of technical assistance 

and consulting services to newly formed 

small businesses and nonprofit 

organizations located in the Distressed 

Community; 

(3) Provision of technical assistance 

and financial education to, or servicing 

the loans of, Low- or Moderate-Income 

homeowners and homeowners that are 

Eligible Residents; and 

(4) Other services provided to Lowand Moderate-Income Eligible Residents 

or enterprises Integrally Involved in a 

Distressed Community, as deemed 

appropriate by the Fund; 

(p) CDFI Partner means a CDFI that 

has been provided assistance in the 

form of CDFI Related Activities by an 

Applicant; 

(q) CDFI Related Activities means 

Equity Investments, Equity-Like Loans 

and CDFI Support Activities; 

(r) CDFI Support Activity means 

assistance provided by an Applicant or 

its Subsidiary to a CDFI that meets 

criteria set forth by the Fund in the 

applicable NOFA, that is Integrally 

Involved in a Distressed Community, in 

the form of the origination of a loan, 

technical assistance, or deposits if such 

deposits are: 

(1) Uninsured and committed for a 

term of at least three years; or 

(2) Insured, committed for a term of 

at least three years, and provided at an 

interest rate that is materially (in the 

determination of the Fund) below 

market rates; 

(s) Deposit Liabilities means time or 

savings deposits or demand deposits, 

accepted from Eligible Residents at 

offices of the Applicant, or a Subsidiary 

of the Applicant, located within the 

Distressed Community. Depository 

Liabilities may only include deposits 

held by individuals in transaction 

accounts (i.e., demand deposits, NOW 

accounts, automated transfer service 

accounts and telephone or 

preauthorized transfer accounts) or nontransaction accounts (i.e., money market 

deposit accounts, other savings deposits 

and all time deposits), as defined by the 

Appropriate Federal Banking Agency; 

(t) Distressed Community means a 

geographic community which meets the 

minimum area eligibility requirements 

specified in § 1806.200, and such 

additional criteria as may be set forth in 

the applicable NOFA; 

(u) Distressed Community Financing 

Activities means Affordable Housing 

Loans, Affordable Housing Development 

Loans and related Project Investments; 

Education Loans; Commercial Real 

Estate Loans and related Project 

Investments; Home Improvement Loans; 

and Small Business Loans and related 

Project Investments; 

(v) Education Loan means an advance 

of funds to a student, who is an Eligible 

Resident, for the purpose of financing a 

college or vocational education. 

(w) Electronic Transfer Account (or 

ETA) means an account meeting the 

requirements, and with respect to which 

the Applicant has satisfied the 

requirements, set forth in the Federal 

Register on July 16, 1999 at 64 FR 

38510, as such requirements may be 

amended from time to time; 

(x) Eligible Resident means an 

individual that resides in a Distressed 

Community; 

(y) Equity Investment means financial 

assistance provided by an Applicant or 

its Subsidiary to a CDFI, which CDFI 

meets such criteria as set forth in the 

applicable NOFA, in the form of a grant, 

a stock purchase, a purchase of a 

partnership interest, a purchase of a 

limited liability company membership 

interest, or any other investment 

deemed to be an Equity Investment by 

the Fund; 

(z) Equity-Like Loan means a loan 

provided by an Applicant or its 

Subsidiary to a CDFI, and made on such 

terms that it has characteristics of an 

Equity Investment which meets such 

criteria as set forth in the applicable 

NOFA; 

(aa) Financial Services means checkcashing, providing money orders and 

certified checks, automated teller 

machines, safe deposit boxes, new 

branches, and other comparable services 

as may be specified by the Fund in the 

applicable NOFA, that are provided by 

the Applicant to Low- and ModerateIncome Eligible Residents or enterprises 

Integrally Involved in the Distressed 

Community; 

(bb) Fund means the Community 

Development Financial Institutions 

Fund, established under section 104(a) 

of the Act (12 U.S.C. 4703(a)); 

(cc) Geographic Units means counties 

(or equivalent areas), incorporated 

places, minor civil divisions that are 

units of local government, census tracts, 

block numbering areas, block groups, 

and American Indian or Alaska Native 

areas (as each is defined by the U.S. 

Bureau of the Census) or other areas 

deemed appropriate by the Fund; 

(dd) Home Improvement Loan means 

an advance of funds, either unsecured 

or secured by a one-to-four family 

residential property, the proceeds of 

which are used to improve the 

borrower’s primary residence; 

(ee) Indian Reservation means a 

geographic area that meets the 

requirements of section 4(10) of the 

Indian Child Welfare Act of 1978 (25 

U.S.C. 1903(10)), and shall include land 

held by incorporated Native groups, 

regional corporations, and village 

corporations, as defined in and pursuant 

to the Alaska Native Claims Settlement 

Act (43 U.S.C. 1601 et seq), public 

domain Indian allotments, and former 

Indian Reservations in the State of 

Oklahoma; 

(ff) Individual Development Account 

(or IDA) means an account that meets 

the requirements, and with respect to 

the provision of which Applicant has 

satisfied the requirements, set forth in 

the U.S. Department of Health and 

Human Services Program 

Announcement OCS–2000–04, 

published on December 14, 1999 in the 

Federal Register at 64 FR 69824, as such 

requirements may be amended from 

time to time; 

(gg) Integrally Involved means: 

(i) For a CDFI Partner, having 

provided or transacted the percentage of 

financial transactions or dollars (e.g., 

loans or equity investments as defined 

in 12 CFR 1805.104(s)), or Development 

Service activities, in the Distressed 

Community identified by the Applicant 

or the CDFI Partner, as applicable, or 

having attained the percentage of market 

share for a particular product in a 

Distressed Community, set forth in the 

applicable NOFA; or 

(ii) For a non-CDFI, having directed 

the percentage of its business activities 

(e.g., investments, revenues, expenses, 

or other appropriate measures) to 


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serving the Distressed Community 

identified by the Applicant, or having 

provided the percentage of its business 

activities in said Distressed Community, 

set forth in the applicable NOFA. 

(hh) Low- and Moderate-Income 

means income that does not exceed 80 

percent of the median income of the 

area involved, as determined by the 

Secretary of Housing and Urban 

Development, with adjustments for 

smaller and larger families pursuant to 

section 102(a)(20) of the Housing and 

Community Development Act of 1974 

(42 U.S.C. 5302(a)(20)); 

(ii) Metropolitan Area means an area 

designated as such (as of the date of the 

application) by the Office of 

Management and Budget pursuant to 44 

U.S.C. 3504(d)(3), 31 U.S.C. 1104(d), 

and Executive Order 10253 (3 CFR, 

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

(jj) Notice of Funds Availability (or 

NOFA) means the public notice, 

published by the Fund in the Federal 

Register, that announces the availability 

of BEA Program funds for a particular 

funding round and that advises 

Applicants with respect to obtaining 

application materials, establishes 

application submission deadlines, and 

establishes other requirements or 

restrictions applicable for the particular 

funding round; 

(kk) Priority Factor means a numeric 

value assigned to each type of activity 

within each category of Qualified 

Activity, as may be established by the 

Fund in the applicable NOFA. A 

priority factor represents the Fund’s 

assessment of the degree of difficulty, 

the extent of innovation, and the extent 

of benefits accruing to the Distressed 

Community for each type of activity; 

(ll) Project Investment means 

providing financial assistance in the 

form of a purchase of stock, limited 

partnership interest, other ownership 

instrument, or a grant to an entity that 

is Integrally Involved in a Distressed 

Community and formed for the sole 

purpose of engaging in a project or 

activity, approved by the Fund, 

including Affordable Housing 

Development Loans, Affordable Housing 

Loans, Commercial Real Estate Loans, 

and Small Business Loans; 

(mm) Qualified Activities means CDFI 

Related Activities, Distressed 

Community Financing Activities, and 

Service Activities; 

(nn) Service Activities means the 

following activities: Deposit Liabilities; 

Financial Services; Community 

Services; Targeted Financial Services; 

and Targeted Retail Savings/Investment 

Products; 

(oo) Small Business Loan means an 

origination of a loan used for 

commercial or industrial activities 

(other than an Affordable Housing Loan, 

Affordable Housing Development Loan, 

Commercial Real Estate Loan, Home 

Improvement Loan) to a business or 

farm that meets the size eligibility 

standards of the Small Business 

Administration’s Development 

Company or Small Business Investment 

Company programs (13 CFR 121.301) 

and is located in a Distressed 

Community; 

(pp) Subsidiary has the same meaning 

as in section 3 of the Federal Deposit 

Insurance Act, except that a CDFI shall 

not be considered a subsidiary of any 

insured depository institution or any 

depository institution holding company 

that controls less than 25 percent of any 

class of the voting shares of such 

corporation and does not otherwise 

control, in any manner, the election of 

a majority of directors of the 

corporation; 

(qq) Targeted Financial Services 

means ETAs, IDAs, and such other 

similar banking products as maybe 

specified by the Fund in the applicable 

NOFA; 

(rr) Targeted Retail Savings/ 

Investment Products means certificates 

of deposit, mutual funds, life insurance 

and other similar savings or investment 

vehicles targeted to Low- and ModerateIncome Eligible Residents, as may be 

specified by the Fund in the applicable 

NOFA; and 

(ss) Unit of General Local Government 

means any city, county town, township, 

parish, village or other general-purpose 

political subdivision of a State or 

Commonwealth of the United States, or 

general-purpose subdivision thereof, 

and the District of Columbia. 

§ 1806.104 Waiver authority. 

The Fund may waive any requirement 

of this part that is not required by law, 

upon a determination of good cause. 

Each such waiver will be in writing and 

supported by a statement of the facts 

and grounds forming the basis of the 

waiver. For a waiver in any individual 

case, the 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 

Fund will publish notification of 

granted waivers in the Federal Register. 

§ 1806.105 OMB control number. 

The collection of information 

requirements in this part have been 

approved by the Office of Management 

and Budget and assigned OMB control 

number 1559–0005. 

Subpart B—Awards 

§ 1806.200 Community eligibility and 

designation. 

(a) General. If an Applicant proposes 

to carry out Service Activities or 

Distressed Community Financing 

Activities, the Applicant shall designate 

one or more Distressed Communities in 

which it proposes to carry out those 

activities. The Applicant may designate 

different Distressed Communities for 

each category of activity. If an Applicant 

proposes to carry out CDFI Support 

Activities, the Applicant shall provide 

evidence that the CDFI it is proposing 

to support is Integrally Involved in a 

Distressed Community as specified in 

the applicable NOFA. 

(b) Minimum area and eligibility 

requirements. A Distressed Community 

must meet the following minimum area 

and eligibility requirements: 

(1) Minimum area requirements. A 

Distressed Community: 

(i) Must be an area that is located 

within the jurisdiction of one (1) Unit of 

General Local Government; 

(ii) The boundaries the area must be 

contiguous; and 

(iii) The area must: 

(A) Have a population, as determined 

by the most recent census data 

available, of not less than 4,000 if any 

portion of the area is located within a 

Metropolitan Area with a population of 

50,000 or greater; or 

(B) Have a population, as determined 

by the most recent census data 

available, of not less than 1,000 in any 

other case; or 

(C) Be located entirely within an 

Indian Reservation. 

(2) Eligibility requirements. A 

Distressed Community must be a 

geographic area where: 

(i) At least 30 percent of the Eligible 

Residents have incomes that are less 

than the national poverty level, as 

published by the U.S. Bureau of the 

Census in the most recent decennial 

census for which data is available; 

(ii) The unemployment rate is at least 

1.5 times greater than the national 

average, as determined by the U.S. 

Bureau of Labor Statistics’ most recent 

data, including estimates of 

unemployment developed using the 

U.S. Bureau of Labor Statistics’ Census 

Share calculation method; and 

(iii) Such additional requirements as 

may be specified by the Fund in the 

applicable NOFA. 

(c) Area designation. An Applicant 

shall designate an area as a Distressed 

Community by: 

(1) Selecting Geographic Units which 

individually meet the minimum area 

eligibility requirements set forth in 

paragraph (b) of this section; or 


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(2) Selecting two or more Geographic 

Units which, in the aggregate, meet the 

minimum area eligibility requirements 

set forth in paragraph (b) of this section, 

provided that no Geographic Unit 

selected by the Applicant within the 

area has a poverty rate of less than 20 

percent. 

(d) Designation and notification 

process. The Fund will provide a 

prospective Applicant with data and 

other information to help it identify 

areas eligible to be designated as a 

Distressed Community. Applicants shall 

submit designation materials as 

instructed in the applicable NOFA. 

§ 1806.201 Measuring and reporting 

Qualified Activities. 

(a) General. An Applicant may receive 

a Bank Enterprise Award for engaging in 

any of the following categories of 

Qualified Activities during an 

Assessment Period: CDFI Related 

Activities, Distressed Community 

Financing Activities, or Service 

Activities. The Fund may further qualify 

such Qualified Activities in the 

applicable NOFA, including such 

additional geographic and transaction 

size limitations as the Fund deems 

appropriate. 

(b) Reporting Qualified Activities. An 

Applicant should report only its 

Qualified Activities for the category in 

which it is seeking a Bank Enterprise 

Award. For example, if an Applicant is 

seeking a Bank Enterprise Award for 

Distressed Community Financing 

Activities only, it should report only its 

activities for the Distressed Community 

Financing Activities category. 

(1) If an Applicant elects to apply for 

an award in either the CDFI Related 

Activities category or the Distressed 

Community Financing Activities 

category, it must report on all types of 

activity within that category unless the 

Applicant can provide a reasonable 

explanation acceptable to the Fund, in 

its sole discretion, as to why it cannot 

report on all activities in such category. 

(2) If an Applicant elects to apply for 

an award in the Service Activities 

category, it may elect not to report each 

type of activity within the Service 

Activities category. 

(c) Area served. CDFI Related 

Activities must be provided to a CDFI 

Partner Integrally Involved in a 

Distressed Community. Service 

Activities and Distressed Community 

Financing Activities must serve a 

Distressed Community. An activity is 

considered to serve a Distressed 

Community if it is: 

(1) Undertaken in the Distressed 

Community; or 

(2) Provided to Low- and ModerateIncome Eligible Residents or enterprises 

Integrally Involved in the Distressed 

Community. 

(d) Certain Limitations on Qualified 

Activities—Activities funded with the 

proceeds of Federal funding or tax 

credit programs may be ineligible for 

purposes of calculating or receiving a 

Bank Enterprise Awards. Please see the 

applicable BEA NOFA for current 

limitations on Qualified Activities. 

(e) Measuring the Value of Qualified 

Activities. Subject to such additional or 

alternative valuations as the Fund may 

specify in the applicable NOFA, the 

Fund will assess the value of: 

(1) Equity Investments, Equity-Like 

Loans, loans, grants and certificates of 

deposits, at the original amount of such 

Equity Investments, Equity-Like Loans, 

loans, grants or certificates of deposits. 

Where a certificate of deposit matures 

and is then rolled over during the 

Baseline Period or the Assessment 

Period, as applicable, the Fund will 

assess the value of the full amount of 

the rolled over deposit. Where an 

existing loan is refinanced (a new loan 

is originated to pay off an existing loan, 

whether or not there is a change in the 

applicable loan terms), the Fund will 

only assess the value of any increase in 

the principal amount of the refinanced 

loan; 

(2) Project Investments at the original 

amount of the purchase of stock, limited 

partnership interest, other ownership 

interest, or grant; 

(3) Deposit Liabilities at the dollar 

amount deposited as measured by 

comparing the net change in the amount 

of applicable funds on deposit at the 

Applicant during the Baseline Period 

with the net change in the amount of 

applicable funds on deposit at the 

Applicant during the Assessment 

Period, as described below: 

(i) The Applicant shall calculate the 

net change in deposits during the 

Baseline Period, by comparing the 

amount of applicable funds on deposit 

at the close of business the day before 

the beginning of the Baseline Period and 

at the close of business on the last day 

of the Baseline Period; and 

(ii) The Applicant shall calculate the 

net change in such deposits during the 

Assessment Period, by comparing the 

amount of applicable funds on deposit 

at the close of business the day before 

the beginning of the Assessment Period 

and at the close of business on the last 

day of the Assessment Period; 

(4) Financial Services and Targeted 

Financial Services based on the 

predetermined amounts as may be set 

forth by the Fund in the applicable 

NOFA; and 

(5) Financial Services (other than 

those for which the Fund has 

established a predetermined value), 

Community Services, and CDFI Support 

Activities consisting of technical 

assistance based on the administrative 

costs of providing such services. 

(f) Closed Transactions. A transaction 

shall be considered to have been carried 

out during the Baseline Period or the 

Assessment Period if the documentation 

evidencing the transaction: 

(1) Is executed on a date within the 

applicable Baseline Period or 

Assessment Period, respectively; and 

(2) Constitutes a legally binding 

agreement between the Applicant and a 

borrower or investee which specifies the 

final terms and conditions of the 

transaction, except that any 

contingencies included in the final 

agreement must be typical of such 

transaction and acceptable (both in the 

judgment of the Fund); and 

(3) An initial cash disbursement of 

loan or investment proceeds has 

occurred in a manner that is consistent 

with customary business practices and 

is reasonable given the nature of the 

transaction (as determined by the Fund) 

unless it is normal business practice to 

make no initial disbursement at closing 

and the Applicant demonstrates that the 

borrower has access to the proceeds, 

subject to reasonable conditions as may 

be determined by the Fund. 

(g) Reporting Period. An Applicant 

may only measure the amount of a 

Qualified Activity that it reasonably 

expects to disburse to an investee, 

borrower, or other recipient within one 

year of the end of the applicable 

Assessment Period, or such other period 

as may be set forth by the Fund in the 

applicable NOFA. 

§ 1806.202 Estimated award amounts. 

(a) General. An Applicant shall 

calculate and submit to the Fund an 

estimated award amount as part of the 

Bank Enterprise Award application. 

(b) Award Percentages. The Fund will 

establish the award percentage for each 

category of Qualified Activities in the 

applicable NOFA. Applicable award 

percentages for activities undertaken by 

Applicants that are CDFIs will be equal 

to three times the award percentages for 

activities undertaken by Applicants that 

are not CDFIs. 

(c) Calculating the estimated award 

amount. The estimated award amount 

for each category of Qualified Activities 

will be equal to the applicable award 

percentage of the increase in the 

weighted value of such Qualified 

Activities between the Baseline Period 

and Assessment Period. The weighted 


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value of the applicable Qualified 

Activities shall be calculated by: 

(1) Subtracting the Baseline Period 

value of such Qualified Activity from 

the Assessment Period value of such 

Qualified Activity to yield a remainder; 

and 

(2) Multiplying the remainder by the 

applicable Priority Factor (as set forth in 

the applicable NOFA). 

(d) Estimated Award Eligibility 

Review. The Fund will determine the 

eligibility of each transaction for which 

an Applicant has applied for a Bank 

Enterprise Award. Based upon this 

review, the Fund will calculate the 

actual award amount for which such 

Applicant is eligible. 

§ 1806.203 Selection Process, actual 

award amounts. 

(a) Sufficient Funds Available to 

Cover Estimated Awards. All Bank 

Enterprise Awards are subject to the 

availability of funds. If the amount of 

funds available during a funding round 

is sufficient to cover all estimated award 

amounts for which Applicants are 

eligible, in the Fund’s determination, 

and an Applicant meets all of the 

program requirements specified in this 

part, then such Applicant shall receive 

an actual award amount that is 

calculated by the Fund in the manner 

specified in § 1806.202. 

(b) Insufficient Funds Available to 

Cover Estimated Awards. If the amount 

of funds available during a funding 

round is insufficient to cover all 

estimated award amounts for which 

Applicants are eligible, in the Fund’s 

determination, then the Fund will select 

Awardees and determine actual award 

amounts based on the process described 

in this section. 

(c) Priority of Awards. The Fund will 

rank Applicants in each category of 

Qualified Activity according to the 

priorities described in this paragraph 

(c). Selections within each priority 

category will be based on the 

Applicants’ relative rankings within 

each such category, subject to the 

availability of funds. 

(1) First priority. If the amount of 

funds available during a funding round 

is insufficient for all estimated award 

amounts, first priority will be given to 

Applicants that propose to engage in 

CDFI Related Activities, ranked in the 

order set forth in the applicable NOFA. 

(2) Second priority. If the amount of 

funds available during a funding round 

is sufficient for all Applicants that 

propose to engage in CDFI Related 

Activities but insufficient for all 

remaining estimated award amounts, 

second priority will be given to 

Applicants that propose to engage in 

Distressed Community Financing 

Activities, ranked in the order set forth 

in the applicable NOFA. 

(3) Third Priority. If the amount of 

funds available during a funding round 

is sufficient for all Applicants that 

propose to engage in CDFI Related 

Activities and Distressed Community 

Financing Activities, but insufficient for 

all remaining estimated award amounts, 

third priority will be given to 

Applicants that propose to engage in 

Service Activities, ranked in the order 

set forth in the applicable NOFA. 

(d) Calculating actual award amounts. 

The Fund will determine actual award 

amounts based upon the availability of 

funds, increases in Qualified Activities 

from the Baseline to the Assessment 

Period, and an Applicant’s priority 

ranking. If an Applicant receives an 

award for more than one priority 

category described in this section, the 

Fund will combine the award amounts 

into a single Bank Enterprise Award. 

(e) Unobligated or deobligated funds. 

The Fund, in its sole discretion, may 

use any deobligated funds or funds not 

obligated during a funding round: 

(1) To select Applicants not 

previously selected, using the 

calculation and selection process 

contained in this part; 

(2) To make additional monies 

available for a subsequent funding 

round; or 

(3) As otherwise authorized by the 

Act. 

(f) Limitation. The Fund, in its sole 

discretion, may deny or limit the 

amount of an award for any reason. 

§ 1806.204 Applications for Bank 

Enterprise Awards. 

(a) Notice of Funds Availability; 

Applications. Applicants shall submit 

applications for Bank Enterprise Awards 

in accordance with this section and the 

applicable NOFA. After receipt of an 

application, the Fund may request 

clarifying or technical information 

related to materials submitted as part of 

such application or to verify that 

Qualified Activities were carried out in 

the manner prescribed in this part. 

(b) Application contents. An 

application for a Bank Enterprise Award 

shall contain: 

(1) A completed worksheet that 

reports the increases in Qualified 

Activities actually carried out during 

the Baseline and Assessment Period. If 

an Applicant has merged with another 

institution during the Assessment 

Period, it shall submit a separate 

Baseline Period worksheet for each 

subject institution and one Assessment 

Period worksheet that reports the 

activities of the merged institutions. If 

such a merger is unexpectedly delayed 

beyond the Assessment Period, the 

Fund reserves the right to withhold 

distribution of an award until the 

merger has been completed; 

(2) A report of Qualified Activities 

that were closed during the Assessment 

Period. Such report shall describe the 

original amount, census tract served, 

and the dates of execution, initial 

disbursement, and final disbursement of 

the instrument; 

(3) With respect to all CDFI Related 

Activities and Distressed Community 

Financing Activities where the amount 

of the Qualified Activity is $250,000 or 

greater, documentation that meets the 

conditions described in § 1806.201(f); 

(4) Information necessary for the Fund 

to complete its environmental review 

requirements pursuant to part 1815 of 

this chapter; 

(5) Certifications, as described in the 

applicable NOFA and Bank Enterprise 

Award application, that the information 

provided to the Fund is true and 

accurate and that the Applicant will 

comply with all relevant provisions of 

this chapter and all applicable Federal, 

State, and local laws, ordinances, 

regulations, policies, guidelines, and 

requirements; 

(6) In the case of an Applicant 

proposing to engage in Service 

Activities, or Distressed Community 

Financing Activities, an Applicant must 

submit a Distressed Community map 

and other documentation as described 

in the applicable NOFA and Bank 

Enterprise Award application; 

(7) Information that indicates that 

each CDFI to which an Applicant has 

provided CDFI Support Activities is 

Integrally Involved in a Distressed 

Community as described in the 

applicable NOFA and Bank Enterprise 

Award application; and 

(8) Any other information requested 

by the Fund, or specified by the Fund 

in the applicable NOFA or the Bank 

Enterprise Award application, in order 

to document or otherwise assess the 

validity of information provided by the 

Applicant to the Fund. 

Subpart C—Terms and Conditions of 

Assistance 

§ 1806.300 Award Agreement; sanctions. 

(a) General. After the Fund selects an 

Awardee, the Fund and the Awardee 

will enter into an Award Agreement. 

The Award Agreement shall provide 

that an Awardee shall: 

(1) Carry out its Qualified Activities 

in accordance with applicable law, the 

approved application, and all other 

applicable requirements; 


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(2) Comply with such other terms and 

conditions (including record keeping 

and reporting requirements) that the 

Fund may establish; and 

(3) Not receive any monies until the 

Fund has determined that the Awardee 

has fulfilled all applicable requirements. 

(4) Comply with performance goals 

that have been established by the Fund. 

Such performance goals will include 

measures that require an Awardee to use 

its BEA Program Award funds for 

Qualified Activities. 

(b) Sanctions. In the event of any 

fraud, misrepresentation, or 

noncompliance with the terms of the 

Award Agreement by the Awardee, the 

Fund may terminate, reduce, or 

recapture the award, bar the Awardee 

and/or its Affiliates from applying for an 

award from the Fund for a period to be 

decided by the Fund in its sole 

discretion, and pursue any other 

available legal remedies. 

(c) Compliance with Other CDFI Fund 

Awards. In the event that an Awardee or 

its Subsidiary or Affiliate is not in 

compliance, as determined by the Fund, 

with the terms and conditions of any 

other award under the Bank Enterprise 

Award Program or any component of 

the Community Development Financial 

Institutions Program, the Fund may, in 

its sole discretion, reject an application 

for or withhold disbursement (either 

initial or subsequent) on a Bank 

Enterprise Award. 

(d) Notice. Prior to imposing any 

sanctions pursuant to this section or an 

Award Agreement, the Fund will 

provide the Awardee with written 

notice of the proposed sanction and an 

opportunity to respond. Nothing in this 

section, however, will provide an 

Awardee with the right to any formal or 

informal hearing or comparable 

proceeding not otherwise required by 

law. 

§ 1806.302 Compliance with government 

requirements. 

In carrying out its responsibilities 

pursuant to an Award Agreement, the 

Awardee shall comply with all 

applicable Federal, State, and local 

laws, regulations and ordinances, OMB 

Circulars, and Executive Orders. 

§ 1806.303 Fraud, waste and abuse. 

Any person who becomes aware of 

the existence or apparent existence of 

fraud, waste, or abuse of assistance 

provided under this part should report 

such incidences to the Office of 

Inspector General of the U.S. 

Department of the Treasury. 

§ 1806.304 Books of account, records and 

government access. 

An Awardee shall submit such 

financial and activity reports, records, 

statements, and documents at such 

times, in such forms, and accompanied 

by such supporting data, as required by 

the Fund and the U.S. Department of the 

Treasury to ensure compliance with the 

requirements of this part. The United 

States Government, including the U.S. 

Department of the Treasury, the 

Comptroller General, and its duly 

authorized representatives, shall have 

full and free access to the Awardee’s 

offices and facilities, and all books, 

documents, records, and financial 

statements relevant to the award of the 

Federal funds and may copy such 

documents as they deem appropriate. 

§ 1806.305 Retention of records. 

An Awardee shall comply with all 

record retention requirements as set 

forth in OMB Circular A–110 (as 

applicable). This circular may be 

obtained from Office of Administration, 

Publications Office, 725 17th Street, 

NW., Room 2200, New Executive Office 

Building, Washington, DC 20503. 

Dated: January 15, 2009. 

Donna J. Gambrell, 

Director, Community Development Financial 

Institutions Fund. 

[FR Doc. E9–1575 Filed 1–29–09; 8:45 am] 

BILLING CODE 4810–70–P 


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