I

103D CONGRESS

1ST SESSION H. R. 2250

To establish the National Community Development Administration to facilitate community and economic development in low-income neighborhoods

in the United States, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 25, 1993

Mr. RUSH (for himself, Mr. FRANK of Massachusetts, Mr. DELLUMS, Mr.

LEWIS of Georgia, Mr. FORD of Tennessee, Mr. EVANS, Mr. DURBIN,

Mrs. COLLINS of Illinois, Ms. FURSE, Mr. JEFFERSON, Ms. CANTWELL,

Mrs. CLAYTON, Ms. NORTON, Mr. BERMAN, Ms. EDDIE BERNICE JOHNSON of Texas, Mr. WATT, Mr. WYNN, Ms. ROYBAL-ALLARD, Mrs.

MALONEY, Mr. HINCHEY, Mr. SCOTT, Mr. TUCKER, Mr. REYNOLDS, Mr.

BLACKWELL, Ms. VELA ́ZQUEZ, Mr. RICHARDSON, Mr. BROWN of Ohio,

Ms. BROWN of Florida, Mr. CLYBURN, Mr. BARRETT of Wisconsin, Mrs.

MEEK, Mr. FILNER, Mr. HASTINGS, Mr. FIELDS of Louisiana, Mr.

TOWNS, Mr. MENENDEZ, Mr. GENE GREEN of Texas, Mr. PASTOR, Mr.

BISHOP, Ms. MCKINNEY, and Mr. NADLER) introduced the following bill;

which was referred jointly to the Committees on Banking, Finance and

Urban Affairs and Ways and Means

A BILL

To establish the National Community Development Administration to facilitate community and economic development in low-income neighborhoods in the United States,

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Community Development Financial Institutions Act of

4 1993’’.

Sec. 1. Short title and table of contents.

Sec. 2. Definitions.

TITLE I—NATIONAL COMMUNITY DEVELOPMENT

ADMINISTRATION

Sec. 101. Establishment.

Sec. 102. Board of directors.

Sec. 103. Duties of board and powers of Administration.

Sec. 104. Capitalization.

Sec. 105. Obligations.

Sec. 106. Management reports and audits.

Sec. 107. Reports to Congress.

Sec. 108. Authorization of appropriations.

TITLE II—CERTIFICATION PROGRAMS

Sec. 201. Certification of CDFI’s.

Sec. 202. Certification of entities to provide technical assistance to CDFI’s and

secondary market institutions.

TITLE III—ASSISTANCE TO COMMUNITY DEVELOPMENT

FINANCIAL INSTITUTIONS

Subtitle A—Assistance to Existing Community Development Financial

Institutions

Sec. 301. Authority.

Sec. 302. Forms of assistance to CDFI’s.

Sec. 303. Eligible uses of assistance by CDFI’s.

Sec. 304. Community development financing initiatives.

Sec. 305. Matching requirement.

Subtitle B—Assistance to Establish Community Development Financial

Institutions

Sec. 321. Program authority.

Sec. 322. Program requirements.

TITLE IV—ASSISTANCE FOR COMMUNITY DEVELOPMENT

SECONDARY MARKET INSTITUTIONS

Sec. 401. Authority.

Sec. 402. Eligible uses of assistance.

Sec. 403. Community development loans.

Sec. 404. Standards for secondary market institutions.

Sec. 405. Secondary market initiatives.

Sec. 406. Matching requirement.

Sec. 407. Tax-exempt bond financing for secondary market institutions.
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Sec. 408. Coordination with secondary mortgage market entities.

TITLE V—COMMUNITY DEVELOPMENT INDIVIDUAL INVESTMENT

CERTIFICATES

Sec. 501. Authorization to issue.

Sec. 502. Limitation on amount issued to any person.

Sec. 503. Terms of issuance.

Sec. 504. Tax treatment.

1 SEC. 2. DEFINITIONS.

2 For purposes of this Act:

3 (1) ADMINISTRATION.—The term ‘‘Administra4 tion’’ means the National Community Development

5 Administration established in section 101.

6 (2) BOARD.—The term ‘‘Board’’ means the

7 board of directors of the Administration established

8 in section 102.

9 (3) CERTIFIED TECHNICAL ASSISTANCE PRO10 VIDER.—The term ‘‘certified technical assistance

11 provider’’ means an individual, an organization, or

12 any other entity certified under the program pursu13 ant to section 202 to provide technical assistance to

14 community development financial institutions or to

15 secondary market institutions.

16 (4) COMMUNITY DEVELOPMENT FINANCING INI17 TIATIVE.—The term ‘‘community development fi18 nancing initiative’’ means a plan under section 304

19 by a community development financial institution for

20 financing community development activities using

21 assistance amounts provided under title III.
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1 (5) COMMUNITY DEVELOPMENT FINANCIAL IN2 STITUTION.—The term ‘‘community development fi3 nancial institution’’ means an entity certified pursu4 ant to the program established under section 201 as

5 a community development financial institution for

6 purposes of this Act.

7 (6) DISPLACED HOMEMAKER.—The term ‘‘dis8 placed homemaker’’ means an individual who—

9 (A) is an adult;

10 (B) has not worked full-time full-year in

11 the labor force for a number of years but has,

12 during such years, worked primarily without re13 muneration to care for the home and family;

14 and

15 (C) is unemployed or underemployed and

16 is experiencing difficulty in obtaining or up17 grading employment.

18 (7) EXISTING COMMUNITY DEVELOPMENT FI19 NANCIAL INSTITUTION.—The term ‘‘existing commu20 nity development financial institution’’ means a com21 munity development financial institution that (A)

22 has been determined by the Administration pursuant

23 to certification under section 201, to have been oper24 ating in the same manner required of a community

25 development financial institution continuously during
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1 the 3-year period ending upon the submission of an

2 application for assistance under title III, or (B) has

3 been certified under section 201 as a community de4 velopment financial institution continuously for such

5 3-year period.

6 (8) FIRST-TIME HOMEBUYER.—The term ‘‘first7 time homebuyer’’ means an individual (and his or

8 her spouse) who has not had a present ownership in9 terest in a principal residence during the 3-year pe10 riod ending upon the purchase of a principal resi11 dence (or ending upon the date of redemption of a

12 Community Development Individual Investment Cer13 tificate issued pursuant to title V, if applicable), ex14 cept that—

15 (A) any individual who is a displaced

16 homemaker may not be excluded from consider17 ation as a first-time homebuyer under this

18 paragraph on the basis that the individual,

19 while a homemaker, owned a home with his or

20 her spouse or resided in a home owned by the

21 spouse;

22 (B) any individual who is a single parent

23 may not be excluded from consideration as a

24 first-time homebuyer under this paragraph on

25 the basis that the individual, while married,
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1 owned a home with his or her spouse or resided

2 in a home owned by the spouse;

3 (C) an individual shall not be excluded

4 from consideration as a first-time homebuyer

5 under this paragraph on the basis that the indi6 vidual owns or owned, as a principal residence

7 during such 3-year period, a dwelling unit

8 whose structure is—

9 (i) not permanently affixed to a per10 manent foundation in accordance with local

11 or other applicable regulations, or

12 (ii) not in compliance with State,

13 local, or model building codes, or other ap14 plicable codes, and cannot be brought into

15 compliance with such codes for less than

16 the cost of constructing a permanent struc17 ture; and

18 (D) with respect to any individual redeem19 ing a Community Development Individual In20 vestment Certificate issued under title V, such

21 individual may not be considered a first-time

22 homebuyer if subsection (a)(6), (h), or (k) of

23 section 1034 of the Internal Revenue Code of

24 1986 suspended the running of any period of

25 time specified in section 1034 of such Code
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1 with respect to such individual on the date of

2 redemption.

3 (9) INVESTMENT CERTIFICATE.—The term ‘‘In4 vestment Certificate’’ means a Community Develop5 ment Individual Investment Certificate issued pursu6 ant to title V.

7 (10) LOW-INCOME FAMILY.—The term ‘‘low-in8 come family’’ means a family or individual whose in9 come does not exceed 80 percent of the median in10 come for the area involved, as determined by the Ad11 ministration with adjustments for smaller and larger

12 families, except that the Administration may estab13 lish income ceilings higher or lower than 80 percent

14 of the median for the area on the basis of the find15 ings of the Administration that such variations are

16 necessary because of prevailing levels of construction

17 costs or unusually high or low family incomes.

18 (11) PRINCIPAL RESIDENCE.—The term ‘‘prin19 cipal residence’’ has the same meaning as when used

20 in section 1034 of the Internal Revenue Code of

21 1986.

22 (12) SECONDARY MARKET INITIATIVE.—The

23 term ‘‘secondary market initiative’’ means a plan

24 under section 405 by a secondary market institution
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1 for carrying out secondary market activities using

2 assistance amounts provided under title IV.

3 (13) SINGLE PARENT.—The term ‘‘single par4 ent’’ means an individual who—

5 (A) is unmarried or legally separated from

6 a spouse; and

7 (B)(i) has 1 or more minor children for

8 whom the individual has custody or joint cus9 tody; or

10 (ii) is pregnant.

11 (14) STATE.—The term ‘‘State’’ means the

12 States of the United States, the District of Colum13 bia, the Commonwealth of Puerto Rico, the Com14 monwealth of the Northern Mariana Islands, Guam,

15 the Virgin Islands, American Samoa, the Trust Ter16 ritory of the Pacific Islands, and any other territory

17 or possession of the United States.

18 (15) TARGET COMMUNITY.—The term ‘‘target

19 community’’ means a geographical area established

20 by a community development financial institution for

21 purposes of this Act—

22 (A) that is located wholly within a State or

23 contiguous States;

24 (B) that has a continuous boundary; and
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1 (C)(i) within which not less than 75 per2 cent of the residents are members of low-income

3 families; or

4 (ii) that is an area of pervasive poverty,

5 unemployment, and general distress, as deter6 mined by the Administration.

7 TITLE I—NATIONAL COMMUNITY

8 DEVELOPMENT ADMINISTRA9 TION

10 SEC. 101. ESTABLISHMENT.

11 (a) ESTABLISHMENT.—There is hereby established

12 an Administration to be known as the National Commu13 nity Development Administration. The principal office of

14 the Administration shall be in the District of Columbia.

15 (b) PURPOSES.—The purposes of the National Com16 munity Development Administration are—

17 (1) to certify community development financial

18 institutions as eligible for assistance under this Act

19 from the Administration;

20 (2) to certify entities as certified technical as21 sistance providers eligible to provide technical assist22 ance to community development financial institu23 tions and secondary market institutions;

24 (3) to provide assistance under title III to assist

25 existing community development financial institu-
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1 tions to help provide credit and promote com2 prehensive community development in low-income

3 communities;

4 (4) to provide assistance under title IV to assist

5 secondary market institutions to purchase and

6 securitize loans for community development activities

7 in low-income communities to increase the liquidity

8 of community development investments in such com9 munities and improve the distribution of investment

10 capital available for community development financ11 ing; and

12 (5) to promote the use of Community Develop13 ment Individual Investment Certificates authorized

14 under title V by institutions eligible to issue such

15 Certificates.

16 SEC. 102. BOARD OF DIRECTORS.

17 (a) INITIAL BOARD.—

18 (1) COMPOSITION.—The Administration shall

19 be under the management of a board of directors

20 which, unless membership of the Board is expanded

21 pursuant to subsection (b), shall be composed of 24

22 members, of which—

23 (A) 4 members shall be—

24 (i) the Secretary of the Treasury (or

25 the Secretary’s delegate);
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1 (ii) the Secretary of Housing and

2 Urban Development (or the Secretary’s

3 delegate);

4 (iii) the Secretary of Health and

5 Human Services (or the Secretary’s dele6 gate); and

7 (iv) the Secretary of Commerce (or

8 the Secretary’s delegate); and

9 (B) 20 members shall be appointed by the

10 President, who shall be—

11 (i) 4 persons who are officers of exist12 ing community development financial insti13 tutions;

14 (ii) 4 persons who are officers of na15 tional consumer or public interest organi16 zations;

17 (iii) 3 persons who are officers of in18 sured depository institutions (as such term

19 is defined in section 3 of the Federal De20 posit Insurance Act);

21 (iv) 2 persons who are officials of

22 State government agencies involved in

23 community development;
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1 (v) 2 persons who are officials of local

2 government agencies involved in commu3 nity development; and

4 (vi) 5 persons who have expertise in

5 community development.

6 (2) APPOINTMENT.—The President shall first

7 appoint the members referred to in paragraph

8 (1)(B) not later than 6 months after the date of the

9 enactment of this Act.

10 (3) TERMS AND VACANCIES.—Members ap11 pointed by the President under paragraph (1)(B)

12 shall serve for terms of 3 years, except as provided

13 in paragraph (4) of this subsection and subsection

14 (c). Any vacancy in any position of the Board under

15 paragraph (1)(B) shall be filled by appointment by

16 the President.

17 (4) TERMS OF INITIAL APPOINTEES.—As des18 ignated by the President at the time of appointment,

19 of the members first appointed—

20 (A) 6 shall be appointed for terms of 1

21 year; and

22 (B) 7 shall be appointed for terms of 2

23 years.
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1 (5) QUORUM.—Unless membership of the

2 Board is expanded pursuant to subsection (b), 13

3 members of the Board shall constitute a quorum.

4 (b) EXPANDED BOARD.—

5 (1) AUTHORITY.—If the Board provides for the

6 issuance of voting common stock under section 104,

7 the Board shall be composed of—

8 (A) the 24 members of the Board under

9 subsection (a)(1); and

10 (B) for every additional 71,400 shares of

11 voting common stock issued under section 104,

12 1 additional member, who shall be elected by

13 the holders of voting common stock of the Ad14 ministration, except that the number of mem15 bers of the Board elected pursuant to this sub16 paragraph may not at any time exceed 14.

17 (2) TERMS AND VACANCIES.—The members

18 elected by the shareholders of the Administration

19 under paragraph (1)(B) shall be elected at the an20 nual meeting of the voting common stockholders for

21 terms of 3 years ending on the date of such annual

22 meeting occurring 3 years after such election, except

23 as provided in paragraph (4) of this subsection and

24 subsection (c). Any position on the Board under

25 paragraph (1)(B) of this subsection that becomes
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1 vacant before the expiration of the term for such po2 sition shall be filled by the Board, but only for the

3 remainder of such term.

4 (3) FIRST ELECTION.—The first election for

5 members referred to in paragraph (1)(B) shall be

6 held at the first annual meeting of the voting com7 mon stockholders of the Administration occurring

8 after the Board elects to provide for the issuance of

9 voting common stock of the Administration, pursu10 ant to section 104.

11 (4) TERMS OF FIRST MEMBERS ELECTED.—Of

12 the members first elected pursuant to paragraph

13 (3)—

14 (A) 4 shall be elected for terms of 1 year;

15 and

16 (B) 5 shall be elected for terms of 2 years.

17 (5) QUORUM.—If membership of the Board is

18 expanded pursuant to this subsection, 20 members

19 of the Board shall constitute a quorum.

20 (c) SERVICE AFTER EXPIRATION OF TERM.—A

21 member of the Board may serve after the expiration of

22 that member’s term until a successor has taken office.

23 (d) PROHIBITION OF COMPENSATION OF FEDERAL

24 EMPLOYEES.—Members of the Board who are full-time

25 officers or employees of the United States may not receive
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1 additional pay, allowances, or benefits by reason of their

2 service on the board.

3 (e) CHAIRPERSON.—The President shall appoint the

4 Chairperson of the board of directors.

5 (f) MEETINGS.—The Board shall meet annually and

6 shall meet at the call of the Chairperson or a majority

7 of its members.

8 SEC. 103. DUTIES OF BOARD AND POWERS OF ADMINISTRA9 TION.

10 (a) DUTIES OF BOARD.—

11 (1) IN GENERAL.—The Board shall—

12 (A) determine the general policies that

13 shall govern the operations of the Administra14 tion and establish the standards for carrying

15 out the programs and activities of the Adminis16 tration under this Act;

17 (B) select, appoint, and determine the

18 compensation of qualified persons to serve as

19 the officers of the Administration established

20 under subsection (b)(4), pursuant to the bylaws

21 of the Administration; and

22 (C) assign to such persons such executive

23 functions, powers, and duties as may be pre24 scribed by the bylaws of the Administration or

25 by the Board.
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1 (2) EXECUTIVE OFFICERS AND FUNCTIONS.—

2 The persons elected or appointed under paragraph

3 (1)(B) shall be the executive officers of the Adminis4 tration and shall discharge the executive functions,

5 powers, and duties of the Administration.

6 (b) POWERS OF THE ADMINISTRATION.—The Admin7 istration shall be a body corporate and shall have the fol8 lowing powers:

9 (1) To operate under the direction of the

10 Board.

11 (2) To issue stock in the manner provided in

12 section 104.

13 (3) To adopt, alter, and use a corporate seal,

14 which shall be judicially noted.

15 (4) To provide for a chief executive officer,

16 president, chief fiscal officer, 1 or more vice presi17 dents, secretary, treasurer, and such other officers,

18 employees, and agents, as may be necessary, define

19 their duties and compensation levels, all without re20 gard to title 5, United States Code, and require sur21 ety bonds or make other provisions against losses oc22 casioned by acts of such persons.

23 (5) To prescribe and impose fees and charges

24 for services by the Administration.
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1 (6) To have succession until dissolved by a law

2 enacted by the Congress.

3 (7) To prescribe bylaws, through the Board, not

4 inconsistent with this Act or any other law, that

5 shall provide for—

6 (A) the classes of the stock of the Adminis7 tration; and

8 (B) the manner in which—

9 (i) the stock shall be issued, trans10 ferred, and retired;

11 (ii) the officers, employees, and agents

12 of the Administration are selected;

13 (iii) the property of the Administra14 tion is acquired, held, and transferred;

15 (iv) the commitments and other finan16 cial assistance of the Administration are

17 made;

18 (v) the general business of the Admin19 istration is conducted; and

20 (vi) the privileges granted by law to

21 the Administration are exercised and en22 joyed.

23 (8) To carry out the programs and activities of

24 the Administration under this Act.
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1 (9) To prescribe such standards as may be nec2 essary to carry out this Act.

3 (10) To enter into contracts and make pay4 ments with respect to the contracts.

5 (11) To sue and be sued in its corporate capac6 ity and to complain and defend in any action

7 brought by or against the Administration in any

8 State or Federal court of competent jurisdiction.

9 (12) To make and perform contracts, agree10 ments, and commitments.

11 (13) To acquire, hold, lease, mortgage or dis12 pose of, at public or private sale, real and personal

13 property, purchase or sell any securities or obliga14 tions, and otherwise exercise all the usual incidents

15 of ownership of property necessary and convenient to

16 the business of the Administration.

17 (14) To exercise such other incidental powers

18 as are necessary to carry out the powers, duties, and

19 functions of the Administration in accordance with

20 this Act.

21 (c) TAX-EXEMPT STATUS.—The Administration, in22 cluding its franchise, activities, capital, reserves, surplus,

23 and income, shall be exempt from all taxation imposed by

24 any territory, dependency, or possession of the United

25 States or by any State, county, municipality, or local tax-
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1 ing authority, except that any real property of the Admin2 istration shall be subject to State, territorial, county, mu3 nicipal, or local taxation to the same extent according to

4 its value as other real property is taxed.

5 (d) FEDERAL JURISDICTION.—Notwithstanding sec6 tion 1349 of title 28, United States Code, or any other

7 provision of law:

8 (1) The Corporation shall be considered an

9 agency under sections 1345 and 1442 of such title.

10 (2) All civil actions to which the Corporation is

11 a party shall be deemed to arise under the laws of

12 the United States and, to the extent applicable, shall

13 be deemed to be governed by Federal common law.

14 The district courts of the United States shall have

15 original jurisdiction of all such actions, without re16 gard to amount of value.

17 (3) Any civil or other action, case, or con18 troversy in a court of a State or any court, other

19 than a district court of the United States, to which

20 the Corporation is a party may at any time before

21 trial be removed by the Corporation, without the giv22 ing of any bond or security—

23 (A) to the District Court of the United

24 States for the district and division embracing

25 the place where the same is pending; or
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1 (B) if there is no such district court, to the

2 District Court of the United States for the dis3 trict in which the principal office of the Cor4 poration is located;

5 by following any procedure for removal for causes in

6 effect at the time of such removal.

7 (4) No attachment or execution shall be issued

8 against the Corporation or any of the property of

9 the Corporation before final judgment in any Fed10 eral, State, or other court.

11 (e) CONFLICTS OF INTEREST.—The Board shall

12 adopt and publish its own conflict of interest rules, which

13 shall be no less stringent in effect than the Federal Execu14 tive conflict of interest rules contained in Executive Order

15 11222 (18 U.S.C. 201 note) in prohibiting participation

16 or action or the use of inside information for personal ad17 vantage on any matter involving a corporation, trust, part18 nership, or cooperative organization in which a Board

19 member, officer, or employee holds a substantial financial

20 interest or holds a position as board member or senior offi21 cer, the activities of which organization might be relevant

22 to, competitive with, or inconsistent with the objectives of

23 the Administration. The rules established under this sub24 section shall require—
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1 (1) each nominee for membership on the Board

2 to make public and file with the designated officer

3 of the Administration a statement of the nominee’s

4 financial interest and position, if any, in such orga5 nization; and

6 (2) each executive officer and appointed mem7 ber of the Board to file with the designated officer,

8 before entering such office, a statement of the offi9 cer’s or member’s financial interest and position, if

10 any, in such organizations, which shall be available

11 for inspection upon request by any interested party.

12 SEC. 104. CAPITALIZATION.

13 (a) COMMON STOCK.—

14 (1) INITIAL OFFERING OF NONVOTING STOCK

15 TO TREASURY.—The members of the Board under

16 section 102(a) shall arrange for an initial offering of

17 2,000,000 shares of the nonvoting common stock of

18 the Administration. The shares initially offered shall

19 be issued only to the Secretary of the Treasury who,

20 to the extent or in such amounts as are appropriated

21 pursuant to section 108(1), purchase such shares at

22 a par value of $50. Such shares shall not be trans23 ferable. Any proceeds from the sale of shares under

24 this paragraph shall be used by the Administration

25 only to carry out title III.
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1 (2) SUBSEQUENT PUBLIC OFFERING OF VOTING

2 STOCK.—

3 (A) AUTHORITY AND TERMS.—If at any

4 time the Board, by vote of a majority of its

5 members so provides, the Administration may

6 issue shares of voting common stock of the Ad7 ministration having such par value as the

8 Board shall fix. Each share of voting common

9 stock shall be entitled to one vote with rights of

10 cumulative voting at all elections of directors.

11 Not more than 1,000,000 shares of voting com12 mon stock of the Administration may be out13 standing at any time.

14 (B) TRANSFERABILITY.—Subject to the

15 provisions of this section and such limitations

16 as the Board may impose, the voting common

17 stock issued under this paragraph shall be free18 ly transferable among all persons, Administra19 tions, and other entities, except that, as to the

20 Administration, such shares shall be transfer21 able only on the books of the Administration.

22 (b) DIVIDENDS.—Such dividends as may be declared

23 by the Board, in the discretion of the Board, shall be paid

24 by the Administration to the holders of the voting common
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1 stock of the Administration pro rata based on the total

2 number of shares of such stock outstanding.

3 (c) AUTHORITY OF BOARD TO ESTABLISH TERMS

4 AND PROCEDURES.—Subject to the provisions of this sec5 tion, the Board shall adopt such terms, conditions, and

6 procedures with regard to the issue of stock under this

7 section as may be necessary and may establish limitations

8 on the concentration of ownership.

9 SEC. 105. OBLIGATIONS.

10 (a) AUTHORITY.—Subject to the applicable provisions

11 of chapter 91 of title 31, United States Code, the Adminis12 tration may borrow, give security, and issue notes, deben13 tures, bonds, and other obligations upon such terms and

14 conditions as the Administration may prescribe.

15 (b) LIMITATION ON OUTSTANDING OBLIGATIONS.—

16 The aggregate amount of any obligations of the Adminis17 tration outstanding at any 1 time may not exceed the

18 greater of (1) the amount that is 20 times the sum of

19 the Administration’s capital, capital surplus, general sur20 plus, reserves, and undistributed earnings, or (2) such

21 other amount as the Secretary of the Treasury may

22 establish.

23 (c) PURCHASE BY SECRETARY.—
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1 (1) IN GENERAL.—The Secretary of the Treas2 ury may purchase any obligation issued by the Ad3 ministration.

4 (2) LIMIT ON AGGREGATE AMOUNT OF OBLIGA5 TIONS HELD BY TREASURY.—The aggregate amount

6 of obligations of the Administration which may be

7 held by the Secretary of the Treasury at any time

8 shall not exceed $250,000,000.

9 (3) TERMS AND CONDITIONS.—

10 (A) IN GENERAL.—Except as provided in

11 subparagraph (B), the purchase or sale by the

12 Secretary of any obligation of the Administra13 tion under this subsection shall be upon such

14 terms and conditions as the Secretary deter15 mines to be appropriate.

16 (B) RATE OF RETURN.—In considering

17 any term or condition for the purchase of any

18 obligation of the Administration by the Sec19 retary under this subsection which would deter20 mine the rate of return from such investment,

21 the Secretary shall take into account the aver22 age rate on outstanding obligations of the Unit23 ed States under chapter 31 of title 31, United

24 States Code, at similar maturities and rates of

25 interest as of the last day of the month preced-
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1 ing the making of such purchase and may take

2 into account rates of interest up to 2 percent

3 less than the rates on such obligations.

4 SEC. 106. MANAGEMENT REPORTS AND AUDITS.

5 (a) IN GENERAL.—The Administration shall submit

6 such reports and conduct such audits as required of the

7 Administration under title 31, United States Code.

8 (b) AMENDMENT TO TITLE 3.—Section 9101(2) of

9 title 31, United States Code, is amended by adding at the

10 end the following new subparagraph:

11 ‘‘(N) the National Community Develop12 ment Administration.’’.

13 SEC. 107. REPORTS TO CONGRESS.

14 The Administration shall annually submit a report to

15 the Congress regarding its activities and programs.

16 SEC. 108. AUTHORIZATION OF APPROPRIATIONS.

17 There is authorized to be appropriated to carry out

18 this Act $200,000,000 for fiscal year 1994, of which—

19 (1) $100,000,000 shall be available to the Sec20 retary of the Treasury to carry out section

21 104(a)(1);

22 (2) $50,000,000 shall be available to the Ad23 ministration only to carry out title III;

24 (3) $30,000,000 shall be available to the Ad25 ministration only to carry out title IV; and
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1 (4) $20,000,000 shall be available to the Ad2 ministration only to carry out section 501(b).

3 Any amounts appropriated pursuant to this section shall

4 remain available until expended.

5 TITLE II—CERTIFICATION

6 PROGRAMS

7 SEC. 201. CERTIFICATION OF CDFI’S.

8 (a) IN GENERAL.—The Administration shall carry

9 out a program to review and certify financial institutions

10 and other entities as community development financial in11 stitutions for purposes of this Act.

12 (b) STANDARDS.—The Board shall establish stand13 ards for certification of financial institutions and other en14 tities as community development financial institutions,

15 which shall—

16 (1) provide for the certification of—

17 (A) depository institutions (as such term is

18 defined in section 3(c) of the Federal Deposit

19 Insurance Act) and credit unions (including

20 community development credit unions, savings

21 and loan associations, and other depository in22 stitutions) that meet the requirements pursuant

23 to this section; and

24 (B) such other corporations, partnerships,

25 organizations, agencies, persons, and other enti-
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1 ties as the Administration considers appropriate

2 (which may include for-profit and nonprofit en3 tities, community development loan funds,

4 microenterprise loan funds and organizations,

5 and community organizations) and that meet

6 the requirements pursuant to this section;

7 (2) require for certification that any such entity

8 have among its principal purposes making credit and

9 credit-related services available to low-income fami10 lies and in low-income communities and promoting

11 the development and revitalization of low-income

12 communities;

13 (3) require for certification that any such entity

14 carry out such purpose in a target community by—

15 (A) providing financing to individuals,

16 families, businesses, organizations, and other

17 entities, which may include mortgage loans,

18 loans for housing development, rehabilitation,

19 and weatherization, business development and

20 assistance loans, personal loans, operating

21 loans, construction loans, loans for community

22 and economic development activities, and other

23 repayable assistance; and

24 (B) conducting such other activities and

25 services relating to making loans (such as loan
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1 counseling and servicing) as the institution con2 siders appropriate;

3 (4) require for certification that any such entity

4 (or the portion of such entity acting as the commu5 nity development financial institution) be governed

6 by a board of directors that—

7 (A) is solely responsible for determining

8 policy for the community development financial

9 institution with respect to management and op10 erations, lending activities, loan standards and

11 implementation, employment, asset manage12 ment, and any other issues; and

13 (B) includes among its members a signifi14 cant number of members who are individuals

15 meeting the requirements of any of clauses (i)

16 through (ii), who shall include—

17 (i) individuals who are experienced in

18 providing financial assistance or financial

19 advice to low-income individuals or resi20 dents, businesses, or organizations in low21 income neighborhoods; and

22 (ii) individuals who have significant

23 experience in serving the target community

24 served by the community development fi-
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1 nancial institution or any other low-income

2 neighborhood;

3 (5) require for certification that any such entity

4 meet such standards for safety and soundness of fi5 nancial operations and for capital reserves as the

6 Administration shall establish; and

7 (6) provide for determining whether community

8 development financial institutions may be treated as

9 existing community development financial institu10 tions (pursuant to section 2(7)) for purposes of as11 sistance under title III.

12 (c) COORDINATION.—Notwithstanding any provision

13 of title III, the Administration shall provide for coordinat14 ing certification of entities as community development fi15 nancial institutions in connection with the submission of

16 applications by such entities for assistance to carry out

17 community development financial initiatives under title

18 III.

19 SEC. 202. CERTIFICATION OF ENTITIES TO PROVIDE TECH20 NICAL ASSISTANCE TO CDFI’S AND SECOND21 ARY MARKET INSTITUTIONS.

22 (a) IN GENERAL.—The Administration shall carry

23 out a program to review and certify individuals, organiza24 tions, and other for-profit and nonprofit entities as cer25 tified technical assistance providers for purposes of this
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1 Act. Under the program, the Administration shall certify

2 entities that are competent to provide technical assistance

3 regarding—

4 (1) conducting community and economic devel5 opment activities in low-income neighborhoods;

6 (2) providing financing for such activities;

7 (3) educating individuals, businesses, and orga8 nizations about the capabilities and advantages of

9 community development financial institutions;

10 (4) establishing, managing, or operating com11 munity development financial institutions in target

12 communities and other low-income neighborhoods;

13 (5) carrying out secondary market activities

14 with respect to community development loans; and

15 (6) assisting community development financial

16 institutions to meet specific community development

17 needs in target communities, including providing job

18 training programs, assisting in optimizing compo19 nents of loan applications, and assisting small busi20 nesses to prepare business plans and obtain financial

21 management, accounting, and marketing services.

22 (b) STANDARDS.—To be eligible for certification

23 under the program established pursuant to this section,

24 an individual, organization, or other entity shall have such

25 demonstrated experience in the activities for which the in-
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1 dividual, organization, or entity is to be certified, as the

2 Administration shall prescribe.

3 TITLE III—ASSISTANCE TO COM4 MUNITY DEVELOPMENT FI5 NANCIAL INSTITUTIONS

6 Subtitle A—Assistance to Existing

7 Community Development Finan8 cial Institutions

9 SEC. 301. AUTHORITY.

10 (a) PROGRAM AUTHORITY.—The Administration

11 shall establish and carry out a program under this subtitle

12 to provide assistance to existing community development

13 financial institutions, using amounts available pursuant to

14 section 108, to assist such institutions to carry out com15 munity development financing initiatives to stimulate

16 broad-based and long-range community development in

17 target communities and to enable such financial institu18 tions to obtain technical assistance regarding such activi19 ties from certified technical assistance providers.

20 (b) AUTHORITY TO ESTABLISH PROGRAM REQUIRE21 MENTS.—The Administration may establish any condi22 tions, terms, or requirements under the program under

23 this subtitle that the Administration considers appropriate

24 to carry out the purposes of this subtitle and that are not

25 inconsistent with the provisions of this subtitle.
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1 SEC. 302. FORMS OF ASSISTANCE TO CDFI’S.

2 Assistance may be provided under the program to ex3 isting community development financial institutions in the

4 form of grants, loans, equity advances, or loan guarantees,

5 or in any other form that the Administration determines

6 is appropriate and effective. Notwithstanding any other

7 provision of law, any loan guarantee made under this title

8 by the Administration shall not constitute a guarantee,

9 debt, or obligation of the United States or any other agen10 cy or instrumentality of the United States, other than the

11 Administration.

12 SEC. 303. ELIGIBLE USES OF ASSISTANCE BY CDFI’S.

13 (a) ELIGIBLE COMMUNITY ACTIVITIES.—Except as

14 provided in subsection (c), assistance provided to an exist15 ing community development financial institution under

16 this subtitle may be used by the institution only to provide

17 financing for community development activities conducted

18 in accordance with a community development financing

19 initiative approved by the Administration under section

20 304. Such community development activities shall include

21 the following activities:

22 (1) REAL PROPERTY.—Acquisition or develop23 ment of real property that is—

24 (A) to be used for providing affordable

25 housing;
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1 (B) to be made available for purchase by

2 low-income families or first-time homebuyers;

3 (C) blighted, deteriorated, deteriorating, or

4 inappropriately developed, for purposes of reha5 bilitating the property in accordance with a spe6 cific plan for rehabilitation in existence at the

7 time of acquisition or development;

8 (D) to be rehabilitated or used for con9 servation activities; or

10 (E) to be used as a center for senior citi11 zen activities, a day care center, a job training

12 site, a recreation facility, or a facility to provide

13 assistance to for-profit or non-profit businesses

14 or economic development organizations.

15 (2) CLEARANCE AND DEMOLITION.—Activities

16 involving the clearance, demolition, removal, or reha17 bilitation of buildings and improvements, including

18 interim assistance and financing rehabilitation of

19 privately owned properties.

20 (3) AFFORDABLE HOUSING.—Development of

21 new housing affordable to low-income families, which

22 shall include acquisition, new construction, recon23 struction, or moderate or substantial rehabilitation

24 of such housing, and site improvement, conversion,
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1 demolition, financing, and other activities necessary

2 to develop such housing.

3 (4) SMALL BUSINESS ASSISTANCE.—Providing

4 assistance to small businesses, including financing,

5 marketing, management, business counseling, and

6 business planning assistance.

7 (5) MICROENTERPRISE ASSISTANCE.—Develop8 ment of microenterprises (as such term is defined in

9 section 102 of the Housing and Community Devel10 opment Act of 1974).

11 (6) CAPACITY BUILDING.—Activities designed

12 to enable borrowers and prospective borrowers of

13 amounts made available under this subtitle and or14 ganizations and entities in which such amounts are

15 invested or to be invested by such borrowers, to fa16 cilitate the activities under this subsection carried

17 out with such amounts and improve the effectiveness

18 of such activities.

19 (7) OTHER ACTIVITIES.—Such other commu20 nity development activities as the Administration

21 may prescribe generally or approve pursuant to a

22 specific community development financing initiative.

23 (b) INELIGIBLE ACTIVITIES.—Assistance provided to

24 an existing community development financial institution
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1 under this subtitle may not be used, directly or indirectly,

2 for any of the following activities:

3 (1) PUBLIC FACILITIES.—Development or as4 sistance of public facilities not specifically referred

5 to in subsection (a), which public facilities shall in6 clude buildings and facilities for the general conduct

7 of government, stadiums and sports arenas, audito8 riums, concert halls, convention centers, museums,

9 schools, airports, subways, trolley lines, bus or other

10 transit terminals, and hospitals or other general

11 public medical facilities.

12 (2) GOVERNMENT EXPENSES.—Payment of ex13 penses required to carry out the general responsibil14 ities of any unit of general local government or

15 State.

16 (3) OPERATING AND MAINTENANCE EX17 PENSES.—Payment of any expense associated with

18 operating, repairing, or maintaining public facilities,

19 improvements, or services.

20 (4) POLITICAL ACTIVITIES.—Financing the use

21 of facilities or equipment for political purposes or to

22 engage in other partisan political activities.

23 (5) INCOME SUPPLEMENT PAYMENTS.—Provid24 ing any income payments for housing or any other

25 purpose.
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1 (c) TECHNICAL ASSISTANCE.—

2 (1) IN GENERAL.—An existing community de3 velopment financial institution that receives assist4 ance under this subtitle may use such assistance to

5 obtain technical assistance from certified technical

6 assistance providers regarding the management, op7 eration, and activities of the financial institution,

8 but only if such use is expressly authorized by the

9 Administration in approving the community develop10 ment financing initiative of the institution and then

11 only to the extent provided by the Administration.

12 (2) PERMISSIBLE ASSISTANCE.—Technical as13 sistance obtained under this subsection may in14 clude—

15 (A) conducting an analysis of the market

16 of the community development financial institu17 tion;

18 (B) preparing business or marketing plans

19 for the community development financial insti20 tution;

21 (C) designing instruments, financing initia22 tives, and other offerings to meet the economic

23 and community development needs of the target

24 community for the institution;
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1 (D) training and assistance to expand the

2 real estate and business development activities

3 of the institution;

4 (E) improving the financial management of

5 the institution;

6 (F) revising the governance of the institu7 tion; and

8 (G) any other technical assistance activi9 ties described in section 202(a) or that the Ad10 ministration determines are appropriate to as11 sist the institution to carry out the purposes of

12 this subtitle.

13 SEC. 304. COMMUNITY DEVELOPMENT FINANCING INITIA14 TIVES.

15 (a) REQUIREMENT FOR ASSISTANCE.—The Adminis16 tration may provide assistance under this subtitle only to

17 an existing community development financial institution

18 that has had a community developing financing initiative

19 reviewed and approved under this section by the Adminis20 tration.

21 (b) REQUIREMENTS OF INITIATIVE.—For purposes

22 of this subtitle, a community development financing initia23 tive shall be a plan for an existing community development

24 financial institution to provide financing to individuals,

25 businesses, organizations, or other entities to carry out eli-
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1 gible community development activities under section

2 303(a) within a target community, using amounts pro3 vided under this subtitle and amounts from other sources

4 (including amounts required under section 305). Under an

5 initiative, financing may be limited to particular activities,

6 types of assistance, or locations.

7 (c) APPLICATION.—The Administration shall provide

8 for community development financial institutions to sub9 mit applications for approval of community development

10 financing initiatives under this section. Each such applica11 tion shall include such information as the Administration

12 considers appropriate to carry out this subtitle and ensure

13 that assistance is provided and used in accordance with

14 the provisions of this subtitle, including—

15 (1) a description of the existing community de16 velopment financial institution that is requesting as17 sistance under this subtitle and any information that

18 the Board considers necessary to indicate the finan19 cial soundness of the institution;

20 (2) a description of the boundaries and charac21 teristics of the target community in which activities

22 to be financed under the community development fi23 nancing initiative are to be carried out, which shall

24 include descriptions of the income characteristics of
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1 the community or neighborhood and the need for the

2 initiative in the community or neighborhood;

3 (3) a description of the community development

4 activities or types of such activities to be financed

5 under the initiative;

6 (4) evidence of amounts or commitments to

7 provide amounts to supplement assistance provided

8 under this subtitle in accordance with the require9 ment under section 305;

10 (5) a description of any participation in devel11 oping or carrying out the initiative by any individ12 uals, businesses, organizations, and governments lo13 cated or interested in the community in which the

14 initiative is to be carried out; and

15 (6) a description of the type and amount of as16 sistance that institution is requesting from the Ad17 ministration.

18 (d) SELECTION.—

19 (1) IN GENERAL.—The Administration shall re20 view each application submitted under this section.

21 The Administration may approve a community de22 velopment financing initiative to receive assistance

23 under this subtitle only if the Administration deter24 mines that the application complies with the require-
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1 ments pursuant to this section and the initiative

2 complies with the requirements pursuant to this Act.

3 (2) RATING SYSTEM.—

4 (A) USE.—The Administration shall estab5 lish a competitive rating system by which to

6 rank community development financing initia7 tives for which applications have been submitted

8 under this paragraph and shall use the rating

9 system to determine which community develop10 ment financing initiatives to approve for assist11 ance under this subtitle.

12 (B) GOALS.—The rating system shall be

13 designed to select for approval initiatives that—

14 (i) will result in significant develop15 ment in the communities in which such ini16 tiatives are to be carried out or that will

17 have significant positive effects on the

18 economies of such communities; and

19 (ii) will be carried out in a financially

20 responsible manner by community develop21 ment financial institutions that have the

22 capability, capacity, resources, and com23 mitment to provide such financing for such

24 purposes.
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1 (C) IMPACT ON TARGET COMMUNITY.—

2 The rating system shall take into consideration,

3 with respect to each community development fi4 nancing initiative, the extent to which—

5 (i) the initiative will assist individuals,

6 businesses, and organizations within the

7 target community for the initiative;

8 (ii) the initiative is designed to meet

9 specific community and economic develop10 ment needs of the target community for

11 the initiative;

12 (iii) the community development fi13 nancial institution that will carry out the

14 initiative has previously provided financing

15 for individuals, businesses, and organiza16 tions within the target community for the

17 initiative;

18 (iv) amounts other than assistance

19 under this subtitle have been acquired to

20 carry out the initiative or commitments for

21 such amounts have been obtained, and the

22 rating system shall specifically provide for

23 a series of higher levels of ranking of ini24 tiatives based on the extent to which such
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1 amounts exceed the amounts required

2 under section 305;

3 (v) individuals and organizations in

4 the target community for the initiative

5 have been involved in developing the initia6 tive or other activities carried out by the

7 community development financial institu8 tion that will carry out the initiative; and

9 (vi) the initiative comprehensively ad10 dresses development needs of the target

11 community.

12 SEC. 305. MATCHING REQUIREMENT.

13 (a) IN GENERAL.—The Administration may not pro14 vide assistance under this subtitle in any form to any com15 munity development financial institution in an amount in

16 excess of the amount that the institution certifies, as the

17 Administration shall require, that the institution will con18 tribute from non-Federal sources to the community devel19 opment financing initiative to be assisted under this sub20 title.

21 (b) PROHIBITION OF SUBSTITUTION OF FUNDS.—A

22 community development financial institution may use as23 sistance received under this Act only so as to supplement

24 and increase any amounts that would, in the absence of

25 assistance provided under this subtitle, be made available
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1 for carrying out the community development initiative of

2 the institution from other sources, and in no case may

3 such assistance be used so as to supplant amounts for

4 such purpose from other sources.

5 Subtitle B—Assistance to Establish

6 Community Development Finan7 cial Institutions

8 SEC. 321. PROGRAM AUTHORITY.

9 The Administration shall establish and carry out a

10 program to provide assistance to nonprofit and for-profit

11 organizations for the establishment of community develop12 ment financial institutions. Any institution established

13 with assistance provided under this subtitle shall be estab14 lished for the purpose of providing financing for commu15 nity development activities described in section 303(a).

16 The Administration shall provide for such organizations

17 to submit applications for assistance under this subtitle,

18 which shall be in such form and contain such information

19 as the Administration shall provide.

20 SEC. 322. PROGRAM REQUIREMENTS.

21 The Administration shall require that—

22 (1) the program carried out under this subtitle

23 shall be, to the extent practicable, consistent with

24 the provisions of subtitle A; and
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1 (2) any financial institution receiving assistance

2 provided under this subtitle shall carry out a com3 munity development financing initiative approved by

4 the Administration for a target community.

5 TITLE IV—ASSISTANCE FOR

6 COMMUNITY DEVELOPMENT

7 SECONDARY MARKET INSTI8 TUTIONS

9 SEC. 401. AUTHORITY.

10 (a) PROGRAM AUTHORITY.—The Administration

11 shall establish and carry out a program under this title

12 to provide assistance to secondary market institutions,

13 using amounts available pursuant to section 108 and sec14 tion 407, to assist such institutions to—

15 (1) establish a secondary market for community

16 development loans and provide stability for such

17 market; and

18 (2) increase the liquidity of community develop19 ment investments and improve the distribution of in20 vestment capital available for community develop21 ment financing.

22 (b) AUTHORITY TO ESTABLISH PROGRAM REQUIRE23 MENTS.—The Administration may establish any condi24 tions, terms, or requirements under the program under

25 this title that the Administration considers appropriate to
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1 carry out the purposes of this title and that are not incon2 sistent with the provisions of this title.

3 SEC. 402. ELIGIBLE USES OF ASSISTANCE.

4 (a) IN GENERAL.—Assistance under this title may be

5 used by the secondary market institution receiving the as6 sistance only for the following purposes:

7 (1) CAPITAL FOR SECONDARY MARKET ACTIVI8 TIES.—To carry out secondary market activities

9 under the secondary market initiative for the institu10 tion approved by the Administration pursuant to

11 section 405.

12 (2) TECHNICAL ASSISTANCE.—To obtain tech13 nical assistance from certified technical assistance

14 providers regarding the management, operation, and

15 activities of the secondary market institution, but

16 only if such use is expressly authorized by the Ad17 ministration in approving the secondary market ini18 tiative of the institution and then only to the extent

19 provided by the Administration.

20 (b) SECONDARY MARKET ACTIVITIES.—For purposes

21 of this title, secondary market activities shall include such

22 activities as the Administration shall prescribe, including

23 the following:
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1 (1) LOAN PURCHASE.—Purchasing of commu2 nity development loans and making of commitments

3 to purchase such loans.

4 (2) LOAN PORTFOLIOS AND DEALING.—Main5 taining a portfolio of community development loans

6 and otherwise dealing in and disposing of such

7 loans.

8 (3) LENDING.—Lending on the security of, and

9 to make commitments to lend on the security of,

10 community development loans.

11 (4) SECURITIES.—Issuing securities represent12 ing interests in, or secured by, a pool of community

13 development loans held by the secondary market in14 stitution.

15 (5) GUARANTEE OF SECURITIES.—Guarantee16 ing the timely payment of principal and interest on

17 securities representing interests in, or secured by, a

18 pool of community development loans.

19 SEC. 403. COMMUNITY DEVELOPMENT LOANS.

20 For purposes of this title, the term ‘‘community de21 velopment loan’’ means a loan—

22 (1) made for the purpose of carrying out, with23 in a target community—

24 (A) a community development activity re25 ferred to in section 303(a);
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1 (B) an activity generally prescribed by the

2 Administration as an eligible community devel3 opment activity under section 303(a)(7); or

4 (C) any other activity approved by the Ad5 ministration as a community development activ6 ity pursuant to a specific secondary marketing

7 initiative;

8 (2) that meets such standards and requirements

9 as the Administration shall establish.

10 SEC. 404. STANDARDS FOR SECONDARY MARKET INSTITU11 TIONS.

12 (a) IN GENERAL.—For purposes of this title, a sec13 ondary market institution shall be an organization, agen14 cy, corporation, or other entity engaged primarily in sec15 ondary market activities with respect to community devel16 opment and similar loans that meet such standards and

17 requirements as the Administration shall establish, which

18 shall include standards and requirements regarding own19 ership, organization, management, capital reserves, invest20 ments, functions and activities, accounting practices, and

21 reporting.

22 (b) SECONDARY MARKET ACTIVITIES.—To be eligible

23 to receive assistance under this title, a secondary market

24 institution shall comply with such standards and qualifica25 tions and shall operate in accordance with such guidelines,
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1 as the Administration shall establish regarding the second2 ary market activities under section 402(b). Such stand3 ards and guidelines shall provide that a secondary market

4 institution receiving such assistance may purchase, hold,

5 securitize, or lend on the security of community develop6 ment loans—

7 (1) only from sellers and servicers meeting such

8 standards and requirements as the Administration

9 shall establish, which may include standards and re10 quirements regarding, among other things, (A) mini11 mum net worth, (B) supervisory mechanisms, (C)

12 warranty compensation mechanisms, (D) prior ap13 proval of facilities, (E) prior origination and servic14 ing experience with respect to different types of

15 loans, (F) capital contributions and substitutes, (G)

16 loan purchase volume limits, and (H) reduction of

17 loan purchases during periods of borrowing;

18 (2) that are of such quality, type, and class as

19 the Administration shall provide; and

20 (3) that have original principal obligations not

21 exceeding such maximum amounts as the Adminis22 tration shall establish for various qualities, types,

23 and classes of loans.
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1 SEC. 405. SECONDARY MARKET INITIATIVES.

2 (a) REQUIREMENT FOR ASSISTANCE.—The Adminis3 tration may provide assistance under this title only to a

4 secondary market institution that has had a secondary

5 market initiative reviewed and approved under this section

6 by the Administration.

7 (b) REQUIREMENTS OF INITIATIVE.—For purposes

8 of this title, a secondary market initiative shall be a plan

9 for a secondary market institution to carry out eligible sec10 ondary market activities under section 402(b) within a

11 specified area or region within the States or with respect

12 to specified types of community development loans, using

13 amounts provided under this title and amounts from other

14 sources (including amounts required under section 406).

15 (c) APPLICATION.—The Administration shall provide

16 for secondary market institutions to submit applications

17 for approval of secondary market initiatives under this

18 section. Each such application shall include such informa19 tion as the Administration considers appropriate to carry

20 out this title and shall ensure that assistance amounts are

21 provided and used in accordance with the requirements

22 pursuant to this title.

23 (d) SELECTION.—

24 (1) IN GENERAL.—The Administration shall re25 view each application submitted under this section.

26 The Administration may approve a secondary mar-
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1 ket initiative to receive assistance under this title

2 only if the Administration determines that the appli3 cation complies with the requirements pursuant to

4 this section and the initiative complies with the re5 quirements pursuant to this title.

6 (2) LIMITATIONS.—In selecting secondary mar7 ket initiatives to approve to receive assistance under

8 this title, the Administration shall attempt to ensure

9 that each such initiative is carried out with respect

10 to a geographic area or region, or types of commu11 nity development loan, that is not the primary re12 gion or loan classification for any other secondary

13 market initiative approved and receiving assistance

14 under this title.

15 (3) PREFERENCES.—In selecting secondary

16 market initiatives to approve to receive assistance

17 under this title, the Administration shall take into

18 consideration the extent to which amounts other

19 than assistance under this title have been acquired

20 to carry out the initiative or commitments for such

21 amounts have been obtained, and shall specifically

22 provide for a series of higher levels of ranking of ini23 tiatives based on the extent to which such amounts

24 exceed the amounts required under section 406.
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1 SEC. 406. MATCHING REQUIREMENT.

2 (a) IN GENERAL.—The Administration may not pro3 vide assistance under this title to any secondary market

4 institution in an amount in excess of the amount that the

5 institution certifies, as the Administration shall require,

6 that the institution will contribute from non-Federal

7 sources to the secondary market initiative to be assisted

8 under this title.

9 (b) PROHIBITION OF SUBSTITUTION OF FUNDS.—A

10 secondary market institution may use assistance received

11 under this title only so as to supplement and increase any

12 amounts that would, in the absence of assistance provided

13 under this title, be made available for carrying out the

14 secondary market initiative of the institution from other

15 sources, and in no case may such assistance be used so

16 as to supplant amounts for such purpose from other

17 sources.

18 SEC. 407. TAX-EXEMPT BOND FINANCING FOR SECONDARY

19 MARKET INSTITUTIONS.

20 (a) AUTHORITY.—The Administration may issue

21 such bonds and other obligations the proceeds of which

22 shall be used to provide assistance under this title to sec23 ondary market institutions in the form of loans for carry24 ing out secondary market initiatives approved under sec25 tion 405. In determining the terms and conditions of re26 payment of any loan financed with the proceeds of any
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1 bonds or obligations issued pursuant to this section, the

2 Administration shall consider the terms and conditions of

3 such bonds or obligations. Any bonds or obligations shall

4 be issued under this section only upon the approval of the

5 Secretary of the Treasury.

6 (b) TERMS.—Bonds and other obligations guaranteed

7 pursuant to this section shall be in such form and denomi8 nation, have such maturities, be redeemable, bear interest

9 at such rates, and be subject to such conditions, as the

10 Administration shall provide by regulation, with the ap11 proval of the Secretary of the Treasury.

12 (c) TAX-EXEMPT STATUS.—Notwithstanding any

13 other provision of law, any interest on any bond or other

14 obligation issued under this section shall be exempt from

15 tax under subtitle A of the Internal Revenue Code of

16 1986.

17 SEC. 408. COORDINATION WITH SECONDARY MORTGAGE

18 MARKET ENTITIES.

19 In carrying out this title, the Administration shall

20 consult with the Federal National Mortgage Association,

21 the Federal Home Loan Mortgage Corporation, and other

22 appropriate entities and shall, to the extent feasible, co23 ordinate the activities under the program under this title

24 to carry out the purposes of this title.
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1 TITLE V—COMMUNITY DEVEL2 OPMENT INDIVIDUAL INVEST3 MENT CERTIFICATES

4 SEC. 501. AUTHORIZATION TO ISSUE.

5 (a) IN GENERAL.—Any community development

6 credit union or community development bank may issue

7 certificates of indebtedness to be known as ‘‘Community

8 Development Individual Investment Certificates’’. Such

9 Certificates shall be issued by any such credit union in

10 a manner designed to ensure that at least 35 percent of

11 the Investment Certificates issued by such institution are

12 issued to persons within its area of business or to organi13 zations exempt from tax under chapter 1 of the Internal

14 Revenue Code of 1986. Notwithstanding any provision of

15 law other than the preceding sentence, there shall be no

16 limitation on type or location of persons to which such

17 Certificates may be issued.

18 (b) PROMOTION OF CERTIFICATES BY ADMINISTRA19 TION.—The Administration shall carry out a program to

20 promote the use of Community Development Individual

21 Investment Certificates to institutions eligible to issue

22 such Certificates.
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1 SEC. 502. LIMITATION ON AMOUNT ISSUED TO ANY PER2 SON.

3 The aggregate amount of Investment Certificates is4 sued to any individual during any calendar year shall not

5 exceed $2,500 ($3,200 in the case of a married couple).

6 The aggregate amount of Investment Certificates issued

7 to any entity during any calendar year shall not exceed

8 $100,000.

9 SEC. 503. TERMS OF ISSUANCE.

10 (a) DISCOUNT BASIS.—Investment Certificates shall

11 be issued—

12 (1) on a discount basis;

13 (2) with a fixed term of 4 years (8 years in the

14 case of a Certificate issued to an entity), except that

15 any such Certificate may be redeemed before its ma16 turity for an amount equal to its redemption value

17 (as of such time) reduced by any reasonable prepay18 ment penalty specified by the issuer;

19 (3) with an investment yield determined by the

20 issuer; and

21 (4) on a nontransferable basis.

22 For purposes of paragraph (2), the redemption value

23 of any Certificate as of any time is an amount equal

24 to the sum of its issue price and the portion of the

25 original issue discount which has accrued before
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1 such time (as determined under the principles of sec2 tion 1272(a) of the Internal Revenue Code of 1986).

3 (b) CERTAIN EARLY REDEMPTIONS WITHOUT PRE4 PAYMENT PENALTY.—

5 (1) IN GENERAL.—Notwithstanding subsection

6 (a), any Investment Certificate may be redeemed be7 fore its maturity without any prepayment penalty if

8 the proceeds from such redemption are to be used

9 for a qualified purpose.

10 (2) QUALIFIED PURPOSE.—For purposes of

11 paragraph (1), the term ‘‘qualified purpose’’

12 means—

13 (A) any payment of qualified acquisition

14 costs with respect to a principal residence of a

15 first-time homebuyer who is the individual re16 ceiving the proceeds of the redemption, or the

17 spouse, child, or grandchild of such individual;

18 (B) any payment of qualified higher edu19 cation expenses; or

20 (C) any use to capitalize a trade or small

21 business carried on (directly or through a cor22 poration or other entity) by an individual de23 scribed in subparagraph (A).
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1 For purposes of paragraph (1), any redemption after

the individual has attained age 591 2 ⁄2 shall be treated

3 as a redemption for a qualified purpose.

4 (c) QUALIFIED ACQUISITION COSTS.—For purposes

5 of this section, the term ‘qualified acquisition costs’ means

6 the costs of acquiring, constructing, or reconstructing a

7 residence. Such term includes any usual or reasonable set8 tlement, financing, or other closing costs.

9 (d) QUALIFIED HIGHER EDUCATION EXPENSES.—

10 For purposes of this section, the term ‘‘qualified higher

11 education expenses’’ means tuition, fees, books, supplies,

12 and equipment required for the enrollment or attendance

13 of—

14 (1) the individual receiving the proceeds of the

15 redemption,

16 (2) such individual’s spouse, or

17 (3) such individual’s child (as defined in section

18 151(c)(3) of the Internal Revenue Code of 1986) or

19 grandchild,

20 at an eligible educational institution (as defined in section

21 135(c)(3) of the Internal Revenue Code of 1986).

22 SEC. 504. TAX TREATMENT.

23 For purposes of the Internal Revenue Code of

24 1986—
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1 (1) section 1271 of such Code (requiring cur2 rent inclusion of accrued original issue discount)

3 shall not apply to any Investment Certificate; and

4 (2) except as provided in section 454 of such

5 Code, any income from an Investment Certificate

6 shall be included in gross income only when such

7 Certificate is redeemed.

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