Bank Enterprise Award Program, 5790-5796 [E9-1575]

Agencies

• Community Development Financial Institutions Fund
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 74, Number 19 (Friday, January 30, 2009)]
[Rules and Regulations]
[Pages 5790-5796]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-1575]



Federal Register / Vol. 74, No. 19 / Friday, January 30, 2009 / Rules 
and Regulations

[[Page 5790]]


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DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund

12 CFR Part 1806

RIN 1505-AA91


Bank Enterprise Award Program

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 the Bank Enterprise Award (BEA) Program administered by 
the Community Development Financial Institutions Fund (Fund). The 
mission of the CDFI Fund is to increase the capacity of financial 
institutions to provide capital, credit and financial services in 
underserved markets. Its long-term vision is an America in which all 
people have access to affordable credit, capital and financial 
services. The purpose of the BEA Program is to provide an incentive to 
insured depository institutions to increase their activities in the 
form of loans, investments, services, and technical assistance, within 
Distressed Communities and provide financial assistance to Community 
Development Financial Institutions (CDFIs) through grants, stock 
purchases, loans, deposits, and other forms of financial and technical 
assistance. This interim rule: amends and simplifies select application 
requirements, and adds the requirement that BEA award funds be used for 
BEA Qualified Activities.

DATES: Interim rule effective January 30, 2009; comments must be 
received on or before March 2, 2009.

ADDRESSES: You may send hard copy comments concerning this interim rule 
to the Depository Institutions Program Advisor, Community Development 
Financial Institutions Fund, Department of the Treasury, 601 13th 
Street, NW., Suite 200 South, Washington, DC 20005. You may also send 
us comments by e-mail to cdfihelp@cdfi.treas.gov, with the subject 
heading ``BEA Program Comments''. When sending comments by e-mail, 
please use an ASCII file format and provide your full name and mailing 
address. Comments may be inspected at the above address weekdays 
between 9:30 a.m. and 4:30 p.m. Other information regarding the Fund 
and its programs may be obtained through the Fund's Web site at https://
www.cdfifund.gov.

FOR FURTHER INFORMATION CONTACT: Jodie Harris, Depository Institutions 
Program Advisor, Community Development Financial Institutions Fund, at 
(202) 622-4499. (This is not a toll free number.)

SUPPLEMENTARY INFORMATION:

I. Background

    Through the Bank Enterprise Award (BEA) Program, the Community 
Development Financial Institutions Fund (the Fund) seeks to: strengthen 
and expand the financial and organizational capacity of CDFIs; provide 
financial incentives to insured depository institutions to increase 
their lending and services in Distressed Communities; and increase the 
flow of private capital into Low- and Moderate-Income areas. Applicants 
participate in the BEA Program through a competitive process, which 
evaluates applications based on the value of their increases in certain 
Qualified Activities. BEA Program Awardees receive award proceeds only 
after successful completion of the specified Qualified Activities. On 
February 4, 2003, the Fund published in the Federal Register an interim 
regulation (62 FR 64439) implementing the BEA Program (the current 
rule).

II. Summary of Changes

    Revised Definitions for Categories of Qualified Activities: The 
interim rule updates the definition of Affordable Housing Development 
Loans (Sec.  1806.103(b)); Affordable Housing Loans (Sec.  
1806.103(c)), and Home Improvement Loans (Sec.  1806.103(ee)); 
Commercial Real Estate Loans (Sec.  1806.103(l)); and Small Business 
Loans (Sec.  1806. 103(oo)) to include the requirement that the 
borrower and/or entity financed be located in a Distressed Community 
(Sec.  1806.103(t)). Affordable Housing Development Loans are loans 
related to the development of residential real property that are 
affordable to Low- and Moderate-Income Eligible Residents. Affordable 
Housing Loan means origination of a loan to finance the purchase or 
improvement of the borrower's primary residence, and that is secured by 
such property, where such borrower is a Low- and Moderate-Income 
individual and an Eligible Resident. Home Improvement Loans mean 
advances of funds, either unsecured or secured by a one-to-four family 
residential property, the proceeds of which are used to improve the 
borrower's primary residence where the borrower is an Eligible 
Resident. Commercial Real Estate Loans are loans secured by real estate 
and used to finance the acquisition or rehabilitation of a building in 
a Distressed Community, or the acquisition, construction and or 
development of property in a Distressed Community, used for commercial 
purposes. Small Business Loan means an origination of a loan used for 
commercial or industrial activities (other than an Affordable Housing 
Finance Loan, Affordable Housing Development Loan, Commercial Real 
Estate Loan, Home Improvement Loan) to a business or farm that meets 
the size eligibility standards of the Small Business Administration's 
Development Company or Small Business Investment Company programs (13 
CFR 121.301) and is located in a Distressed Community.
    Award Agreement; Sanctions: Section 1806.300(a) of the interim rule 
provides that a BEA Program Award recipient shall comply with 
performance goals that have been established by the Fund. Such 
performance goals will include the requirement that an Awardee use its 
BEA Program Award for Qualified Activities under the BEA Program.

III. Rulemaking Analysis

Executive Order (E.O.) 12866

    It has been determined that this regulation is not a significant 
regulatory action as defined in Executive Order 12866. Therefore, a 
Regulatory Assessment is not required.

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.

Paperwork Reduction Act

    The collections of information contained in this interim rule have 
been previously reviewed and approved by OMB in accordance with the 
Paperwork Reduction Act of 1995 and assigned OMB Control Number 1559-
0005. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid control number assigned by OMB. This document restates the 
collections of information without substantive change. Comments 
concerning suggestions for reducing the burden of collections of 
information should be directed to the Deputy Director for Policy and 
Programs, Community Development Financial Institutions Fund, 601 13th 
Street, NW., Suite 200 South, Washington, DC 20005, and to the Office 
of Management and Budget, Attention: Desk Officer for the Department of 
the Treasury, Office of

[[Page 5791]]

Information and Regulatory Affairs, Washington, DC 20503.

National Environmental Policy Act

    Pursuant to Treasury Directive 75-02 (Department of the Treasury 
Environmental Quality Program), the Department has determined that 
these interim regulations are categorically excluded from the National 
Environmental Policy Act and do not require an environmental review.

Administrative Procedure Act

    The Fund is promulgating this interim rule without opportunity for 
prior public comment pursuant to the Administrative Procedure Act 
(APA), 5 U.S.C. 553, because the BEA Program involves grants and is 
thereby exempt from the procedural requirements of the APA pursuant to 
5 U.S.C. 553(a)(2). The Fund also believes that an immediate effective 
date is necessary for the convenience of the persons affected. 
Specifically, an immediate effective date will minimize the risk of 
confusion on the affected community by ensuring that there will be a 
single and uniform regulation in effect during the Assessment Period 
for the upcoming round of the BEA Program.

Comment

    Public comment is solicited on all aspects of this interim 
regulation. The Fund will consider all comments made on the substance 
of this interim regulation, but does not intend to hold hearings.

Catalog of Federal Financial Assistance Number

    Bank Enterprise Award Program--21.021.

List of Subjects in 12 CFR Part 1806

    Banks, banking, Community development, Grant programs--housing and 
community development, Reporting and recordkeeping requirements, 
Savings associations.

0
For the reasons set forth in the preamble, 12 CFR Part 1806 is revised 
to read as follows:

PART 1806--BANK ENTERPRISE AWARD PROGRAM

Sec.
Subpart A--General Provisions
1806.100 Purpose.
1806.101 Summary.
1806.102 Relationship to other Community Development Financial 
Institutions Programs.
1806.103 Definitions.
1806.104 Waiver authority.
1806.105 OMB control number.
Subpart B--Awards
1806.200 Community eligibility and designation.
1806.201 Measuring and reporting Qualified Activities.
1806.202 Estimated award amounts.
1806.203 Selection Process, actual award amounts.
1806.204 Applications for Bank Enterprise Awards.
Subpart C--Terms and Conditions of Assistance
1806.300 Award Agreement; sanctions.
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. 1834a, 4703, 4703 note, 4713, 4717; 31 
U.S.C. 321.

Subpart A--General Provisions


Sec.  1806.100  Purpose.

    The purpose of the Bank Enterprise Award Program is to provide 
financial assistance to Community Development Financial Institutions, 
and provide an incentive for insured depository institutions to 
increase their activities in Distressed Communities.


Sec.  1806.101  Summary.

    (a) Under the Bank Enterprise Award Program, the Fund makes awards 
to selected Applicants that:
    (1) Increase their investments in or other support of Community 
Development Financial Institutions;
    (2) Increase lending and investment activities within Distressed 
Communities; or
    (3) Increase the provision of certain services and assistance.
    (b) Distressed Communities must meet minimum geographic, poverty 
and unemployment criteria.
    (c) Applicants are selected to participate in the program through a 
competitive application process. 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 and must be 
used for BEA Qualified Activities. All awards shall be made subject to 
the availability of funding.


Sec.  1806.102  Relationship to other Community Development Financial 
Institutions Programs.

    Prohibition against double funding. A BEA Applicant may not submit 
as Qualified Activities any transactions funded with award proceeds 
from another Fund program.


Sec.  1806.103  Definitions.

    For purposes of this part the following terms shall have the 
following definitions:
    (a) Act means the Community Development Banking and Financial 
Institutions Act of 1994, as amended (12 U.S.C. 4701 et seq.);
    (b) Affordable Housing Development Loan means origination of a loan 
to finance the acquisition, construction, and/or development of single- 
or multi-family residential real property, where at least sixty percent 
of the units in such property are affordable, as may be defined in the 
applicable NOFA, to Low- and Moderate-Income Eligible Residents.
    (c) Affordable Housing Loan means origination of a loan to finance 
the purchase or improvement of the borrower's primary residence, and 
that is secured by such property, where such borrower is a Low- and 
Moderate-Income Eligible Resident. Affordable Housing Loan may also 
refer to second (or otherwise subordinated) liens or ``soft second'' 
mortgages, and other similar types of down payment assistance loans but 
may not necessarily be secured by such property originated for the 
purpose of facilitating the purchase or improvement of the borrower's 
primary residence, where such borrower is a Low- and Moderate-Income 
Eligible Resident.
    (d) 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;
    (e) Appropriate Federal Banking Agency has the same meaning as in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
    (f) Assessment Period means an annual or semi-annual period 
specified in the applicable Notice of Funds Availability in which an 
Applicant will carry out, or has carried out, Qualified Activities;
    (g) Award Agreement means a formal agreement between the Fund and 
an Awardee pursuant to Sec.  1806.300;
    (h) Awardee means an Applicant selected by the Fund to receive a 
Bank Enterprise Award;
    (i) Bank Enterprise Award (or BEA Program Award) means an award 
made to an Applicant pursuant to this part;
    (j) Bank Enterprise Award (or BEA) Program means the program 
authorized by section 114 of the Act and implemented under this part;
    (k) Baseline Period means an annual or semi-annual period specified 
in the applicable NOFA in which an Applicant has previously carried out 
Qualified Activities;

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    (l) Commercial Real Estate Loan means an origination of a loan 
(other than an Affordable Housing Development Loan or Affordable 
Housing Loan) that is secured by real estate and used to finance the 
acquisition or rehabilitation of a building in a Distressed Community, 
or the acquisition, construction and/or development of property in a 
Distressed Community, used for commercial purposes;
    (m) Community Development Entity (or CDE) means any Qualified 
Community Development Entity that meets the requirements set forth at 
Internal Revenue Code (IRC) Sec.  45D(c) and that has been certified as 
such by the Fund;
    (n) Community Development Financial Institution (or CDFI) means an 
entity that has been certified as a CDFI by the CDFI Fund as of the 
date specified in the applicable NOFA.
    (o) Community Services means the following forms of assistance 
provided by officers, employees or agents (contractual or otherwise) of 
the Applicant:
    (1) Provision of technical assistance and financial education to 
Eligible Residents regarding managing their personal finances;
    (2) Provision of technical assistance and consulting services to 
newly formed small businesses and nonprofit organizations located in 
the Distressed Community;
    (3) Provision of technical assistance and financial education to, 
or servicing the loans of, Low- or Moderate-Income homeowners and 
homeowners that are Eligible Residents; and
    (4) Other services provided to Low- and Moderate-Income Eligible 
Residents or enterprises Integrally Involved in a Distressed Community, 
as deemed appropriate by the Fund;
    (p) CDFI Partner means a CDFI that has been provided assistance in 
the form of CDFI Related Activities by an Applicant;
    (q) CDFI Related Activities means Equity Investments, Equity-Like 
Loans and CDFI Support Activities;
    (r) CDFI Support Activity means assistance provided by an Applicant 
or its Subsidiary to a CDFI that meets criteria set forth by the Fund 
in the applicable NOFA, that is Integrally Involved in a Distressed 
Community, in the form of the origination of a loan, technical 
assistance, or deposits if such deposits are:
    (1) Uninsured and committed for a term of at least three years; or
    (2) Insured, committed for a term of at least three years, and 
provided at an interest rate that is materially (in the determination 
of the Fund) below market rates;
    (s) Deposit Liabilities means time or savings deposits or demand 
deposits, accepted from Eligible Residents at offices of the Applicant, 
or a Subsidiary of the Applicant, located within the Distressed 
Community. Depository Liabilities may only include deposits held by 
individuals in transaction accounts (i.e., demand deposits, NOW 
accounts, automated transfer service accounts and telephone or 
preauthorized transfer accounts) or non-transaction accounts (i.e., 
money market deposit accounts, other savings deposits and all time 
deposits), as defined by the Appropriate Federal Banking Agency;
    (t) Distressed Community means a geographic community which meets 
the minimum area eligibility requirements specified in Sec.  1806.200, 
and such additional criteria as may be set forth in the applicable 
NOFA;
    (u) Distressed Community Financing Activities means Affordable 
Housing Loans, Affordable Housing Development Loans and related Project 
Investments; Education Loans; Commercial Real Estate Loans and related 
Project Investments; Home Improvement Loans; and Small Business Loans 
and related Project Investments;
    (v) Education Loan means an advance of funds to a student, who is 
an Eligible Resident, for the purpose of financing a college or 
vocational education.
    (w) Electronic Transfer Account (or ETA) means an account meeting 
the requirements, and with respect to which the Applicant has satisfied 
the requirements, set forth in the Federal Register on July 16, 1999 at 
64 FR 38510, as such requirements may be amended from time to time;
    (x) Eligible Resident means an individual that resides in a 
Distressed Community;
    (y) Equity Investment means financial assistance provided by an 
Applicant or its Subsidiary to a CDFI, which CDFI meets such criteria 
as set forth in the applicable NOFA, in the form of a grant, a stock 
purchase, a purchase of a partnership interest, a purchase of a limited 
liability company membership interest, or any other investment deemed 
to be an Equity Investment by the Fund;
    (z) Equity-Like Loan means a loan provided by an Applicant or its 
Subsidiary to a CDFI, and made on such terms that it has 
characteristics of an Equity Investment which meets such criteria as 
set forth in the applicable NOFA;
    (aa) Financial Services means check-cashing, providing money orders 
and certified checks, automated teller machines, safe deposit boxes, 
new branches, and other comparable services as may be specified by the 
Fund in the applicable NOFA, that are provided by the Applicant to Low- 
and Moderate-Income Eligible Residents or enterprises Integrally 
Involved in the Distressed Community;
    (bb) Fund means the Community Development Financial Institutions 
Fund, established under section 104(a) of the Act (12 U.S.C. 4703(a));
    (cc) Geographic Units means counties (or equivalent areas), 
incorporated places, minor civil divisions that are units of local 
government, census tracts, block numbering areas, block groups, 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;
    (dd) Home Improvement Loan means an advance of funds, either 
unsecured or secured by a one-to-four family residential property, the 
proceeds of which are used to improve the borrower's primary residence;
    (ee) 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 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;
    (ff) Individual Development Account (or IDA) means an account that 
meets the requirements, and with respect to the provision of which 
Applicant has satisfied the requirements, set forth in the U.S. 
Department of Health and Human Services Program Announcement OCS-2000-
04, published on December 14, 1999 in the Federal Register at 64 FR 
69824, as such requirements may be amended from time to time;
    (gg) Integrally Involved means:
    (i) For a CDFI Partner, having provided or transacted the 
percentage of financial transactions or dollars (e.g., loans or equity 
investments as defined in 12 CFR 1805.104(s)), or Development Service 
activities, in the Distressed Community identified by the Applicant or 
the CDFI Partner, as applicable, or having attained the percentage of 
market share for a particular product in a Distressed Community, set 
forth in the applicable NOFA; or
    (ii) For a non-CDFI, having directed the percentage of its business 
activities (e.g., investments, revenues, expenses, or other appropriate 
measures) to

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serving the Distressed Community identified by the Applicant, or having 
provided the percentage of its business activities in said Distressed 
Community, set forth in the applicable NOFA.
    (hh) 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));
    (ii) 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;
    (jj) Notice of Funds Availability (or NOFA) means the public 
notice, published by the Fund in the Federal Register, that announces 
the availability of BEA Program funds for a particular funding round 
and that advises Applicants with respect to obtaining application 
materials, establishes application submission deadlines, and 
establishes other requirements or restrictions applicable for the 
particular funding round;
    (kk) Priority Factor means a numeric value assigned to each type of 
activity within each category of Qualified Activity, as may be 
established by the Fund in the applicable NOFA. 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;
    (ll) Project Investment means providing financial assistance in the 
form of a purchase of stock, limited partnership interest, other 
ownership instrument, or a grant to an entity that is Integrally 
Involved in a Distressed Community and formed for the sole purpose of 
engaging in a project or activity, approved by the Fund, including 
Affordable Housing Development Loans, Affordable Housing Loans, 
Commercial Real Estate Loans, and Small Business Loans;
    (mm) Qualified Activities means CDFI Related Activities, Distressed 
Community Financing Activities, and Service Activities;
    (nn) Service Activities means the following activities: Deposit 
Liabilities; Financial Services; Community Services; Targeted Financial 
Services; and Targeted Retail Savings/Investment Products;
    (oo) Small Business Loan means an origination of a loan used for 
commercial or industrial activities (other than an Affordable Housing 
Loan, Affordable Housing Development Loan, Commercial Real Estate Loan, 
Home Improvement Loan) to a business or farm that meets the size 
eligibility standards of the Small Business Administration's 
Development Company or Small Business Investment Company programs (13 
CFR 121.301) and is located in a Distressed Community;
    (pp) 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;
    (qq) Targeted Financial Services means ETAs, IDAs, and such other 
similar banking products as maybe specified by the Fund in the 
applicable NOFA;
    (rr) Targeted Retail Savings/Investment Products means certificates 
of deposit, mutual funds, life insurance and other similar savings or 
investment vehicles targeted to Low- and Moderate-Income Eligible 
Residents, as may be specified by the Fund in the applicable NOFA; and
    (ss) 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 
will 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 
notification 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 number 1559-0005.

Subpart B--Awards


Sec.  1806.200  Community eligibility and designation.

    (a) General. If an Applicant proposes to carry out Service 
Activities or Distressed Community Financing Activities, the Applicant 
shall designate one or more Distressed Communities in which it proposes 
to carry out those activities. The Applicant may designate different 
Distressed Communities for each category of activity. If an Applicant 
proposes to carry out CDFI Support Activities, the Applicant shall 
provide evidence that the CDFI it is proposing to support is Integrally 
Involved in a Distressed Community as specified in the applicable NOFA.
    (b) Minimum area and eligibility requirements. A Distressed 
Community must meet the following minimum area and eligibility 
requirements:
    (1) Minimum area requirements. A Distressed Community:
    (i) Must be an area that is located within the jurisdiction of one 
(1) Unit of General Local Government;
    (ii) The boundaries the area must be contiguous; and
    (iii) The area must:
    (A) Have a population, as determined by the most recent census data 
available, of not less than 4,000 if any portion of the area is located 
within a Metropolitan Area with a population of 50,000 or greater; or
    (B) Have a population, as determined by the most recent census data 
available, of not less than 1,000 in any other case; or
    (C) Be located entirely within an Indian Reservation.
    (2) Eligibility requirements. A Distressed Community must be a 
geographic area where:
    (i) At least 30 percent of the Eligible Residents have incomes that 
are less than the national poverty level, as published by the U.S. 
Bureau of the Census in the most recent decennial census for which data 
is available;
    (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, including estimates of unemployment developed using 
the U.S. Bureau of Labor Statistics' Census Share calculation method; 
and
    (iii) Such additional requirements as may be specified by the Fund 
in the applicable NOFA.
    (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 set forth in paragraph (b) of this 
section; or

[[Page 5794]]

    (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. The Fund will provide a 
prospective Applicant with data and other information to help it 
identify areas eligible to be designated as a Distressed Community. 
Applicants shall submit designation materials as instructed in the 
applicable NOFA.


Sec.  1806.201  Measuring and reporting Qualified Activities.

    (a) General. An Applicant may receive a Bank Enterprise Award for 
engaging in any of the following categories of Qualified Activities 
during an Assessment Period: CDFI Related Activities, Distressed 
Community Financing Activities, or Service Activities. The Fund may 
further qualify such Qualified Activities in the applicable NOFA, 
including such additional geographic and transaction size limitations 
as the Fund deems appropriate.
    (b) Reporting Qualified Activities. An Applicant should report only 
its Qualified Activities for the category in which it is seeking a Bank 
Enterprise Award. For example, if an Applicant is seeking a Bank 
Enterprise Award for Distressed Community Financing Activities only, it 
should report only its activities for the Distressed Community 
Financing Activities category.
    (1) If an Applicant elects to apply for an award in either the CDFI 
Related Activities category or the Distressed Community Financing 
Activities category, it must report on all types of activity within 
that category unless the Applicant can provide a reasonable explanation 
acceptable to the Fund, in its sole discretion, as to why it cannot 
report on all activities in such category.
    (2) If an Applicant elects to apply for an award in the Service 
Activities category, it may elect not to report each type of activity 
within the Service Activities category.
    (c) Area served. CDFI Related Activities must be provided to a CDFI 
Partner Integrally Involved in a Distressed Community. Service 
Activities and Distressed Community Financing Activities must serve a 
Distressed Community. An activity is considered to serve a Distressed 
Community if it is:
    (1) Undertaken in the Distressed Community; or
    (2) Provided to Low- and Moderate-Income Eligible Residents or 
enterprises Integrally Involved in the Distressed Community.
    (d) Certain Limitations on Qualified Activities--Activities funded 
with the proceeds of Federal funding or tax credit programs may be 
ineligible for purposes of calculating or receiving a Bank Enterprise 
Awards. Please see the applicable BEA NOFA for current limitations on 
Qualified Activities.
    (e) Measuring the Value of Qualified Activities. Subject to such 
additional or alternative valuations as the Fund may specify in the 
applicable NOFA, the Fund will assess the value of:
    (1) Equity Investments, Equity-Like Loans, loans, grants and 
certificates of deposits, at the original amount of such Equity 
Investments, Equity-Like Loans, loans, grants or certificates of 
deposits. Where a certificate of deposit matures and is then rolled 
over during the Baseline Period or the Assessment Period, as 
applicable, the Fund will assess the value of the full amount of the 
rolled over deposit. Where an existing loan is refinanced (a new loan 
is originated to pay off an existing loan, whether or not there is a 
change in the applicable loan terms), the Fund will only assess the 
value of any increase in the principal amount of the refinanced loan;
    (2) Project Investments at the original amount of the purchase of 
stock, limited partnership interest, other ownership interest, or 
grant;
    (3) Deposit Liabilities at the dollar amount deposited as measured 
by comparing the net change in the amount of applicable funds on 
deposit at the Applicant during the Baseline Period with the net change 
in the amount of applicable funds on deposit at the Applicant during 
the Assessment Period, as described below:
    (i) The Applicant shall calculate the net change in deposits during 
the Baseline Period, by comparing the amount of applicable funds on 
deposit at the close of business the day before the beginning of the 
Baseline Period and at the close of business on the last day of the 
Baseline Period; and
    (ii) The Applicant shall calculate the net change in such deposits 
during the Assessment Period, by comparing the amount of applicable 
funds on deposit at the close of business the day before the beginning 
of the Assessment Period and at the close of business on the last day 
of the Assessment Period;
    (4) Financial Services and Targeted Financial Services based on the 
predetermined amounts as may be set forth by the Fund in the applicable 
NOFA; and
    (5) Financial Services (other than those for which the Fund has 
established a predetermined value), Community Services, and CDFI 
Support Activities consisting of technical assistance based on the 
administrative costs of providing such services.
    (f) Closed Transactions. A transaction shall be considered to have 
been carried out during the Baseline Period or the Assessment Period if 
the documentation evidencing the transaction:
    (1) Is executed on a date within the applicable Baseline Period or 
Assessment Period, respectively; and
    (2) Constitutes a legally binding agreement between the Applicant 
and a borrower or investee which specifies the final terms and 
conditions of the transaction, except that any contingencies included 
in the final agreement must be typical of such transaction and 
acceptable (both in the judgment of the Fund); and
    (3) An initial cash disbursement of loan or investment proceeds has 
occurred in a manner that is consistent with customary business 
practices and is reasonable given the nature of the transaction (as 
determined by the Fund) unless it is normal business practice to make 
no initial disbursement at closing and the Applicant demonstrates that 
the borrower has access to the proceeds, subject to reasonable 
conditions as may be determined by the Fund.
    (g) Reporting Period. An Applicant may only measure the amount of a 
Qualified Activity that it reasonably expects to disburse to an 
investee, borrower, or other recipient within one year of the end of 
the applicable Assessment Period, or such other period as may be set 
forth by the Fund in the applicable NOFA.


Sec.  1806.202  Estimated award amounts.

    (a) General. An Applicant shall calculate and submit to the Fund an 
estimated award amount as part of the Bank Enterprise Award 
application.
    (b) Award Percentages. The Fund will establish the award percentage 
for each category of Qualified Activities in the applicable NOFA. 
Applicable award percentages for activities undertaken by Applicants 
that are CDFIs will be equal to three times the award percentages for 
activities undertaken by Applicants that are not CDFIs.
    (c) Calculating the estimated award amount. The estimated award 
amount for each category of Qualified Activities will be equal to the 
applicable award percentage of the increase in the weighted value of 
such Qualified Activities between the Baseline Period and Assessment 
Period. The weighted

[[Page 5795]]

value of the applicable Qualified Activities shall be calculated by:
    (1) Subtracting the Baseline Period value of such Qualified 
Activity from the Assessment Period value of such Qualified Activity to 
yield a remainder; and
    (2) Multiplying the remainder by the applicable Priority Factor (as 
set forth in the applicable NOFA).
    (d) Estimated Award Eligibility Review. The Fund will determine the 
eligibility of each transaction for which an Applicant has applied for 
a Bank Enterprise Award. Based upon this review, the Fund will 
calculate the actual award amount for which such Applicant is eligible.


Sec.  1806.203  Selection Process, actual award amounts.

    (a) Sufficient Funds Available to Cover Estimated Awards. All Bank 
Enterprise Awards are subject to the availability of funds. If the 
amount of funds available during a funding round is sufficient to cover 
all estimated award amounts for which Applicants are eligible, in the 
Fund's determination, and an Applicant meets all of the program 
requirements specified in this part, then such Applicant shall receive 
an actual award amount that is calculated by the Fund in the manner 
specified in Sec.  1806.202.
    (b) Insufficient Funds Available to Cover Estimated Awards. If the 
amount of funds available during a funding round is insufficient to 
cover all estimated award amounts for which Applicants are eligible, in 
the Fund's determination, then the Fund will select Awardees and 
determine actual award amounts based on the process described in this 
section.
    (c) Priority of Awards. The Fund will rank Applicants in each 
category of Qualified Activity according to the priorities described in 
this paragraph (c). Selections within each priority category will be 
based on the Applicants' relative rankings within each such category, 
subject to the availability of funds.
    (1) First priority. If the amount of funds available during a 
funding round is insufficient for all estimated award amounts, first 
priority will be given to Applicants that propose to engage in CDFI 
Related Activities, ranked in the order set forth in the applicable 
NOFA.
    (2) Second priority. If the amount of funds available during a 
funding round is sufficient for all Applicants that propose to engage 
in CDFI Related Activities but insufficient for all remaining estimated 
award amounts, second priority will be given to Applicants that propose 
to engage in Distressed Community Financing Activities, ranked in the 
order set forth in the applicable NOFA.
    (3) Third Priority. If the amount of funds available during a 
funding round is sufficient for all Applicants that propose to engage 
in CDFI Related Activities and Distressed Community Financing 
Activities, but insufficient for all remaining estimated award amounts, 
third priority will be given to Applicants that propose to engage in 
Service Activities, ranked in the order set forth in the applicable 
NOFA.
    (d) Calculating actual award amounts. The Fund will determine 
actual award amounts based upon the availability of funds, increases in 
Qualified Activities from the Baseline to the Assessment Period, and an 
Applicant's priority ranking. If an Applicant receives an award for 
more than one priority category described in this section, the Fund 
will combine the award amounts into a single Bank Enterprise Award.
    (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) To select Applicants not previously selected, using the 
calculation and selection process contained in this part;
    (2) To make additional monies available for a subsequent funding 
round; or
    (3) As otherwise authorized by the Act.
    (f) Limitation. The Fund, in its sole discretion, may deny or limit 
the amount of an award for any reason.


Sec.  1806.204  Applications for Bank Enterprise Awards.

    (a) Notice of Funds Availability; Applications. Applicants shall 
submit applications for Bank Enterprise Awards in accordance with this 
section and the applicable NOFA. After receipt of an application, the 
Fund may request clarifying or technical information related to 
materials submitted as part of such application or to verify that 
Qualified Activities were carried out in the manner prescribed in this 
part.
    (b) Application contents. An application for a Bank Enterprise 
Award shall contain:
    (1) A completed worksheet that reports the increases in Qualified 
Activities actually carried out during the Baseline and Assessment 
Period. If an Applicant has merged with another institution during the 
Assessment Period, it shall submit a separate Baseline Period worksheet 
for each subject institution and one Assessment Period worksheet that 
reports the activities of the merged institutions. If such a merger is 
unexpectedly delayed beyond the Assessment Period, the Fund reserves 
the right to withhold distribution of an award until the merger has 
been completed;
    (2) A report of Qualified Activities that were closed during the 
Assessment Period. Such report shall describe the original amount, 
census tract served, and the dates of execution, initial disbursement, 
and final disbursement of the instrument;
    (3) With respect to all CDFI Related Activities and Distressed 
Community Financing Activities where the amount of the Qualified 
Activity is $250,000 or greater, documentation that meets the 
conditions described in Sec.  1806.201(f);
    (4) Information necessary for the Fund to complete its 
environmental review requirements pursuant to part 1815 of this 
chapter;
    (5) Certifications, as described in the applicable NOFA and Bank 
Enterprise Award application, that the information provided to the Fund 
is true and accurate and 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;
    (6) In the case of an Applicant proposing to engage in Service 
Activities, or Distressed Community Financing Activities, an Applicant 
must submit a Distressed Community map and other documentation as 
described in the applicable NOFA and Bank Enterprise Award application;
    (7) Information that indicates that each CDFI to which an Applicant 
has provided CDFI Support Activities is Integrally Involved in a 
Distressed Community as described in the applicable NOFA and Bank 
Enterprise Award application; and
    (8) Any other information requested by the Fund, or specified by 
the Fund in the applicable NOFA or the Bank Enterprise Award 
application, in order to document or otherwise assess the validity of 
information provided by the Applicant to the Fund.

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 shall:
    (1) Carry out its Qualified Activities in accordance with 
applicable law, the approved application, and all other applicable 
requirements;

[[Page 5796]]

    (2) 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.
    (4) Comply with performance goals that have been established by the 
Fund. Such performance goals will include measures that require an 
Awardee to use its BEA Program Award funds for Qualified Activities.
    (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, bar the Awardee 
and/or its Affiliates from applying for an award from the Fund for a 
period to be decided by the Fund in its sole discretion, and pursue any 
other available legal remedies.
    (c) Compliance with Other CDFI Fund Awards. In the event that an 
Awardee or its Subsidiary or Affiliate is not in compliance, as 
determined by the Fund, with the terms and conditions of any other 
award under the Bank Enterprise Award Program or any component of the 
Community Development Financial Institutions Program, the Fund may, in 
its sole discretion, reject an application for or withhold disbursement 
(either initial or subsequent) on a Bank Enterprise Award.
    (d) Notice. Prior to imposing any sanctions pursuant to this 
section or an Award Agreement, the Fund will provide the Awardee with 
written notice of the proposed sanction and an opportunity to respond. 
Nothing in this section, however, will provide an Awardee with the 
right to any formal or informal hearing or comparable proceeding not 
otherwise required by law.


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 facilities, 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.

    Dated: January 15, 2009.
Donna J. Gambrell,
Director, Community Development Financial Institutions Fund.
[FR Doc. E9-1575 Filed 1-29-09; 8:45 am]
BILLING CODE 4810-70-P