Modification of CDFI Certification Requirements, 19195-19196 [granule299]

Agencies

• Community Development Financial Institutions Fund
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 80, Number 69 (Friday, April 10, 2015)]
[Unknown Section]
[Pages 19195-19196]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: granule299]



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Federal Register&thnsp;/&thnsp;Vol. 80, No. 69&thnsp;/&thnsp;Friday, 
April 10, 2015&thnsp;/&thnsp;Rules and Regulations

[[Page 19195]]



DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund

12 CFR Part 1805


Modification of CDFI Certification Requirements

AGENCY: Community Development Financial Institutions Fund (CDFI Fund), 
Department of the Treasury.

ACTION: Interim rule.

-----------------------------------------------------------------------

SUMMARY: The Community Development Financial Institutions Fund (CDFI 
Fund) is amending the CDFI certification regulation with respect to the 
financing entity requirement and participation as an Eligible CDFI in 
the CDFI Bond Guarantee Program. This regulatory change creates a means 
for the CDFI Fund, in its discretion, to permit a CDFI's Affiliate, 
which applies for CDFI certification, to rely on the Controlling CDFI's 
activity or track record in order to meet the financing entity 
requirement, solely for the purpose of the Affiliate participating as 
an Eligible CDFI under the CDFI Bond Guarantee Program.

DATES: Effective on April 10, 2015. Comment due date: June 9, 2015.

ADDRESSES: All comments concerning this revised interim rule should be 
addressed to the Certification, Compliance Monitoring and Evaluation 
Manager, Community Development Financial Institutions Fund, Department 
of the Treasury, 1500 Pennsylvania Avenue NW., Washington, DC 20220; by 
email to; by email to cdfihelp@cdfi.treas.gov; or by facsimile 
at (202) 453–2466.
    Electronic Submission of Comments: Interested persons are 
encouraged to submit comments electronically through the Federal 
eRulemaking Portal at https://www.regulations.gov. Electronic submission 
of comments allows the commenter maximum time to prepare and submit a 
comment, ensures timely receipt, and enables the Department to make 
them available to the public. Comments submitted electronically through 
the https://www.regulations.gov Web site can be viewed by other 
commenters and interested members of the public. Commenters should 
follow the instructions provided on that site to submit comments 
electronically.
    All properly submitted comments will be available for inspection 
and downloading at https://www.regulations.gov. In general, comments 
received, including attachments and other supporting materials, are 
part of the public record and are available to the public. Do not 
submit any information in your comment or supporting materials that you 
consider confidential or inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: David Meyer, Acting Manager, 
Certification, Compliance Monitoring and Evaluation, by mail to the 
CDFI Fund, Department of the Treasury, 1500 Pennsylvania Avenue NW., 
Washington, DC 20220; by email to cdfihelp@cdfi.treas.gov; or by 
facsimile at (202) 453–2466 (This is not a toll free number).

SUPPLEMENTARY INFORMATION: The CDFI Fund, Department of the Treasury, 
was established by the Community Development Banking and Financial 
Institutions Act of 1994, as amended (12 U.S.C. 4701 et seq.). The 
mission of the Community Development Financial Institutions Fund (CDFI 
Fund) is to increase economic opportunity and promote community 
development investments for underserved populations in distressed 
communities in the United States. Its long-term vision is to 
economically empower America's underserved and distressed communities. 
The CDFI Fund's programs are designed to facilitate the flow of lending 
and investment capital to distressed communities and to individuals who 
have been unable to take full advantage of the financial services 
industry. Access to credit, investment capital, and financial services 
are essential ingredients for creating and retaining jobs, developing 
affordable housing, revitalizing neighborhoods, unleashing the economic 
potential of small businesses, and empowering people.
    An important component of the CDFI Fund's authority is the 
certification of entities as Community Development Financial 
Institutions (CDFIs), which permits such entities to have access to 
financial assistance through the Community Development Financial 
Institutions Program (CDFI Program) and other CDFI Fund programs, 
including the CDFI Bond Guarantee Program.
    Through the CDFI Bond Guarantee Program, the Secretary of the 
Treasury provides a Guarantee for Bond(s) issued by a Qualified Issuer 
as part of a Bond Issue. In turn, the Qualified Issuer uses Bond 
Proceeds to make Bond Loans to Eligible CDFIs for Eligible Purposes, as 
those terms are defined in 12 CFR 1808.102. Under the CDFI Bond 
Guarantee Program, for a CDFI to be an Eligible CDFI, the CDFI must be 
certified by the CDFI Fund as meeting certification requirements (see 
12 CFR 1808.202(a)).
    In order for an entity to be certified as a CDFI, it must meet six 
criteria that are set forth in the regulation that governs CDFI 
certification: (i) Primary mission (12 CFR 1805.201(b)(1)); (ii) 
financing entity (12 CFR 1805.201(b)(2)); (iii) Target Market (12 CFR 
1805.201(b)(3)); (iv) Development Services (12 CFR 1805.201(b)(4)); (v) 
accountability (12 CFR 1805.201(b)(5)); and (vi) non-government entity 
(12 CFR 1805.201(b)(6)).
    The CDFI Fund is amending the CDFI certification regulation only 
with respect to the financing entity requirement and participation as 
an Eligible CDFI in the CDFI Bond Guarantee Program. This regulatory 
change creates a means for the CDFI Fund, in its discretion, to permit 
a CDFI's Affiliate (as defined in 12 CFR 1805.104(b)), which applies 
for CDFI certification, to rely on the Controlling CDFI's activity or 
track record in order to meet the financing entity requirement, solely 
for the purpose of the Affiliate participating as an Eligible CDFI 
under the CDFI Bond Guarantee Program.
    In other words, this revised regulation states that, for purposes 
of participating in the CDFI Bond Guarantee Program, the Eligible CDFI, 
if it is an Affiliate of a CDFI, need not meet the financing entity 
requirement based on its own merit or activity but may instead rely on 
the financing entity track record of the

[[Page 19196]]

affiliated CDFI. This regulatory revision affects only the Affiliate's 
ability to meet the financing entity requirement for CDFI 
certification: said entity must meet the other five certification 
criteria in accordance with the existing regulation.
    Further, in this revised regulation, the CDFI Fund reserves the 
authority, in its discretion, to set additional parameters and 
restrictions on the financing entity requirement, which will be set 
forth in the Notice of Guarantee Availability (NOGA) for a particular 
application round of the CDFI Bond Guarantee Program. Such additional 
parameters or restrictions may include, for example, (i) a deadline by 
which the Affiliate must meet the financing entity requirement based on 
its own merit or activity, rather than relying on that of the 
affiliated CDFI, and (ii) a requirement that the affiliated CDFI must 
maintain its CDFI certification until such time that the Affiliate is 
able to meet all CDFI certification requirements based on its own merit 
or activity.

Regulatory Analysis and Notices

Executive Order 12866

    It has been determined that this rule 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 under the 
Administrative Procedure Act (5 U.S.C. 553) or any other law, the 
Regulatory Flexibility Act does not apply.

Paperwork Reduction Act

    The collections of information contained in this interim rule have 
been previously reviewed and approved by the Office of Management and 
Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 and 
assigned OMB Control Numbers 1559–0006, 1559–0021, and 
1559–0022. 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.

National Environmental Policy Act

    This revised interim rule has been reviewed in accordance with 12 
CFR part 1815. The CDFI Fund's Environmental Regulations under the 
National Environmental Protection Act of 1969 (NEPA) require that the 
CDFI Fund adequately consider the cumulative impact proposed activities 
have upon the human environment. It is the determination of the CDFI 
Fund that the interim rule does not constitute a major federal action 
significantly affecting the quality of the human environment and, in 
accordance with the NEPA and the CDFI Fund Environmental Quality 
Regulations, 12 CFR part 1815, neither an Environmental Assessment nor 
an Environmental Impact Statement is required.

Administrative Procedure Act

    Because this interim rule relates to loans and grants, notice and 
public procedure and a delayed effective date are not required pursuant 
to the Administrative Procedure Act, 5 U.S.C. 553(a)(2).

Catalogue of Federal Domestic Assistance Number

    Community Development Financial Institutions 
Program—21.020.

List of Subjects in 12 CFR Part 1805

    Community development, Grant programs-housing and community 
development, Loan programs-housing and community development, Reporting 
and recordkeeping requirements, Small businesses.

Amendment to the Regulations

    For the reasons discussed in the preamble, the CDFI Fund is 
amending 12 CFR chapter XVII, part 1805 as follows:

PART 1805—COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS 
PROGRAM

0
1. The authority citation for part 1805 continues to read as follows:

    Authority: 12 U.S.C. 4703, 4703 note, 4710, 4717; and 31 U.S.C. 
321.


0
2. Section 1805.201(b)(2) is revised to read as follows:


§&thnsp;1805.201  Certification as a Community Development 
Financial Institution.

* * * * *
    (b) * * *
    (2) Financing entity. (i) A CDFI shall be an entity whose 
predominant business activity is the provision, in arms-length 
transactions, of Financial Products, Development Services, and/or other 
similar financing. An Applicant may demonstrate that it is such an 
entity if it is a(n):
    (A) Depository Institution Holding Company;
    (B) Insured Depository Institution, Insured Credit Union, or State-
Insured Credit Union; or
    (C) Organization that is deemed by the CDFI Fund to have such a 
predominant business activity as a result of analysis of its financial 
statements, organizing documents, and any other information required to 
be submitted as part of its application. In conducting such analysis, 
the CDFI Fund may take into consideration an Applicant's total assets 
and its use of personnel.
    (ii) For the sole purpose of participating as an Eligible CDFI in 
the CDFI Bond Guarantee Program (see 12 CFR part 1808), an Affiliate of 
a Controlling CDFI may be deemed to meet the financing entity 
requirement of this subsection by relying on the CDFI Fund's 
determination that the Controlling CDFI has met said requirement; 
provided, however, that the CDFI Fund reserves the right, in its sole 
discretion, to set additional parameters and restrictions on such, 
which parameters and restrictions shall be set forth in the applicable 
Notice of Guarantee Availability for a CDFI Bond Guarantee Program 
application round.
    (iii) Further, for the sole purpose of participating as an Eligible 
CDFI in the CDFI Bond Guarantee Program, the provision of Financial 
Products, Development Services, and/or other similar financing by an 
Affiliate of a Controlling CDFI need not be arms-length if such 
transaction is by and between the Affiliate and the Controlling CDFI, 
pursuant to an operating agreement that includes management and 
ownership provisions and is in form and substance that is acceptable to 
the CDFI Fund.
* * * * *

    Dated: April 7, 2015.
Mary Ann Donovan,
Director, Community Development Financial Institutions Fund.
[FR Doc. 2015–08356 Filed 4–9–15; 8:45 am]
 BILLING CODE 4810–70–P