I
103D CONGRESS
1ST SESSION
H. R. 2250
To establish the National Community Development Administration to facili-
tate 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 JOHN-
SON 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 Adminis-
tration to facilitate community and economic develop-
ment in low-income neighborhoods in the United States,
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 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Community Development Financial Institutions Act of
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.
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.
SEC. 2. DEFINITIONS.
For purposes of this Act:
(1) ADMINISTRATION.—The term ‘‘Administra-
tion’’ means the National Community Development
Administration established in section 101.
(2) BOARD.—The term ‘‘Board’’ means the
board of directors of the Administration established
in section 102.
(3) CERTIFIED
TECHNICAL
ASSISTANCE
PRO-
VIDER.—The term ‘‘certified technical assistance
provider’’ means an individual, an organization, or
any other entity certified under the program pursu-
ant to section 202 to provide technical assistance to
community development financial institutions or to
secondary market institutions.
(4) COMMUNITY DEVELOPMENT FINANCING INI-
TIATIVE.—The term ‘‘community development fi-
nancing initiative’’ means a plan under section 304
by a community development financial institution for
financing community development activities using
assistance amounts provided under title III.
(5) COMMUNITY DEVELOPMENT FINANCIAL IN-
STITUTION.—The term ‘‘community development fi-
nancial institution’’ means an entity certified pursu-
ant to the program established under section 201 as
a community development financial institution for
purposes of this Act.
(6) DISPLACED HOMEMAKER.—The term ‘‘dis-
placed homemaker’’ means an individual who—
(A) is an adult;
(B) has not worked full-time full-year in
the labor force for a number of years but has,
during such years, worked primarily without re-
muneration to care for the home and family;
and
(C) is unemployed or underemployed and
is experiencing difficulty in obtaining or up-
grading employment.
(7) EXISTING COMMUNITY DEVELOPMENT FI-
NANCIAL INSTITUTION.—The term ‘‘existing commu-
nity development financial institution’’ means a com-
munity development financial institution that (A)
has been determined by the Administration pursuant
to certification under section 201, to have been oper-
ating in the same manner required of a community
development financial institution continuously during
the 3-year period ending upon the submission of an
application for assistance under title III, or (B) has
been certified under section 201 as a community de-
velopment financial institution continuously for such
3-year period.
(8) FIRST-TIME HOMEBUYER.—The term ‘‘first-
time homebuyer’’ means an individual (and his or
her spouse) who has not had a present ownership in-
terest in a principal residence during the 3-year pe-
riod ending upon the purchase of a principal resi-
dence (or ending upon the date of redemption of a
Community Development Individual Investment Cer-
tificate issued pursuant to title V, if applicable), ex-
cept that—
(A) any individual who is a displaced
homemaker may not be excluded from consider-
ation as a first-time homebuyer under this
paragraph on the basis that the individual,
while a homemaker, owned a home with his or
her spouse or resided in a home owned by the
spouse;
(B) any individual who is a single parent
may not be excluded from consideration as a
first-time homebuyer under this paragraph on
the basis that the individual, while married,
owned a home with his or her spouse or resided
in a home owned by the spouse;
(C) an individual shall not be excluded
from consideration as a first-time homebuyer
under this paragraph on the basis that the indi-
vidual owns or owned, as a principal residence
during such 3-year period, a dwelling unit
whose structure is—
(i) not permanently affixed to a per-
manent foundation in accordance with local
or other applicable regulations, or
(ii) not in compliance with State,
local, or model building codes, or other ap-
plicable codes, and cannot be brought into
compliance with such codes for less than
the cost of constructing a permanent struc-
ture; and
(D) with respect to any individual redeem-
ing a Community Development Individual In-
vestment Certificate issued under title V, such
individual may not be considered a first-time
homebuyer if subsection (a)(6), (h), or (k) of
section 1034 of the Internal Revenue Code of
1986 suspended the running of any period of
time specified in section 1034 of such Code
with respect to such individual on the date of
redemption.
(9) INVESTMENT CERTIFICATE.—The term ‘‘In-
vestment Certificate’’ means a Community Develop-
ment Individual Investment Certificate issued pursu-
ant to title V.
(10) LOW-INCOME FAMILY.—The term ‘‘low-in-
come family’’ means a family or individual whose in-
come does not exceed 80 percent of the median in-
come for the area involved, as determined by the Ad-
ministration with adjustments for smaller and larger
families, except that the Administration may estab-
lish income ceilings higher or lower than 80 percent
of the median for the area on the basis of the find-
ings of the Administration that such variations are
necessary because of prevailing levels of construction
costs or unusually high or low family incomes.
(11) PRINCIPAL RESIDENCE.—The term ‘‘prin-
cipal residence’’ has the same meaning as when used
in section 1034 of the Internal Revenue Code of
1986.
(12) SECONDARY
MARKET
INITIATIVE.—The
term ‘‘secondary market initiative’’ means a plan
under section 405 by a secondary market institution
for carrying out secondary market activities using
assistance amounts provided under title IV.
(13) SINGLE PARENT.—The term ‘‘single par-
ent’’ means an individual who—
(A) is unmarried or legally separated from
a spouse; and
(B)(i) has 1 or more minor children for
whom the individual has custody or joint cus-
tody; or
(ii) is pregnant.
(14) STATE.—The term ‘‘State’’ means the
States of the United States, the District of Colum-
bia, the Commonwealth of Puerto Rico, the Com-
monwealth of the Northern Mariana Islands, Guam,
the Virgin Islands, American Samoa, the Trust Ter-
ritory of the Pacific Islands, and any other territory
or possession of the United States.
(15) TARGET COMMUNITY.—The term ‘‘target
community’’ means a geographical area established
by a community development financial institution for
purposes of this Act—
(A) that is located wholly within a State or
contiguous States;
(B) that has a continuous boundary; and
(C)(i) within which not less than 75 per-
cent of the residents are members of low-income
families; or
(ii) that is an area of pervasive poverty,
unemployment, and general distress, as deter-
mined by the Administration.
TITLE I—NATIONAL COMMUNITY
DEVELOPMENT ADMINISTRA-
TION
SEC. 101. ESTABLISHMENT.
(a) ESTABLISHMENT.—There is hereby established
an Administration to be known as the National Commu-
nity Development Administration. The principal office of
the Administration shall be in the District of Columbia.
(b) PURPOSES.—The purposes of the National Com-
munity Development Administration are—
(1) to certify community development financial
institutions as eligible for assistance under this Act
from the Administration;
(2) to certify entities as certified technical as-
sistance providers eligible to provide technical assist-
ance to community development financial institu-
tions and secondary market institutions;
(3) to provide assistance under title III to assist
existing community development financial institu-
tions to help provide credit and promote com-
prehensive community development in low-income
communities;
(4) to provide assistance under title IV to assist
secondary market institutions to purchase and
securitize loans for community development activities
in low-income communities to increase the liquidity
of community development investments in such com-
munities and improve the distribution of investment
capital available for community development financ-
ing; and
(5) to promote the use of Community Develop-
ment Individual Investment Certificates authorized
under title V by institutions eligible to issue such
Certificates.
SEC. 102. BOARD OF DIRECTORS.
(a) INITIAL BOARD.—
(1) COMPOSITION.—The Administration shall
be under the management of a board of directors
which, unless membership of the Board is expanded
pursuant to subsection (b), shall be composed of 24
members, of which—
(A) 4 members shall be—
(i) the Secretary of the Treasury (or
the Secretary’s delegate);
(ii) the Secretary of Housing and
Urban Development (or the Secretary’s
delegate);
(iii) the Secretary of Health and
Human Services (or the Secretary’s dele-
gate); and
(iv) the Secretary of Commerce (or
the Secretary’s delegate); and
(B) 20 members shall be appointed by the
President, who shall be—
(i) 4 persons who are officers of exist-
ing community development financial insti-
tutions;
(ii) 4 persons who are officers of na-
tional consumer or public interest organi-
zations;
(iii) 3 persons who are officers of in-
sured depository institutions (as such term
is defined in section 3 of the Federal De-
posit Insurance Act);
(iv) 2 persons who are officials of
State government agencies involved in
community development;
(v) 2 persons who are officials of local
government agencies involved in commu-
nity development; and
(vi) 5 persons who have expertise in
community development.
(2) APPOINTMENT.—The President shall first
appoint the members referred to in paragraph
(1)(B) not later than 6 months after the date of the
enactment of this Act.
(3) TERMS
AND
VACANCIES.—Members ap-
pointed by the President under paragraph (1)(B)
shall serve for terms of 3 years, except as provided
in paragraph (4) of this subsection and subsection
(c). Any vacancy in any position of the Board under
paragraph (1)(B) shall be filled by appointment by
the President.
(4) TERMS OF INITIAL APPOINTEES.—As des-
ignated by the President at the time of appointment,
of the members first appointed—
(A) 6 shall be appointed for terms of 1
year; and
(B) 7 shall be appointed for terms of 2
years.
(5) QUORUM.—Unless membership of the
Board is expanded pursuant to subsection (b), 13
members of the Board shall constitute a quorum.
(b) EXPANDED BOARD.—
(1) AUTHORITY.—If the Board provides for the
issuance of voting common stock under section 104,
the Board shall be composed of—
(A) the 24 members of the Board under
subsection (a)(1); and
(B) for every additional 71,400 shares of
voting common stock issued under section 104,
1 additional member, who shall be elected by
the holders of voting common stock of the Ad-
ministration, except that the number of mem-
bers of the Board elected pursuant to this sub-
paragraph may not at any time exceed 14.
(2) TERMS
AND
VACANCIES.—The members
elected by the shareholders of the Administration
under paragraph (1)(B) shall be elected at the an-
nual meeting of the voting common stockholders for
terms of 3 years ending on the date of such annual
meeting occurring 3 years after such election, except
as provided in paragraph (4) of this subsection and
subsection (c). Any position on the Board under
paragraph (1)(B) of this subsection that becomes
vacant before the expiration of the term for such po-
sition shall be filled by the Board, but only for the
remainder of such term.
(3) FIRST
ELECTION.—The first election for
members referred to in paragraph (1)(B) shall be
held at the first annual meeting of the voting com-
mon stockholders of the Administration occurring
after the Board elects to provide for the issuance of
voting common stock of the Administration, pursu-
ant to section 104.
(4) TERMS OF FIRST MEMBERS ELECTED.—Of
the members first elected pursuant to paragraph
(3)—
(A) 4 shall be elected for terms of 1 year;
and
(B) 5 shall be elected for terms of 2 years.
(5) QUORUM.—If membership of the Board is
expanded pursuant to this subsection, 20 members
of the Board shall constitute a quorum.
(c) SERVICE AFTER EXPIRATION
OF TERM.—A
member of the Board may serve after the expiration of
that member’s term until a successor has taken office.
(d) PROHIBITION OF COMPENSATION OF FEDERAL
EMPLOYEES.—Members of the Board who are full-time
officers or employees of the United States may not receive
additional pay, allowances, or benefits by reason of their
service on the board.
(e) CHAIRPERSON.—The President shall appoint the
Chairperson of the board of directors.
(f) MEETINGS.—The Board shall meet annually and
shall meet at the call of the Chairperson or a majority
of its members.
SEC. 103. DUTIES OF BOARD AND POWERS OF ADMINISTRA-
TION.
(a) DUTIES OF BOARD.—
(1) IN GENERAL.—The Board shall—
(A) determine the general policies that
shall govern the operations of the Administra-
tion and establish the standards for carrying
out the programs and activities of the Adminis-
tration under this Act;
(B) select, appoint, and determine the
compensation of qualified persons to serve as
the officers of the Administration established
under subsection (b)(4), pursuant to the bylaws
of the Administration; and
(C) assign to such persons such executive
functions, powers, and duties as may be pre-
scribed by the bylaws of the Administration or
by the Board.
(2) EXECUTIVE OFFICERS AND FUNCTIONS.—
The persons elected or appointed under paragraph
(1)(B) shall be the executive officers of the Adminis-
tration and shall discharge the executive functions,
powers, and duties of the Administration.
(b) POWERS OF THE ADMINISTRATION.—The Admin-
istration shall be a body corporate and shall have the fol-
lowing powers:
(1) To operate under the direction of the
Board.
(2) To issue stock in the manner provided in
section 104.
(3) To adopt, alter, and use a corporate seal,
which shall be judicially noted.
(4) To provide for a chief executive officer,
president, chief fiscal officer, 1 or more vice presi-
dents, secretary, treasurer, and such other officers,
employees, and agents, as may be necessary, define
their duties and compensation levels, all without re-
gard to title 5, United States Code, and require sur-
ety bonds or make other provisions against losses oc-
casioned by acts of such persons.
(5) To prescribe and impose fees and charges
for services by the Administration.
(6) To have succession until dissolved by a law
enacted by the Congress.
(7) To prescribe bylaws, through the Board, not
inconsistent with this Act or any other law, that
shall provide for—
(A) the classes of the stock of the Adminis-
tration; and
(B) the manner in which—
(i) the stock shall be issued, trans-
ferred, and retired;
(ii) the officers, employees, and agents
of the Administration are selected;
(iii) the property of the Administra-
tion is acquired, held, and transferred;
(iv) the commitments and other finan-
cial assistance of the Administration are
made;
(v) the general business of the Admin-
istration is conducted; and
(vi) the privileges granted by law to
the Administration are exercised and en-
joyed.
(8) To carry out the programs and activities of
the Administration under this Act.
(9) To prescribe such standards as may be nec-
essary to carry out this Act.
(10) To enter into contracts and make pay-
ments with respect to the contracts.
(11) To sue and be sued in its corporate capac-
ity and to complain and defend in any action
brought by or against the Administration in any
State or Federal court of competent jurisdiction.
(12) To make and perform contracts, agree-
ments, and commitments.
(13) To acquire, hold, lease, mortgage or dis-
pose of, at public or private sale, real and personal
property, purchase or sell any securities or obliga-
tions, and otherwise exercise all the usual incidents
of ownership of property necessary and convenient to
the business of the Administration.
(14) To exercise such other incidental powers
as are necessary to carry out the powers, duties, and
functions of the Administration in accordance with
this Act.
(c) TAX-EXEMPT STATUS.—The Administration, in-
cluding its franchise, activities, capital, reserves, surplus,
and income, shall be exempt from all taxation imposed by
any territory, dependency, or possession of the United
States or by any State, county, municipality, or local tax-
ing authority, except that any real property of the Admin-
istration shall be subject to State, territorial, county, mu-
nicipal, or local taxation to the same extent according to
its value as other real property is taxed.
(d) FEDERAL JURISDICTION.—Notwithstanding sec-
tion 1349 of title 28, United States Code, or any other
provision of law:
(1) The Corporation shall be considered an
agency under sections 1345 and 1442 of such title.
(2) All civil actions to which the Corporation is
a party shall be deemed to arise under the laws of
the United States and, to the extent applicable, shall
be deemed to be governed by Federal common law.
The district courts of the United States shall have
original jurisdiction of all such actions, without re-
gard to amount of value.
(3) Any civil or other action, case, or con-
troversy in a court of a State or any court, other
than a district court of the United States, to which
the Corporation is a party may at any time before
trial be removed by the Corporation, without the giv-
ing of any bond or security—
(A) to the District Court of the United
States for the district and division embracing
the place where the same is pending; or
(B) if there is no such district court, to the
District Court of the United States for the dis-
trict in which the principal office of the Cor-
poration is located;
by following any procedure for removal for causes in
effect at the time of such removal.
(4) No attachment or execution shall be issued
against the Corporation or any of the property of
the Corporation before final judgment in any Fed-
eral, State, or other court.
(e) CONFLICTS
OF INTEREST.—The Board shall
adopt and publish its own conflict of interest rules, which
shall be no less stringent in effect than the Federal Execu-
tive conflict of interest rules contained in Executive Order
11222 (18 U.S.C. 201 note) in prohibiting participation
or action or the use of inside information for personal ad-
vantage on any matter involving a corporation, trust, part-
nership, or cooperative organization in which a Board
member, officer, or employee holds a substantial financial
interest or holds a position as board member or senior offi-
cer, the activities of which organization might be relevant
to, competitive with, or inconsistent with the objectives of
the Administration. The rules established under this sub-
section shall require—
(1) each nominee for membership on the Board
to make public and file with the designated officer
of the Administration a statement of the nominee’s
financial interest and position, if any, in such orga-
nization; and
(2) each executive officer and appointed mem-
ber of the Board to file with the designated officer,
before entering such office, a statement of the offi-
cer’s or member’s financial interest and position, if
any, in such organizations, which shall be available
for inspection upon request by any interested party.
SEC. 104. CAPITALIZATION.
(a) COMMON STOCK.—
(1) INITIAL OFFERING OF NONVOTING STOCK
TO TREASURY.—The members of the Board under
section 102(a) shall arrange for an initial offering of
2,000,000 shares of the nonvoting common stock of
the Administration. The shares initially offered shall
be issued only to the Secretary of the Treasury who,
to the extent or in such amounts as are appropriated
pursuant to section 108(1), purchase such shares at
a par value of $50. Such shares shall not be trans-
ferable. Any proceeds from the sale of shares under
this paragraph shall be used by the Administration
only to carry out title III.
(2) SUBSEQUENT PUBLIC OFFERING OF VOTING
STOCK.—
(A) AUTHORITY AND TERMS.—If at any
time the Board, by vote of a majority of its
members so provides, the Administration may
issue shares of voting common stock of the Ad-
ministration having such par value as the
Board shall fix. Each share of voting common
stock shall be entitled to one vote with rights of
cumulative voting at all elections of directors.
Not more than 1,000,000 shares of voting com-
mon stock of the Administration may be out-
standing at any time.
(B) TRANSFERABILITY.—Subject to the
provisions of this section and such limitations
as the Board may impose, the voting common
stock issued under this paragraph shall be free-
ly transferable among all persons, Administra-
tions, and other entities, except that, as to the
Administration, such shares shall be transfer-
able only on the books of the Administration.
(b) DIVIDENDS.—Such dividends as may be declared
by the Board, in the discretion of the Board, shall be paid
by the Administration to the holders of the voting common
stock of the Administration pro rata based on the total
number of shares of such stock outstanding.
(c) AUTHORITY OF BOARD TO ESTABLISH TERMS
AND PROCEDURES.—Subject to the provisions of this sec-
tion, the Board shall adopt such terms, conditions, and
procedures with regard to the issue of stock under this
section as may be necessary and may establish limitations
on the concentration of ownership.
SEC. 105. OBLIGATIONS.
(a) AUTHORITY.—Subject to the applicable provisions
of chapter 91 of title 31, United States Code, the Adminis-
tration may borrow, give security, and issue notes, deben-
tures, bonds, and other obligations upon such terms and
conditions as the Administration may prescribe.
(b) LIMITATION ON OUTSTANDING OBLIGATIONS.—
The aggregate amount of any obligations of the Adminis-
tration outstanding at any 1 time may not exceed the
greater of (1) the amount that is 20 times the sum of
the Administration’s capital, capital surplus, general sur-
plus, reserves, and undistributed earnings, or (2) such
other amount as the Secretary of the Treasury may
establish.
(c) PURCHASE BY SECRETARY.—
(1) IN GENERAL.—The Secretary of the Treas-
ury may purchase any obligation issued by the Ad-
ministration.
(2) LIMIT ON AGGREGATE AMOUNT OF OBLIGA-
TIONS HELD BY TREASURY.—The aggregate amount
of obligations of the Administration which may be
held by the Secretary of the Treasury at any time
shall not exceed $250,000,000.
(3) TERMS AND CONDITIONS.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the purchase or sale by the
Secretary of any obligation of the Administra-
tion under this subsection shall be upon such
terms and conditions as the Secretary deter-
mines to be appropriate.
(B) RATE
OF
RETURN.—In considering
any term or condition for the purchase of any
obligation of the Administration by the Sec-
retary under this subsection which would deter-
mine the rate of return from such investment,
the Secretary shall take into account the aver-
age rate on outstanding obligations of the Unit-
ed States under chapter 31 of title 31, United
States Code, at similar maturities and rates of
interest as of the last day of the month preced-
ing the making of such purchase and may take
into account rates of interest up to 2 percent
less than the rates on such obligations.
SEC. 106. MANAGEMENT REPORTS AND AUDITS.
(a) IN GENERAL.—The Administration shall submit
such reports and conduct such audits as required of the
Administration under title 31, United States Code.
(b) AMENDMENT TO TITLE 3.—Section 9101(2) of
title 31, United States Code, is amended by adding at the
end the following new subparagraph:
‘‘(N) the National Community Develop-
ment Administration.’’.
SEC. 107. REPORTS TO CONGRESS.
The Administration shall annually submit a report to
the Congress regarding its activities and programs.
SEC. 108. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated to carry out
this Act $200,000,000 for fiscal year 1994, of which—
(1) $100,000,000 shall be available to the Sec-
retary of the Treasury to carry out section
104(a)(1);
(2) $50,000,000 shall be available to the Ad-
ministration only to carry out title III;
(3) $30,000,000 shall be available to the Ad-
ministration only to carry out title IV; and
counseling and servicing) as the institution con-
siders appropriate;
(4) require for certification that any such entity
(or the portion of such entity acting as the commu-
nity development financial institution) be governed
by a board of directors that—
(A) is solely responsible for determining
policy for the community development financial
institution with respect to management and op-
erations, lending activities, loan standards and
implementation, employment, asset manage-
ment, and any other issues; and
(B) includes among its members a signifi-
cant number of members who are individuals
meeting the requirements of any of clauses (i)
through (ii), who shall include—
(i) individuals who are experienced in
providing financial assistance or financial
advice to low-income individuals or resi-
dents, businesses, or organizations in low-
income neighborhoods; and
(ii) individuals who have significant
experience in serving the target community
served by the community development fi-
nancial institution or any other low-income
neighborhood;
(5) require for certification that any such entity
meet such standards for safety and soundness of fi-
nancial operations and for capital reserves as the
Administration shall establish; and
(6) provide for determining whether community
development financial institutions may be treated as
existing community development financial institu-
tions (pursuant to section 2(7)) for purposes of as-
sistance under title III.
(c) COORDINATION.—Notwithstanding any provision
of title III, the Administration shall provide for coordinat-
ing certification of entities as community development fi-
nancial institutions in connection with the submission of
applications by such entities for assistance to carry out
community development financial initiatives under title
III.
SEC. 202. CERTIFICATION OF ENTITIES TO PROVIDE TECH-
NICAL ASSISTANCE TO CDFI’S AND SECOND-
ARY MARKET INSTITUTIONS.
(a) IN GENERAL.—The Administration shall carry
out a program to review and certify individuals, organiza-
tions, and other for-profit and nonprofit entities as cer-
tified technical assistance providers for purposes of this
Act. Under the program, the Administration shall certify
entities that are competent to provide technical assistance
regarding—
(1) conducting community and economic devel-
opment activities in low-income neighborhoods;
(2) providing financing for such activities;
(3) educating individuals, businesses, and orga-
nizations about the capabilities and advantages of
community development financial institutions;
(4) establishing, managing, or operating com-
munity development financial institutions in target
communities and other low-income neighborhoods;
(5) carrying out secondary market activities
with respect to community development loans; and
(6) assisting community development financial
institutions to meet specific community development
needs in target communities, including providing job
training programs, assisting in optimizing compo-
nents of loan applications, and assisting small busi-
nesses to prepare business plans and obtain financial
management, accounting, and marketing services.
(b) STANDARDS.—To be eligible for certification
under the program established pursuant to this section,
an individual, organization, or other entity shall have such
demonstrated experience in the activities for which the in-
dividual, organization, or entity is to be certified, as the
Administration shall prescribe.
TITLE III—ASSISTANCE TO COM-
MUNITY 
DEVELOPMENT 
FI-
NANCIAL INSTITUTIONS
Subtitle A—Assistance to Existing
Community Development Finan-
cial Institutions
SEC. 301. AUTHORITY.
(a) PROGRAM
AUTHORITY.—The Administration
shall establish and carry out a program under this subtitle
to provide assistance to existing community development
financial institutions, using amounts available pursuant to
section 108, to assist such institutions to carry out com-
munity development financing initiatives to stimulate
broad-based and long-range community development in
target communities and to enable such financial institu-
tions to obtain technical assistance regarding such activi-
ties from certified technical assistance providers.
(b) AUTHORITY TO ESTABLISH PROGRAM REQUIRE-
MENTS.—The Administration may establish any condi-
tions, terms, or requirements under the program under
this subtitle that the Administration considers appropriate
to carry out the purposes of this subtitle and that are not
inconsistent with the provisions of this subtitle.
SEC. 302. FORMS OF ASSISTANCE TO CDFI’S.
Assistance may be provided under the program to ex-
isting community development financial institutions in the
form of grants, loans, equity advances, or loan guarantees,
or in any other form that the Administration determines
is appropriate and effective. Notwithstanding any other
provision of law, any loan guarantee made under this title
by the Administration shall not constitute a guarantee,
debt, or obligation of the United States or any other agen-
cy or instrumentality of the United States, other than the
Administration.
SEC. 303. ELIGIBLE USES OF ASSISTANCE BY CDFI’S.
(a) ELIGIBLE COMMUNITY ACTIVITIES.—Except as
provided in subsection (c), assistance provided to an exist-
ing community development financial institution under
this subtitle may be used by the institution only to provide
financing for community development activities conducted
in accordance with a community development financing
initiative approved by the Administration under section
304. Such community development activities shall include
the following activities:
(1) REAL PROPERTY.—Acquisition or develop-
ment of real property that is—
(A) to be used for providing affordable
housing;
(B) to be made available for purchase by
low-income families or first-time homebuyers;
(C) blighted, deteriorated, deteriorating, or
inappropriately developed, for purposes of reha-
bilitating the property in accordance with a spe-
cific plan for rehabilitation in existence at the
time of acquisition or development;
(D) to be rehabilitated or used for con-
servation activities; or
(E) to be used as a center for senior citi-
zen activities, a day care center, a job training
site, a recreation facility, or a facility to provide
assistance to for-profit or non-profit businesses
or economic development organizations.
(2) CLEARANCE AND DEMOLITION.—Activities
involving the clearance, demolition, removal, or reha-
bilitation of buildings and improvements, including
interim assistance and financing rehabilitation of
privately owned properties.
(3) AFFORDABLE
HOUSING.—Development of
new housing affordable to low-income families, which
shall include acquisition, new construction, recon-
struction, or moderate or substantial rehabilitation
of such housing, and site improvement, conversion,
demolition, financing, and other activities necessary
to develop such housing.
(4) SMALL BUSINESS ASSISTANCE.—Providing
assistance to small businesses, including financing,
marketing, management, business counseling, and
business planning assistance.
(5) MICROENTERPRISE ASSISTANCE.—Develop-
ment of microenterprises (as such term is defined in
section 102 of the Housing and Community Devel-
opment Act of 1974).
(6) CAPACITY
BUILDING.—Activities designed
to enable borrowers and prospective borrowers of
amounts made available under this subtitle and or-
ganizations and entities in which such amounts are
invested or to be invested by such borrowers, to fa-
cilitate the activities under this subsection carried
out with such amounts and improve the effectiveness
of such activities.
(7) OTHER
ACTIVITIES.—Such other commu-
nity development activities as the Administration
may prescribe generally or approve pursuant to a
specific community development financing initiative.
(b) INELIGIBLE ACTIVITIES.—Assistance provided to
an existing community development financial institution
under this subtitle may not be used, directly or indirectly,
for any of the following activities:
(1) PUBLIC FACILITIES.—Development or as-
sistance of public facilities not specifically referred
to in subsection (a), which public facilities shall in-
clude buildings and facilities for the general conduct
of government, stadiums and sports arenas, audito-
riums, concert halls, convention centers, museums,
schools, airports, subways, trolley lines, bus or other
transit terminals, and hospitals or other general
public medical facilities.
(2) GOVERNMENT EXPENSES.—Payment of ex-
penses required to carry out the general responsibil-
ities of any unit of general local government or
State.
(3) 
OPERATING
AND
MAINTENANCE
EX-
PENSES.—Payment of any expense associated with
operating, repairing, or maintaining public facilities,
improvements, or services.
(4) POLITICAL ACTIVITIES.—Financing the use
of facilities or equipment for political purposes or to
engage in other partisan political activities.
(5) INCOME SUPPLEMENT PAYMENTS.—Provid-
ing any income payments for housing or any other
purpose.
(c) TECHNICAL ASSISTANCE.—
(1) IN GENERAL.—An existing community de-
velopment financial institution that receives assist-
ance under this subtitle may use such assistance to
obtain technical assistance from certified technical
assistance providers regarding the management, op-
eration, and activities of the financial institution,
but only if such use is expressly authorized by the
Administration in approving the community develop-
ment financing initiative of the institution and then
only to the extent provided by the Administration.
(2) PERMISSIBLE ASSISTANCE.—Technical as-
sistance obtained under this subsection may in-
clude—
(A) conducting an analysis of the market
of the community development financial institu-
tion;
(B) preparing business or marketing plans
for the community development financial insti-
tution;
(C) designing instruments, financing initia-
tives, and other offerings to meet the economic
and community development needs of the target
community for the institution;
(D) training and assistance to expand the
real estate and business development activities
of the institution;
(E) improving the financial management of
the institution;
(F) revising the governance of the institu-
tion; and
(G) any other technical assistance activi-
ties described in section 202(a) or that the Ad-
ministration determines are appropriate to as-
sist the institution to carry out the purposes of
this subtitle.
SEC. 304. COMMUNITY DEVELOPMENT FINANCING INITIA-
TIVES.
(a) REQUIREMENT FOR ASSISTANCE.—The Adminis-
tration may provide assistance under this subtitle only to
an existing community development financial institution
that has had a community developing financing initiative
reviewed and approved under this section by the Adminis-
tration.
(b) REQUIREMENTS OF INITIATIVE.—For purposes
of this subtitle, a community development financing initia-
tive shall be a plan for an existing community development
financial institution to provide financing to individuals,
businesses, organizations, or other entities to carry out eli-
gible community development activities under section
303(a) within a target community, using amounts pro-
vided under this subtitle and amounts from other sources
(including amounts required under section 305). Under an
initiative, financing may be limited to particular activities,
types of assistance, or locations.
(c) APPLICATION.—The Administration shall provide
for community development financial institutions to sub-
mit applications for approval of community development
financing initiatives under this section. Each such applica-
tion shall include such information as the Administration
considers appropriate to carry out this subtitle and ensure
that assistance is provided and used in accordance with
the provisions of this subtitle, including—
(1) a description of the existing community de-
velopment financial institution that is requesting as-
sistance under this subtitle and any information that
the Board considers necessary to indicate the finan-
cial soundness of the institution;
(2) a description of the boundaries and charac-
teristics of the target community in which activities
to be financed under the community development fi-
nancing initiative are to be carried out, which shall
include descriptions of the income characteristics of
the community or neighborhood and the need for the
initiative in the community or neighborhood;
(3) a description of the community development
activities or types of such activities to be financed
under the initiative;
(4) evidence of amounts or commitments to
provide amounts to supplement assistance provided
under this subtitle in accordance with the require-
ment under section 305;
(5) a description of any participation in devel-
oping or carrying out the initiative by any individ-
uals, businesses, organizations, and governments lo-
cated or interested in the community in which the
initiative is to be carried out; and
(6) a description of the type and amount of as-
sistance that institution is requesting from the Ad-
ministration.
(d) SELECTION.—
(1) IN GENERAL.—The Administration shall re-
view each application submitted under this section.
The Administration may approve a community de-
velopment financing initiative to receive assistance
under this subtitle only if the Administration deter-
mines that the application complies with the require-
ments pursuant to this section and the initiative
complies with the requirements pursuant to this Act.
(2) RATING SYSTEM.—
(A) USE.—The Administration shall estab-
lish a competitive rating system by which to
rank community development financing initia-
tives for which applications have been submitted
under this paragraph and shall use the rating
system to determine which community develop-
ment financing initiatives to approve for assist-
ance under this subtitle.
(B) GOALS.—The rating system shall be
designed to select for approval initiatives that—
(i) will result in significant develop-
ment in the communities in which such ini-
tiatives are to be carried out or that will
have significant positive effects on the
economies of such communities; and
(ii) will be carried out in a financially
responsible manner by community develop-
ment financial institutions that have the
capability, capacity, resources, and com-
mitment to provide such financing for such
purposes.
(C) IMPACT
ON
TARGET
COMMUNITY.—
The rating system shall take into consideration,
with respect to each community development fi-
nancing initiative, the extent to which—
(i) the initiative will assist individuals,
businesses, and organizations within the
target community for the initiative;
(ii) the initiative is designed to meet
specific community and economic develop-
ment needs of the target community for
the initiative;
(iii) the community development fi-
nancial institution that will carry out the
initiative has previously provided financing
for individuals, businesses, and organiza-
tions within the target community for the
initiative;
(iv) amounts other than assistance
under this subtitle have been acquired to
carry out the initiative or commitments for
such amounts have been obtained, and the
rating system shall specifically provide for
a series of higher levels of ranking of ini-
tiatives based on the extent to which such
amounts exceed the amounts required
under section 305;
(v) individuals and organizations in
the target community for the initiative
have been involved in developing the initia-
tive or other activities carried out by the
community development financial institu-
tion that will carry out the initiative; and
(vi) the initiative comprehensively ad-
dresses development needs of the target
community.
SEC. 305. MATCHING REQUIREMENT.
(a) IN GENERAL.—The Administration may not pro-
vide assistance under this subtitle in any form to any com-
munity development financial institution in an amount in
excess of the amount that the institution certifies, as the
Administration shall require, that the institution will con-
tribute from non-Federal sources to the community devel-
opment financing initiative to be assisted under this sub-
title.
(b) PROHIBITION OF SUBSTITUTION OF FUNDS.—A
community development financial institution may use as-
sistance received under this Act only so as to supplement
and increase any amounts that would, in the absence of
assistance provided under this subtitle, be made available
for carrying out the community development initiative of
the institution from other sources, and in no case may
such assistance be used so as to supplant amounts for
such purpose from other sources.
Subtitle B—Assistance to Establish
Community Development Finan-
cial Institutions
SEC. 321. PROGRAM AUTHORITY.
The Administration shall establish and carry out a
program to provide assistance to nonprofit and for-profit
organizations for the establishment of community develop-
ment financial institutions. Any institution established
with assistance provided under this subtitle shall be estab-
lished for the purpose of providing financing for commu-
nity development activities described in section 303(a).
The Administration shall provide for such organizations
to submit applications for assistance under this subtitle,
which shall be in such form and contain such information
as the Administration shall provide.
SEC. 322. PROGRAM REQUIREMENTS.
The Administration shall require that—
(1) the program carried out under this subtitle
shall be, to the extent practicable, consistent with
the provisions of subtitle A; and
(2) any financial institution receiving assistance
provided under this subtitle shall carry out a com-
munity development financing initiative approved by
the Administration for a target community.
TITLE 
IV—ASSISTANCE 
FOR
COMMUNITY 
DEVELOPMENT
SECONDARY MARKET INSTI-
TUTIONS
SEC. 401. AUTHORITY.
(a) PROGRAM
AUTHORITY.—The Administration
shall establish and carry out a program under this title
to provide assistance to secondary market institutions,
using amounts available pursuant to section 108 and sec-
tion 407, to assist such institutions to—
(1) establish a secondary market for community
development loans and provide stability for such
market; and
(2) increase the liquidity of community develop-
ment investments and improve the distribution of in-
vestment capital available for community develop-
ment financing.
(b) AUTHORITY TO ESTABLISH PROGRAM REQUIRE-
MENTS.—The Administration may establish any condi-
tions, terms, or requirements under the program under
this title that the Administration considers appropriate to
carry out the purposes of this title and that are not incon-
sistent with the provisions of this title.
SEC. 402. ELIGIBLE USES OF ASSISTANCE.
(a) IN GENERAL.—Assistance under this title may be
used by the secondary market institution receiving the as-
sistance only for the following purposes:
(1) CAPITAL FOR SECONDARY MARKET ACTIVI-
TIES.—To carry out secondary market activities
under the secondary market initiative for the institu-
tion approved by the Administration pursuant to
section 405.
(2) TECHNICAL ASSISTANCE.—To obtain tech-
nical assistance from certified technical assistance
providers regarding the management, operation, and
activities of the secondary market institution, but
only if such use is expressly authorized by the Ad-
ministration in approving the secondary market ini-
tiative of the institution and then only to the extent
provided by the Administration.
(b) SECONDARY MARKET ACTIVITIES.—For purposes
of this title, secondary market activities shall include such
activities as the Administration shall prescribe, including
the following:
(1) LOAN PURCHASE.—Purchasing of commu-
nity development loans and making of commitments
to purchase such loans.
(2) LOAN PORTFOLIOS AND DEALING.—Main-
taining a portfolio of community development loans
and otherwise dealing in and disposing of such
loans.
(3) LENDING.—Lending on the security of, and
to make commitments to lend on the security of,
community development loans.
(4) SECURITIES.—Issuing securities represent-
ing interests in, or secured by, a pool of community
development loans held by the secondary market in-
stitution.
(5) GUARANTEE OF SECURITIES.—Guarantee-
ing the timely payment of principal and interest on
securities representing interests in, or secured by, a
pool of community development loans.
SEC. 403. COMMUNITY DEVELOPMENT LOANS.
For purposes of this title, the term ‘‘community de-
velopment loan’’ means a loan—
(1) made for the purpose of carrying out, with-
in a target community—
(A) a community development activity re-
ferred to in section 303(a);
(B) an activity generally prescribed by the
Administration as an eligible community devel-
opment activity under section 303(a)(7); or
(C) any other activity approved by the Ad-
ministration as a community development activ-
ity pursuant to a specific secondary marketing
initiative;
(2) that meets such standards and requirements
as the Administration shall establish.
SEC. 404. STANDARDS FOR SECONDARY MARKET INSTITU-
TIONS.
(a) IN GENERAL.—For purposes of this title, a sec-
ondary market institution shall be an organization, agen-
cy, corporation, or other entity engaged primarily in sec-
ondary market activities with respect to community devel-
opment and similar loans that meet such standards and
requirements as the Administration shall establish, which
shall include standards and requirements regarding own-
ership, organization, management, capital reserves, invest-
ments, functions and activities, accounting practices, and
reporting.
(b) SECONDARY MARKET ACTIVITIES.—To be eligible
to receive assistance under this title, a secondary market
institution shall comply with such standards and qualifica-
tions and shall operate in accordance with such guidelines,
as the Administration shall establish regarding the second-
ary market activities under section 402(b). Such stand-
ards and guidelines shall provide that a secondary market
institution receiving such assistance may purchase, hold,
securitize, or lend on the security of community develop-
ment loans—
(1) only from sellers and servicers meeting such
standards and requirements as the Administration
shall establish, which may include standards and re-
quirements regarding, among other things, (A) mini-
mum net worth, (B) supervisory mechanisms, (C)
warranty compensation mechanisms, (D) prior ap-
proval of facilities, (E) prior origination and servic-
ing experience with respect to different types of
loans, (F) capital contributions and substitutes, (G)
loan purchase volume limits, and (H) reduction of
loan purchases during periods of borrowing;
(2) that are of such quality, type, and class as
the Administration shall provide; and
(3) that have original principal obligations not
exceeding such maximum amounts as the Adminis-
tration shall establish for various qualities, types,
and classes of loans.
SEC. 405. SECONDARY MARKET INITIATIVES.
(a) REQUIREMENT FOR ASSISTANCE.—The Adminis-
tration may provide assistance under this title only to a
secondary market institution that has had a secondary
market initiative reviewed and approved under this section
by the Administration.
(b) REQUIREMENTS OF INITIATIVE.—For purposes
of this title, a secondary market initiative shall be a plan
for a secondary market institution to carry out eligible sec-
ondary market activities under section 402(b) within a
specified area or region within the States or with respect
to specified types of community development loans, using
amounts provided under this title and amounts from other
sources (including amounts required under section 406).
(c) APPLICATION.—The Administration shall provide
for secondary market institutions to submit applications
for approval of secondary market initiatives under this
section. Each such application shall include such informa-
tion as the Administration considers appropriate to carry
out this title and shall ensure that assistance amounts are
provided and used in accordance with the requirements
pursuant to this title.
(d) SELECTION.—
(1) IN GENERAL.—The Administration shall re-
view each application submitted under this section.
The Administration may approve a secondary mar-
ket initiative to receive assistance under this title
only if the Administration determines that the appli-
cation complies with the requirements pursuant to
this section and the initiative complies with the re-
quirements pursuant to this title.
(2) LIMITATIONS.—In selecting secondary mar-
ket initiatives to approve to receive assistance under
this title, the Administration shall attempt to ensure
that each such initiative is carried out with respect
to a geographic area or region, or types of commu-
nity development loan, that is not the primary re-
gion or loan classification for any other secondary
market initiative approved and receiving assistance
under this title.
(3) PREFERENCES.—In selecting secondary
market initiatives to approve to receive assistance
under this title, the Administration shall take into
consideration the extent to which amounts other
than assistance under this title have been acquired
to carry out the initiative or commitments for such
amounts have been obtained, and shall specifically
provide for a series of higher levels of ranking of ini-
tiatives based on the extent to which such amounts
exceed the amounts required under section 406.
SEC. 406. MATCHING REQUIREMENT.
(a) IN GENERAL.—The Administration may not pro-
vide assistance under this title to any secondary market
institution in an amount in excess of the amount that the
institution certifies, as the Administration shall require,
that the institution will contribute from non-Federal
sources to the secondary market initiative to be assisted
under this title.
(b) PROHIBITION OF SUBSTITUTION OF FUNDS.—A
secondary market institution may use assistance received
under this title only so as to supplement and increase any
amounts that would, in the absence of assistance provided
under this title, be made available for carrying out the
secondary market initiative of the institution from other
sources, and in no case may such assistance be used so
as to supplant amounts for such purpose from other
sources.
SEC. 407. TAX-EXEMPT BOND FINANCING FOR SECONDARY
MARKET INSTITUTIONS.
(a) AUTHORITY.—The Administration may issue
such bonds and other obligations the proceeds of which
shall be used to provide assistance under this title to sec-
ondary market institutions in the form of loans for carry-
ing out secondary market initiatives approved under sec-
tion 405. In determining the terms and conditions of re-
payment of any loan financed with the proceeds of any
bonds or obligations issued pursuant to this section, the
Administration shall consider the terms and conditions of
such bonds or obligations. Any bonds or obligations shall
be issued under this section only upon the approval of the
Secretary of the Treasury.
(b) TERMS.—Bonds and other obligations guaranteed
pursuant to this section shall be in such form and denomi-
nation, have such maturities, be redeemable, bear interest
at such rates, and be subject to such conditions, as the
Administration shall provide by regulation, with the ap-
proval of the Secretary of the Treasury.
(c) TAX-EXEMPT
STATUS.—Notwithstanding any
other provision of law, any interest on any bond or other
obligation issued under this section shall be exempt from
tax under subtitle A of the Internal Revenue Code of
1986.
SEC. 408. COORDINATION WITH SECONDARY MORTGAGE
MARKET ENTITIES.
In carrying out this title, the Administration shall
consult with the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation, and other
appropriate entities and shall, to the extent feasible, co-
ordinate the activities under the program under this title
to carry out the purposes of this title.
TITLE 
V—COMMUNITY 
DEVEL-
OPMENT INDIVIDUAL INVEST-
MENT CERTIFICATES
SEC. 501. AUTHORIZATION TO ISSUE.
(a) IN
GENERAL.—Any community development
credit union or community development bank may issue
certificates of indebtedness to be known as ‘‘Community
Development Individual Investment Certificates’’. Such
Certificates shall be issued by any such credit union in
a manner designed to ensure that at least 35 percent of
the Investment Certificates issued by such institution are
issued to persons within its area of business or to organi-
zations exempt from tax under chapter 1 of the Internal
Revenue Code of 1986. Notwithstanding any provision of
law other than the preceding sentence, there shall be no
limitation on type or location of persons to which such
Certificates may be issued.
(b) PROMOTION OF CERTIFICATES BY ADMINISTRA-
TION.—The Administration shall carry out a program to
promote the use of Community Development Individual
Investment Certificates to institutions eligible to issue
such Certificates.
SEC. 502. LIMITATION ON AMOUNT ISSUED TO ANY PER-
SON.
The aggregate amount of Investment Certificates is-
sued to any individual during any calendar year shall not
exceed $2,500 ($3,200 in the case of a married couple).
The aggregate amount of Investment Certificates issued
to any entity during any calendar year shall not exceed
$100,000.
SEC. 503. TERMS OF ISSUANCE.
(a) DISCOUNT BASIS.—Investment Certificates shall
be issued—
(1) on a discount basis;
(2) with a fixed term of 4 years (8 years in the
case of a Certificate issued to an entity), except that
any such Certificate may be redeemed before its ma-
turity for an amount equal to its redemption value
(as of such time) reduced by any reasonable prepay-
ment penalty specified by the issuer;
(3) with an investment yield determined by the
issuer; and
(4) on a nontransferable basis.
For purposes of paragraph (2), the redemption value
of any Certificate as of any time is an amount equal
to the sum of its issue price and the portion of the
original issue discount which has accrued before
such time (as determined under the principles of sec-
tion 1272(a) of the Internal Revenue Code of 1986).
(b) CERTAIN EARLY REDEMPTIONS WITHOUT PRE-
PAYMENT PENALTY.—
(1) IN GENERAL.—Notwithstanding subsection
(a), any Investment Certificate may be redeemed be-
fore its maturity without any prepayment penalty if
the proceeds from such redemption are to be used
for a qualified purpose.
(2) QUALIFIED
PURPOSE.—For purposes of
paragraph 
(1), 
the 
term 
‘‘qualified 
purpose’’
means—
(A) any payment of qualified acquisition
costs with respect to a principal residence of a
first-time homebuyer who is the individual re-
ceiving the proceeds of the redemption, or the
spouse, child, or grandchild of such individual;
(B) any payment of qualified higher edu-
cation expenses; or
(C) any use to capitalize a trade or small
business carried on (directly or through a cor-
poration or other entity) by an individual de-
scribed in subparagraph (A).