Source: https://www.federalregister.gov/documents/2015/08/31/2015-21227/community-development-financial-institutions-program
Timestamp: 2017-09-21 19:52:16
Document Index: 477486216

Matched Legal Cases: ['art 1000', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805', '§\u20091805']

80 FR 52379
52379-52392 (14 pages)
II. Comments on the April 10, 2015 Interim Rule
A. Section 1805.102, Relationship to Other CDFI Fund Programs
B. Section 1805.104, Definitions
C. Section 1805.105, Uniform Requirements; Waiver Authority
D. Section 1805.201, Certification as a Community Development Financial Institution
E. Section 1805.502, Severe Constraints Waiver
F. Section 1805.504, Retained Earnings
G. Section 1805.701, Evaluation of Applications
H. Section 1805.801, Notice of Award
I. Section 1805.803, Data Collection and Reporting
https://www.federalregister.gov/d/2015-21227 https://www.federalregister.gov/d/2015-21227
Start Printed Page 52380
You may submit comments concerning this interim rule via the Federal e-Rulemaking Portal at http://www.regulations.gov (please follow the instructions for submitting comments). All submissions received must include the agency name and Regulatory Information Number (RIN) for this rulemaking. Other information regarding the CDFI Fund and its programs may be obtained through the CDFI Fund's Web site at http://www.cdfifund.gov.
Amber Kuchar, CDFI Program Manager, Community Development Financial Institutions Fund, at cdfihelp@cdfi.treas.gov.
On December 19, 2014, the Department of the Treasury published a final rule, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 1000), which adopted the government-wide framework for grants management codified by the Office of Management and Budget (OMB) at 2 CFR 200 (the Uniform Requirements). The Uniform Requirements combine grant-related OMB guidance circulars—reducing the administrative burden for award Recipients and reducing the risk of waste, fraud, and abuse of Federal financial assistance—and establish financial, administrative, procurement, and program management standards for Federal award-making agencies, including the CDFI Fund and its award Recipients.
On April 10, 2015, the CDFI Fund published in the Federal Register an amendment to the interim rule (80 FR 19195) modifying the certification requirements for CDFI Bond Guarantee Program participants seeking to meet the “financing entity” criterion of the CDFI certification requirements. The deadline for the submission of comments on the current rule was June 9, 2015.
Throughout the rule, the defined term “Awardee” has been replaced by “Recipient.” Further, award funds being transmitted from the CDFI Fund to Recipients are referred to as payments, rather than disbursements. These changes were made to align the terminology in the CDFI Program regulations with the terms used in the Uniform Requirements. Other changes to the rule are specified below:
As indicated above, the defined term “Awardee” has been removed and replaced with the defined term “Recipient”. The defined term “Fund” has been removed and replaced with the defined term “Community Development Financial Institutions Fund” so as to provide clear delineation between the CDFI Fund and the Capital Magnet Fund, another CDFI Fund program. The definition of “Comprehensive Business Plan” has been modified to better reflect the Act's requirements for Comprehensive Business Plans submitted with funding applications. The definition of Development Services has been modified for clarity. The definition of “Financial Product” has been modified to eliminate grants by CDFI Intermediaries to CDFIs and/or emerging CDFIs from the definition. The CDFI Fund believes that this change is necessary to ensure that Recipients apply their financial assistance award funding directly to eligible activities rather than passing their financial assistance awards on to other CDFIs. “Uniform Requirements” has been added as a defined term. In addition, the paragraph numbering has been removed to allow for future modifications to the Definitions section without the need for re-numbering the entire section.
Section 1805.201(b)(3)(ii)(B), Geographic Units, has been revised to better conform the description of eligible Investment Areas to the Start Printed Page 52381language of the Act. References to “American Indian or Alaska Native area” have been replaced with “Indian Reservation.”
Because the revisions to this interim rule relate to loans and grants, notice and public procedure and a delayed effective date are not required pursuant to the Administrative Procedure Act found at 5 U.S.C. 553(a)(2).Start Printed Page 52382
Uniform Requirements; Waiver authority.
Community Development Financial Institution (or CDFI) means an entity currently meeting the requirements described in § 1805.201;
Community Development Financial Institution Intermediary (or CDFI Intermediary) means an entity that meets the CDFI Program eligibility requirements described in § 1805.200 and whose primary business activity is the provision of Financial Products to CDFIs and/or emerging CDFIs;
Community Facility means a facility where health care, childcare, educational, cultural, or social services are provided;Start Printed Page 52383
Community Partner means a person (other than an individual) that provides loans, Equity Investments, or Development Services and enters into a Community Partnership with an Applicant or a Recipient. A Community Partner may include a Depository Institution Holding Company, an Insured Depository Institution, an Insured Credit Union, a State-Insured Credit Union, a non-profit or for-profit organization, a State or local government entity, a quasi-government entity, or an investment company authorized pursuant to the Small Business Investment Act of 1958 (15 U.S.C. 661 et se.);
Investment Area means a geographic area meeting the requirements of § 1805.201(b)(3);
Non-Regulated CDFI means any entity meeting the eligibility requirements described in § 1805.200 and that is not a Depository Institution Holding Company, Insured Depository Institution, Insured Credit Union, or State-Insured Credit Union;
(1) Any voting rights associated with the shares or interest are limited solely to the type customarily provided by statute with regard to matters that would significantly and adversely affect the rights or preferences of the security or other interest, such as the issuance of additional amounts or classes of senior securities, the modification of the terms of the security or interest, the dissolution of the issuing company, or the payment of dividends by the issuing Start Printed Page 52384company when preferred dividends are in arrears:
Subsidiary means any company that is owned or Controlled directly or indirectly by another company and includes any service corporation owned in whole or part by an Insured Depository Institution or any Subsidiary of such a service corporation, except as provided in § 1805.200(b)(4);
Targeted Population means individuals or an identifiable group of individuals meeting the requirements of § 1805.201(b)(3);
(B) Determines that such entity's application materials provide a realistic course of action to ensure that it will meet the requirements described in § 1805.201(b) and paragraph (b) of this section within the period set forth in an applicable Notice of Funds Availability.
(ii) The CDFI Fund will not, however, make a payment of any financial assistance to such an entity before or unless it meets the requirements described in this section. Moreover, notwithstanding paragraphs (a)(1) and (a)(2)(i)(B) of this section, the CDFI Fund reserves the right to require an entity to have been certified as described in § 1805.201(a) prior to its submission of an application for assistance, as set forth in an applicable Notice of Funds Availability.
(4) The CDFI Fund, in its sole discretion, shall determine whether an entity fulfills the requirements set forth in this section and § 1805.201(b).
(a) General. An entity may apply to the CDFI Fund for certification that it meets the CDFI eligibility requirements regardless of whether it is seeking financial or technical assistance from the CDFI Fund. Entities seeking such certification shall provide the information set forth in the application for certification. Certification by the CDFI Fund will verify that the entity meets the CDFI eligibility requirements. However, such certification shall not constitute an opinion by the CDFI Fund as to the financial viability of the CDFI or that the CDFI will be selected to receive an award from the CDFI Fund. The CDFI Fund, in its sole discretion, shall have the right to decertify a certified entity after a determination that the eligibility requirements of paragraph (b) of this section or § 1805.200(b) are no longer met.
(b) Eligibility verification. An entity shall demonstrate whether it meets the eligibility requirements described in this paragraph (b) by providing the information described in the application for certification demonstrating that the entity meets the eligibility requirements described in paragraphs (b)(1) through Start Printed Page 52385(6) of this section. The CDFI Fund, in its sole discretion, shall determine whether an entity has satisfied the requirements of this paragraph.
(3) Target Market—(i) General. A CDFI must serve a Target Market by virtue of serving one or more Investment Areas and/or Targeted Populations. An entity may demonstrate that it meets this requirement by demonstrating that it provides Financial Products and/or Financial Services in an Investment Areas and/or Targeted Populations as described in this section. An Investment Area shall meet specific geographic and other criteria described in paragraph (b)(3)(ii) of this section, and a Targeted Population shall meet the criteria described in paragraph (b)(3)(iii) of this section.
(iii) Targeted Population—(A) General. Targeted Population shall mean individuals, or an identifiable group of individuals, who are Low-Income persons or lack adequate access to Financial Products or Financial Services in the entity's Target Market. The members of a Targeted Population shall reside within the boundaries of the United States (which shall encompass any State of the United States, the District of Columbia or any territory of the United States, Puerto Rico, Guam, Start Printed Page 52386American Samoa, the Virgin Islands, and the Northern Mariana Islands).
(3) Increase the availability of products and services to Low-Income persons;
(b) The CDFI Fund may provide technical assistance regardless of whether the Recipient also receives financial assistance under this part. Technical assistance provided pursuant to this part is subject to the assistance limits described in § 1805.402.
The CDFI Fund will provide financial assistance to a Recipient through one or more of the investment instruments described in § 1805.401, and under such terms and conditions as described in this subpart D. The CDFI Fund, in its sole discretion, may provide financial assistance in amounts, through investment instruments, or under rates, terms and conditions that are different from those requested by an Applicant.
(b) Grants. The CDFI Fund may award grants.Start Printed Page 52387
(d) Deposits and credit union shares. The CDFI Fund may make deposits (which shall include credit union shares) in Insured CDFIs and State-Insured Credit Unions. Deposits in an Insured CDFI or a State-Insured Credit Union shall not be subject to any requirement for collateral or security.
(2) Must be distributed to a new Subsidiary or Affiliate that meets the eligibility requirements described in § 1805.200 and is selected for assistance pursuant to subpart G of this part.
(c) A Recipient may receive the assistance described in paragraph (b) of this section only if no other application to serve substantially the same Investment Area(s) or Targeted Population(s) that meets the requirements of § 1805.701(a) was submitted to the CDFI Fund prior to the receipt of the application of said Recipient and within the current funding round.
All financial assistance awarded under this part shall be matched with funds from sources other than the Federal government. Except as provided in § 1805.502, such matching funds shall be provided on the basis of not less than one dollar for each dollar provided by the CDFI Fund. Funds that have been used to satisfy a legal requirement for obtaining funds under either the CDFI Program or another Federal grant or award program may not be used to satisfy the matching requirements described in this section. Community Development Block Grant Program and other funds provided pursuant to the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5301 et seq.), shall be considered Federal government funds and shall not be used to meet the matching requirements. Matching funds shall be used as provided in the applicable Notice of Funds Availability and/or the corresponding Assistance Agreement. Funds that are used prior to the execution of the Assistance Agreement may nevertheless qualify as matching funds provided they were used as provided in the applicable Notice of Funds Availability and/or Assistance Agreement.
(a) Matching funds shall be at least comparable in form (e.g., equity investments, deposits, credit union shares, loans and grants) and value to financial assistance provided by the CDFI Fund (except as provided in § 1805.502). The CDFI Fund shall have the discretion to determine whether matching funds pledged are comparable in form and value to the financial assistance requested.
(b) Applicants other than Insured Credit Unions, State-Insured Credit Unions and Insured Depository Institutions. In the case of an Applicant or Recipient that is not an Insured Credit Union, State-Insured Credit Union or Insured Depository Institution, retained earnings that may be used for matching funds purposes shall consist of:
(1) The increase in retained earnings (meaning, for purposes of § 1805.504(b), revenue minus expenses less any dividend payments) that has occurred over the Applicant's or Recipient's fiscal year as set forth in the applicable Notice of Funds Availability; or
(2) The annual average of such increases that occurred over the Applicant's or Recipient's three consecutive fiscal years as set forth in Start Printed Page 52388the applicable Notice of Funds Availability.
(a) Eligibility and completeness. An Applicant will not be eligible to receive assistance pursuant to this part if it fails to meet the eligibility requirements described in § 1805.200 or if it has not submitted complete application materials. For the purposes of this paragraph (a), the CDFI Fund reserves the right to request additional information from the Applicant, if the CDFI Fund deems it appropriate.
(6) Program design and implementation plan, including: A plan to coordinate use of a financial assistance award with existing Federal State, local and Tribal government assistance programs, and private sector financial services; A description of how the Applicant will coordinate with community organizations and financial institutions which will provide equity investments, loans, secondary markets, or other services to the Investment Area or Targeted Population; an assessment of its products and services, marketing and outreach efforts, delivery strategy, and coordination with other institutions and/or a Community Partner, or participation in a secondary market for purposes of increasing the Applicant's resources. In the case of an Applicant submitting an application with a Community Partner, the CDFI Fund will evaluate: the extent to which the Community Partner will participate in carrying out the activities of the Community Partnership; the extent to which the Community Partner will enhance the likelihood of success of the Comprehensive Business Plan; and the extent to which service to the designated Target Market will be better performed by a Community Partnership than by the Applicant alone;Start Printed Page 52389
(8) Projections for community development impact, including the extent to which an Applicant will concentrate its activities on serving its Target Market(s), the extent of support from the designated Target Market, the extent to which an Applicant is, or will be, Community-Owned or Community-Governed, and the extent to which the activities proposed in the Comprehensive Business Plan are consistent with existing economic, community, and housing development plans adopted by or applicable to the Investment Area or Targeted Population and will expand economic opportunities or promote community development within the designated Target Market;
(e) The CDFI Fund shall notify the Appropriate Federal Banking Agency before imposing any sanctions on an Insured CDFI or other institution that is examined by or subject to the reporting requirements of that agency. The CDFI Fund shall not impose a sanction described in paragraph (c) of this Start Printed Page 52390section if the Appropriate Federal Banking Agency, in writing, and to the satisfaction of the CDFI Fund, not later than 30 calendar days after receiving notice from the CDFI Fund:
(a) Data—General. A Recipient shall maintain such records as may be prescribed by the CDFI Fund that are necessary to:
(1) Audits and Audited Financial Statements. (i) All non-profit organizations that are required to have their financial statements audited pursuant to the Uniform Requirements, must submit their single-audits no later than nine months after the end of the Recipient's fiscal year. Non-profit organizations (excluding Insured CDFIs and State-Insured Credit Unions) that are not required to have financial statements audited pursuant to the Uniform Requirements, must submit to the CDFI Fund a statement signed by the Recipient's Authorized Representative or certified public accountant, asserting that the Recipient is not required to have a single audit pursuant to the Uniform Requirements as indicated in the Assistance Agreement. In such instances, the CDFI Fund may require additional audits to be performed as stated in the applicable Notice of Funds Availability.
(ii) For-profit organizations (excluding Insured CDFIs and State-Insured Credit Unions) must submit to the CDFI Fund financial statements audited in conformity with generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants, no later than six months after the end of the Recipient's fiscal year.
(ii) The CDFI Fund will use the Annual Report to collect data to assess the Recipient's compliance with its Start Printed Page 52391Performance Goals and the impact of the CDFI Program and the CDFI industry.
(a) Provision of credit to Insiders. (1) A Recipient that is a Non-Regulated CDFI may not use any monies provided to it by the CDFI Fund to make any credit (including loans and Equity Investments) available to an Insider, unless it meets the following restrictions:
(b) Recipient standards of conduct. A Recipient that is a Non-Regulated CDFI shall maintain a code or standards of conduct acceptable to the CDFI Fund that shall govern the performance of its Insiders engaged in the awarding and administration of any credit (including loans and Equity Investments) and Start Printed Page 52392contracts using monies from the CDFI Fund. No Insider of a Recipient shall solicit or accept gratuities, favors, or anything of monetary value from any actual or potential borrowers, owners, or contractors for such credit or contracts. Such policies shall provide for disciplinary actions to be applied for violation of the standards by the Recipient's Insiders.
[FR Doc. 2015-21227 Filed 8-28-15; 8:45 am]