[Federal Register Volume 60, Number 202 (Thursday, October 19, 1995)]
[Rules and Regulations]
[Pages 54110-54133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25725]
[[Page 54109]]
_______________________________________________________________________
Part III
Department of the Treasury
_______________________________________________________________________
Community Development Financial Institutions Fund
_______________________________________________________________________
12 CFR Chapter XVIII et al.
Community Development Financial Institutions Program, Bank Enterprise
Award Program, Environmental Quality; Interim Final Rule
Federal Register / Vol. 60, No. 202 / Thursday, October 19, 1995 /
Rules and Regulations
[[Page 54110]]
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
12 CFR Chapter XVIII and Parts 1805, 1806 and 1815
RIN 1505-AA71
Community Development Financial Institutions Program, Bank
Enterprise Award Program, Environmental Quality
AGENCY: Community Development Financial Institutions Fund, Department
of the Treasury.
ACTION: Interim rule with request for comment.
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SUMMARY: The Department of the Treasury is issuing an interim rule
implementing two new programs administered by the Community Development
Financial Institutions Fund (CDFI Fund or Fund). The initiatives shall
be known as the Community Development Financial Institutions Program
(CDFI Program) and the Bank Enterprise Award Program (BEA Program). The
programs were authorized by the Community Development Banking and
Financial Institutions Act of 1994. The interim rule also provides
environmental quality procedures related to these programs. The CDFI
Fund's programs are designed to facilitate the flow of lending and
investment capital into distressed communities and to individuals who
have been unable to take full advantage of the financial services
industry.
DATES: Interim rule effective October 19, 1995; comments must be
received on or before January 15, 1996.
ADDRESSES: All comments concerning this interim rule should be
addressed to the Director, Community Development Financial Institutions
Fund, Department of the Treasury, 1500 Pennsylvania Avenue N.W., Room
5116, Washington, DC 20220. Comments may be inspected at the above
address between 9:30 a.m. and 4:30 p.m.
FOR FURTHER INFORMATION CONTACT: Kirsten Moy, Community Development
Financial Institutions Fund, at (202) 622-8662. (This is not a toll
free number.)
SUPPLEMENTARY INFORMATION:
I. General
Executive Order (E.O.) 12866
It has been determined that this regulation is a significant
regulatory action as defined in E.O. 12866. Because no substantive
changes were made to this regulation subsequent to submission to the
Office of Management and Budget (OMB), the provisions of section
6(a)(3)(E) of the Order do not apply.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required for this
interim rule, the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.) do not apply. Moreover, the Department of the
Treasury finds that any economic or other consequence of this interim
rule are a direct result of the implementation of statutory provisions.
Paperwork Reduction Act
The Department of the Treasury is issuing these regulations without
notice and public comment pursuant to the Administrative Procedure Act
(5 U.S.C. 553). For this reason, the collections of information
contained in these regulations have been reviewed and, pending receipt
and evaluation of public comments, approved by the Office of Management
and Budget under control number 1505-0153 (expires 9/30/98). Comments
concerning the collections of information, the accuracy of the
estimated average annual burden, and suggestions for reducing such
burden should be directed to the Office of Management and Budget,
Paperwork Reduction Project (OMB Paperwork control number 1505-0153),
Washington, DC 20503, with copies to the Community Development
Financial Institutions Fund, Department of the Treasury, 1500
Pennsylvania Avenue N.W., Room 5116, Washington, DC 20220. Any such
comments should be submitted not later than January 15, 1996.
Provisions requiring the collection of information can be found in
Secs. 1805.701, 1805.903, 1806.206, 1806.301, 1806.304, 1806.305 and
1815.105 of these regulations. The information requested in such
provisions is necessary to evaluate applications, monitor the
performance of entities receiving assistance, and ensure compliance
with statutory and program requirements. The anticipated respondents
and recordkeepers are financial institutions that may apply for and
receive assistance.
Estimated total annual reporting and/or recordkeeping burden:
CDFI Program:
Applicants--30,000 hours
Awardees--2,160 hours.
BEA Program:
Applicants--1,000 hours
Awardees--750 hours.
Total Hours--33,910.
Estimated average annual burden hours per respondent and/or
recordkeeper:
CDFI Program:
Applicants--100 hours
Awardees--72 hours.
BEA Program:
Applicants--12 hours
Awardees--25 hours.
Estimated number of respondents and/or recordkeepers: 400.
Estimated annual frequency of responses: CDFI Program: 1-5; BEA
Program: 1-2.
National Environmental Policy Act
Pursuant to Treasury Directive 75-02 (Department of the Treasury
Environmental Quality Program), the Department has determined that
these regulations are categorically excluded from the National
Environmental Policy Act and do not require an environmental review.
Administrative Procedures Act
Pursuant to the provisions of 5 U.S.C. 553(a)(2), these regulations
are exempt from the proposed rule-making requirements of 5 U.S.C.
553(b) and are being issued as interim regulations without opportunity
for notice and public comment prior to their effective date.
Furthermore, the Department for good cause finds that notice and public
comment prior to effect are impracticable and contrary to the public
interest. The statute authorizing the programs was enacted over a year
ago. As part of that Act, Congress set up special procedures to make
the CDFI Fund operational as soon as possible. Furthermore, Congress
appropriated funds for FY 1995 and required such funds to be obligated
by September 30, 1996. Such actions clearly indicate Congress' intent
that the program be implemented in an expeditious manner. If the
Department does not issue these regulations for effect, it will not be
feasible to implement the program prior to September 30, 1996 in a
manner that achieves the results intended by Congress.
Catalog of Federal Financial Assistance Numbers: Community
Development Financial Institutions Program--21.020; Bank Enterprise
Award Program--21.021.
II. Background
The CDFI Fund was established as a wholly owned government
corporation by the Community Development Banking and Financial
Institutions Act of 1994 (the CDFI Act). Subsequent legislation placed
the Fund within the Department of the Treasury and gave the Secretary
of the Treasury all powers and rights of the Administrator of the Fund
as set forth in the authorizing statute.
[[Page 54111]]
Consistent with the placement and administration of the Fund within
the Department's organizational structure, the Department of the
Treasury's Inspector General will serve as the Inspector General for
the Fund. Any individual who becomes aware of the existence or apparent
existence of fraud, waste or abuse of assistance provided by the Fund
is encouraged to report it to the Department of the Treasury's Office
of Inspector General in writing or on the Inspector General's Hotline
(toll free 1-800-359-3898). All telephone calls will be handled
confidentially. Written complaints should be addressed to the U.S.
Department of the Treasury, Office of Inspector General, Room 2412,
1500 Pennsylvania Avenue N.W., Washington, DC 20220.
All records and materials pertaining to the selection and award of
assistance by the Fund shall be fully subject to the Freedom of
Information Act. Interested parties should contact the U.S. Department
of the Treasury, Office of the Assistant Secretary for Management,
Disclosure Services at (202) 622-1500.
The CDFI Fund's programs are designed to facilitate the flow of
lending and investment capital into distressed communities and to
individuals who have been unable to take full advantage of the
financial services industry. The initiative is an important step in
rebuilding poverty-stricken and transitional communities and creating
economic opportunity for people often left behind by the economic
mainstream.
Access to credit and investment capital is an essential ingredient
for creating and retaining jobs, developing affordable housing,
revitalizing neighborhoods, unleashing the economic potential of small
business, and empowering people. Over the past three decades,
community-based financial institutions have proven that strategic
lending and investment activities tailored to the unique
characteristics of underserved markets are highly effective in
improving the economic well-being of communities and the people who
live there.
The CDFI Fund was established to facilitate the creation of new,
and expansion of existing, financial institutions that are specialized
in serving these markets. These institutions--while highly effective--
are typically small in scale, too few in number, and often have
difficulty raising the equity capital needed to meet the demands for
their products and services. The investments of the CDFI Program are
intended to provide much-needed capital that will enable existing
institutions to expand and facilitate the start-up of new institutions.
The CDFI Fund also recognizes the important role that traditional
financial institutions have played, and should continue to play, in
serving the credit needs of distressed communities and their residents.
As a means of facilitating increased activity and innovation among
traditional financial institutions, these regulations will implement
the BEA Program. The BEA Program has its roots in the Federal Deposit
Insurance Corporation Improvement Act of 1991. The program was
significantly modified as part of the CDFI Act to enable it to function
as a companion to the CDFI Program. Together, the CDFI Program and BEA
Program will promote activity among the spectrum of financial
institutions that serve distressed communities.
The following interim regulations permit the Fund to implement the
CDFI Program and the BEA Program. Today's Federal Register contains a
separate Notice of Funds Availability (NOFA) for each of these
programs. It is the intention of the Fund to evaluate the first round
of applications for the programs using these regulations and applicable
Department of the Treasury regulations. Final regulations will be
published after receipt and consideration of public comments. Such
public comments are extremely important to the development of the final
regulations. The remainder of this background section provides a
summary of the major provisions in the regulations and highlights
important issues for public comment.
III. Community Development Financial Institutions Program
Under the CDFI Program (12 CFR part 1805), the Fund will provide
financial and technical assistance to selected applicants in order to
enhance their ability to make loans and investments and provide
services for the benefit of designated investment area(s), targeted
population(s) or both. The Fund will select awardees through a
competitive application process. After selection, each awardee will
enter into an assistance agreement with the Fund that will require it
to achieve financial, organizational development, and community impact
performance goals.
Subpart A--General Provisions
Subpart A contains general provisions of the CDFI Program,
including its relationship to other Fund programs (Sec. 1805.102) and
the definitions applicable to this part (Sec. 1805.104).
Subpart B--Eligibility
Section 1805.200 establishes criteria for qualification as a CDFI.
The criteria reflect the requirements stated in the authorizing
statute. To be eligible to apply for assistance, an entity must either
be, or propose to become, a CDFI. The regulations describe the
information needed by the Fund to assess whether, among other things:
(1) The applicant has a primary mission of community development; (2)
the applicant's predominant business activity is the provision of loans
or investments; and (3) the applicant serves an investment area(s) or
targeted population(s). The Fund recognizes that there will be
significant diversity among applicants with respect to asset size,
organizational type, stage of organizational development, products and
services offered, and the geographic location. The Fund seeks comments
on how effectively the eligibility criteria in the regulations apply to
this broad range of organizations.
Section 1805.201 allows an entity to apply to the Fund for
certification as a CDFI regardless of whether it is applying for
assistance. The Fund believes that such a certification process will
recognize the importance of the activities that institutions are
engaged in, enhance their credibility with investors, and facilitate
participation by CDFIs in other government programs.
Subpart C--Target Markets
As stated in Sec. 1805.300, an applicant must designate one or more
investment areas or targeted populations as the target market(s) it
intends to serve. Section 1805.301 gives each applicant significant
flexibility in designating an investment area provided that certain
conditions are met. Investment areas must meet objective criteria of
distress. Consistent with its statutory mandate, the Fund has developed
objective criteria that are appropriate for identifying distress in
metropolitan, non-metropolitan and Native American communities. These
criteria were developed in consultation with the Departments of Housing
and Urban Development, Agriculture, Interior and Commerce and the Small
Business Administration. Investment areas can comprise a variety of
different geographic units in order to reflect the neighborhoods,
areas, or markets that applicants serve or propose to serve. The Fund
seeks input from applicants and other interested parties on whether the
Fund's criteria for designation of investment areas are appropriate for
the markets and communities that applicants serve.
[[Page 54112]]
Section 1805.302 incorporates the statutory requirements for
defining a targeted population.
Subpart D--Use of Funds/Eligible Activities
Section 1805.401 lists the eligible activities for which financial
assistance must be used and permits the Fund to approve other
activities. Section 1805.402 requires that an applicant's use of the
Fund's assistance and any corresponding matching funds for purposes
approved by the Fund as reflected in an assistance agreement. The
regulations place restrictions on such applicant's distribution of
monies to affiliates or its community partners. Section 1805.403
provides that technical assistance resources may be allocated at the
discretion of the Fund and must be used to build the capacity of CDFIs.
Such assistance may be provided regardless of whether an entity
receives financial assistance.
Subpart E--Investment Instruments
Section 1805.500 states that the Fund's primary objective in
awarding financial assistance is to enhance the stability, performance
and capacity of an awardee. Both Fund financial assistance and matching
funds must be used to achieve specific performance goals. The Fund
retains discretion to provide its assistance in a manner and amount
different from an applicant's request.
Section 1805.501 describes the types of investment instruments
through which the Fund may provide financial assistance. Section
1805.502 restates the CDFI Act's aggregate assistance limit of $5
million for each applicant in any three-year period (which may be
increased by up to $3.75 million under special circumstances). Pursuant
to Sec. 1805.503, the Fund has the right to sell its equity investments
or loans, but retains the authority to monitor and enforce each
awardee's performance goals.
Subpart F--Matching Funds Requirements
Pursuant to Sec. 1805.600, each applicant must obtain matching
funds from sources other than the Federal government that are at least
equal to the amount of financial assistance provided by the Fund.
Community Development Block Grant funds may not be used for the match.
As required by the Act and Sec. 1805.601, the matching funds must be
comparable in form and value to the Fund's financial assistance. This
provision is intended to encourage match providers to offer their
resources under the most favorable terms and conditions possible and
enable a CDFI to obtain the Fund's assistance in a like manner. Under
certain limited circumstances and at the Fund's discretion, an
applicant may receive a severe constraints waiver of the matching funds
requirements pursuant to Sec. 1805.602. Section 1805.603 permits
applicants to use matching funds obtained for up to one year prior to
publication of a NOFA for a particular funding round. Each NOFA may
establish other conditions or restrictions on the time period for
raising matching funds. The Fund seeks comments on how to structure its
assistance so that CDFIs may seek matching funds on the most favorable
terms possible.
Subpart G--Applications for Assistance
Section 1805.701 specifies the information that must be provided as
part of an application. This information describes how an applicant can
demonstrate whether it meets the eligibility requirements of subpart B.
The section also describes information that an applicant must provide
to be evaluated and selected under subpart H. The most significant
component of the application is a five-year comprehensive business
plan. The plan will provide the basis for evaluating both the
applicant's current capacity and its potential for the future. The plan
must include, among other things, elements related to financial
performance, management policies and capacity, market analysis,
coordination efforts, community impact, funding resources, and timing.
The application must contain a detailed description of the matching
funds to be raised by the applicant for use in conjunction with the
Fund's assistance. In developing the application requirements, the Fund
has sought to focus on the types of information that private or public
investors would expect from such institutions. The Fund seeks comments
from applicants and other interested parties on the appropriateness of
the comprehensive business plan's contents.
Subpart H--Rating and Selection of Applicants
Section 1805.800 outlines the evaluation and selection process.
Section 1805.801 indicates the Fund's intent to seek to fund a
geographically diverse group of applicants as required by the CDFI Act.
Pursuant to Sec. 1805.802, applicants will be evaluated and selected on
a competitive basis using a three-tiered process. Tier I is intended to
screen out applicants that do not meet the eligibility requirements or
who have submitted inadequate application materials. Tier II is
intended to screen out applicants that do not possess the
organizational and financial capacity to be a successful CDFI. Tiers I
and II will eliminate applications not appropriate for funding and
allow the Fund to focus on those applications with the greatest ability
to maximize community impact, operate in a sound manner, and achieve
the public policy goals of the program. As provided in the CDFI Act,
the Fund has sole discretion in selecting applicants for assistance.
Tier III of the process will be used to evaluate the qualitative
aspects of the remaining applications. The Fund will examine factors
related to organizational capacity, extent of external resources, and
community impact. The Fund will seek to implement the evaluation and
selection process in a manner that takes into consideration the unique
characteristics of applicants that vary by organizational type, total
asset size, and stage of organizational development. The process will
consider the contributions of community partners in an applicant's
efforts. The process will permit the Fund to give additional
consideration to applicants that: (1) Have secured all their matching
funds; (2) concentrate their activities within target markets; and (3)
dedicate the greatest portion of their overall resources to lending,
investments and development service activities.
The Fund has dedicated significant efforts toward designing its
evaluation and selection process and seeks comments on its
effectiveness in directing resources to applicants that can best
fulfill the objectives of the program. Comments are also requested to
assist the Fund in identifying the best measures of an applicant's
organizational and financial capacity--reflecting its desire to direct
monies to applicants that can use its resources most effectively.
Finally, the Fund seeks comments on other priorities that should be
reflected in the evaluation and selection process.
Subpart I--Terms and Conditions of Assistance
While Federal and State agencies will retain responsibility for
assuring the safety and soundness of insured CDFIs, pursuant to
Sec. 1805.900 the Fund will (to the extent practicable) ensure that
unregulated awardees are financially and managerially sound and
maintain appropriate internal controls. Prior to receiving assistance,
each awardee will execute an agreement with the Fund that describes its
performance goals and other terms and conditions of assistance. Section
1805.901 describes the nature and use of the Fund's assistance
agreements. The agreement
[[Page 54113]]
will contain sanctions for noncompliance. As required by the Act, any
proposed sanctions to be imposed on an insured CDFI must be discussed
with the appropriate Federal banking agency under specific procedures.
Pursuant to Sec. 1805.902, disbursement of assistance from the Fund
will be in a lump sum or over a period of time, as determined by the
Fund. However, the Fund may provide no financial assistance until the
awardee has secured a firm commitment for its corresponding matching
funds. This provision is intended to ensure that no Federal funds are
released until other resources are leveraged.
Section 1805.903 describes the recordkeeping and reporting
requirements applicable to awardees. These requirements are consistent
with the Fund's fiduciary and monitoring responsibilities. Awardees are
required to submit quarterly data on financial performance and annual
reports and audits on its financial and programmatic performance. The
Fund will seek to utilize information available through the appropriate
Federal banking agencies on insured CDFIs as required by the CDFI Act.
In developing its regulations, the Fund has sought to minimize its
recordkeeping and reporting requirements. The Fund requests input on
how to further reduce such burden while still meeting its monitoring
and enforcement needs. The Fund further seeks suggestions how to best
measure and monitor the performance of awardees without imposing
onerous reporting requirements.
All awardees shall be subject to legal requirements pertaining to
the Fund's assistance, including conflict of interest standards.
Section 1805.905 requires each awardee to comply with all other
governmental requirements. Section 1805.906 requires awardees to
maintain standards of conduct acceptable to the Fund. Section 1805.907
describes lobbying restrictions applicable to awardees.
IV. Bank Enterprise Award Program
Section 114 of the CDFI Act is based on the Bank Enterprise Act and
gives the Fund authority to implement, with some modifications, its
provisions. The Bank Enterprise Act was enacted in 1991, but had not
previously received appropriated funds for implementation.
The purpose of the BEA Program (12 CFR part 1806) is to encourage
insured depository institutions to increase loans, services and
technical assistance within distressed communities and to make equity
investments in CDFIs. The BEA Program rewards participating insured
depository institutions for increasing their activities in economically
distressed communities and investing in CDFIs. Applicants are selected
to participate in the program through a competitive process which
evaluates applications based on the value of proposed increases in
their specified activities. Program participants receive monies only
after successful completion of the specified activities.
Subpart A--General Provisions
Section 1806.102 describes the program's relationship to the CDFI
Program (part 1805). To prevent applicants from receiving more than one
Federal award for a single activity, no CDFI may receive an award under
the BEA Program if it: (1) Has an application pending under the CDFI
Program; (2) has received assistance from that program within the
preceding 12 months; or (3) has ever received assistance under that
program for the same activities proposed in a BEA Program application.
Assistance provided to a CDFI by a BEA Program participant may be used
by the CDFI as matching funds for the CDFI Program. BEA applicants that
propose to make an equity investment in a CDFI must request that the
entity be certified as a CDFI under Sec. 1805.201 of the CDFI Program
regulations.
Subpart B--Awards
Distressed Community
Section 1806.200 describes the community eligibility and
designation process. An insured depository institution applying for an
award is required to designate a distressed community or communities if
it proposes to carry out certain specified activities (Eligible
Development Activities) or make equity investments that support the
efforts of a CDFI in a distressed community.
The statute mandates that each designated distressed community meet
certain geographic requirements and distress criteria. Under the
geographic requirements, the community must be located within certain
boundaries, its boundaries must be contiguous and its population must
meet certain requirements or it must be located entirely within an
Indian Reservation (as defined in the regulations). The distress
criteria require that at least 30 percent of the residents have incomes
which are less than the national poverty level and the unemployment
rate for the area must be at least 1.5 times the national average (as
determined by the Bureau of the Statistics' most recent figures). Such
criteria will target BEA Program resources to some of the most
distressed communities in the nation. The Fund seeks comments from
applicants and other interested parties on how, working within the
framework of the geographic requirements and distress criteria, it can
maximize participation in the program.
Qualified Activities
In Sec. 1806.201 the activities that program participants may
engage in are categorized as equity investments in CDFIs or Eligible
Development Activities. Eligible Development Activities include certain
consumer, commercial real estate, single family, multi-family, business
and agricultural loans. Each of these loans is defined and must serve
the distressed community. Additional Eligible Development Activities
specified are deposit taking activities and providing certain services
and technical assistance to specified persons. Certain grants, loans
and technical assistance to CDFIs also qualify as Eligible Development
Activities. Each Eligible Development Activity is assigned a priority
factor based on the Fund's assessment of its degree of difficulty, the
extent of innovation involved, and the extent of benefits provided to a
distressed community by the activity. The Fund specifically seeks
comments about the appropriateness of the priority factors assigned to
each activity, as well as other methodologies that could be explored
for prioritizing activities.
In developing the categories of Eligible Development Activities,
the Fund sought to minimize recordkeeping and reporting burdens. The
Fund specifically seeks comments on the extent to which the activity
categories correspond to information already collected by insured
depository institutions and how the categories (and the manner in which
activities are valued) might be modified to reduce reporting burden.
Measuring Activities
Section 1806.202 describes the methodology used to measure
activities for the purpose of ranking applications and determining
award amounts. All qualified activities will be measured by the
increases in value of the activities between a retroactive baseline
period (for which the applicant will provide historical data) and a
prospective assessment period (for which the applicant must project
future activity levels). Dates for the baseline and assessment periods
will be published in the NOFA for each funding round.
[[Page 54114]]
Estimated Award Amounts
In Sec. 1806.203 procedures are established for calculating
estimated award amounts. In general, the estimated award amount for
equity investments in CDFIs will be equal to 15 percent of an
applicant's anticipated increase in such equity investments. For
Eligible Development Activities, a seven step procedure is established
under which a total score is calculated. Generally, if the applicant is
a CDFI, the total score is multiplied by 15 percent to determine the
estimated award. If the applicant is not a CDFI, the total score is
multiplied by 5 percent. The Fund specifically seeks comment on whether
the award levels are appropriate for prompting applicants to increase
their activities within distressed communities. The Fund also requests
comments on whether there are other approaches or methodologies that
could be explored for facilitating increased activity levels among
insured depository institutions.
Selection Process
A selection process is established in Sec. 1806.204 which reflects
the funding priorities mandated in statute. First, applications that
propose equity investments in CDFIs that support the efforts of those
institutions in distressed communities will be selected. Second,
applicants that propose equity investments in other CDFIs will be
selected. Finally, applicants that propose to undertake Eligible
Development Activities will be selected. Applications in the first two
categories will be ranked based on the extent to which an applicant
proposes to reduce its award below 15 percent. Ties between applicants
will be broken using the ratio of proposed equity investments to the
asset size of the institution. Applications in the last category of
funding priorities will be ranked according to the ratio of an
applicant's total score relative to its asset size. Any ties between
such applicants will be broken using the poverty rates of the
distressed communities.
Actual Award Amounts
Section 1806.205 establishes the funding process. In developing
these regulations, the Fund considered three alternative schemes for
selecting and funding applicants. A ``prospective'' system was
considered which makes selections based on projected achievements and
provides incentives at the beginning of the implementation period (with
a requirement that the award be returned in the event of
nonperformance). A ``ex-post facto'' system was also considered which
evaluates and makes awards based on activities that have already been
implemented. Finally, a ``hybrid'' system was considered which selects
program participants based on projected performance, but provides
awards only after the activities have been implemented. The latter
approach was selected because it: (1) Provides greater certainty to
program participants that they will be rewarded for completing their
projected activities; and (2) achieves the public policy objective of
utilizing the Fund's limited resources to catalyze new activities. The
Fund specifically seeks comments on whether this approach will best
maximize community impact and the participation of insured depository
institutions. The Fund also seeks suggestions on other approaches that
might maximize the impact of its limited resources.
Awards are provided based on activities that are actually carried
out. If an awardee carries out 90 percent or more of its projected
activities, it will receive the full estimated award amount. If an
awardee only partially achieves its projected activities, the Fund may
provide a partial award. Partial achievement is set at less than 90
percent but at least 75 percent. The Fund may adjust the percentages
used to define partial achievement in certain circumstances. These
provisions will allow the Fund to pro-rate award amounts based on
actual performance in order to: (1) Prevent applicants from over-
estimating projected activities to enhance their competitiveness in the
selection process; and (2) recognize that achieving a projected
performance goal is not always within the complete control of the
program participant. The Fund specifically seeks public comments on
whether such a mechanism will accomplish these goals or whether there
are alternative mechanisms that should be explored.
Application Process
Section 1806.206 describes the application process for Bank
Enterprise Awards. Each funding round will be proceeded by a NOFA
published in the Federal Register. The NOFA will contain specific
information on requirements or restrictions applicable to such round.
As indicated above, the Fund has sought to minimize its application and
reporting requirements and seeks comment on how these requirements
might be improved.
Subpart C--Terms and Conditions of Assistance
Section 1806.300 requires that each Awardee execute an award
agreement with the Fund. The agreement will establish requirements for
receiving funds and appropriate sanctions for failure to comply with
program requirements. Section 1806.301 specifies that, at the end of
the assessment period, each Awardee will submit evidence of its
completed activities and an estimate of the benefits they have
generated within the distressed community. Upon receipt of these final
reports, the Fund will make the appropriate disbursement of funds to
the awardee.
V. Environmental Quality
The National Environmental Policy Act (NEPA) directs Federal
agencies to interpret and administer the policies, regulations and
public laws of the United States in accordance with the environmental
policies established in section 101 of NEPA. The Council on
Environmental Quality (CEQ) issued regulations to provide uniform
standards applicable throughout the Federal government for conducting
environmental reviews. The CEQ regulations require that each agency
develop its own procedures to supplement the CEQ regulations. The
Department of the Treasury's NEPA implementing procedures are contained
in Treasury Directive 75-02, Department of the Treasury Environmental
Quality Program. The Directive provides that each bureau issue its own
supplementary procedures as necessary for the implementation of NEPA.
The regulations in 12 CFR 1815 are the Fund's implementing
procedures for compliance with NEPA and the CEQ regulations. These
regulations are designed to: (1) Integrate the NEPA process with other
planning and decisionmaking processes of the Fund; (2) ensure that the
Fund's decisions are made in compliance with NEPA and the CEQ
regulations, and (3) involve the public in the NEPA process in an
appropriate and responsible manner. These procedures address: (1) the
Fund's decisionmaking process related to substantive consideration of
environmental factors; (2) the procedural requirements for
environmental documentation at critical stages of the decisionmaking
process; and (3) establishment of criteria to assist in determining the
need for environmental assessments and environmental impact statements.
Part 1815 of these regulations have been reviewed by the CEQ for
conformance with NEPA and the CEQ regulations.
Section 1815.103 designates the Director of the Fund as the
official responsible for implementation of the
[[Page 54115]]
Fund's environmental quality policies and procedures. Section 1815.104
sets forth the specific duties of such official.
As indicated in Sec. 1815.105, there are two distinct stages in the
decisionmaking process for award of the Fund's assistance: (1) A
preliminary approval point at which applications are selected; and (2)
a subsequent stage where funding actually occurs. Part 1815 of the
regulations have been drafted to take into account this staged process.
During its initial application review, the Fund will determine whether
an applicant proposes actions which are categorically excluded or that
normally require an environmental impact statement (EIS) or an
environmental assessment. If any proposed action is not categorically
excluded, funding approval will be conditioned upon submission of
information by the applicant that is necessary to perform the
appropriate environmental review. No Federal funds may be used for such
an action until the environmental review is completed and approved by
the Fund. If the information provided is not sufficient to perform a
meaningful environmental review during the application screening
process, Sec. 1815.106 requires a supplemental environmental review
prior to taking any action: (1) That is not categorically excluded; (2)
that directly uses Federal funds; and (3) for which an environmental
assessment or EIS has not been approved by the Fund. The Fund will
require that it be informed of any action that would require further
environmental review prior to the use of any Federal funds as part of
the required application materials and assistance agreements.
Section 1815.108 establishes certain actions that will require an
EIS to be performed. Section 1815.109 prescribes procedures to be
followed when such an EIS is necessary. Section 1815.110 provides a
list of actions that constitute a categorical exclusion (activities
that do not individually or collectively have a significant effect on
the human environment). Absent extraordinary circumstances, these
actions do not require preparation of either an environmental
assessment or an EIS. Section 1815.112 outlines procedures for the
preparation of an environmental assessment if an action does not
normally require an EIS and is not categorically excluded. As indicated
in Sec. 1815.113, information collected by the Fund will be available
to the public consistent with the CEQ regulations.
The Fund anticipates that most actions to be proposed and carried
out by applicants will be categorically excluded. However, if it
becomes evident during either the application review or implementation
stages that an action does not meet these exclusion standards, the Fund
(in cooperation with the program recipient) will diligently perform its
environmental review responsibilities under NEPA, the CEQ regulations,
and these supplemental procedures.
List of Subjects
12 CFR Part 1805
Community development, Economic development, Grant programs--
community development, Loan programs--community development, Reporting
and recordkeeping requirements, Small businesses.
12 CFR Part 1806
Banks, banking, Community development, Economic development, Grant
programs--community development, Reporting and recordkeeping
requirements, Savings associations.
12 CFR Part 1815
Environmental impact statements, Environmental protection,
Reporting and recordkeeping requirements.
Dated: October 10, 1995.
John D. Hawke, Jr.,
Under Secretary (Domestic Finance).
For the reasons set forth in the preamble, a new chapter XVIII
consisting of parts 1805, 1806, and 1815 is established in title 12 of
the Code of Federal Regulations to read as follows:
CHAPTER XVIII--COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND,
DEPARTMENT OF THE TREASURY
Part
1805 Community development financial institutions program
1806 Bank enterprise award program
1815 Environmental quality
PART 1805--COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS PROGRAM
Subpart A--General Provisions
Sec.
1805.100 Purpose.
1805.101 Summary.
1805.102 Relationship to other Fund programs.
1805.103 Awardee not instrumentality.
1805.104 Definitions.
1805.105 Waiver authority.
1805.106 OMB control number.
Subpart B--Eligibility
1805.200 Applicant eligibility.
1805.201 Certification as a Community Development Financial
Institution.
Subpart C--Target Markets
1805.300 Target markets--general.
1805.301 Investment Area.
1805.302 Targeted Population.
Subpart D--Use of Funds/Eligible Activities
1805.400 Purposes of financial assistance.
1805.401 Eligible activities.
1805.402 Restrictions on use of assistance.
1805.403 Technical assistance.
Subpart E--Investment Instruments
1805.500 Investment instruments--general.
1805.501 Forms of investment instruments.
1805.502 Assistance limits.
1805.503 Authority to sell.
Subpart F--Matching Funds Requirements
1805.600 Matching funds--general.
1805.601 Comparability of form and value.
1805.602 Severe constraints waiver.
1805.603 Time frame for raising match.
Subpart G--Applications for Assistance
1805.700 Notice of funds availability.
1805.701 Application contents.
Subpart H--Rating and Selection of Applications
1805.800 Rating and selection--general.
1805.801 Geographic diversity.
1805.802 Tiered review process.
Subpart I--Terms and Conditions of Assistance
1805.900 Safety and soundness.
1805.901 Assistance Agreement; sanctions.
1805.902 Disbursement of funds.
1805.903 Data collection and reporting.
1805.904 Information.
1805.905 Compliance with government requirements.
1805.906 Conflict of interest requirements.
1805.907 Lobbying restrictions.
1805.908 Criminal provisions.
1805.909 Fund deemed not to control.
1805.910 Limitation on liability.
1805.911 Fraud, waste and abuse.
Authority: 12 U.S.C. 4703, 4717; chapter X, Pub. L. 104-19, 109
Stat. 237 (12 U.S.C. 4703 note).
Subpart A--General Provisions
Sec. 1805.100 Purpose.
The purpose of the Community Development Financial Institutions
Program is to facilitate the creation of a national network of
financial institutions that is dedicated to community development.
Sec. 1805.101 Summary.
Under the Community Development Financial Institutions Program, the
Fund will provide financial and technical assistance to Applicants
selected by the Fund in order to enhance their ability to make loans
and investments and provide services. An Awardee must serve an
Investment Area(s), Targeted Population(s), or both. The Fund will
select Awardees to receive financial and technical
[[Page 54116]]
assistance through a competitive application process. Each financial
assistance Awardee will enter into an Assistance Agreement which will
require it to achieve financial, organizational development, and
community impact goals.
Sec. 1805.102 Relationship to other Fund programs.
(a) Bank Enterprise Award Program. (1) No Insured CDFI may receive
assistance from the Bank Enterprise Award Program (part 1806 of this
chapter) if it has:
(i) An application for assistance pending under the Community
Development Financial Institutions Program;
(ii) Received assistance under the Community Development Financial
Institutions Program within the preceding 12-month period; or
(iii) Received assistance under the Community Development Financial
Institutions Program for the same activities as proposed under an
application for the Bank Enterprise Award Program.
(2) An Equity Investment (as defined in part 1806 of this chapter)
in, or a loan to, a CDFI made by a Bank Enterprise Award Program
Awardee may be used to meet the matching fund requirements described in
subpart F of this part. Receipt of such Equity Investment or loan does
not disqualify a CDFI from receiving assistance under this part.
(b) Liquidity enhancement program. No entity that receives
assistance through the liquidity enhancement program authorized under
section 113 (12 U.S.C. 4712) of the Act may receive assistance under
the Community Development Financial Institutions Program.
Sec. 1805.103 Awardee not instrumentality.
No Awardee (or its Community Partner) shall be deemed to be an
agency, department, or instrumentality of the United States.
Sec. 1805.104 Definitions.
For the purpose of this part:
(a) Act means the Community Development Banking and Financial
Institutions Act of 1994 (12 U.S.C. 4701 et seq.);
(b) Affiliate means any company or entity that controls, is
controlled by, or is under common control with another company;
(c) Applicant means any entity submitting an application for
assistance under this part;
(d) Appropriate Federal Banking Agency has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1811 et
seq.), and also includes the National Credit Union Administration with
respect to Insured Credit Unions;
(e) Assistance Agreement means a contract between the Fund and an
Awardee which specifies the terms and conditions of assistance under
this part;
(f) Awardee means an Applicant selected by the Fund to receive
assistance pursuant to this part;
(g) Community Development Financial Institution (or CDFI) means an
entity currently meeting the eligibility requirements under
Sec. 1805.200;
(h) Community Development Financial Institutions Program means the
program authorized by sections 105-108 of the Act (12 U.S.C. 4704-4707)
and implemented under this part;
(i) Community Facility means a facility where health care, child
care, educational, cultural, or social services are provided;
(j) Community-Governed means an entity in which the residents of an
Investment Area(s) or members of a Targeted Population(s) represent
greater than 50 percent of the governing body;
(k) Community-Owned means an entity in which the residents of an
Investment Area(s) or members of a Targeted Population(s) have an
ownership interest of greater than 50 percent;
(l) 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. A Community
Partner may include a Depository Institution Holding Company, an
Insured Depository Institution, an Insured Credit Union, a not-for-
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 seq.);
(m) Community Partnership means an agreement between an Applicant
and a Community Partner to collaboratively provide loans, equity
investments, or Development Services to an Investment Area(s) or a
Targeted Population(s);
(n) Comprehensive Business Plan means a document covering not less
than the next five fiscal years which meets the requirements described
under Sec. 1805.701(d);
(o) Depository Institution Holding Company means a bank holding
company or a savings and loan holding company as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.);
(p) Development Investment means an equity investment made by an
Applicant which, in the judgment of the Fund, directly supports or
enhances activities that serve an Investment Area(s) or a Targeted
Population(s). Such investments must be made through an arms-length
transaction with a third party that does not have a relationship with
the Applicant as an Affiliate;
(q) Development Services means activities that promote community
development and are integral to lending and Development Investment
activities. Such services shall prepare or assist potential borrowers
or investees to utilize the lending or investment products of the
Awardee, its Affiliates, or its Community Partners. Such services
include:
(1) Financial or credit counseling to individuals for the purpose
of facilitating home ownership, promoting self-employment, or enhancing
consumer financial management skills; or
(2) Technical assistance to borrowers or investees for the purpose
of enhancing business planning, marketing, management, and financial
management skills;
(r) Financial Services means checking, check-cashing, money orders,
certified checks, automated teller machines, deposit-taking, and safe
deposit box services;
(s) Fund means the Community Development Financial Institutions
Fund established under section 104(a) (12 U.S.C. 4703(a)) of the Act;
(t) Indian Reservation means any geographic area that meets the
requirements of section 4(10) of the Indian Child Welfare Act of 1978
(25 U.S.C. 1903(10)), and shall include land held by incorporated
Native groups, regional corporations, and village corporations, as
defined in and pursuant to the Alaska Native Claims Settlement Act (43
U.S.C. 1601 et seq.), public domain Indian allotments, and former
Indian reservations in the State of Oklahoma;
(u) Indian Tribe means any Indian Tribe, band, pueblo, nation, or
other organized group or community, including any Alaska Native village
or regional or village corporation, as defined in or established
pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et
seq.), which is recognized as eligible for special programs and
services provided by the United States to Indians because of their
status as Indians;
(v) Insider means any director, officer, employee, principal
shareholder (owning, individually or in combination
[[Page 54117]]
with family members, five percent or more of any class of stock), or
agent (or any family member or business partner of any of the above) of
any Applicant, Affiliate or Community Partner;
(w) Insured CDFI means a CDFI that is an Insured Depository
Institution or an Insured Credit Union;
(x) Insured Credit Union means any credit union, the member
accounts of which are insured by the National Credit Union Share
Insurance Fund;
(y) Insured Depository Institution means any bank or thrift, the
deposits of which are insured by the Federal Deposit Insurance
Corporation;
(z) Investment Area means a geographic area meeting the
requirements of Sec. 1805.301;
(aa) Low-Income means an income (as reported by the Bureau of the
Census in the 1990 decennial census), adjusted for family size, of not
more than:
(1) For Metropolitan Areas, 80 percent of the area median family
income; and
(2) For non-Metropolitan Areas, the greater of:
(i) 80 percent of the area median family income; or
(ii) 80 percent of the statewide non-Metropolitan Area median
family income;
(bb) Metropolitan Area means an area designated as such by the
Office of Management and Budget pursuant to 44 U.S.C. 3504(d)(3) and 31
U.S.C. 1104(d) and Executive Order 10253 (3 CFR, 1949-1953 Comp., p.
758), as amended;
(cc) Non-Regulated CDFI means any entity meeting the eligibility
requirements of Sec. 1805.200 which is not a Depository Institution
Holding Company, Insured Depository Institution, or Insured Credit
Union;
(dd) State means any State of the United States, the District of
Columbia or any territory of the United States, Puerto Rico, Guam,
American Samoa, the Trust Territories of the Pacific Islands, the
Virgin Islands, and the Northern Mariana Islands;
(ee) Subsidiary means any company which 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
Sec. 1805.200(h)(4); and
(ff) Targeted Population means individuals or an identifiable group
meeting the requirements of Sec. 1805.302.
Sec. 1805.105 Waiver authority.
The Fund may waive any requirement of this part that is not
required by law upon a determination of good cause. Each such waiver
shall be in writing and supported by a statement of the facts and the
grounds forming the basis of the waiver. For a waiver in an individual
case, the Fund must determine that application of the requirement to be
waived would adversely affect the achievement of the purposes of the
Act. For waivers of general applicability, the Fund will publish notice
of granted waivers in the Federal Register.
Sec. 1805.106 OMB control number.
The collection of information requirements in this part have been
approved by the Office of Management and Budget and assigned OMB
control number 1505-0153 (expires September 30, 1998).
Subpart B--Eligibility
Sec. 1805.200 Applicant eligibility.
(a) General requirements. (1) An entity that meets the requirements
described in paragraphs (b) through (h) of this section will be
considered a CDFI and will be eligible to apply for assistance under
this part. Criteria to establish compliance with such requirements are
set forth in Sec. 1805.701(b).
(2) An entity that proposes to become a CDFI is eligible to apply
for assistance under this part if the Fund determines that such
entity's Comprehensive Business Plan provides a realistic course of
action to ensure that it will meet the requirements described in this
section within three years of entering into an Assistance Agreement
with the Fund.
(3) The Fund, in its sole discretion, shall determine whether an
Applicant fulfills the requirements set forth in this section and as
set forth in Sec. 1805.701(b).
(b) Primary mission. A CDFI shall have a primary mission of
promoting community development.
(c) Target market. A CDFI shall serve an Investment Area(s) or
Targeted Population(s).
(d) Financing entity. A CDFI shall be an entity whose predominant
business activity is the provision of loans or Development Investments.
(e) Development Services. A CDFI, directly or through an Affiliate,
shall provide Development Services in conjunction with loans or
Development Investments.
(f) Accountability. A CDFI must maintain accountability to its
Investment Area(s) or Targeted Population(s) through representation on
its governing board or otherwise.
(g) Non-government entity. A CDFI shall not be an agency or
instrumentality of the government of the United States, or any State or
political subdivision thereof. An entity that is created by, or that
receives substantial assistance from, one or more government entities
may be a CDFI provided that it is not controlled by such entities and
maintains independent decision-making power over its activities.
(h) Provisions applicable to Depository Institution Holding
Companies and Insured Depository Institutions. (1) A Depository
Institution Holding Company may qualify as a CDFI only if it and its
Affiliates collectively satisfy the requirements described in
paragraphs (a) through (g) of this section.
(2) No Affiliate of a Depository Institution Holding Company may
qualify as a CDFI unless the holding company and all of its Affiliates
collectively meet the requirements described in paragraphs (a) through
(g) of this section.
(3) No Subsidiary of an Insured Depository Institution may qualify
as a CDFI if the Insured Depository Institution and its Subsidiaries do
not collectively meet the requirements described in paragraphs (a)
through (g) of this section.
(4) For the purposes of paragraphs (h) (1), (2) and (3) of this
section, an Applicant will not be considered to be a Subsidiary of any
Insured Depository Institution or Depository Institution Holding
Company that controls less than 25 percent of any class of its voting
shares, and which does not, in any manner, otherwise control the
election of a majority of directors of the Applicant.
Sec. 1805.201 Certification as a Community Development Financial
Institution.
An entity may apply to the Fund for certification that it meets the
CDFI eligibility requirements (as described under Sec. 1805.200)
regardless of whether it is seeking financial or technical assistance
from the Fund. Entities seeking such certification shall provide the
information described under Sec. 1805.701(b). Certification by the Fund
will verify that the entity meets the CDFI eligibility requirements.
However, such a certification shall not constitute an opinion by the
Fund as to the financial viability of the entity that obtains such
certification.
Subpart C--Target Markets
Sec. 1805.300 Target markets--general.
An Applicant shall designate one or more Investment Area(s) or
Targeted Population(s) that it proposes to serve. An Applicant may also
choose to serve both an Investment Area(s) and a Targeted
Population(s). An Investment
[[Page 54118]]
Area shall meet specific geographic and other criteria discussed in
Sec. 1805.301. A Targeted Population shall consist of Low-Income
persons or those who otherwise lack adequate access to loans or equity
investments.
Sec. 1805.301 Investment area.
(a) General. A geographic area will be considered eligible for
designation as an Investment Area if it:
(1)(i) Meets at least one of the objective criteria of economic
distress as set forth in paragraph (d) of this section and has
significant unmet needs for loans or equity investments as described in
paragraph (e) of this section; or
(ii) Encompasses or is located in an Empowerment Zone or Enterprise
Community designated under section 1391 of the Internal Revenue Code of
1986 (26 U.S.C. 1391); and
(2) Is entirely located within the geographic 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, American Samoa, the Trust Territories of the Pacific
Islands, the Virgin Islands, and the Northern Mariana Islands).
(b) Geographic units. An Investment Area shall consist of a
geographic unit(s) that is a county (or equivalent area), minor civil
division that is a unit of local government, incorporated place, census
tract, block numbering area, block group, or American Indian or Alaska
Native area (as such units are defined or reported by the U.S. Bureau
of the Census). An Applicant can designate one or more Investment Areas
as part of a single application.
(c) Designation. An Applicant can designate an Investment Area by
selecting:
(1) A geographic unit(s) which individually meets one of the
criteria in paragraph (d) of this section; or
(2) A group of contiguous geographic units which together meet one
of the criteria in paragraph (d) of this section, provided that the
combined population residing within individual geographic units not
meeting any such criteria does not exceed 15 percent of the total
population of the entire Investment Area.
(d) Distress criteria. An Investment Area (or the units that
comprise an area) must meet at least one of the following objective
criteria of economic distress (as reported in the 1990 (or subsequent)
decennial Census and published by the U.S. Bureau of the Census):
(1) The percentage of the population living in poverty is at least
20 percent;
(2) In the case of an Investment Area located:
(i) Within a Metropolitan Area, the median family income shall be
at or below 80 percent of the Metropolitan Area median family income or
the national Metropolitan Area median family income, whichever is
greater; or
(ii) Outside of a Metropolitan Area, the median family income shall
be at or below 80 percent of the statewide non-Metropolitan Area median
family income or the national non-Metropolitan Area median family
income, whichever is greater;
(3) The unemployment rate is at least 1.5 times the national
average;
(4) The percentage of occupied distressed housing (as indicated by
lack of complete plumbing and occupancy of more than one person per
room) is at least 20 percent; or
(5) In areas located outside of a Metropolitan Area, the county
population loss between 1980 and 1990 is at least 10 percent.
(e) Unmet needs. An Investment Area will be deemed to have
significant unmet needs for loans or equity investments if studies or
other analyses provided by the Applicant adequately demonstrate a
pattern of unmet needs for loans and equity investments within such
area(s).
Sec. 1805.302 Targeted population.
(a) A Targeted Population shall mean individuals, or an
identifiable group of individuals, who: Are Low-Income persons; or lack
adequate access to loans or equity investments. An Applicant can serve
the members of a Targeted Population directly or through borrowers or
investees that directly serve or provide significant benefits to such
members.
(b) 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, American Samoa, the Trust Territories of the
Pacific Islands, the Virgin Islands, and the Northern Mariana Islands).
(c) An Applicant shall provide its products and services in a
manner that is consistent with the Equal Credit Opportunity Act (15
U.S.C. 1691), to the extent that the Applicant is subject to the
requirements of such Act.
Subpart D--Use of Funds/Eligible Activities
Sec. 1805.400 Purposes of financial assistance.
The Fund may provide financial assistance through investment
instruments described under subpart E of this part. Such financial
assistance is intended to strengthen the capital position and enhance
the ability of an Awardee to make loans and Development Investments and
provide Financial Services.
Sec. 1805.401 Eligible activities.
Financial assistance provided under this part may be used by an
Awardee to serve Investment Area(s) or Targeted Population(s) by
developing or supporting:
(a) Commercial facilities that promote revitalization, community
stability or job creation or retention;
(b) Businesses that:
(1) Provide jobs for Low-Income persons;
(2) Are owned by Low-Income persons; or
(3) Enhance the availability of products and services to Low-Income
persons;
(c) Community Facilities;
(d) The provision of Financial Services;
(e) Housing that is principally affordable to Low-Income persons,
except that assistance used to facilitate home ownership shall only be
used for services and lending products that serve Low-Income persons
and that:
(1) Are not provided by other lenders in the area; or
(2) Complement the services and lending products provided by other
lenders that serve the Investment Area(s) or Targeted Population(s);
(f) The provision of Consumer Loans (a loan to one or more
individuals for household, family, or other personal expenditures); or
(g) Other businesses or activities as requested by the Applicant
and deemed appropriate by the Fund.
Sec. 1805.402 Restrictions on use of assistance.
(a) An Awardee shall only use assistance provided by the Fund and
its corresponding matching funds for the eligible activities approved
by the Fund and described in the Assistance Agreement.
(b) An Awardee shall consult with, and obtain the approval of, the
Fund for any significant changes in its activities from those approved
by the Fund and described in the Assistance Agreement.
(c) An Awardee may not distribute assistance to an Affiliate
without the Fund's consent.
(d) Assistance provided upon approval of an application involving a
Community Partnership shall only be distributed to the Awardee and
shall not be used to fund any activities carried out by a Community
Partner or an Affiliate of a Community Partner.
[[Page 54119]]
Sec. 1805.403 Technical assistance.
(a) General. The Fund may provide technical assistance to build the
capacity of a CDFI. Such technical assistance may include training for
management and other personnel; development of programs, products and
services; improving financial management and internal operations;
enhancing a CDFI's community impact; or other activities deemed
appropriate by the Fund. The Fund, in its sole discretion, may provide
technical assistance in amounts, or under terms and conditions that are
different from those requested by an Applicant. The Fund may not
provide any technical assistance to an Applicant for the purpose of
assisting in the preparation of an application. The Fund may provide
technical assistance to a CDFI directly, through grants, or by
contracting with organizations that possess the appropriate expertise.
(b) The Fund may provide technical assistance regardless of whether
or not the recipient also receives financial assistance under this
part. Technical assistance provided pursuant to this part is subject to
the assistance limits described in Sec. 1805.502.
(c) An Applicant seeking technical assistance must meet the
eligibility requirements of Sec. 1805.200 and submit an application as
described in Sec. 1805.701.
(d) The Fund, in its sole discretion, may select Applicants to
receive technical assistance.
Subpart E--Investment Instruments
Sec. 1805.500 Investment instruments--general.
The Fund's primary objective in awarding financial assistance is to
enhance the stability, performance and capacity of an Awardee. The Fund
will require each Awardee to utilize such financial assistance and its
corresponding matching funds to achieve the performance goals
established in its Assistance Agreement. The Fund will provide
financial assistance to an Awardee through one or more of the
investment instruments described in Sec. 1805.501, and under such terms
and conditions as described in this subpart. The 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.
Sec. 1805.501 Forms of investment instruments.
(a) Equity. The Fund may purchase non-voting stock in a for-profit
Awardee. The stock shall be transferable and may convert to voting
stock upon transfer. The Fund shall not own more than 50 percent of the
equity of an Awardee and shall not control its operations.
(b) Capital grants. The Fund may award grants.
(c) Loans. The Fund may make loans, if permitted by applicable law.
(d) Deposits and credit union shares. The Fund may make deposits
(which shall include credit union shares) in Insured CDFIs. Deposits in
an Insured CDFI shall not be subject to any requirement for collateral
or security.
Sec. 1805.502 Assistance limits.
(a) General. Except as provided in paragraph (b) of this section,
the Fund may not provide more than $5 million, in the aggregate, in
financial and technical assistance to an Awardee and its Affiliates
during any three-year period.
(b) Additional amounts. If an Awardee proposes to establish a new
Affiliate to serve an Investment Area(s) or Targeted Population(s)
outside of any State, and outside of any Metropolitan Area, currently
served by the Awardee or its Affiliates, the Awardee may receive
additional financial assistance up to a maximum of $3.75 million during
the same three-year period. Such additional assistance:
(1) Shall only be used to finance activities in the new or expanded
Investment Area(s) or Targeted Population(s); and
(2) Must be distributed to a new Affiliate that meets the
eligibility requirements described in Sec. 1805.200 and is selected for
assistance pursuant to subpart H of this part.
(c) An Awardee may only receive the financial assistance described
in paragraph (b) of this section if no other application to serve
substantially the same Investment Area(s) or Targeted Population(s) has
been selected by the Fund within the previous one-year period, and no
other application which meets the minimum requirements of
Sec. 1805.802(a) and (b) was submitted within the current funding
round.
Sec. 1805.503 Authority to sell.
The Fund may, at any time, sell its equity investments and loans.
Subsequent to such disposition, the Fund shall retain the authority to
enforce the provisions of the Assistance Agreement until the
performance goals specified therein have been met.
Subpart F--Matching Funds Requirements
Sec. 1805.600 Matching funds--general.
All financial assistance awarded under this part shall be matched
with funds from sources other than the Federal government. Except as
provided in Sec. 1805.602, such matching funds shall be provided on the
basis of not less than one dollar for each dollar provided by the Fund.
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
Assistance Agreement.
Sec. 1805.601 Comparability of form and value.
(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 Fund (except as
provided in Sec. 1805.602). The Fund shall have the discretion to
determine whether matching funds pledged are comparable in form and
value to the financial assistance requested.
(b) In the case of an Awardee that raises matching funds from more
than one source, through different investment instruments, or under
varying terms and conditions, the Fund may provide financial assistance
in a manner that represents the combined characteristics of such
instruments.
(c) An Awardee may meet all or part of its matching requirements by
committing available earnings retained from its operations.
Sec. 1805.602 Severe constraints waiver.
(a) In the case of an Applicant with severe constraints on
available sources of matching funds, the Fund, in its sole discretion,
may permit such Applicant to comply with the matching requirements by:
(1) Reducing such requirements by up to 50 percent; or
(2) Permitting an Applicant to provide matching funds in a form to
be determined at the discretion of the Fund, if such an Applicant:
(i) Has total assets of less than $100,000;
(ii) Serves an area that is not a Metropolitan Area; and
(iii) Is not requesting more than $25,000 in assistance.
(b) Not more than 25 percent of the total funds available for
obligation
[[Page 54120]]
under this part in any fiscal year may be matched as described in
paragraph (a) of this section.
(c) An Applicant may request a ``severe constraints waiver'' as
part of its application for assistance. An Applicant shall provide a
narrative justification for its request, indicating:
(1) The cause and extent of the constraints on raising matching
funds;
(2) Efforts to date, results, and projections for raising matching
funds;
(3) A description of the matching funds expected to be raised; and
(4) Any additional information requested by the Fund.
(d) The Fund will grant a ``severe constraints waiver'' only in
exceptional circumstances when it has been demonstrated, to the
satisfaction of the Fund, that an Investment Area(s) or Targeted
Population(s) would not be adequately served without the waiver.
Sec. 1805.603 Time frame for raising match.
Applicants may use monies that have been obtained or legally
committed for up to one year prior to the publication of a Notice of
Funds Availability (NOFA) for an applicable funding round to meet the
matching requirements. An Applicant shall raise the balance of its
matching requirements within the period set forth in the applicable
NOFA.
Subpart G--Applications for Assistance
Sec. 1805.700 Notice of Funds Availability.
Each Applicant shall submit an application for financial or
technical assistance under this part in accordance with these
regulations and a NOFA published in the Federal Register. The NOFA will
advise Applicants on how to obtain an application packet and will
establish deadlines and other requirements. The NOFA may specify any
limitations, special rules, procedures, and restrictions for a
particular funding round. After receipt of an application, the Fund may
request clarifying or technical information on the materials submitted
as part of such application.
Sec. 1805.701 Application contents.
Each application must contain the information specified in the
application packet including the items specified in this section.
(a) Award request. An Applicant shall indicate:
(1) The dollar amount, form, rates, terms and conditions of
financial assistance requested; and
(2) Any technical assistance needs for which it is requesting
assistance.
(b) Eligibility verification. An Applicant shall provide
information necessary to establish that it is, or will be, a CDFI. An
Applicant shall demonstrate whether it meets the eligibility
requirements described in Sec. 1805.200 by providing the information
requested in this paragraph. The Fund, in its sole discretion, shall
determine whether an Applicant has satisfied the requirements of this
paragraph.
(1) Primary mission. (i) A CDFI shall have a primary mission of
promoting community development. The Fund will consider an Applicant to
have such a mission if the activities of the Applicant and its
Affiliates are principally directed:
(A) Within the geographic boundaries of an Investment Area(s);
(B) To members of a Targeted Population(s);
(C) To projects that provide significant benefits to residents of
an Investment Area(s) or members of a Targeted Population(s); or
(D) To any combination of the above.
(ii) Using indicators selected by the Applicant that are
appropriate given the nature of the products and services it (and its
Affiliates) offers, an Applicant shall be deemed to satisfy the
requirements of paragraph (b)(1)(i) of this section if it demonstrates
that the activities of the Applicant and each Affiliate, when viewed
collectively (as a whole), principally benefit such area(s) or
population(s).
(iii) An Applicant shall provide the information requested in
paragraph (b)(1)(ii) of this section in accordance with paragraph (c)
of this section.
(2) Target markets. Using the information in paragraph (b)(1) of
this section that is submitted for the Applicant (excluding information
on any Affiliates), an Applicant shall demonstrate that its total
activities predominantly serve Investment Area(s), Targeted
Population(s) or both.
(3) Designation. An Applicant shall provide a description of the
Investment Area(s) or Targeted Population(s) to be served. If an
Applicant is serving:
(i) An Investment Area(s), it shall submit:
(A) A completed Investment Area Designation worksheet contained in
the application packet;
(B) A map of the designated area(s); and
(C) Studies or other analyses as described in Sec. 1805.301(e);
(ii) A Targeted Population(s), it shall submit:
(A) A completed Targeted Population Designation worksheet contained
in the application packet; or
(B) Studies or other analyses that provide adequate evidence of
lack of adequate access to loans or equity investments.
(4) Financing entity. (i) A CDFI shall be an entity whose
predominant business activity is the provision of loans or Development
Investments. An Applicant can demonstrate that it is such an entity if
it is a:
(A) Depository Institution Holding Company;
(B) Insured Depository Institution or Insured Credit Union; or
(C) Organization which is deemed by the Fund to have such a
predominant business activity as a result of analysis of its financial
statements, annual reports, organizing documents, and any other
information submitted as part of its application. In conducting such
analysis, the Fund may take into consideration an Applicant's
institutional type, total asset size, and stage of organizational
development.
(ii) An Applicant described under:
(A) Paragraph (b)(4)(i)(A) of this section shall submit a copy of
its organizing documents that indicate that it is a Depository
Institution Holding Company;
(B) Paragraph (b)(4)(i)(B) of this section shall submit a copy of
its current certificate of insurance issued by the Federal Deposit
Insurance Corporation or the National Credit Union Administration; and
(C) Paragraph (b)(4)(i)(C) of this section shall submit a copy of
its balance sheets and income and expense statements (and any notes or
other supplemental information to its financial statements) as
described in paragraph (d)(2)(i) of this section which clearly document
its assets, liabilities, and net worth that are dedicated to lending
and Development Investments and an explanation of how such assets,
liabilities and net worth support these activities. An Applicant shall
provide the information specified in this paragraph (b)(4)(ii)(C) for
such periods as specified in paragraph (c) of this section.
(5) Development Services. An Applicant shall submit a summary
description of the Development Services to be offered, the expected
provider of such services, and information on the persons expected to
use such services.
(6) Accountability. An Applicant shall describe how it has and will
maintain accountability to the Investment Area(s) or Targeted
Population(s) it serves.
(7) Non-government. An Applicant shall submit articles of
incorporation (or comparable organizing documents), charter, by-laws,
or other legal documentation or opinions sufficient to verify that it
is not a government entity.
(8) Ownership. An Applicant shall submit information indicating the
portion of shares of all classes of voting
[[Page 54121]]
stock that are held by each Insured Depository Institution or
Depository Institution Holding Company investor (if any).
(9) Previous Awardees. In the case of an Applicant that has
previously received assistance under this part, the Applicant shall
demonstrate that it:
(i) Has substantially met its performance goals and other
requirements described in its previous Assistance Agreement(s); and
(ii) Will expand its operations into a new Investment Area(s),
serve a new Targeted Population(s), offer new products and services, or
increase the volume of its activities.
(10) Previous history. An Applicant with a prior history of serving
Investment Area(s) or Targeted Population(s) shall describe its
activities, operations and community benefits created for such periods
as described in paragraph (c) of this section.
(c) Time of operation. At the time of submission of an application,
an Applicant that has been in operation for:
(1) Three years or more shall submit information on its activities
(as described in paragraphs (b) (1), (2) and (10) of this section) and
financial statements (as described in paragraph (d)(2)(i) of this
section) for the three most recent fiscal years;
(2) For more than one year, but less than three years, shall submit
information on its activities (as described in paragraphs (b) (1), (2)
and (10) of this section) and financial statements (as described in
paragraph (d)(2)(i) of this section) for each full fiscal year since
its inception; or
(3) For less than one year (including a start up organization),
shall submit information on its activities and financial statements as
described in paragraph (d) of this section.
(d) Comprehensive Business Plan. An Applicant shall submit a five-
year Comprehensive Business Plan that addresses the items described in
this paragraph. The Comprehensive Business Plan shall provide that an
Applicant is a CDFI and will maintain such status throughout the five-
year period, or will become a CDFI within three years of entering into
an Assistance Agreement and maintain such status for the balance of the
five-year period. The Plan should include projections that are
appropriate given an Applicant's current and anticipated organizational
type, total asset size, and stage of organizational development.
(1) Executive summary. An Applicant shall provide an executive
summary of the Comprehensive Business Plan which includes a description
of the institution (including relationships to any Affiliates), markets
served or to be served, community needs, and other pertinent
information.
(2) Financial performance--(i) Historic performance. An Applicant
shall submit historic financial statements for such periods as
specified in paragraph (c) of this section. Such statements should
include balance sheets, income and expense statements, and a
capitalization statement (which includes information on changes in
capital structure and funding from outside sources) for the Applicant.
The Applicant shall provide information necessary to assess trends in
financial and operating performance (e.g., portfolio delinquencies,
defaults and charge-offs, origination volume and volume of loans
closed, annual or cumulative operating ratios).
(ii) Future projections. An Applicant shall submit projections for
each of the next five years which includes balance sheet projections,
income and expense projections, operating budgets, capitalization
projections, estimates of the volume of new activity to be achieved
with assistance provided by the Fund and matching funds, and describe
any assumptions that underlie its projections.
(iii) Financial statements. If available, an Applicant shall submit
audited financial statements. If audited statements are not available,
an Applicant shall submit financial statements that have been reviewed
by a certified public accountant and developed using accrual based
accounting methods. All financial statements shall be reported on the
basis of the Applicant's fiscal year. If an Applicant is seeking to use
retained earnings to meet its match requirements pursuant to
Sec. 1805.600, it must submit audited financial statements for the
applicable period.
(iv) Financial management policies. An Applicant shall submit
information on its financial management policies that describe its
methodologies for underwriting and approving loans and investments and
managing and monitoring its portfolio, internal operations, and
capitalization needs.
(3) Management capacity. An Applicant shall provide information on
the background and capacity of its management team, including the
relevant background and expertise of management (such as resumes or
statements of personal history), key personnel and governing board
members, if appropriate. The Applicant shall also provide information
on any training or technical assistance needed to enhance the capacity
of the organization to successfully carry out its Comprehensive
Business Plan.
(4) Market analysis. An Applicant shall provide an analysis of its
target markets. An Applicant must:
(i) Describe its proposed target market(s), including a description
of the characteristics of the Investment Area(s) (e.g., location,
boundaries, economic characteristics, relationships to Metropolitan,
non-Metropolitan, or regional markets) or Targeted Population(s) (e.g.,
number of persons, income, and other socio-economic characteristics),
its methodology for selecting such target market(s), the size of the
market(s), and any relevant market trends;
(ii) Describe the products and services (and corresponding pricing)
it proposes to provide and analyze the competitiveness of such products
and services in the target market(s); and
(iii) Identify and analyze any characteristics of the target
market(s) that will create opportunities or present impediments for its
products, services and overall market strategy (e.g., economic
conditions, perceived or documented credit needs or Financial Service
needs, market activity, neighborhood perceptions, government services
or delivery systems, community institutions, or the strength of the
employment base).
(5) Strategy. An Applicant shall describe its strategy for
delivering its products and services to its target market(s). An
Applicant may also describe any product or service development
activities that are necessary before undertaking its strategy including
the nature, scope, cost, timing, and risks of such activities. An
Applicant shall also describe anticipated incremental increases in
activity to be achieved with assistance provided by the Fund and
matching funds.
(6) Coordination strategy. An Applicant shall describe:
(i) Its plan to coordinate use of assistance from the Fund with
existing Federal, State, local, and tribal government assistance
programs and private sector resources;
(ii) How its proposed activities are consistent with existing
economic, community and housing development plans adopted for an
Investment Area(s) or Targeted Population(s); and
(iii) How it will coordinate with community organizations,
financial institutions, and Community Partners which will provide
loans, equity investments, secondary markets, or other services to an
Investment Area(s) or a Targeted Population(s).
[[Page 54122]]
(7) Projected community impact. An Applicant shall provide an
estimate of the benefits expected to be created within its Investment
Area(s) or Targeted Population(s) over the next five years, as
indicated by the extent to which:
(i) The Applicant will concentrate its activities within an
Investment Area(s) or among Targeted Population(s);
(ii) The Applicant's activities will expand economic opportunity
(e.g., number of jobs created, jobs retained, businesses financed,
business ownership opportunities facilitated, residents of Investment
Area(s) or members of Targeted Population(s) employed, number or dollar
amount of business loans and investment originations);
(iii) The Applicant's activities will facilitate revitalization
(e.g., number of square feet of commercial space financed, dollar
amount of commercial real estate loan originations, indicators of
demand for such commercial space (e.g., market vacancy rates, pre-
leased tenants, number of long term leases), number and square feet of
Community Facility space financed, number of long term leases, and
dollar amount of Community Facility loan originations);
(iv) The Applicant's activities will promote affordable housing
(e.g., number of affordable rental units, dollar amount of affordable
rental housing loans originated, information on the demand for such
housing (e.g., market vacancy rates, number of people on public and
assisted housing waiting lists), information on the type of size of
units and the people who will reside in such units (e.g., families,
special needs populations), number of homes purchased and dollar amount
of home ownership loan originations));
(v) The Applicant will provide Development Services (as measured by
the number of individuals that will receive Development Services);
(vi) The Applicant will provide Financial Services (as measured by
the number of new customers of Financial Services (e.g., individuals
opening checking and savings accounts)); and
(vii) Such other indicators as deemed appropriate by the Applicant
or the Fund.
(8) Community need. An Applicant may provide information on the
extent of economic distress within its Investment Area(s) or needs of
its Targeted Population(s) to supplement the data required pursuant to
subpart C of this part and paragraph (b)(3) of this section. Such
information may be from sources other than the 1990 decennial census.
(9) Funding sources. An Applicant shall provide information:
(i) On its current and projected sources of capital and other
financial support;
(ii) To demonstrate that it has a plan for achieving or maintaining
financial viability within the five-year period; and
(iii) To demonstrate that it will, to the maximum extent
appropriate, increase self-sufficiency. Such information shall
demonstrate that the Applicant will not be dependent upon future awards
from the Fund for continued viability.
(10) Risks and assumptions. An Applicant shall identify and discuss
critical risks (including strategies to mitigate risk) and assumptions
contained in its Comprehensive Business Plan, and any significant
impediments to the Plan's implementation.
(11) Schedule. An Applicant shall provide a schedule indicating the
timing of major events necessary to realize the objectives of its
Comprehensive Business Plan.
(12) Community Partnership. In the case of an Applicant submitting
an application with a Community Partner, the Applicant shall:
(i) Describe how the Applicant and the Community Partner will
participate in carrying out the Community Partnership and how the
partnership will enhance activities serving the Investment Area(s) or
Targeted Population(s);
(ii) Demonstrate that the Community Partnership activities are
consistent with the Comprehensive Business Plan;
(iii) Provide information necessary to evaluate such an application
as described under Sec. 1805.802(c)(4);
(iv) Include a copy of any written agreement between the Applicant
and the Community Partner related to the Community Partnership; and
(v) Provide information to demonstrate that the Applicant meets the
eligibility requirements described in Sec. 1805.200 and satisfies the
selection criteria described in subpart H of this part. (A Community
Partner shall not be required to meet the eligibility requirements
described in Sec. 1805.200.)
(e) Matching funds. (1) An Applicant shall submit a detailed
description of its plans for raising matching funds and likely or
committed sources of funds to match the amount of financial assistance
requested from the Fund. An Applicant shall indicate the extent to
which such matching funds will be derived from private, non-government
sources.
(2) An Applicant shall submit a description of any matching funds
previously obtained or legally committed. Such description shall
include the name of the source, total amount of such match, the date
the matching funds were obtained or legally committed, percentage that
remains available to serve as match, and terms and restrictions on use
for each matching source. The Application shall include copies of any
agreements, memoranda of understanding, letters of intent, or similar
documents pertaining to matching funds. The Applicant shall provide
documentation to indicate that the matching fund source(s) has approved
the use of the funds for matching purposes and the name, address and
telephone number of a contact person for each entity providing matching
funds.
(3) If the Applicant intends to use retained earnings to meet the
matching requirements, it shall provide the information described in
paragraph (d)(2)(iii) of this section and a copy of its tax returns for
the same period. The Applicant shall submit a certification from its
governing body:
(i) As to the amount and form of retained earnings available as
matching funds; and
(ii) That such earnings will be used for the purposes described in
its application.
(4) If the Applicant is requesting a ``severe constraint waiver''
of any matching requirements, it shall submit the information requested
in Sec. 1805.602.
(f) Support. An Applicant shall provide information to demonstrate
the extent of support (if any) within the Investment Area(s) or
Targeted Population(s) for its activities.
(g) Community Ownership and Governance. An Applicant shall provide
information to demonstrate whether it is Community-Owned or Community-
Governed.
(h) Conflict of interest. An Applicant shall submit a copy of its
conflict of interest policies that are consistent with the requirements
of Sec. 1805.906.
(i) Environmental information. The Applicant shall provide
sufficient information regarding the potential environmental impact of
its proposed activities in order for the Fund to complete its
environmental review requirements pursuant to part 1815 of this
chapter.
(j) Applicant certification. The Applicant and Community Partner
(if applicable) shall certify that:
(1) It possesses the legal authority to apply for assistance from
the Fund;
(2) The application has been duly authorized by its governing body
and duly executed;
[[Page 54123]]
(3) It will not use any Fund resources for lobbying activities as
set forth in Sec. 1805.907; and
(4) It will comply with all relevant provisions of this chapter and
all applicable Federal, State, and local laws, ordinances, regulations,
policies, guidelines, and requirements.
Subpart H--Rating and Selection of Applications
Sec. 1805.800 Rating and selection--general.
Applicants will be rated and selected, at the sole discretion of
the Fund, to receive assistance based on a multi-tiered review process
that is intended to:
(a) Screen out Applicants that do not meet the basic program
requirements or possess adequate capacity to be a successful CDFI;
(b) Take into consideration the unique characteristics of
institutions that vary by institution type, total asset sizes, stage of
organizational development, markets served, products and services
provided, and location; and
(c) Evaluate and select Applicants.
Sec. 1805.801 Geographic diversity.
In selecting Awardees, the Fund shall seek to fund a geographically
diverse group of Applicants serving Metropolitan Areas, non-
Metropolitan Areas, and Indian Reservations from different regions of
the United States.
Sec. 1805.802 Tiered review process.
(a) Tier I Review. Tier I of the review process is intended to
ensure that an Applicant meets the eligibility requirements described
under Sec. 1805.200 and has submitted complete application materials.
An Applicant that fails to meet the basic eligibility and application
requirements will be notified of the reasons for such determination.
(b) Tier II Review. Tier II of the review process is intended to
ensure that an Applicant meeting the Tier I requirements possesses the
financial and organizational capacity to be a successful CDFI.
(1) The Fund will examine several criteria in evaluating financial
and organizational capacity and an Applicant's likelihood of success in
meeting the goals of its Comprehensive Business Plan. These criteria
will include the strength and background of an Applicant's management
team and other key personnel, the quality of its financial management
policies and practices, breadth and depth of its financial resources,
the depth of its market analysis, and trends in financial and operating
performance.
(2) An Applicant that fails to meet the minimum requirements of
Tier II will be notified of the reasons for such determination.
(c) Tier III Review. Tier III of the review process is intended to
examine other qualitative aspects of an application. The Fund will rate
each application meeting the Tier I and II requirements based on the
selection criteria set forth in this part. The selection criteria and
ratings will be considered in the following categories:
(1) Organizational capacity. The Fund will evaluate the information
described in the Tier II review to rate an Applicant's organizational
and financial strength and capacity.
(2) External resources. The Fund will evaluate the extent of
external resources available to an Applicant based on:
(i) The amount of firm commitments to meet or exceed the matching
requirements and the likely success of the plan for raising the balance
of the matching funds in a timely manner;
(ii) The extent to which the matching funds are, or will be,
derived from private sources or new investments;
(iii) Whether an Applicant is, or will become, an Insured CDFI; and
(iv) The extent to which an Awardee will use assistance to expand
the funds available for lending and equity investments beyond the sum
of the award and the matching funds.
(3) Community impact. The Fund will evaluate an application's
community impact based on:
(i) The extent of economic distress within the designated
Investment Area(s) or the extent to which the designated Targeted
Population(s) is Low-Income;
(ii) The extent to which an Applicant will concentrate its
activities on serving Investment Area(s) or Targeted Population(s);
(iii) The extent of need for loans, equity investments, Development
Services, and Financial Services within the designated Investment
Area(s) or Targeted Population(s);
(iv) The extent to which the activities proposed in the
Comprehensive Business Plan will expand economic opportunities within
the designated Investment Area(s) or Targeted Population(s);
(v) The extent of support from the designated Investment Area(s) or
Targeted Population(s);
(vi) The extent to which an Applicant is, or will be, Community-
Owned or Community-Governed;
(vii) The extent to which an Applicant will increase its resources
through such means as a Community Partnership, participation in the
secondary market, and coordination with other institutions (e.g., a
local Empowerment Zone or Enterprise Community coordinating entity),
particularly other CDFIs; and
(viii) In the case of an Applicant with a prior history of serving
Investment Area(s) or Targeted Population(s), the extent of success in
serving them.
(4) Community Partnerships. Community Partnerships will be rated
based on the extent to which the Applicant and Community Partner meet
the factors described in paragraphs (c) (1), (2) and (3) of this
section and giving consideration to the extent to which:
(i) The Community Partner will participate in carrying out the
activities of the Community Partnership;
(ii) The Community Partnership will enhance the likelihood of
success of the Comprehensive Business Plan; and
(iii) Service to an Investment Area(s) or Targeted Population(s)
will be better performed by a Community Partnership than by an
Applicant alone.
(5) Other factors. The Fund may consider any other factors with
respect to any application as it deems appropriate.
(6) Priorities. The Fund may give additional consideration to
Applicants that:
(i) Have secured firm commitments for all of the matching funds at
the time of submission of an application;
(ii) Concentrate their activities within an Investment Area(s) or
Targeted Population(s); or
(iii) Dedicate the greatest portion of their total resources to
lending, Development Investments, and Development Services.
(d) Consultation with Appropriate Federal Banking Agencies. The
Fund shall consult with, and consider the views of, the Appropriate
Federal Banking Agency prior to providing assistance to:
(1) An Insured CDFI;
(2) A CDFI that is examined by or subject to the reporting
requirements of an Appropriate Federal Banking Agency; and
(3) A CDFI that has as its Community Partner an institution that is
examined by, or subject to, the reporting requirements of an
Appropriate Federal Banking Agency.
(e) Awardee selection. The Fund will select Awardees based on the
criteria described in paragraph (c) of this section and any other
criteria set forth in this part or the applicable NOFA.
Subpart I--Terms and Conditions of Assistance
Sec. 1805.900 Safety and soundness.
(a) Regulated institutions. Nothing in this part, or in an
Assistance Agreement,
[[Page 54124]]
shall affect any authority of an Appropriate Federal Banking Agency to
supervise and regulate any institution or company.
(b) Non-Regulated CDFIs. The Fund will, to the extent practicable,
ensure that Awardees that are Non-Regulated CDFIs are financially and
managerially sound and maintain appropriate internal controls.
Sec. 1805.901 Assistance Agreement; sanctions.
(a) Prior to providing any assistance, the Fund and an Awardee
shall execute an Assistance Agreement that requires an Awardee to
comply with performance goals and abide by other terms and conditions
of assistance. If a Community Partner is part of an application that is
selected for assistance, such partner must be a party to the Assistance
Agreement if deemed appropriate by the Fund.
(b) An Awardee shall comply with performance goals that have been
negotiated with the Fund and which are based upon the Comprehensive
Business Plan submitted as part of the Awardee's application.
Performance goals for Insured CDFIs shall be determined in consultation
with the Appropriate Federal Banking Agency. Such goals shall be
incorporated in, and enforced under, the Awardee's Assistance
Agreement.
(c) The Assistance Agreement shall provide that, in the event of
fraud, mismanagement, noncompliance with the Fund's regulations or
noncompliance with the terms and conditions of the Assistance Agreement
on the part of the Awardee (or the Community Partner, if applicable),
the Fund, in its discretion, may:
(1) Require changes in the performance goals set forth in the
Assistance Agreement;
(2) Require changes in the Awardee's Comprehensive Business Plan;
(3) Revoke approval of the Awardee's application;
(4) Reduce or terminate the Awardee's assistance;
(5) Require repayment of any assistance that has been distributed
to the Awardee;
(6) Bar the Awardee (and the Community Partner, if applicable) from
reapplying for any assistance from the Fund; or
(7) Take any other action as permitted by the terms of the
Assistance Agreement.
(d) In the case of an Insured Depository Institution, the
Assistance Agreement shall provide that the provisions of the Act, this
part, and the Assistance Agreement shall be enforceable under section 8
of the Federal Deposit Insurance Act by the Appropriate Federal Banking
Agency and that any violation of such provisions shall be treated as a
violation of the Federal Deposit Insurance Act. Nothing in this
paragraph precludes the Fund from directly enforcing the Assistance
Agreement as provided for under the terms of the Act.
(e) The 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 Fund shall not impose a sanction described in paragraph (c)
of this section if the Appropriate Federal Banking Agency, in writing,
not later than 30 calendar days after receiving notice from the Fund:
(1) Objects to the proposed sanction;
(2) Determines that the sanction would:
(i) Have a material adverse effect on the safety and soundness of
the institution; or
(ii) Impede or interfere with an enforcement action against that
institution by that agency;
(3) Proposes a comparable alternative action; and
(4) Specifically explains:
(i) The basis for the determination under paragraph (e)(2) of this
section and, if appropriate, provides documentation to support the
determination; and
(ii) How the alternative action suggested pursuant to paragraph
(e)(3) of this section would be as effective as the sanction proposed
by the Fund in securing compliance and deterring future noncompliance.
(f) In reviewing the performance of an Awardee in which its
Investment Area(s) includes an Indian Reservation or Targeted
Population(s) includes an Indian Tribe, the Fund shall consult with,
and seek input from, the appropriate Tribal Government.
(g) Prior to imposing any sanctions pursuant to this section or an
Assistance Agreement, the Fund shall, to the maximum extent
practicable, provide the Awardee (or the Community Partner, if
applicable) with written notice of the proposed sanction and an
opportunity to comment. Nothing in this section, however, shall provide
an Awardee or Community Partner with the right to any formal or
informal hearing or comparable proceeding not otherwise required by
law.
Sec. 1805.902 Disbursement of funds.
Assistance provided pursuant to this part may be provided in a lump
sum or over a period of time, as determined appropriate by the Fund.
The Fund shall not provide any assistance (other than technical
assistance) under this part until an Awardee has satisfied any
conditions set forth in its Assistance Agreement and has secured firm
commitments for the matching funds required for such assistance. At a
minimum, a firm commitment must consist of a binding written agreement
between an Awardee and the source of the matching funds that is
conditioned only upon the availability of the Fund's assistance and
such other conditions as the Fund, in its sole discretion, may deem
appropriate. Such agreement must provide for disbursal of the matching
funds to an Awardee prior to, or simultaneously with, receipt by an
Awardee of the Federal funds.
Sec. 1805.903 Data collection and reporting.
(a) Data--general. An Awardee (and a Community Partner, if
appropriate) shall maintain such records as may be prescribed by the
Fund which are necessary to:
(1) Disclose the manner in which Fund assistance is used; and
(2) Demonstrate compliance with the requirements of this part and
an Assistance Agreement.
(b) Customer profiles. An Awardee (and a Community Partner, if
appropriate) shall compile such data on the gender, race, ethnicity,
national origin, or other information on individuals that utilize its
products and services as the Fund shall prescribe in an Assistance
Agreement. Such data will be used to determine whether residents of
Investment Area(s) or members of Targeted Population(s) are adequately
served.
(c) Access to records. An Awardee (and a Community Partner, if
appropriate) must submit such financial and activity reports, records,
statements, and documents at such times, in such forms, and accompanied
by such reporting data, as required by the Fund or the U.S. Department
of Treasury to ensure compliance with the requirements of this part.
The United States Government, including the U.S. Department of
Treasury, the Comptroller General, and their duly authorized
representatives, shall have full and free access to the Awardee's
offices and facilities and all books, documents, records, and financial
statements relating to use of Federal funds and may copy such documents
as they deem appropriate. The Fund, if it deems appropriate, may
prescribe access to record requirements for entities that are borrowers
of, or that receive investments from, an Awardee.
[[Page 54125]]
(d) Retention of records. An Awardee shall comply with all record
retention requirements as set forth in OMB Circular A-110 (as
applicable).
(e) Review. (1) At least annually, the Fund will review the
progress of an Awardee (and a Community Partner, if appropriate) in
implementing its Comprehensive Business Plan and satisfying the terms
and conditions of its Assistance Agreement. During such review, the
Fund may consider requests to modify Comprehensive Business Plans or
performance goals.
(2) An Awardee shall submit a report within:
(i) 45 days of the end of each calendar quarter with information on
the performance of its loans, Development Investments, Development
Services, and Financial Services in the previous quarter, and unaudited
financial statements. Such report shall include key indicators of
portfolio performance, including volume of originations, delinquencies,
and defaults, and charge-offs for the previous quarter; and
(ii) 60 days at the end of each Federal fiscal year with:
(A) Information on its customer profile and the performance of its
loans, Development Investments, Development Services, and Financial
Services for the previous year;
(B) Information on its portfolio performance, including volume of
originations, delinquencies, and defaults and charge-offs for the
previous year;
(C) Qualitative and quantitative information on an Awardee's
compliance with its performance goals and (if appropriate) an analysis
of factors contributing to any failure to meet such goals;
(D) Information describing the manner in which Fund assistance and
any corresponding matching funds were used. The Fund will use such
information to verify that assistance was used in a manner consistent
with the Assistance Agreement;
(E) Certification that an Awardee continues to meet the eligibility
requirements described in Sec. 1805.200; and
(F) Its most recent audited financial statements prepared by an
independent certified public accountant. Such statements shall cover
the operations of the Awardee's most recently completed fiscal year.
The audit shall be conducted in accordance with generally accepted
Government Auditing Standards set forth in the General Accounting
Office's Government Auditing Standards (1994 Revision) issued by the
Comptroller General and OMB Circular A-133 (``Audits of Institutions of
Higher Education and Other Nonprofit Institutions''), as applicable.
The independent certified public accountant shall review and attest
that an Awardee's use of Federal assistance is in compliance with the
Assistance Agreement.
(3) The Fund shall make reports described in paragraph (e)(2) of
this section available for public inspection after deleting any
materials necessary to protect privacy or proprietary interests.
(f) Exchange of information with Appropriate Federal Banking
Agencies. (1) Except as provided in paragraph (f)(4) of this section,
prior to directly requesting information from or imposing reporting or
record keeping requirements on an Insured CDFI or other institution
that is examined by or subject to the reporting requirements of an
Appropriate Federal Banking Agency, the Fund shall consult with the
Appropriate Federal Banking Agency to determine if the information
requested is available from or may be obtained by such agency in the
form, format, and detail required by the Fund.
(2) If the information, reports, or records requested by the Fund
pursuant to paragraph (f)(1) of this section are not provided by the
Appropriate Federal Banking Agency within 15 calendar days after the
date on which the material is requested, the Fund may request the
information from or impose the record keeping or reporting requirements
directly on such institutions with notice to the Appropriate Federal
Banking Agency.
(3) The Fund shall use any information provided by the Appropriate
Federal Banking Agency under this section to the extent practicable to
eliminate duplicative requests for information and reports from, and
record keeping by, an Insured CDFI or other institution that is
examined by or subject to the reporting requirements of an Appropriate
Federal Banking Agency.
(4) Notwithstanding paragraphs (f)(1) and (2) of this section, the
Fund may require an Insured CDFI or other institution that is examined
by or subject to the reporting requirements of an Appropriate Federal
Banking Agency to provide information with respect to the institution's
implementation of its Comprehensive Business Plan or compliance with
the terms of its Assistance Agreement, after providing notice to the
Appropriate Federal Banking Agency.
(5) Nothing in this part shall be construed to permit the Fund to
require an Insured CDFI or other institution that is examined by or
subject to the reporting requirements of a Appropriate Federal Banking
Agency to obtain, maintain, or furnish an examination report of any
Appropriate Federal Banking Agency or records contained in or related
to such report.
(6) The Fund and the Appropriate Federal Banking Agency shall
promptly notify each other of material concerns about an Awardee that
is an Insured CDFI or that is examined by or subject to the reporting
requirements of an Appropriate Federal Banking Agency, and share
appropriate information relating to such concerns.
(7) Neither the Fund nor the Appropriate Federal Banking Agency
shall disclose confidential information obtained pursuant to this
section from any party without the written consent of that party.
(8) The Fund, the Appropriate Federal Banking Agency, and any other
party providing information under this paragraph (f) of this section
shall not be deemed to have waived any privilege applicable to the any
information or data, or any portion thereof, by providing such
information or data to the other party or by permitting such data or
information, or any copies or portions thereof, to be used by the other
party.
(g) Availability of referenced publications. The publications
referenced in this section are available as follows:
(1) OMB Circulars may be obtained from the Office of
Administration, Publications Office, 725 17th Street, NW., room 2200,
New Executive Office Building, Washington, DC 20503; and
(2) General Accounting Office materials may be obtained from GAO
Distribution, 700 4th Street, NW., suite 1100, Washington, DC 20548.
Sec. 1805.904 Information.
The Fund and each Appropriate Federal Banking Agency shall
cooperate and respond to requests from each other and from other
Appropriate Federal Banking Agencies in a manner that ensures the
safety and soundness of the Insured CDFIs or other institution that is
examined by or subject to the reporting requirements of an appropriate
Federal banking agency.
Sec. 1805.905 Compliance with government requirements.
In carrying out its responsibilities pursuant to an Assistance
Agreement, the Awardee shall comply with all applicable Federal, State,
and local laws, regulations, and ordinances, OMB Circulars, and
Executive Orders.
[[Page 54126]]
Sec. 1805.906 Conflict of interest requirements.
(a) Provision of credit to Insiders. (1) An Awardee that is a Non-
Regulated CDFI may not use any monies provided to it by the Fund to
make any credit (including loans and Development Investments) available
to an Insider unless it meets the following restrictions:
(i) The credit must be provided pursuant to standard underwriting
procedures, terms and conditions;
(ii) The Insider receiving the credit, and any family member or
business partner thereof, shall not participate in any way in the
decision making regarding such credit;
(iii) The Board of Directors or other governing body of the Awardee
shall approve the extension of the credit; and
(iv) For credit of $10,000 or more, the Awardee shall provide
written notice to the Fund at least 30 days prior to initial
disbursement and shall receive written approval from the Fund prior to
any disbursement.
(2) An Awardee that is an Insured CDFI or a Depository Institution
Holding Company shall comply with the restrictions on Insider
activities and any comparable restrictions established by its
Appropriate Federal Banking Agency.
(b) Awardee standards of conduct. An Awardee shall maintain a code
or standards of conduct acceptable to the Fund that shall govern the
performance of its Insiders engaged in the awarding and administration
of any credit (including loans and Development Investments) and
contracts using monies from the Fund. No Insider of an Awardee 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 Awardee's
Insiders.
Sec. 1805.907 Lobbying restrictions.
No assistance made available under this part may be expended by an
Awardee to pay any person to influence or attempt to influence any
agency, elected official, officer or employee of a State or local
government in connection with the making, award, extension,
continuation, renewal, amendment, or modification of any State or local
government contract, grant, loan or cooperative agreement as such terms
as are defined in 31 U.S.C. 1352.
Sec. 1805.908 Criminal provisions.
The criminal provisions of 18 U.S.C. 657 regarding embezzlement or
misappropriation of funds are applicable to all Awardees and Insiders.
Sec. 1805.909 Fund deemed not to control.
The Fund shall not be deemed to control an Awardee by reason of any
assistance provided under the Act for the purpose of any applicable
law.
Sec. 1805.910 Limitation on liability.
The liability of the Fund and the United States Government arising
out of any assistance to a CDFI in accordance with this part shall be
limited to the amount of the investment in the CDFI. The Fund shall be
exempt from any assessments and other liabilities that may be imposed
on controlling or principal shareholders by any Federal law or the law
of any State. Nothing in this section shall affect the application of
any Federal tax law.
Sec. 1805.911 Fraud, waste and abuse.
Any person who becomes aware of the existence or apparent existence
of fraud, waste or abuse of assistance provided under this part should
report such incidences to the Office of Inspector General of the U.S.
Department of the Treasury.
PART 1806--BANK ENTERPRISE AWARD PROGRAM
Subpart A--General Provisions
Sec.
1806.100 Purpose.
1806.101 Summary.
1806.102 Relationship to the Community Development Financial
Institutions Program.
1806.103 Definitions.
1806.104 Waiver authority.
1806.105 OMB control number.
Subpart B--Awards
1806.200 Community eligibility and designation.
1806.201 Qualified activities.
1806.202 Measuring activities.
1806.203 Estimated award amounts.
1806.204 Selection process.
1806.205 Actual award amounts.
1806.206 Applications for Bank Enterprise Awards.
Subpart C--Terms and Conditions of Assistance
1806.300 Award Agreement; sanctions.
1806.301 Records, reports, and audits of Awardees.
1806.302 Compliance with government requirements.
1806.303 Fraud, waste, and abuse.
1806.304 Books of account, records and government access.
1806.305 Retention of records.
Authority: 12 U.S.C. 4703, 4717; chapter X, Pub. L. 104-19, 109
Stat. 237 (12 U.S.C. 4703 note).
Subpart A--General Provisions
Sec. 1806.100 Purpose.
The purpose of the Bank Enterprise Award program is to encourage
insured depository institutions to make Equity Investments and engage
in Eligible Development Activities.
Sec. 1806.101 Summary.
(a) Under the Bank Enterprise Awards Program, the Fund makes awards
to selected Applicants that:
(1) Invest in Community Development Financial Institutions;
(2) Increase lending activities within Distressed Communities; or
(3) Increase the provision of certain services and assistance.
(b) Distressed Communities must meet minimum poverty and
unemployment criteria. Applicants are selected to participate in the
program through a competitive application process. Generally, awards
are based on increases in Qualified Activities that are carried out by
the Applicant during an Assessment Period. Bank Enterprise Awards are
distributed after successful completion of projected Qualified
Activities. All awards shall be made subject to the availability of
funding.
Sec. 1806.102 Relationship to the Community Development Financial
Institutions Program.
(a) Prohibition against double funding. No CDFI may receive a Bank
Enterprise Award if it has:
(1) An application pending for assistance under the Community
Development Financial Institutions Program (part 1805 of this chapter);
(2) Received assistance from the Community Development Financial
Institutions Program within the preceding 12-month period; or
(3) Ever received assistance under the Community Development
Financial Institutions Program for the same activities for which it is
seeking a Bank Enterprise Award.
(b) Matching funds. Equity Investments and loans provided to a CDFI
under this part can be used by the CDFI to meet the matching funds
requirements of the Community Development Financial Institutions
Program.
(c) CDFI certification. Any entity receiving a CDFI certification
under Sec. 1805.201 of this chapter within two years of the filing an
application for a Bank Enterprise Award shall qualify as a CDFI for the
purposes of this part. If an Applicant is proposing to make an
[[Page 54127]]
Equity Investment in an entity that has not been certified as a CDFI,
the application submitted by the Applicant under this part shall
include a letter from the entity requesting certification and the
information described in Sec. 1805.701(b) of this chapter.
Sec. 1806.103 Definitions.
For the purpose of this part:
(a) Act means the Community Development Banking and Financial
Institutions Act of 1994 (12 U.S.C. 4701 et seq.);
(b) Agricultural Loan means a new origination (including
refinancing) of a loan secured by farm land (including farm residential
and other improvements), a loan to finance agricultural production, or
a loan to a farmer (other than a Single Family Loan or Consumer Loan);
(c) Applicant means any insured depository institution (as defined
in section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1813)) that is applying for a Bank Enterprise Award;
(d) Appropriate Federal Banking Agency has the same meaning as in
section 3 of the Federal Deposit Insurance Act;
(e) Assessment Period means an annual or semi-annual period
specified in the applicable Notice of Funds Availability (NOFA) in
which an Applicant will carry out Qualified Activities;
(f) Award Agreement means a contract between the Fund and an
Awardee pursuant to Sec. 1806.300;
(g) Awardee means an Applicant selected by the Fund to receive a
Bank Enterprise Award;
(h) Bank Enterprise Award means an award made to an Applicant
pursuant to this part;
(i) Bank Enterprise Award Program means the program authorized by
section 114 of the Act and implemented under this part;
(j) Baseline Period means an annual or semi-annual period specified
in the applicable NOFA in which an Applicant has previously carried out
Qualified Activities;
(k) Business Loan means a new origination (including refinancing)
of a loan used for commercial or industrial activities (other than an
Agricultural Loan, Commercial Real Estate Loan, Multi-Family Loan or
Single Family Loan);
(l) Commercial Real Estate Loan means a new origination (including
refinancing) of a loan (other than a Multi-Family Loan or a Single
Family Loan) used to finance:
(1) Construction and land development; or
(2) Commercial real estate in amounts of more than one million
dollars and which is secured by real estate;
(m) Community Development Financial Institution (or CDFI) means an
entity certified under Sec. 1805.201 of this chapter and that meets the
eligibility requirements under Sec. 1805.200 of this chapter;
(n) Consumer Loan means a new origination (including refinancing)
of a loan to one or more individuals for household, family, or other
personal expenditures;
(o) Distressed Community means a geographic community which meets
the minimum area eligibility requirements specified in Sec. 1806.200;
(p) Eligible Development Activities means activities described in
Sec. 1806.201(b)(4) that are carried out by the Applicant or its
Subsidiary;
(q) Equity Investment means new financial assistance provided by an
Applicant or its Subsidiary to a CDFI in the form of a stock purchase,
a grant (excluding grants used to support operating costs), or a loan
made on such terms that it has characteristics of equity (and is
considered as such by the Fund and is consistent with requirements of
the Applicant's Appropriate Federal Banking Agency);
(r) Financial Services means check-cashing, providing money orders
and certified checks, automated teller machines, safe deposit boxes,
and other services as may be specified by the Fund;
(s) Fund means the Community Development Financial Institutions
Fund established under section 104(a) of the Act (12 U.S.C. 4703(a));
(t) Geographic Units means counties (or equivalent areas),
incorporated places, minor civil divisions that are units of local
government, census tracts, block numbering areas, and American Indian
or Alaska Native areas (as each is defined by the U.S. Bureau of the
Census) or other areas deemed appropriate by the Fund);
(u) Indian Reservation means a geographic area that meets the
requirements of section 4(10) of the Indian Child Welfare Act of 1978
(25 U.S.C. 1903(10)), and shall include land held by incorporated
Native groups, regional corporations, and village corporation, as
defined in and pursuant to the Alaska Native Claims Settlement Act (43
U.S.C. 1601 et seq.), public domain Indian allotments, and former
Indian Reservations in the State of Oklahoma;
(v) Low- and Moderate-Income means income that does not exceed 80
percent of the median income of the area involved, as determined by the
Secretary of Housing and Urban Development with adjustments for smaller
and larger families pursuant to section 102(a)(20) of the Housing and
Community Development Act of 1974 (42 U.S.C. 5302(a)(20);
(w) Metropolitan Area means an area designated as such (as of the
date of the application) by the Office of Management and Budget
pursuant to 44 U.S.C. 3504(d)(3), 31 U.S.C. 1104(d) and Executive Order
10253 (3 CFR, 1949-1953 Comp., p. 758), as amended;
(x) Multi-Family Loan means a new origination (including
refinancing) of a loan secured by a five- or more family residential
property;
(y) Qualified Activities means Equity Investments and Eligible
Development Activities;
(z) Resident means an individual domiciled in a Distressed
Community;
(aa) Single Family Loan means a new origination (including
refinancing) of a loan secured by a one-to-four family residential
property;
(bb) Subsidiary has the same meaning as in section 3 of the Federal
Deposit Insurance Act, except that a CDFI shall not be considered a
subsidiary of any insured depository institution or any depository
institution holding company that controls less than 25 percent of any
class of the voting shares of such corporation and does not otherwise
control, in any manner, the election of a majority of directors of the
corporation; and
(cc) Unit of General Local Government means any city, county, town,
township, parish, village, or other general purpose political
subdivision of a State or Commonwealth of the United States, or general
purpose subdivision thereof, and the District of Columbia.
Sec. 1806.104 Waiver authority.
The Fund may waive any requirement of this part that is not
required by law, upon a determination of good cause. Each such waiver
shall be in writing and supported by a statement of the facts and
grounds forming the basis of the waiver. For a waiver in any individual
case, the Fund must determine that application of the requirement to be
waived would adversely affect the achievement of the purposes of the
Act. For waivers of general applicability, the Fund will publish notice
of granted waivers in the Federal Register.
Sec. 1806.105 OMB control number.
The collection of information requirements in this part have been
approved by the Office of Management and Budget and assigned OMB
control
[[Page 54128]]
number 1505-0153 (expires September 30, 1998).
Subpart B--Awards
Sec. 1806.200 Community eligibility and designation.
(a) General. If an Applicant proposes to carry out Eligible
Development Activities, or Equity Investments that support efforts of a
CDFI in a Distressed Community, the Applicant shall designate one or
more Distressed Communities in which it proposes to carry out those
activities.
(b) Minimum area eligibility requirements. A Distressed Community
must meet the minimum area eligibility requirements contained in this
paragraph.
(1) Geographic requirements. A Distressed Community must be a
geographic area:
(i) That is located within the boundaries of a Unit of General
Local Government;
(ii) The boundaries of which are contiguous; and
(iii)(A) The population of which must be at least 4,000 if any
portion of the area is located within a Metropolitan Area with a
population of 50,000 or greater;
(B) The population must be at least 1,000 if no portion of the area
is located within such a Metropolitan Area; or
(C) Is located entirely within an Indian Reservation.
(2) Distress requirements. A Distressed Community must be a
geographic area where:
(i) At least 30 percent of the Residents have incomes which are
less than the national poverty level, as determined by the U.S. Bureau
of the Census in the 1990 decennial census; and
(ii) The unemployment rate is at least 1.5 times greater than the
national average, as determined by the U.S. Bureau of Labor Statistics'
most recent data.
(c) Area designation. An Applicant shall designate an area as a
Distressed Community by:
(1) Selecting Geographic Units which individually meet the minimum
area eligibility requirements; or
(2) Selecting two or more Geographic Units which, in the aggregate,
meet the minimum area eligibility requirements set forth in paragraph
(b) of this section provided that no Geographic Unit selected by the
Applicant within the area has a poverty rate of less than 20 percent.
(d) Designation and notification process. Upon request, the Fund
will provide a prospective Applicant with data to help it identify
areas eligible to be a Distressed Community. A prospective Applicant
may contact the Fund prior to filing an application to determine if an
area meets the minimum area eligibility requirements.
Sec. 1806.201 Qualified Activities.
(a) Equity Investment. An Applicant may receive a Bank Enterprise
Award for making an Equity Investment during an Assessment Period.
(b) Eligible Development Activities.--(1) General. An Applicant may
receive a Bank Enterprise Award for carrying out Eligible Development
Activities during an Assessment Period.
(2) Service. The Eligible Development Activities listed in
paragraphs (b)(4)(i) through (vii) of this section must serve a
Distressed Community. An activity is considered to serve a Distressed
Community if it is:
(i) Undertaken in the Distressed Community; or
(ii) Provided to Low- and Moderate-Income Residents or enterprises
integrally involved in the Distressed Community.
(3) Priority factors. Each Eligible Development Activity is
assigned a priority factor. A priority factor represents the Fund's
assessment of the degree of difficulty, the extent of innovation, and
the extent of benefits accruing to the Distressed Community for each
type of activity.
(4) Eligible Development Activities. Eligible Development
Activities are listed in this paragraph with their corresponding
priority factors:
(i) Consumer Loans (priority factor=1.2);
(ii) Commercial Real Estate Loans (priority factor=1.6);
(iii) Single Family Loans (priority factor=1.4);
(iv) Multi-Family Loans (priority factor=1.6);
(v) Business Loans and Agricultural Loans of $100,000 or less
(priority factor=1.9);
(vi) Business Loans and Agricultural Loans of more than $100,000
through $250,000 (priority factor=1.8);
(vii) Business Loans of more than $250,000 through $1,000,000 and
Agricultural Loans of more than $250,000 through $500,000 (priority
factor=1.7);
(viii) Deposit liabilities in the form of savings or other demand
or time accounts accepted from Residents at offices located within the
Distressed Community (priority factor=1.0);
(ix) Financial Services provided to Low- and Moderate-Income
persons in the Distressed Community or provided to enterprises
integrally involved in the Distressed Community (priority factor=1.2);
(x) Provision of technical assistance to Residents in managing
their personal finances through consumer education programs (either
sponsored or offered by the Applicant) (priority factor=1.4);
(xi) Provision of technical assistance and consulting services to
newly formed small businesses located in the Distressed Community
(priority factor=1.4);
(xii) Provision of technical assistance to, or servicing the loans
of, Low- and Moderate-Income home owners and home owners located in the
Distressed Community (priority factor=1.4); and
(xiii) Grants used to support the operating costs of, new
origination (including refinancing) of loans to, or technical
assistance provided to:
(A) A CDFI that supports efforts in the Distressed Community
(priority factor=2.2); and
(B) Any other CDFI (priority factor=2.0).
Sec. 1806.202 Measuring activities.
(a) General. Qualified Activities shall be measured by comparing
the Qualified Activities carried out during the Baseline Period with
the Qualified Activities projected to be carried out during the
Assessment Period. Increases in the values of Qualified Activities
between the Baseline and Assessment Periods will be used in determining
award amounts. Applicants shall report their activities in all
categories of Qualified Activities for the Baseline and Assessment
Periods. The dates of the Baseline Period and the Assessment Periods
will be published in the NOFA for each funding round.
(b) Value. The Fund will assess the value of:
(1) Equity Investments, loans and grants at the original amount of
such investments, loans or grants;
(2) Deposit liabilities at the face dollar amount of monies
deposited; and
(3) Financial Services and technical assistance based on the
administrative costs of providing such services.
(c) Reporting. An Applicant shall report Qualified Activities:
(1) That were carried out during the Baseline Period; and
(2) Proposed to be carried out during the Assessment Period.
Sec. 1806.203 Estimated award amounts.
Award amounts will be determined at the sole discretion of the Fund
and estimated as described in this section.
(a) Equity Investments. The estimated award amount for an Equity
Investment will be equal to 15 percent (or such lower percentage as may
be requested by the Applicant) of the anticipated increase in the value
of such investment
[[Page 54129]]
between the Baseline and Assessment Periods.
(b) Eligible Development Activities. The estimated award amount for
Eligible Development Activities will be calculated as follows:
(1) Step 1. For each type of Eligible Development Activity,
subtract the value in the Baseline Period from the estimated value for
the Assessment Period to yield a remainder;
(2) Step 2. Multiply the remainder for each Eligible Development
Activity by the assigned priority factor to yield a weighted value for
each activity;
(3) Step 3. Add the weighted values for deposit liabilities and
Financial Services to yield a service score;
(4) Step 4. Add the weighted values for all other categories of
Eligible Development Activities to yield a development score. If the
development score is negative, an Applicant will be ineligible to
receive a Bank Enterprise Award. If the development score is positive,
go to Step 5;
(5) Step 5. If the service score is greater than the development
score, reduce the service score to equal the same amount as the
development score to yield an adjusted service score. (The Act
prohibits an Applicant from receiving more assistance for its deposit
taking activities than for other Qualified Activities.);
(6) Step 6. Add the service score (or adjusted service score if
applicable) and the development score to yield a total score; and
(7) Step 7. If the Applicant is:
(i) A CDFI, multiply the total score by 15 percent to yield an
estimated award amount; or
(ii) Not a CDFI, multiply the total score by 5 percent to yield an
estimated award amount.
Sec. 1806.204 Selection process.
(a) Availability of funds. All awards are subject to the
availability of funds. If the amount of funds available during a
funding round is insufficient for all estimated award amounts, Awardees
will be selected based on the process described in this section.
(b) Priority of categories.--(1) General. The Fund will rank an
Applicant's estimated award amount for Qualified Activities according
to the following priority categories:
(i) First priority. Equity Investments that support efforts of
CDFIs in the Distressed Community;
(ii) Second priority. Other Equity Investments; and
(iii) Third priority. Eligible Development Activities.
(2) Ranking among categories. All Applicants in the first priority
category will be selected as Awardees before Applicants in the second
priority category, and Applicants in the second priority category will
be selected as Awardees before Applicants in the third priority
category. Selections within each priority category will be based on the
relative rankings within such category, subject to the availability of
funds.
(3) Combined awards. If an Applicant receives an award for more
than one priority category described in paragraph (b)(1) of this
section, the award amounts will be combined into a single Bank
Enterprise Award.
(c) Ranking Equity Investments. Estimated awards for Equity
Investments will be ranked within each applicable priority category
based on the extent to which an Applicant proposes to reduce the
percentage used to calculate its award amount (e.g., an Applicant that
chooses to reduce its award to 13 percent will be ranked higher than an
Applicant that reduces its award to 14 percent). For Applicants that
propose the same percentage, estimated awards will be ranked by the
ratio of the proposed Equity Investment to the asset size of the
Applicant (as reported in the Applicant's most recent Report of
Condition or Thrift Financial Report) at the time of submission of an
application.
(d) Ranking Eligible Development Activities. Estimated awards for
Eligible Development Activities will be ranked by the ratio of the
total score to the asset size of the Applicant (as reported in the
Applicant's most recent Report of Condition or Thrift Financial Report)
at the time of the submission of an application. If the ratios of two
Applicants are the same, the estimated awards will be ranked based on
the degree of the poverty of each Applicant's Distressed Community.
Sec. 1806.205 Actual award amounts.
(a) General. The Fund will assess an Applicant's success in
achieving the Qualified Activities projected in its application. The
extent of such success will be measured based on the activities that
were actually carried out during the Assessment Period. Subject to
Sec. 1806.204, the actual award amount that an Awardee shall receive
will be equal to the estimated award previously calculated and (if
necessary) adjusted pursuant to this section.
(b) Substantial achievement. If an Awardee carries out 90 percent
or more of its projected activities, it will be deemed to have
substantially achieved those activities. Such Awardee will receive the
full estimated award amount.
(c) Partial achievement.--(1) General. If an Awardee carries out
less than 90 percent but at least 75 percent of its projected Qualified
Activities, it will be deemed to have partially achieved those
activities. In such cases the Fund may, in its sole discretion, provide
a partial award based upon (among other things) the Awardee's
satisfactory explanation for its failure to substantially achieve the
activities projected in its application. Any estimated award amount
will be adjusted on a pro rata basis to reflect the activities actually
performed.
(2) Adverse change in condition. In the case of an adverse change
in national or regional economic conditions, the Fund may adjust the
percentages used to define partial achievement.
(d) Non-achievement. If an Awardee does not satisfy the conditions
necessary for substantial or partial achievement, it will be ineligible
to receive any award amount.
(e) Unobligated or deobligated funds. The Fund, in its sole
discretion, may use any deobligated funds or funds not obligated during
a funding round:
(1) Using the calculation and selection process contained in this
part--
(i) To increase an award amount of an Awardee for achievement in
excess of the projected Qualified Activities; or
(ii) To select Applicants not previously selected;
(2) To make additional monies available for a subsequent funding
round; or
(3) As otherwise authorized by the Act.
Sec. 1806.206 Applications for Bank Enterprise Awards.
(a) Notice of Funds Availability. An Applicant shall submit an
application for a Bank Enterprise Award in accordance with this section
and the applicable NOFA published by the Fund in the Federal Register.
The NOFA will advise potential Applicants on how to obtain an
application packet and will establish submission deadlines. The NOFA
also will establish any other requirements or restrictions applicable
for the funding round including any restrictions on award amounts.
After receipt of an application, the Fund may request clarifying or
technical information on materials submitted as part of such
application.
(b) Application contents. Each application must contain the
information required in the application packet, which may include:
(1) A completed Bank Enterprise Award Rating and Calculations
worksheet;
[[Page 54130]]
(2) A narrative description of each of the Qualified Activities
expected to be performed in the Assessment Period;
(3) If applicable, a completed Distressed Community Designation
worksheet and a map and narrative description of the Distressed
Community;
(4) If applicable, a narrative description of each CDFI that the
Applicant proposes to provide an Equity Investment in and the amount,
terms, and conditions of the investment;
(5) The asset size of the Applicant, as reported in its most recent
Report of Condition or Thrift Financial Report to its Appropriate
Federal Banking Agency;
(6) Information necessary for the Fund to complete its
environmental review requirements pursuant to part 1815 of this
chapter; and
(7) Certifications that the Applicant will comply with all relevant
provisions of this chapter and all applicable Federal, State, and local
laws, ordinances, regulations, policies, guidelines, and requirements.
Subpart C--Terms and Conditions of Assistance
Sec. 1806.300 Award Agreement; sanctions.
(a) General. After the Fund selects an Awardee, the Fund and the
Awardee will enter into an Award Agreement. The Award Agreement shall
provide that an Awardee:
(1) Carry out its Qualified Activities in accordance with
applicable law, the approved application, and all other applicable
requirements;
(2) Shall comply with such other terms and conditions (including
record keeping and reporting requirements) that the Fund may establish;
and
(3) Not receive any monies until the Fund has determined that the
Awardee has fulfilled all applicable requirements.
(b) Sanctions. In the event of any fraud, misrepresentation, or
noncompliance with the terms of the Award Agreement by the Awardee, the
Fund may terminate, reduce, or recapture the Award and pursue any other
available legal remedies.
(c) Notice. Prior to imposing any sanctions pursuant to this
section or an Award Agreement, the Fund shall, to the maximum extent
practicable, provide the Awardee with written notice of the proposed
sanction and an opportunity to comment. Nothing in this section,
however, shall provide an Awardee with the right to any formal or
informal hearing or comparable proceeding not otherwise required by
law.
Sec. 1806.301 Records, reports and audits of Awardees.
(a) At the end of an Assessment Period, each Awardee shall submit
to the Fund:
(1) Worksheet. A Bank Enterprise Award worksheet that reports the
Qualified Activities actually carried out during the Assessment Period;
(2) Estimate of benefits. An estimate of the benefits generated
within the Distressed Community by the Qualified Activities that were
carried out during the Assessment Period, as measured by the:
(i) Number of jobs created or retained;
(ii) Type of new financial and technical assistance services
available;
(iii) Number and type of businesses created and retained;
(iv) Number of home owners assisted;
(v) Number of affordable housing units financed;
(vi) Number and type of new deposit accounts opened at offices
located within the Distressed Community; and
(vii) Other measures deemed appropriate by the Awardee that convey
the nature or extent of the benefits created by the Qualified
Activities; and
(3) Certification. A certification that the information provided to
the Fund is true and accurately reflects the Qualified Activities
carried out during an Assessment Period.
(b) Additional information. At the request of the Fund, the
Applicant shall make available any records necessary to assess the
validity of the information provided to the Fund.
Sec. 1806.302 Compliance with government requirements.
In carrying out its responsibilities pursuant to an Award
Agreement, the Awardee shall comply with all applicable Federal, state
and local laws, regulations and ordinances, OMB Circulars, and
Executive Orders.
Sec. 1806.303 Fraud, waste and abuse.
Any person who becomes aware of the existence or apparent existence
of fraud, waste or abuse of assistance provided under this part should
report such incidences to the Office of Inspector General of the U.S.
Department of the Treasury.
Sec. 1806.304 Books of account, records and government access.
An Awardee shall submit such financial and activity reports,
records, statements, and documents at such times, in such forms, and
accompanied by such supporting data, as required by the Fund and the
U.S. Department of the Treasury to ensure compliance with the
requirements of this part. The United States Government, including the
U.S. Department of the Treasury, the Comptroller General, and its duly
authorized representatives, shall have full and free access to the
Awardee's offices and facilitates and all books, documents, records,
and financial statements relevant to the award of the Federal funds and
may copy such documents as they deem appropriate.
Sec. 1806.305 Retention of records.
An Awardee shall comply with all record retention requirements as
set forth in OMB Circular A-110 (as applicable). This circular may be
obtained from Office of Administration, Publications Office, 725 17th
Street, NW., room 2200, New Executive Office Building, Washington, DC
20503.
PART 1815--ENVIRONMENTAL QUALITY
Sec.
1815.100 Policy.
1815.101 Purpose.
1815.102 Definitions.
1815.103 Designation of responsible Fund official.
1815.104 Specific responsibilities of designated Fund official.
1815.105 Major decision points.
1815.106 Supplemental environmental review.
1815.107 Determination of review requirement.
1815.108 Actions that normally require an EIS.
1815.109 Preparation of an EIS.
1815.110 Categorical exclusion.
1815.111 Actions that require an environmental assessment.
1815.112 Preparation of an environmental assessment.
1815.113 Public involvement.
1815.114 Fund decisionmaking procedures.
1815.115 OMB control number.
Authority: 12 U.S.C. 4703, 4717; 42 U.S.C. 4332; Chapter X, Pub
L. 104-19, 109 Stat. 237 (12 U.S.C. 4703 note).
Sec. 1815.100 Policy.
The Community Development Financial Institution Fund's policy is to
ensure that environmental factors and concerns are given appropriate
consideration in decisions and actions by the Fund and to reduce any
possible adverse effects of Fund decisions and actions upon the quality
of the human environment.
Sec. 1815.101 Purpose.
This part supplements Council on Environmental Quality regulations
for implementing the procedural provisions of the National
Environmental Policy Act of 1969, as amended, and describe how the
Community Development Financial Institutions Fund intends to consider
environmental factors and
[[Page 54131]]
concerns in the Fund's decisionmaking process. This part applies only
to the Fund and not to any other bureau, office or organization within
the Department of the Treasury.
Sec. 1815.102 Definitions.
(a) For the purpose of this part:
(1) Act means the Community Development Banking and Financial
Institutions Act (12 U.S.C. 4701 et seq.);
(2) Application means a request for assistance from the Fund
submitted pursuant to parts 1805 or 1806 of this chapter;
(3) CEQ regulations means the regulations for implementing the
procedural provisions of the National Environmental Policy Act of 1969
as promulgated by the Council on Environmental Quality, Executive
Office of the President, appearing at 40 CFR parts 1500-1508 and to
which this part is a supplement;
(4) Comprehensive Business Plan means a document submitted as part
of an Application pursuant to part 1805 of this chapter which describes
an organization's proposed process for offering products or services to
a particular market, including organizational requirements needed to
serve that market effectively;
(5) Consumer Loans means loans to one or more individuals for
household, family or other personal expenditures;
(6) Decisionmaker means the Director of the Fund, unless an
appropriate delegation of authority has been made;
(7) EIS means an environmental impact statement as defined in 40
CFR 1508.11 of the CEQ regulations;
(8) Fund means the Community Development Financial Institutions
Fund, established under section 104(a) of the Act (12 U.S.C. 4703(a));
(9) NEPA means the National Environmental Policy Act, as amended,
42 U.S.C. 4321-4335; and
(10) Project means all closely related actions relating to a
specific site.
(b) Other terms used in this part are defined in 40 CFR part 1508
of the CEQ regulations.
Sec. 1815.103 Designation of responsible Fund official.
The Director of the Fund is the designated Fund official
responsible for implementation and operation of the Fund's policies and
procedures on environmental quality and control.
Sec. 1815.104 Specific responsibilities of the designated Fund
official.
The designated Fund official shall:
(a) Coordinate the formulation and revision of Fund policies and
procedures on matters pertaining to environmental quality and control;
(b) Establish and maintain working relationships with relevant
government agencies (including Federal, state and local) concerned with
environmental matters;
(c) Develop procedures within the Fund's planning and
decisionmaking processes to ensure that environmental factors are
properly considered in all proposals and decisions in accordance with
this part;
(d) Develop, monitor, and review the Fund's implementation of
standards, procedures, and working relationships for protection and
enhancement of environmental quality and compliance with applicable
laws and regulations;
(e) Monitor processes to ensure that the Fund's procedures
regarding consideration of environmental quality are achieving their
intended purposes;
(f) Advise the officers and employees of the Fund of technical and
management requirements of environmental analysis, of appropriate
expertise available, and, with the assistance of the Department of the
Treasury's Office of the General Counsel, of relevant legal
developments;
(g) Monitor the consideration and documentation of the
environmental aspects of Fund planning and decisionmaking processes by
appropriate officers and employees of the Fund;
(h) Ensure that all environmental assessments and, where required,
all EISs are prepared in accordance with the appropriate regulations
adopted by the Council on Environmental Quality and the Fund;
(i) Ensure that, as required, a legislative EIS is submitted with
all proposed legislation;
(j) Consolidate and transmit to appropriate parties the Fund's
comments on EISs and other environmental reports prepared by other
agencies;
(k) Acquire information and prepare appropriate reports on
environmental matters required of the Fund; and
(l) Coordinate the Fund's efforts to make available to other
parties information and advice on the Fund's policies for protecting
and enhancing the quality of the environment.
Sec. 1815.105 Major decision points.
(a) The possible environmental effects of an Application, including
any Comprehensive Business Plan, must be considered along with
technical, economic, and other factors throughout the decisionmaking
process. For most Fund actions there are two distinct stages in the
decisionmaking process:
(1) Preliminary approval stage, at which point applications are
selected for funding; and
(2) Final approval and funding stage.
(b) Environmental review shall be integrated into the
decisionmaking process of the Fund as follows:
(1) During the preliminary approval stage, the designated Fund
official shall determine whether the Application proposes actions which
are categorically excluded, or normally require an environmental
assessment or an EIS;
(2) If the designated Fund official determines that the Application
proposes actions which normally require an environmental assessment or
an EIS, the applicant shall be informed that the final approval and
funding, in addition to any other conditions, is contingent upon:
(i) The applicant supplying to the Fund all information necessary
for the Fund to perform or have performed any environmental review
required by this part;
(ii) The applicant not using any Fund financial assistance to
perform any of such proposed actions in the Application that affect the
physical environment until Fund approval is received; and
(iii) The outcome of the environmental review required by this
part;
(3) The Fund will perform or have performed the environmental
reviews required by this part;
(4) A preliminary approval of an Application may be withdrawn or
further conditions may be imposed based upon the outcome of an
environmental review required by this part; and
(5) If the designated Fund official determines that the Application
proposes actions that require an environmental assessment or an EIS,
the environmental assessment and/or EIS must be completed and
circulated prior to the use of Federal funds for any activity that
triggers the need for an environmental assessment and/or EIS.
Sec. 1815.106 Supplemental environmental review.
(a) The designated Fund official shall determine whether the
proposed actions in the Application are sufficiently definite to
perform a meaningful environmental review during the preliminary
approval stage.
(b) If the designated Fund official determines that the Application
is sufficiently definite to perform a meaningful environmental review
during the preliminary approval stage, no conditions for supplemental
environmental review shall be imposed.
[[Page 54132]]
(c) If the designated Fund official determines that the
Application, or any part of the Application, is not sufficiently
definite to complete a meaningful environmental review during the
preliminary approval stage, the Fund shall require a supplemental
environmental review prior to the taking of any action directly using
Fund financial assistance that is not categorically excluded from
environmental review or for which an environmental assessment or EIS
has not been approved by the Fund. The applicant shall notify the
designated Fund official when proposing any action requiring a
supplemental environmental review and shall supply to the Fund all
information necessary for the Fund to perform the supplemental
environmental review. The Fund shall perform or have performed such a
supplemental environmental review. The applicant shall not use any Fund
financial assistance to perform any of the proposed actions requiring a
supplemental environmental review that affect the physical environment
until Fund approval for such action is received.
Sec. 1815.107 Determination of review requirement.
In deciding whether to prepare an EIS, the designated Fund official
shall determine whether the proposal is one that normally:
(a) Requires an EIS;
(b) Requires an environmental assessment, but not necessarily an
EIS; or
(c) Does not require either an EIS or an environmental assessment
(categorical exclusion).
Sec. 1815.108 Actions that normally require an EIS.
(a) If necessary, the Fund shall perform or have performed an
environmental assessment to determine if an Application, or any portion
of an Application, requires an EIS. However, it may be readily apparent
that a proposed action in an Application will have a significant impact
on the environment; in such cases, an environmental assessment is not
required and the Fund shall immediately begin to prepare, or have
prepared, an EIS.
(b) An EIS normally is required where an Application proposes to
directly use financial assistance from the Fund for any Project that
would:
(1) Remove, demolish, convert, or substantially rehabilitate 2,500
or more existing housing units, or would result in the construction or
installation of 2,500 or more new housing units, or which would provide
sites for 2,500 or more new housing units; or
(2) Remove, demolish, convert, or substantially rehabilitate
1,500,000 square feet or more of commercial space, or would result in
the construction or installation of 1,500,000 square feet or more of
new commercial space, or which would provide sites for 1,500,000 square
feet or more of new commercial space.
Sec. 1815.109 Preparation of an EIS.
(a) If the Fund determines that an EIS should be prepared, it shall
publish a notice of intent in the Federal Register in accordance with
40 CFR 1501.7 and 1508.22 of the CEQ regulations. After publishing the
notice of intent, the Fund shall begin to prepare or have prepared the
EIS. Procedures for preparing the EIS are set forth in 40 CFR part 1502
of the CEQ regulations.
(b) The Fund may supplement a draft or final EIS at any time. The
Fund shall prepare or have prepared a supplement to either the draft or
final EIS when:
(1) Substantial changes are proposed to an action contained in the
draft or final EIS that are relevant to environmental concerns or there
are significant new circumstances or information relevant to
environmental concerns and bearing on the proposed action or its
impacts; or
(2) Actions are proposed which relate or are similar to other
action(s) taken or proposed and that together have a cumulatively
significant impact on the environment.
Sec. 1815.110 Categorical exclusion.
The CEQ regulations provide for the categorical exclusion of
actions that do not individually or cumulatively have a significant
effect on the human environment (40 CFR 1508.4). Therefore, neither an
environmental assessment nor an EIS is required for such actions. An
action which falls into one of the categories below may still require
the preparation of an EIS or environmental assessment if the designated
Fund official determines it meets the criteria stated in Sec. 1815.109
or involves extraordinary circumstances that may have a significant
environmental effect. The Fund has determined the following categorical
exclusions:
(a) Actions directly related to the administration or operation of
the Fund (e.g. personnel actions, including, but not limited to, staff
recruitment and training; purchase of goods and services for the Fund,
including, but not limited to, furnishings, equipment, supplies and
services; space acquisition; property management; and security);
(b) Actions directly related to and implementing proposals for
which an environmental assessment or an environmental assessment and
EIS have been prepared;
(c) Actions directly related to the granting or receipt of Bank
Enterprise Act awards pursuant to part 1806 of this chapter;
(d) Actions directly related to training and/or technical
assistance;
(e) Projects for the acquisition, disposition, rehabilitation and/
or modernization of 500 existing housing units or less when all the
following conditions are met:
(1) Unit density is not increased more than 20 percent;
(2) The Project does not involve changes in land use from
nonresidential to residential;
(3) The estimated cost of rehabilitation is less than 75 percent of
the total estimated cost of replacement after rehabilitation; and
(4) The Project does not involve the demolition of one or more
buildings containing the primary use served by the project that,
together, have more than 20 percent of the square footage of the
Project;
(f) Projects for the construction of 200 housing units or less when
all the following conditions are met:
(1) The Project does not involve changes in existing land use from
nonresidential to residential; and
(2) The Project does not involve the demolition of one or more
buildings containing the primary use served by the project that,
together, have more than 20 percent of the square footage of the
Project;
(g) Projects for the acquisition, disposition, rehabilitation and/
or modernization of 200,000 square feet or less of existing commercial
space when all the following conditions are met:
(1) The Project does not involve changes in existing land use from
residential to nonresidential;
(2) The estimated cost of rehabilitation is less than 75 percent of
the total estimated cost of replacement after rehabilitation; and
(3) The Project does not involve the demolition of more than 10,000
square feet of commercial space containing the primary use served by
the Project;
(h) Projects for the construction of 100,000 square feet or less of
commercial space when all the following conditions are met:
(1) The Project does not involve changes in existing land use from
residential to nonresidential: and
(2) The Project does not involve the demolition of more than 10,000
square
[[Page 54133]]
feet of commercial space containing the primary use served by the
Project;
(i) Projects for the acquisition of an existing structure, provided
that the property to be acquired is in place and will be retained in
the same use;
(j) Projects involving Fund financial assistance of $1,000,000 or
less;
(k) Actions directly related to the provision of residential
tenant-based rental assistance, Consumer Loans, health care, child
care, educational, cultural and/or social services;
(l) Actions involving Fund financial assistance that is used to
increase the permanent capital and/or liquidity of an applicant;
(m) Actions where no use of Federal funds is involved in the
activity or Project; and
(n) Actions directly related to the provision of working capital,
the acquisition of machinery and equipment or the purchase of
inventory, raw materials or supplies.
Sec. 1815.111 Actions that require an environmental assessment.
If a Project or action is not one that normally requires an EIS and
does not qualify for categorical exclusion, the Fund shall prepare, or
have prepared, an environmental assessment.
Sec. 1815.112 Preparation of an environmental assessment.
(a) The Fund shall begin the preparation of an environmental
assessment as early as possible after the designated Fund official has
determined that it is required. The Fund may prepare an environmental
assessment at any time to assist planning and decisionmaking.
(b) An environmental assessment is a concise public document used
to determine whether to prepare an EIS. An environmental assessment
aids in complying with the NEPA when no EIS is necessary, and it
facilitates the preparation of an EIS, if one is necessary. The
environmental assessment shall contain brief discussions of the
following topics:
(1) Purpose and need for the proposed action;
(2) Description of the proposed action;
(3) Alternatives considered, including the no action alternative;
(4) Environmental effects of the proposed action and alternative
actions; and
(5) Listing of agencies, organizations or persons consulted.
(c) The most important or significant environmental consequences
and effects on the areas listed below should be addressed in the
environmental assessment. Only those areas which are specifically
relevant to the particular proposal should be addressed. Those areas
should be addressed in as much detail as is necessary to allow an
analysis of the alternatives and the proposal. The areas to be
considered are the following:
(1) Natural/ecological features (such as floodplain, wetlands,
coastal zones, wildlife refuges, and endangered species);
(2) Air quality;
(3) Sound levels;
(4) Water supply, wastewater treatment and water runoff;
(5) Energy requirements and conservation;
(6) Solid waste;
(7) Transportation;
(8) Community facilities and services;
(9) Social and economic;
(10) Historic and aesthetic; and
(11) Other relevant factors.
(d) If the Fund completes an environmental assessment and
determines that an EIS is not required, then the Fund shall prepare a
finding of no significant impact. The finding of no significant impact
shall be made available to the public by the Fund as specified in 40
CFR 1506.6 of the CEQ regulations.
Sec. 1815.113 Public involvement.
All information collected by the Fund pursuant to this part shall
be available to the public consistent with the CEQ regulations.
Interested persons may obtain information concerning any pending EIS or
any other element of the environmental review process of the Fund by
contacting the Community Development Financial Institutions Fund,
Department of the Treasury, 1500 Pennsylvania Avenue N.W., room 5116,
Washington, DC 20220, or such other contact entity designated by the
Fund.
Sec. 1815.114 Fund decisionmaking procedures.
To ensure that at major decisionmaking points all relevant
environmental concerns are considered by the Decisionmaker, the
following procedures are established:
(a) An environmental document, i.e., the EIS, environmental
assessment, finding of no significant impact, or notice of intent, in
addition to being prepared at the earliest point in the decisionmaking
process, shall accompany the relevant proposal or action through the
Fund's decisionmaking process to ensure adequate consideration of
environmental factors;
(b) The Decisionmaker shall consider in its decisionmaking process
only those alternatives discussed in the relevant environmental
documents. Also, where an EIS has been prepared, the decisionmaker
shall consider all comments received during any comment process and all
alternatives described in the EIS. A written record of the
consideration of alternatives during the decisionmaking process shall
be maintained; and
(c) Any environmental document prepared for a proposal or action
shall be made part of the record of any formal rulemaking by the Fund.
Sec. 1815.115 OMB control number.
The collection of information requirements in this part have been
approved by the Office of Management and Budget and assigned OMB
control number 1505-0153 (expires September 30, 1998).
[FR Doc. 95-25725 Filed 10-18-95; 8:45 am]
BILLING CODE 4810-70-P
