I
106TH CONGRESS
1ST SESSION
H. R. 2764
To license America’s Private Investment Companies and provide enhanced
credit to stimulate private investment in low-income communities, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 5, 1999
Mr. LAFALCE (for himself, Mr. KANJORSKI, Mr. VENTO, Ms. WATERS, Mr.
WATT of North Carolina, Ms. HOOLEY of Oregon, Mr. GUTIERREZ, Ms.
CARSON, Mr. SANDLIN, Mr. MEEKS of New York, Mr. MASCARA, Mr.
GONZALEZ, Mr. BRADY of Pennsylvania, Mr. JEFFERSON, Mr. KLINK,
Mr. OWENS, Mr. ANDREWS, Mr. FROST, Mrs. MINK of Hawaii, Ms.
SLAUGHTER, and Mr. RUSH) introduced the following bill; which was re-
ferred to the Committee on Banking and Financial Services
A BILL
To license America’s Private Investment Companies and pro-
vide enhanced credit to stimulate private investment in
low-income communities, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION. 101. SHORT TITLE.
This Act may be cited as the ‘‘America’s Private In-
vestment Companies Act’’.
SEC. 102. CONGRESSIONAL FINDINGS AND PURPOSES.
(a) CONGRESSIONAL FINDINGS.—
(1) People living in distressed areas, both urban
and rural, characterized by high levels of joblessness,
poverty, and low incomes continue to miss out on
the economic expansion experienced by the Nation as
a whole.
(2) Unequal access to economic opportunities
continues to make the social costs of joblessness and
poverty to our Nation very high.
(3) There are significant untapped markets in
our Nation, and many of these are in areas that are
underserved by institutions that can make equity
and credit investments.
(b) PURPOSES.—The purposes of this Act are to—
(1) license private for profit community devel-
opment entities that will focus on making equity and
credit investments for large-scale business develop-
ments that benefit low-income communities;
(2) provide credit enhancement for those enti-
ties for use in low-income communities; and
(3) provide a vehicle under which the economic
and social returns on financial investments made
pursuant to this Act may be available both to the in-
vestors in these entities and to the residents of the
low-income communities.
SEC. 103. DEFINITIONS.
As used in this Act:
(1) The term ‘‘Administrator’’ means the Ad-
ministrator of the Small Business Administration.
(2) The term ‘‘Agency’’ has the meaning given
such term in section 551(1) of title 5, United States
Code.
(3) The term ‘‘APIC’’ means a business entity
that has been licensed under the terms of this Act
as an America’s Private Investment Company, and
the license of which has not been revoked.
(4) The term ‘‘community development entity’’
means an entity whose primary mission must be
serving or providing investment capital for low-in-
come communities or low-income persons and which
maintains accountability to residents of low-income
communities.
(5) The term ‘‘cost’’ has the meaning set forth
in section 502(5) of the Federal Credit Reform Act
of 1990.
(6) The term ‘‘debentures’’ means debt instru-
ments the terms of any of which may be specified
by the Secretary.
(7) The term ‘‘HUD’’ means the Secretary of
Housing and Urban Development or the Department
of Housing and Urban Development, as the context
requires.
(8) The term ‘‘low-income communities’’ means
census tracts with (A) poverty rates of at least 20
percent, based on the most recent census data; or
(B) median family income that does not exceed 80
percent of the greater of (i) metropolitan area me-
dian family income, or (ii) statewide median family
income.
(9) The term ‘‘qualified active business’’ means
a business or trade—
(A) at least 50 percent of the gross income
of which is derived from conduct of trade or
business activities in low-income communities;
(B) a substantial portion of the use of the
tangible property of which is used within low-
income communities;
(C) a substantial portion of the services
that the employees of which perform are per-
formed in low-income communities; and
(D) less than 5 percent of the aggregate
unadjusted bases of the property of which is at-
tributable to certain financial property, as the
Secretary shall set forth in regulations, or in
collectibles, other than collectibles held pri-
marily for sale to customers.
(10) The term ‘‘qualified low-income community
investments’’ means equity investments in, or loans
to, qualified active businesses located in low-income
communities.
(11) The term ‘‘Secretary’’ means the Secretary
of Housing and Urban Development, unless other-
wise specified in this Act.
SEC. 104. AUTHORIZATION.
(a) LICENSES.—The Secretary is authorized to li-
cense America’s Private Investment Companies, in accord-
ance with the terms of this Act.
(b) REGULATIONS.—The Secretary is authorized to
regulate APICs for compliance with sound financial man-
agement practices, and the program and procedural goals
of this and other related Acts, and other purposes as re-
quired or authorized by this Act, or determined by the
Secretary. The Secretary may issue regulations, Federal
Register notices, and other guidance or directives to carry
out licensing and regulatory and other duties under this
Act.
(c) USE OF CREDIT SUBSIDY FOR LICENSES.—
(1) NUMBER OF LICENSES.—The Secretary is
authorized to have outstanding at any one time the
number of licenses for APICs that may be supported
by the amount of the budget authority appropriated
in accordance with the Federal Credit Reform Act of
1990 for the subsidy cost and the investment strate-
gies of such APICs.
(2) USE OF CREDIT SUBSIDY AFTER INITIAL
APPROPRIATION TO HUD.—With respect to any ap-
propriation of budget authority for the credit costs
after the initial appropriation, the Secretary may li-
cense additional APICs, or as hereinafter provided,
increase the credit subsidy allocated to an APIC as
an award for high performance under this Act.
(d) COOPERATION AND COORDINATION.—
(1) PROGRAM POLICIES.—The Secretary is au-
thorized to coordinate and cooperate, through memo-
randa of understanding, an APIC liaison committee,
or otherwise, with the Administrator, the Secretary
of the Treasury, and other agencies in the discretion
of the Secretary, on implementation of this Act, in-
cluding regulation, examination, and monitoring of
APICs under this Act.
(2) OPERATIONS.—The Secretary may carry
out this Act—
(A) directly, through agreements with
other Federal entities under section 1535 of
title 31, United States Code, or otherwise, or
(B) indirectly, under contracts or agree-
ments, as the Secretary shall determine.
(e) FEES
AND
CHARGES
FOR
ADMINISTRATIVE
COSTS.—To the extent provided in appropriations Acts,
the Secretary is authorized to impose fees and charges for
application, review, licensing, and regulation, or other ac-
tions under this Act, and to pay for the costs of such ac-
tivities from the fees and charges collected.
(f) GUARANTEE FEES.—The Secretary is authorized
to set and collect fees for loan guarantee commitments and
loan guarantees that the Secretary makes under this Act.
(g) FUNDING.—
(1) AUTHORIZATION
FOR
APPROPRIATION
OF
COST
OF
ANNUAL
LOAN
GUARANTEE
COMMIT-
MENT.—For each of fiscal years 2000, 2001, 2002,
2003, and 2004, there is authorized to be appro-
priated up to $36,000,000 for the cost of annual
loan guarantee commitments under this Act. The
Secretary may make commitments to guarantee
loans only to the extent that the total loan principal,
any part of which is guaranteed, will not exceed
$1,000,000,000, or the amount specified in appro-
priations Acts in each such fiscal year. Amounts ap-
propriated under this paragraph shall remain avail-
able for 5 years.
(2) AUTHORIZATION
FOR
APPROPRIATION
OF
ADMINISTRATIVE EXPENSES.—For each of the fiscal
years 2000, 2001, 2002, 2003, and 2004, there is
authorized to be appropriated $1,000,000 for admin-
istrative expenses for carrying out this Act. The Sec-
retary may transfer amounts appropriated under
this paragraph to any appropriation account of
HUD or another agency, to carry out the program
under this Act. Any agency to which the Secretary
may transfer amounts under this Act is authorized
to accept such transferred amounts in any appro-
priation account of such agency.
SEC. 105. SELECTION OF APICS.
(a) NOTICE OF COMPETITIONS.—The Secretary shall
select APICs for licensing on the basis of competitions.
Such competitions shall be announced by a Federal Reg-
ister notice that invites applications for APIC licenses.
Each such notice shall set forth application requirements,
and such other terms of the competition not otherwise pro-
vided for, as determined by the Secretary.
(b) LICENSEE SELECTION CRITERIA.—The Secretary
shall select among applicants for licenses on the basis of
the extent to which an applicant may be expected to
achieve the goals of the Act by satisfying the requirements
set forth in this subsection.
(1) The applicant shall be a private for profit
entity that qualifies as a community development en-
tity for the purposes of the New Markets Tax Cred-
its, to the extent such credits are established under
Federal law.
(2) The entity must, as of the time that the li-
cense is approved, have reasonably available to it, as
determined by the Secretary, a minimum of
$25,000,000 in equity capital, as determined by the
Secretary.
(3) The entity must demonstrate that its man-
agers are qualified, and have the knowledge, experi-
ence, and capability necessary to raise large amounts
of capital and make investments for community eco-
nomic development in distressed areas.
(4) The entity must demonstrate that, as a
matter of sound financial management practices, it
is structured to preclude financial conflict of interest
between the APIC and a manager or investor.
(5) The entity must prepare and submit an in-
vestment strategy that includes benchmarks for eval-
uation of its progress.
(6) The entity must prepare and submit a
statement of public purpose goals. The statement
shall include elements specified by the Secretary, in-
cluding proposed measurements and strategies for
meeting the goals. The goals shall promote commu-
nity and economic development, and include at
least—
(A) making investments that are qualified
investments in low-income communities;
(B) creation of jobs that pay decent wages
in low-income communities and for residents of
such areas; and
(C) involvement of community-based orga-
nizations and residents in community develop-
ment activities.
(7) The entity must demonstrate a capacity to
cooperate with States or units of general local gov-
ernment and with community-based organizations
and residents of low-income communities.
(8) The entity must agree to comply with appli-
cable laws, including Federal executive orders, Office
of Management and Budget circulars, and Treasury
requirements, and such operating and regulatory re-
quirements as the Secretary may impose from time
to time.
(9) The entity must satisfy other application re-
quirements that the Secretary may impose by regu-
lation or Federal Register notice.
(c) COMMUNICATIONS BETWEEN HUD AND APPLI-
CANTS DURING SELECTION PROCESS.—
(1) The Secretary shall set forth in regulations
the procedures under which HUD, on the one hand,
and applicants for APIC licenses, and others, on the
other hand, may communicate. Such regulations
shall—
(A) specify by position the HUD officers
and employees who may communicate with such
applicants and others;
(B) permit such officers and employees to
request and discuss with the applicant and oth-
ers (such as banks or other credit or business
references, or potential investors, that the appli-
cant specifies in writing) any more detailed in-
formation that may be desirable to facilitate
HUD’s review of the applicant’s application;
(C) restrict such officers and employees
from revealing to any applicant—
(i) the fact or chances of award of a
license to such applicant, unless there has
been a public announcement of the results
of the competition; and
(ii) any information with respect to
any other applicant; and
(D) set forth requirements for making and
keeping records of any communications con-
ducted under this subsection, including require-
ments for making such records available to the
public after the award of licenses under an ini-
tial or subsequent notice, as appropriate, under
subsection (a).
(2) Regulations under this subsection may be
issued as interim rules for effect on or before the
date of publication of the first notice under sub-
section (a), and shall apply only with respect to ap-
plications under such notice. Regulations to imple-
ment this subsection with respect to any notice after
the first such notice shall be subject to notice and
comment rulemaking.
(3) Section 12(e)(2) of the Department of
Housing and Urban Development Act (42 U.S.C.
3537a(e)(2)) is amended by inserting before the pe-
riod at the end the following: ‘‘, or any license pro-
vided under the America’s Private Investment Com-
panies Act’’.
SEC. 106. OPERATIONS OF APICS.
(a) IN GENERAL.—
(1) An APIC shall have any powers or
authorities—
(A) that the APIC derives from the juris-
diction in which it is organized, or that the
APIC otherwise has;
(B) as may be conferred by a license under
this Act; and
(C) as the Secretary may prescribe by reg-
ulation.
(2) Nothing in this Act shall preclude an APIC
or its investors from receiving an allocation of New
Market Tax Credits (to the extent such credits are
established under Federal law) if the APIC satisfies
any applicable terms and conditions under the Inter-
nal Revenue Code of 1986.
(b) INVESTMENT LIMITATIONS.—
(1) QUALIFIED
LOW-INCOME
COMMUNITY
IN-
VESTMENTS.—Substantially all investments that an
APIC makes must be qualified low-income commu-
nity investments if the investments are financed
with—
(A) amounts available from the proceeds of
the issuance of an APICs debenture guaranteed
under this Act;
(B) proceeds of the sale of obligations de-
scribed under subsection (c)(3)(C)(iii); or
(C) the use of equity capital, as deter-
mined by the Secretary, in an amount specified
in the APIC’s license.
(2) INVESTMENT LIMIT.—An APIC shall not,
as a matter of sound financial practice, invest in any
one business, an amount that exceeds an amount
equal to 35 percent of the sum of—
(A) the APIC’s equity capital; plus
(B) an amount equal to the percentage
limit that the Secretary determines that an
APIC may have outstanding at any one time,
under subsection (c)(2)(A).
(c) BORROWING POWERS; DEBENTURES.—
(1) ISSUING.—An APIC may issue debentures
that the Secretary may guarantee under the terms
of this Act.
(2) LEVERAGE LIMITS.—In general, as a mat-
ter of sound financial management practices—
(A) the total amount of debentures that an
APIC issues under this Act that an APIC may
have outstanding at any one time shall not ex-
ceed an amount equal to 200 percent of the eq-
uity capital of the APIC, as determined by the
Secretary: Provided, That the Secretary may by
regulation increase the foregoing percentage to
up to 300 percent for all APICs, or any reason-
able class of APICs; and
(B) an APIC must not have more than
$300,000,000 in face value of debentures issued
under this Act outstanding at any one time.
(3) REPAYMENT.—
(A) An APIC must have repaid, or have
otherwise been relieved of indebtedness, with re-
spect to any interest or principal amounts of
borrowings under this subsection no less than 2
years before the APIC may dissolve or other-
wise complete the wind-up of its business.
(B) An APIC may repay any interest or
principal amounts of borrowings under this sub-
section at any time: Provided, That the repay-
ment of such amounts shall not relieve an APIC
of any duty otherwise applicable to the APIC
under this Act, unless the Secretary orders such
relief.
(C) Until an APIC has repaid all interest
and principal amounts on APIC borrowings
under this subsection, an APIC may use the
proceeds of investments in accordance with reg-
ulations issued by the Secretary only to—
(i) pay for proper costs and expenses
the APIC incurs in connection with such
investments;
(ii) pay for the reasonable administra-
tive expenses of the APIC;
(iii) purchase Treasury securities;
(iv) repay interest and principal
amounts on APIC borrowings under this
subsection;
(v) make interest, dividend, or other
distributions to or on behalf of an investor;
or
(vi) undertake such other purposes as
the Secretary may approve.
(D) After an APIC has repaid all interest
and principal amounts on APIC borrowings
under this subsection, and subject to continuing
compliance with subsection (a), the APIC may
use the proceeds from investments to make in-
terest, dividend, or other distributions to or on
behalf of investors in the nature of returns on
capital, or the withdrawal of equity capital,
without regard to subparagraph (C) but in con-
formity with the APIC’s investment strategy
and statement of public purpose goals.
(d) REUSE OF DEBENTURE PROCEEDS.—An APIC
may use the proceeds of sale of Treasury securities pur-
chased under subsection (c)(3)(C)(iii) to make qualified
low-income community investments, subject to the Sec-
retary’s approval. In making the request for the Sec-
retary’s approval, the APIC shall follow the procedures ap-
plicable to an APIC’s request for HUD guarantee action,
as the Secretary may modify such procedures for imple-
mentation of this subsection. Such procedures shall never-
theless include the description and certifications that an
APIC must include in all requests for guarantee action,
and the environmental certification applicable to initial ex-
penditures for a project or activity.
(e) ANTIPIRATING.—Notwithstanding any other pro-
vision of law, an APIC may not use any equity capital
required to be contributed under this Act, or the proceeds
from the sale of any debenture under this Act, to make
an investment, as determined by the Secretary, to assist
directly in the relocation of any industrial or commercial
plant, facility, or operation, from 1 area to another area,
if the relocation is likely to result in a significant loss of
employment in the labor market area from which the relo-
cation occurs.
(f) EXCLUSION
OF APIC FROM DEFINITION
OF
DEBTOR
UNDER
BANKRUPTCY
PROVISIONS.—Section
109(b)(2) of title 11, United States Code, is amended by
inserting before ‘‘credit union’’ the following: ‘‘America’s
Private Investment Companies licensed by the Depart-
ment of Housing and Urban Development under the
America’s Private Investment Companies Act,’’.
SEC. 107. CREDIT ENHANCEMENT BY THE FEDERAL GOV-
ERNMENT.
(a) ISSUANCE AND GUARANTEE OF DEBENTURES.—
Consistent with the Federal Credit Reform Act of 1990,
the Secretary is authorized to make commitments to guar-
antee and guarantee the timely payment of all principal
and interest as scheduled on, debentures issued by APICs.
Such commitments or guarantees may be made by the
Secretary on such terms and conditions, including but not
limited to amounts, expirations, number, priorities of re-
payment, security, collateral, amortization, payment of in-
terest (including the timing thereof), and fees and charges,
as the Secretary determines to be appropriate, in docu-
ments that the Secretary approves for any commitment
or guarantee, or pursuant to regulations issued by the Sec-
retary. Debentures guaranteed by the Secretary under this
subsection shall be senior to any debt obligation, equity
contribution or earnings, or the distribution of dividends,
interest, or other amounts of an APIC, notwithstanding
any Federal or other law. Debentures may be issued for
a term of not to exceed 21 years and shall bear interest
during all or any part of that time period at a rate or
rates approved by the Secretary. The debentures shall also
contain such other terms as the Secretary may fix.
(b) ISSUANCE OF TRUST CERTIFICATES.—The Sec-
retary, or an agent or entity selected by the Secretary,
is authorized to issue trust certificates representing own-
ership of all or a fractional part of guaranteed debentures
issued by APICs and held in trust.
(c) GUARANTEE OF TRUST CERTIFICATES.—
(1) IN GENERAL.—The Secretary is authorized,
upon such terms and conditions as the Secretary de-
termines to be appropriate, to guarantee the timely
payment of the principal of and interest on trust
certificates issued by the Secretary, or an agent or
other entity, for purposes of this section. Such guar-
antee shall be limited to the extent of principal and
interest on the guaranteed debentures which com-
pose the trust.
(2) SUBSTITUTION
OPTION.—The Secretary
shall have the option to replace in the corpus of the
trust any prepaid or defaulted debenture with a de-
benture, another full faith and credit instrument, or
any obligations of the United States, that may rea-
sonably substitute for such prepaid or defaulted de-
benture.
(3) PROPORTIONATE REDUCTION OPTION.—In
the event that the Secretary elects not to exercise
the option under paragraph (2), and a debenture in
such trust is prepaid, or in the event of default of
a debenture, the guarantee of timely payment of
principal and interest on the trust certificate shall be
reduced in proportion to the amount of principal and
interest that such prepaid debenture represents in
the trust. Interest on prepaid or defaulted deben-
tures shall accrue and be guaranteed by the Sec-
retary only through the date of payment of the guar-
antee. During the term of a trust certificate, it may
be called for redemption due to prepayment or de-
fault of all debentures that are in the corpus of the
trust.
(d) FULL FAITH AND CREDIT BACKING OF GUARAN-
TEES.—The full faith and credit of the United States is
pledged to the timely payment of all amounts which may
be required to be paid under any guarantee by the Sec-
retary pursuant to this section.
(e) SUBROGATION AND LIENS.—
determines to be necessary to protect the interests of
the Government.
(3) Book-entry or other electronic forms of reg-
istration for trust certificates under this Act are au-
thorized.
(g) TIMING OF ISSUANCE OF GUARANTEES OF DE-
BENTURES AND TRUST CERTIFICATES.—The Secretary
may, from time to time in the Secretary’s discretion, exer-
cise the authority to issue guarantees of debentures under
this Act or trust certificates under this Act.
SEC. 108. APIC REQUESTS FOR GUARANTEE ACTIONS.
(a) ALL APIC REQUESTS FOR HUD GUARANTEE
ACTION.—An APIC may request that the Secretary guar-
antee a debenture that the APIC intends to issue, in ac-
cordance with the Secretary’s regulations. All such re-
quests shall include a description of the manner in which
the APIC intends to use the proceeds from such deben-
ture. All such requests shall also include certification by
the APIC that the APIC is in substantial compliance
with—
(1) this Act and other applicable laws;
(2) all terms and conditions of its license, and
of any penalty or condition that may have arisen
from examination or monitoring by the Secretary or
otherwise, including the satisfaction of any financial
audit exception that may have been outstanding;
(3) all requirements relating to the allocation
and use of New Markets Tax Credits, to the extent
such credits are established under Federal law; and
(4) any other requirements that the Secretary
may specify under regulations.
(b) REQUESTS FOR GUARANTEE OF DEBENTURES
THAT WOULD INCLUDE FUNDING FOR INITIAL EXPENDI-
TURE FOR A PROJECT OR ACTIVITY.—In addition to the
description and certification that an APIC is required to
supply in all requests for guarantee action under sub-
section (a), in the case of an APIC’s request for a guar-
antee that includes a debenture, the proceeds of which the
APIC expects to be used as its initial expenditure for a
project or activity in which the APIC intends to invest,
and the expenditure for which would require an environ-
mental assessment under the National Environmental Pol-
icy Act of 1969 and other related laws that further the
purposes of such Act, such request for guarantee action
must include evidence satisfactory to the Secretary of the
certification of the completion of environmental review of
the project or activity required of the cognizant State or
local government under subsection (c). If the environ-
mental review responsibility for the project or activity has
not been assumed by a State or local government under
subsection (c), then the Secretary is responsible for car-
rying out the applicable responsibilities under the National
Environmental Policy Act of 1969 and other provisions
of law that further the purposes of such Act that relate
to the project or activity, and the Secretary must execute
such responsibilities before acting on the APIC’s request
for the guarantee that is covered by this subsection.
(c) RESPONSIBILITY
FOR
ENVIRONMENTAL
RE-
VIEWS.—
(1) EXECUTION
OF
RESPONSIBILITY
BY
THE
SECRETARY.—This subsection shall apply to guaran-
tees by the Secretary of debentures under this Act,
the proceeds of which would be used in connection
with qualified low-income community investments of
APICs under this Act.
(2) ASSUMPTION OF RESPONSIBILITY BY COG-
NIZANT UNIT OF GENERAL GOVERNMENT.—
(A) GUARANTEE
OF
DEBENTURES.—In
order to assure that the policies of the National
Environmental Policy Act of 1969 and other
provisions of law that further the purposes of
such Act (as specified in regulations issued by
the Secretary) are most effectively implemented
in connection with the expenditure of funds
under this Act, and to assure to the public
undiminished protection of the environment, the
Secretary may, under such regulations, in lieu
of the environmental protection procedures oth-
erwise applicable, provide for the guarantee of
debentures, any part of the proceeds of which
are to fund particular qualified low-income com-
munity investments of APICs under this Act, if
a State or unit of general local government, as
designated by the Secretary in accordance with
regulations issued by the Secretary, assumes all
of the responsibilities for environmental review,
decisionmaking, and action pursuant to the Na-
tional Environmental Policy Act of 1969 and
such other provisions of law that further such
Act as the regulations of the Secretary specify,
that would otherwise apply to the Secretary
were the Secretary to undertake the funding of
such investments as a Federal action.
(B) 
IMPLEMENTATION.—The 
Secretary
shall issue regulations to carry out this sub-
section only after consultation with the Council
on Environmental Quality. Such regulations
shall—
(i) specify any other provisions of law
which further the purposes of the National
Environmental Policy Act of 1969 and to
which the assumption of responsibility as
provided in this subsection applies;
(ii) provide eligibility criteria and pro-
cedures for the designation of a State or
unit of general local government to assume
all of the responsibilities in this subsection;
(iii) specify the purposes for which
funds may be committed without regard to
the procedure established under paragraph
(3);
(iv) provide for monitoring of the per-
formance of environmental reviews under
this subsection;
(v) in the discretion of the Secretary,
provide for the provision or facilitation of
training for such performance; and
(vi) subject to the discretion of the
Secretary, provide for suspension or termi-
nation by the Secretary of the assumption
under subparagraph (A).
(C) RESPONSIBILITIES
OF
STATES
AND
UNITS OF GENERAL LOCAL GOVERNMENT.—The
Secretary’s duty under subparagraph (B) shall
not be construed to limit any responsibility as-
sumed by a State or unit of general local gov-
ernment with respect to any particular request
for guarantee under subparagraph (A), or the
use of funds for a qualified investment.
(3) PROCEDURE.—The Secretary shall approve
the request for guarantee of a debenture, any part
of the proceeds of which is to fund particular quali-
fied low-income community investments of APICs
under this Act, that is subject to the procedures au-
thorized by this subsection only if, not less than 15
days prior to such approval and prior to any com-
mitment of funds to such investment (except for
such purposes specified in the regulations issued
under paragraph (2)(B)), the APIC submits to the
Secretary a request for guarantee of a debenture
that is accompanied by evidence of a certification of
the State or unit of general local government which
meets the requirements of paragraph (4). The ap-
proval by the Secretary of any such certification
shall be deemed to satisfy the Secretary’s respon-
sibilities pursuant to paragraph (1) under the Na-
tional Environmental Policy Act of 1969 and such
other provisions of law as the regulations of the Sec-
retary specify insofar as those responsibilities relate
to the guarantees of debentures, any parts of the
proceeds of which are to fund such investments,
which are covered by such certification.
(4) CERTIFICATION.—A certification under the
procedures authorized by this subsection shall—
(A) be in a form acceptable to the Sec-
retary;
(B) be executed by the chief executive offi-
cer or other officer of the State or unit of gen-
eral local government who qualifies under regu-
lations of the Secretary;
(C) specify that the State or unit of gen-
eral local government under this subsection has
fully carried out its responsibilities as described
under paragraph (2); and
(D) specify that the certifying officer—
(i) consents to assume the status of a
responsible Federal official under the Na-
tional Environmental Policy Act of 1969
and each provision of law specified in regu-
lations issued by the Secretary insofar as
the provisions of such Act or other such
provision of law apply pursuant to para-
graph (2); and
(ii) is authorized and consents on be-
half of the State or unit of general local
government and himself or herself to ac-
cept the jurisdiction of the Federal courts
for the purpose of enforcement of the re-
sponsibilities as such an official.
SEC. 109. EXAMINATION AND MONITORING OF APICS.
(a) IN GENERAL.—The Secretary shall, under regula-
tions, through audits, performance agreements, license
conditions, or otherwise, examine and monitor the oper-
ations and activities of APICs for compliance with sound
financial management practices, and for satisfaction of the
program and procedural goals of this Act and other re-
lated Acts. The Secretary may undertake any responsi-
bility under this section in cooperation with an APIC liai-
son committee, or any agency that is a member of such
a committee, or other agency.
(b) MONITORING, UPDATING, AND PROGRAM RE-
VIEW.—
(1) REPORTING
AND
UPDATING.—The Sec-
retary may establish such annual or more frequent
reporting requirements for APICs, and such require-
ments for independent audits, and the updating of
the statement of public purpose goals, investment
strategy (including the benchmarks in such strat-
egy), and other documents that may have been used
in the license application process under this Act, as
the Secretary determines necessary to assist the Sec-
retary in monitoring the compliance and perform-
ance of APICs.
(2) EXAMINATIONS.—The Secretary shall, no
less often than once every 2 years, examine the oper-
ations and portfolio of each APIC licensed under
this Act for compliance with sound financial man-
agement practices, and for compliance with this Act.
(3) EXAMINATION STANDARDS.—
(A) 
SOUND
FINANCIAL
MANAGEMENT
PRACTICES.—The Secretary shall examine each
APIC to ensure, as a matter of sound financial
management practices, substantial compliance
with this and other applicable laws, including
Federal executive orders, Department of Treas-
ury and Office of Management and Budget
guidance, circulars, and application and licens-
ing requirements on a continuing basis. The
Secretary may set any additional sound finan-
cial management practices standards by regula-
tion, including standards that address solvency
and financial exposure.
(B) PERFORMANCE AND OTHER EXAMINA-
TIONS.—The Secretary shall monitor each
APIC’s progress in meeting the goals in the
APIC’s statement of public purpose goals, exe-
cuting the APIC’s investment strategy, and
other matters.
SEC. 110. INCENTIVES AND PENALTIES.
(a) INCENTIVES.—From amounts of budget authority
appropriated after the initial appropriation for the cost of
annual loan guarantee commitments under this Act, the
Secretary may increase the credit subsidy allocated to an
APIC, in the Secretary’s discretion, as an award for high
performance of the APIC in carrying out its investment
strategy and statement of public purpose goals.
(b) PENALTIES.—
(1) IN GENERAL.—The Secretary may penalize
any APIC, or any manager of an APIC, in the event
such APIC or a manager of the APIC commits an
act of fraud, mismanagement, or noncompliance with
this Act or regulations thereunder or a condition of
the APIC’s license under this Act. The Secretary in
regulations shall identify, by generic description of a
role or responsibilities, any manager of an APIC
that is subject to this subsection.
(2) PENALTIES REQUIRING NOTICE AND HEAR-
ING.—With respect to an act of commission or omis-
sion under paragraph (1) for which the Secretary
may penalize an APIC or a manager, the Secretary
may, following notice in writing to the APIC or the
manager, 
and 
opportunity 
for 
administrative
hearing—
(A) assess a civil money penalty against an
APIC, or a manager of an APIC, the amount
of which may exceed $10,000;
(B) require an APIC to divest any interest
in an investment, on such terms and conditions
as the Secretary imposes; or
(C) revoke the APIC’s license.
(3) PENALTIES REQUIRING NOTICE AND AN OP-
PORTUNITY TO RESPOND.—With respect to any act
of commission or omission under paragraph (1) for
which the Secretary may penalize an APIC or a
manager, following notice in writing and an oppor-
tunity for the APIC or manager to respond, impose
any reasonable penalty. Such a penalty may, in addi-
tion to any others, be—
(A) a civil money penalty of $10,000 or
less;
(B) the suspension of an APIC’s license, or
the conditioning of the use of an APIC’s li-
cense, for up to 90 days, including the deferral
for the period of the suspension of a commit-
ment to guarantee any new debenture of the
APIC; or
(C) any other penalty that the Secretary
determines to be less burdensome to the APIC
than a penalty that requires notice and an ad-
ministrative hearing under this Act.
(c) PROCEDURES.—
(1) No award under this section shall be made
until notice thereof is published in the Federal Reg-
ister.
(2) No civil money penalty, or other penalty
under subsection (b), except suspension or condi-
tioning of an APIC’s license under subsection
(b)(3)(B), shall be due and payable, or otherwise
take effect, or be subject to enforcement by an order
of a court, until notice thereof is published in the
Federal Register.
(3)(A) The Secretary may suspend or condition
an APIC’s license for up to 45 days without prior
notice in the Federal Register, but such suspension
or conditioning shall take effect only after the Sec-
retary has issued a written notice (including a writ-
ing in electronic form) of such action to the APIC.
Such written notice shall be effective without regard
to whether the APIC has been accorded the oppor-
tunity to respond. Such suspension or conditioning
shall be subject to enforcement by an order of a
court when the Secretary has issued such written
notice.
(B) After such suspension or conditioning takes
effect, the Secretary shall promptly cause a notice of
suspension or conditioning of such license for a pe-
riod of up to 90 days to be published in the Federal
Register. The APIC shall be entitled to respond to
such notice. In counting the time period of the sus-
pension or conditioning, the first day shall be the
day that written notice under this paragraph is
issued.
(C) During the time period of such suspension
or conditioning, the Secretary may proceed under
subsection (b)(2), and in accordance with the proce-
dures applicable to such subsection, to revoke the
APIC’s license. Only if the Secretary so proceeds,
notwithstanding any other provision of this section,
the Secretary may extend the suspension or condi-
tioning of the APIC’s license by publishing a notice
of such action in the Federal Register—
(i) for the first such extension, before the
period under subparagraph (B) expires; and
(ii) for any subsequent extensions of up to
90 days, before the preceding period of up to
90 days expires.
(D) The suspension or conditioning of an
APIC’s license by the Secretary under this para-
graph shall remain in effect in accordance with its
terms until final adjudication in any litigation un-
dertaken to challenge such suspension or condi-
tioning, or revocation, of an APIC’s license.
Æ