Community Development Financial Institutions Program, 52379-52392 [2015-21227]

Download as PDF Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations other dried and smoked meats to the United States. The final rule expands choices for U.S. consumers and promotes economic competition. Regulatory Flexibility Act Assessment The FSIS Administrator certifies that, for the purposes of the Regulatory Flexibility Act (5 U.S.C. 601–602), this final rule will not have a significant impact on a substantial number of small entities in the United States. Executive Order 12988, Civil Justice Reform This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under this rule: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) no administrative proceedings will be required before parties may file suit in court challenging this rule. Paperwork Reduction Act No new paperwork requirements are associated with this proposed rule. Foreign countries wanting to export meat and meat products to the United States are required to provide information to FSIS certifying that their inspection systems provide standards equivalent to those of the United States, and that the legal authority for the system and their implementing regulations are equivalent to those of the United States. FSIS provided Lithuania with questionnaires asking for detailed information about the country’s inspection practices and procedures to assist that country in organizing its materials. This information collection was approved under OMB number 0583–0153. The proposed rule contains no other paperwork requirements. E-Government Act FSIS and USDA are committed to achieving the purposes of the EGovernment Act (44 U.S.C. 3601, et seq.) by, among other things, promoting the use of the Internet and other information technologies and providing increased opportunities for citizen access to Government information and services, and for other purposes. rmajette on DSK7SPTVN1PROD with RULES Additional Public Notification FSIS will officially notify the World Trade Organization’s Committee on Sanitary and Phytosanitary Measures (WTO/SPS Committee) in Geneva, Switzerland, of this rule and will announce it online through the FSIS Web page located at: http:// www.fsis.usda.gov/wps/portal/fsis/ VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 topics/regulations/federal-register/ interim-and-final-rules. Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this Federal Register publication on-line through the FSIS Web page located at: http:// www.fsis.usda.gov/federal-register. FSIS also will make copies of this publication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, and other types of information that could affect or would be of interest to our constituents and stakeholders. The Update is available on the FSIS Web page. Through the Web page, FSIS is able to provide information to a much broader, more diverse audience. In addition, FSIS offers an email subscription service which provides automatic and customized access to selected food safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export information, regulations, directives, and notices. Customers can add or delete subscriptions themselves, and have the option to password protect their accounts. USDA Nondiscrimination Statement No agency, officer, or employee of the USDA shall, on the grounds of race, color, national origin, religion, sex, gender identity, sexual orientation, disability, age, marital status, family/ parental status, income derived from a public assistance program, or political beliefs, exclude from participation in, deny the benefits of, or subject to discrimination any person in the United States under any program or activity conducted by the USDA. To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at: http:// www.ocio.usda.gov/sites/default/files/ docs/2012/ Complain_combined_6_8_12.pdf, or write a letter signed by you or your authorized representative. Send your completed complaint form or letter to USDA by mail, fax, or email: Mail: U.S. Department of Agriculture, Director, Office of Adjudication, 1400 Independence Avenue SW., Washington, DC 20250–9410. Fax: (202) 690–7442. Email: program.intake@usda.gov. PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.), should contact USDA’s TARGET Center at (202) 720–2600 (voice and TDD). List of Subjects in 9 CFR Part 327 Imported products. For the reasons set out in the preamble, FSIS amends 9 CFR part 327 as follows: 9 CFR PART 327—IMPORTED PRODUCTS 1. The authority citation for part 327 continues to read as follows: ■ Authority: 21 U.S.C. 601–695; 7 CFR 2.18, 2.53. § 327.2 [Amended] 2. Amend § 327.2(b) by adding ‘‘Lithuania’’ in alphabetical order to the list of countries. ■ Done at Washington, DC, on: August 13, 2015. Alfred V. Almanza, Acting Administrator. [FR Doc. 2015–21510 Filed 8–28–15; 8:45 am] BILLING CODE 3410–DM–P DEPARTMENT OF THE TREASURY Community Development Financial Institutions Fund 12 CFR Part 1805 RIN 1505–AA92 Community Development Financial Institutions Program Community Development Financial Institutions Fund, Department of the Treasury. ACTION: Interim rule with request for comment. AGENCY: The Department of the Treasury is issuing an interim rule implementing the Community Development Financial Institutions Program (CDFI Program), administered by the Community Development Financial Institutions Fund (CDFI Fund). This interim rule includes revisions necessary to implement the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by the Department of the Treasury on December 19, 2014, as well as to make technical corrections and other updates to the current rule. DATES: Effective date: August 31, 2015; all comments must be written and must be received in the offices of the CDFI Fund on or before October 30, 2015. SUMMARY: How To File a Complaint of Discrimination 52379 E:\FR\FM\31AUR1.SGM 31AUR1 52380 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations You may submit comments concerning this interim rule via the Federal e-Rulemaking Portal at http:// www.regulations.gov (please follow the instructions for submitting comments). All submissions received must include the agency name and Regulatory Information Number (RIN) for this rulemaking. Other information regarding the CDFI Fund and its programs may be obtained through the CDFI Fund’s Web site at http:// www.cdfifund.gov. ADDRESSES: FOR FURTHER INFORMATION CONTACT: Amber Kuchar, CDFI Program Manager, Community Development Financial Institutions Fund, at cdfihelp@ cdfi.treas.gov. SUPPLEMENTARY INFORMATION: rmajette on DSK7SPTVN1PROD with RULES I. Background The CDFI Fund, Department of the Treasury, was authorized by the Community Development Banking and Financial Institutions Act of 1994, as amended (12 U.S.C. 4701 et seq.) (the Act). The purpose of the CDFI Fund is to promote economic revitalization and community development through investment in and assistance to Community Development Financial Institutions (CDFIs). The mission of the CDFI Fund is to increase economic opportunity and promote community development investments for underserved populations and in distressed communities in the United States. Its long-term vision is an America in which all people have access to affordable credit, capital, and financial services. The purpose of the CDFI Fund is to promote economic revitalization and community development through investment in and assistance to Community Development Financial Institutions (CDFIs). Through the CDFI Program, the CDFI Fund directly invests in, supports, and trains CDFIs that provide loans, investments, financial services, and technical assistance to underserved populations and communities by providing (i) financial assistance in the form of grants, loans, equity investments, and deposits to CDFIs and (ii) technical assistance grants to CDFIs and entities that propose to become CDFIs, for the purpose of increasing their capacity to serve their Target Markets. The CDFI Fund provides such financial assistance to CDFIs to enhance their ability to make loans and investments, and to provide related services for the benefit of designated Investment Areas, Targeted Populations, or both. Awards are made through a competitive, meritbased application process. VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 Through the CDFI Program, the CDFI Fund uses Federal resources to invest in CDFIs and to build their capacity to serve low-income people and communities that lack access to affordable financial products and services. Through the CDFI Program, the CDFI Fund provides two types of monetary awards to CDFIs: financial assistance awards and technical assistance awards. Applicants participate in the CDFI Program through a competitive, merit-based quantitative and qualitative application and selection process in which the CDFI Fund makes funding decisions based on pre-established evaluation criteria. An entity may receive a CDFI Program award only after entering into an Assistance Agreement with the CDFI Fund that includes performance goals, matching funds requirements (if applicable), and reporting requirements. On December 19, 2014, the Department of the Treasury published a final rule, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 1000), which adopted the government-wide framework for grants management codified by the Office of Management and Budget (OMB) at 2 CFR 200 (the Uniform Requirements). The Uniform Requirements combine grant-related OMB guidance circulars— reducing the administrative burden for award Recipients and reducing the risk of waste, fraud, and abuse of Federal financial assistance—and establish financial, administrative, procurement, and program management standards for Federal award-making agencies, including the CDFI Fund and its award Recipients. On April 10, 2015, the CDFI Fund published in the Federal Register an amendment to the interim rule (80 FR 19195) modifying the certification requirements for CDFI Bond Guarantee Program participants seeking to meet the ‘‘financing entity’’ criterion of the CDFI certification requirements. The deadline for the submission of comments on the current rule was June 9, 2015. II. Comments on the April 10, 2015 Interim Rule As of the close of the June 9, 2015 comment period, the CDFI Fund received no comments on the current rule. III. Summary of Changes Throughout the rule, the defined term ‘‘Awardee’’ has been replaced by ‘‘Recipient.’’ Further, award funds being transmitted from the CDFI Fund to Recipients are referred to as payments, PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 rather than disbursements. These changes were made to align the terminology in the CDFI Program regulations with the terms used in the Uniform Requirements. Other changes to the rule are specified below: A. Section 1805.102, Relationship to Other CDFI Fund Programs This section has been revised to clarify that the restrictions on entities applying for, receiving, and using CDFI Program awards, as well as awards through other CDFI Fund programs during the same annual award application cycle, will be described in the corresponding funding notices for those programs. B. Section 1805.104, Definitions As indicated above, the defined term ‘‘Awardee’’ has been removed and replaced with the defined term ‘‘Recipient’’. The defined term ‘‘Fund’’ has been removed and replaced with the defined term ‘‘Community Development Financial Institutions Fund’’ so as to provide clear delineation between the CDFI Fund and the Capital Magnet Fund, another CDFI Fund program. The definition of ‘‘Comprehensive Business Plan’’ has been modified to better reflect the Act’s requirements for Comprehensive Business Plans submitted with funding applications. The definition of Development Services has been modified for clarity. The definition of ‘‘Financial Product’’ has been modified to eliminate grants by CDFI Intermediaries to CDFIs and/or emerging CDFIs from the definition. The CDFI Fund believes that this change is necessary to ensure that Recipients apply their financial assistance award funding directly to eligible activities rather than passing their financial assistance awards on to other CDFIs. ‘‘Uniform Requirements’’ has been added as a defined term. In addition, the paragraph numbering has been removed to allow for future modifications to the Definitions section without the need for re-numbering the entire section. C. Section 1805.105, Uniform Requirements; Waiver Authority Section 1805.105(a), Uniform Requirements, has been added to affirm that the Uniform Requirements will be applied to all awards made pursuant to this part, as applicable. D. Section 1805.201, Certification as a Community Development Financial Institution Section 1805.201(b)(3)(ii)(B), Geographic Units, has been revised to better conform the description of eligible Investment Areas to the E:\FR\FM\31AUR1.SGM 31AUR1 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations language of the Act. References to ‘‘American Indian or Alaska Native area’’ have been replaced with ‘‘Indian Reservation.’’ Section 1805.201(b)(4), Development Services, has been revised to permit Development Services to be offered in conjunction with Financial Services in order to meet the certification requirement that CDFIs must provide Development Services. Previously, only Development Services in conjunction with Financial Products met this requirement. Section 1805.201(b)(5), Accountability, has been revised to require that a CDFI must demonstrate accountability to residents of its Target Market through representation on either its governing board or advisory board. Previously, other means of demonstrating accountability were permitted. Section 1805.201(c), Records and Review, has been added to clarify that each certified CDFI is subject to periodic review by the CDFI Fund to ensure continued compliance with the CDFI certification requirements in this part, as well as to review the certified CDFI’s organizational capacity, lending activity, community impacts, and such other information that the CDFI Fund deems appropriate. CDFIs will be required to provide, upon request, additional information and documentation to the CDFI Fund to facilitate this review. E. Section 1805.502, Severe Constraints Waiver Section 1805.502(c) has been revised to indicate that the terms of the severe constraints waiver will be set forth in the affected Recipient’s Assistance Agreement. rmajette on DSK7SPTVN1PROD with RULES F. Section 1805.504, Retained Earnings Section 1805.504(a) has been revised to eliminate the restriction on Applicants submitting as matching funds those retained earnings that have been accumulated by the Applicant after the end of the Applicant’s most recent fiscal year end prior to the application deadline. The CDFI Fund believes that this change will allow Applicants additional flexibility in attracting and obtaining matching funds. Section 1805.504(c) has been revised to permit Insured Depository Institutions to use retained earnings that have been accumulated since the inception of the organization as matching funds for financial assistance awards. Previously, this option was only available to Insured Credit Unions and State-Insured Credit Unions. VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 Section 1805.504(c)(1)(iii)(D) has been revised to eliminate the July 31 date as a specified deadline for the measurement of required increases in member shares, non-member shares, outstanding loans, and other measurable activity. Under the current rule, Insured Credit Union and State-Insured Credit Union Applicants may use the increase in retained earnings since the inception of the organization as matching funds so long as they also demonstrate a required amount of increase in shares, loans, and other activity as described in the applicable Notice of Funds Availability. Due to fluctuations in the timing of the funding rounds, the July 31 date being fixed in the regulations made administration of this requirement challenging. With this revision, the CDFI Fund will have greater flexibility to schedule deadlines in the applicable Notice of Funds Availability relative to the application deadline therein. G. Section 1805.701, Evaluation of Applications Section 1805.701(b) has been revised to more accurately reflect the application and selection requirements of the Act as indicated at 12 U.S.C. 4704, 4705, and 4706. H. Section 1805.801, Notice of Award This section was removed as the CDFI Fund no longer uses Notices of Award (NOAs) that are separate from the Assistance Agreements. I. Section 1805.803, Data Collection and Reporting This section has been revised to accommodate the audit requirements of the Uniform Requirements. Section 1805.803(e)(1)(i) has been revised to conform to the Uniform Requirements. Per the Uniform Requirements and the interim rule, all non-profit organizations that are required to have their financial statements audited pursuant to the Uniform Requirements, must submit their single-audits to the Federal Audit Clearinghouse no later than nine months after the end of the Recipient’s fiscal year. Under this rule, as indicated in the applicable Notice of Funds Availability and Assistance Agreement, non-profit organizations that are not required to have their financial statements audited pursuant to the Uniform Requirements may still be subject to additional audit requirements. Section 1805.803(e)(2)(A) has been revised and simplified to eliminate some outdated report form references in favor of a description of the report types to be collected from Recipients on an annual basis. Specific reporting PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 52381 requirements using OMB Paperwork Reduction Act (PRA) approved information collections will be described in the applicable Notices of Funds Availability and Assistance Agreements. IV. Rulemaking Analysis A. 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. B. 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. C. 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 the applicable, approved OMB Control Numbers associated with the CDFI Fund under 1559. 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. D. National Environmental Policy Act This interim rule has been reviewed in accordance with the CDFI Fund’s Environmental Quality regulations (12 CFR part 1815), promulgated pursuant to the National Environmental Protection Act of 1969 (NEPA), which requires 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’s Environmental Quality regulations (12 CFR 1815), neither an Environmental Assessment nor an Environmental Impact Statement is required. E. Administrative Procedure Act Because the revisions to this interim rule relate to loans and grants, notice and public procedure and a delayed effective date are not required pursuant to the Administrative Procedure Act found at 5 U.S.C. 553(a)(2). E:\FR\FM\31AUR1.SGM 31AUR1 52382 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations F. Comment Public comment is solicited on all aspects of this interim rule. The CDFI Fund will consider all comments made on the substance of this interim rule, but it does not intend to hold hearings. G. Catalog 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. For the reasons set forth in the preamble, 12 CFR part 1805 is revised to read as follows: PART 1805—COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS PROGRAM Subpart A—General Provisions 1805.100 Purpose. 1805.101 Summary. 1805.102 Relationship to other CDFI Fund programs. 1805.103 Recipient not instrumentality. 1805.104 Definitions. 1805.105 Uniform Requirements; 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—Use of Funds/Eligible Activities Purposes of financial assistance. Eligible activities. Restrictions on use of assistance. Technical assistance. Subpart D—Investment Instruments 1805.400 Investment instruments—general. 1805.401 Forms of investment instruments. 1805.402 Assistance limits. 1805.403 Authority to sell. rmajette on DSK7SPTVN1PROD with RULES Subpart E—Matching Funds Requirements 1805.500 Matching funds—general. 1805.501 Comparability of form and value. 1805.502 Severe constraints waiver. 1805.503 Time frame for raising match. 1805.504 Retained earnings. Subpart F—Applications for Assistance 1805.600 Notice of Funds Availability. Subpart G—Evaluation and Selection of Applications 1805.700 Evaluation and selection— general. 1805.701 Evaluation of applications. VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 Authority: 12 U.S.C. 4703, 4703 note, 4710, 4717; and 31 U.S.C. 321. Subpart A—General Provisions § 1805.100 Purpose. The purpose of the Community Development Financial Institutions (CDFI) Program is to promote economic revitalization and community development through investment in and assistance to Community Development Financial Institutions. § 1805.101 Sec. 1805.300 1805.301 1805.302 1805.303 Subpart H—Terms and Conditions of Assistance 1805.800 Safety and soundness. 1805.801 Assistance Agreement; sanctions. 1805.802 Payment of funds. 1805.803 Data collection and reporting. 1805.804 Information. 1805.805 Compliance with government requirements. 1805.806 Conflict of interest requirements. 1805.807 Lobbying restrictions. 1805.808 Criminal provisions. 1805.809 CDFI Fund deemed not to control. 1805.810 Limitation on liability. 1805.811 Fraud, waste and abuse. Summary. Through the Community Development Financial Institutions Program, the CDFI Fund provides financial and technical assistance to Recipients selected by the CDFI Fund in order to enhance their ability to provide Financial Products, Financial Services and Development Services to and in their Target Markets. Each Recipient must serve an Investment Area(s), a Targeted Population(s), or both. The CDFI Fund will select Recipients to receive financial or technical assistance through a merit-based, qualitative application process. Each Recipient must enter into an Assistance Agreement that requires it to achieve specific performance goals and abide by other terms and conditions pertinent to any assistance received under this part, as well as the Uniform Requirements, as applicable. All CDFI Program awards shall be made subject to funding availability. § 1805.102 Relationship to other CDFI Fund programs. Restrictions on applying for, receiving, and using CDFI Program awards in conjunction with awards under other programs administered by the CDFI Fund (including, but not limited to, the Bank Enterprise Award Program, the Capital Magnet Fund, the CDFI Bond Guarantee Program, the Native American CDFI Assistance (NACA) Program, and the New Markets Tax Credit Program) are as set forth in the applicable Notice of Funds Availability, Notice of Guarantee PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 Availability, or Notice of Allocation Availability. § 1805.103 Recipient not instrumentality. No Recipient (or its Community Partner) shall be deemed to be an agency, department, or instrumentality of the United States. § 1805.104 Definitions. For the purpose of this part, the following terms shall have the following definitions: Act means the Community Development Banking and Financial Institutions Act of 1994, as amended (12 U.S.C. 4701 et se.); Affiliate means any company or entity that Controls, is Controlled by, or is under common Control with another company; Applicant means any entity submitting an application for CDFI Program assistance or funding under this part; Appropriate Federal Banking Agency has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), and includes, with respect to Insured Credit Unions, the National Credit Union Administration; Appropriate State Agency means an agency or instrumentality of a State that regulates and/or insures the member accounts of a State-Insured Credit Union; Assistance Agreement means a formal agreement between the CDFI Fund and a Recipient, which agreement specifies the terms and conditions of assistance under this part; Community Development Financial Institution (or CDFI) means an entity currently meeting the requirements described in § 1805.201; Community Development Financial Institutions Fund (or CDFI Fund) means the Community Development Financial Institutions Fund established pursuant to section 104(a) (12 U.S.C. 4703(a)) of the Act; Community Development Financial Institution Intermediary (or CDFI Intermediary) means an entity that meets the CDFI Program eligibility requirements described in § 1805.200 and whose primary business activity is the provision of Financial Products to CDFIs and/or emerging CDFIs; Community Development Financial Institutions Program (or CDFI Program) means the program authorized by sections 105–108 of the Act (12 U.S.C. 4704–4707) and implemented under this part; Community Facility means a facility where health care, childcare, educational, cultural, or social services are provided; E:\FR\FM\31AUR1.SGM 31AUR1 rmajette on DSK7SPTVN1PROD with RULES Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations 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; Community-Owned means an entity in which the residents of an Investment Area(s) or members of a Targeted Population(s) have an aggregate ownership interest of greater than 50 percent; Community Partner means a person (other than an individual) that provides loans, Equity Investments, or Development Services and enters into a Community Partnership with an Applicant or a Recipient. A Community Partner may include a Depository Institution Holding Company, an Insured Depository Institution, an Insured Credit Union, a State-Insured Credit Union, a non-profit or for-profit organization, a State or local government entity, a quasi-government entity, or an investment company authorized pursuant to the Small Business Investment Act of 1958 (15 U.S.C. 661 et se.); Community Partnership means an agreement between an Applicant or Recipient and a Community Partner to provide collaboratively Financial Products and/or Financial Services or Development Services to an Investment Area(s) or a Targeted Population(s); Comprehensive Business Plan means a document, covering not less than the next five years, that demonstrates that the Applicant will be properly managed and will have the capacity to operate as a CDFI that will not be dependent upon assistance from the CDFI Fund for continued viability, and that meets the requirements described in an applicable Notice of Funds Availability; Control or Controlling means: (1) Ownership, control, or power to vote 25 percent or more of the outstanding shares of any class of Voting Securities of any company, directly or indirectly or acting through one or more other persons; (2) Control in any manner over the election of a majority of the directors, trustees, or general partners (or individuals exercising similar functions) of any company; or (3) Power to exercise, directly or indirectly, a controlling influence over the management, credit or investment decisions, or policies of any company. 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. 1813(w)(1)); Development Services means activities undertaken by a CDFI, its VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 Affiliate or contractor that promote community development and shall prepare or assist current or potential borrowers or investees to use the CDFI’s Financial Products or Financial Services. For example, such activities include, financial or credit counseling; homeownership counseling; and business planning and management assistance; Equity Investment means an investment made by a CDFI that, in the judgment of the CDFI Fund, supports or enhances activities serving the CDFI’s 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 CDFI as an Affiliate. Equity Investments may comprise a stock purchase, a purchase of a partnership interest, a purchase of a limited liability company membership interest, a loan made on such terms that it has sufficient characteristics of equity (and is considered as such by the CDFI Fund); a purchase of secondary capital, or any other investment deemed by the CDFI Fund to be an Equity Investment; Financial Products means loans, Equity Investments and similar financing activities (as determined by the CDFI Fund) including the purchase of loans originated by certified CDFIs and the provision of loan guarantees; in the case of CDFI Intermediaries, Financial Products may also include loans to CDFIs and/or emerging CDFIs and deposits in Insured Credit Union CDFIs, emerging Insured Credit Union CDFIs, and/or State-Insured Credit Union CDFIs; Financial Services means providing checking, savings accounts, check cashing, money orders, certified checks, automated teller machines, deposit taking, safe deposit box services, and other similar services; 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 or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1602); public domain Indian allotments; and former Indian reservations in the State of Oklahoma; 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 se.). Each such Indian Tribe PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 52383 must be recognized as eligible for special programs and services provided by the United States to Indians because of their status as Indians; Insider means any director, officer, employee, principal shareholder (owning, individually or in combination 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, Subsidiary, Affiliate, or Community Partner; Insured CDFI means a CDFI that is an Insured Depository Institution or an Insured Credit Union; Insured Credit Union means any credit union, the member accounts of which are insured by the National Credit Union Share Insurance Fund; Insured Depository Institution means any bank or thrift, the deposits of which are insured by the Federal Deposit Insurance Corporation; Investment Area means a geographic area meeting the requirements of § 1805.201(b)(3); Low-Income means income, 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 nonMetropolitan Area median family income; Metropolitan Area means an area designated as such by the Office of Management and Budget pursuant to 44 U.S.C. 3504(e) and 31 U.S.C. 1104(d) and Executive Order 10253 (3 CFR, 1949–1953 Comp., p. 758), as amended; Non-Regulated CDFI means any entity meeting the eligibility requirements described in § 1805.200 and that is not a Depository Institution Holding Company, Insured Depository Institution, Insured Credit Union, or State-Insured Credit Union; Nonvoting Securities or Nonvoting Shares. Preferred shares, limited partnership shares or interests, or similar interests are Nonvoting Securities if: (1) Any voting rights associated with the shares or interest are limited solely to the type customarily provided by statute with regard to matters that would significantly and adversely affect the rights or preferences of the security or other interest, such as the issuance of additional amounts or classes of senior securities, the modification of the terms of the security or interest, the dissolution of the issuing company, or the payment of dividends by the issuing E:\FR\FM\31AUR1.SGM 31AUR1 rmajette on DSK7SPTVN1PROD with RULES 52384 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations company when preferred dividends are in arrears: (2) The shares or interest represent an essentially passive investment or financing device and do not otherwise provide the holder with control over the issuing company; and (3) The shares or interest do not entitle the holder, by statute, charter, or in any manner, to select or to vote for the selection of directors, trustees, or partners (or persons exercising similar functions) of the issuing company. Recipient means an Applicant selected by the CDFI Fund to receive assistance pursuant to this part; 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 Virgin Islands, and the Northern Mariana Islands; State-Insured Credit Union means any credit union that is regulated by, and/ or the member accounts of which are insured by, a State agency or instrumentality; Subsidiary means any company that is owned or Controlled directly or indirectly by another company and includes any service corporation owned in whole or part by an Insured Depository Institution or any Subsidiary of such a service corporation, except as provided in § 1805.200(b)(4); Targeted Population means individuals or an identifiable group of individuals meeting the requirements of § 1805.201(b)(3); Target Market means an Investment Area(s) and/or a Targeted Population(s); Uniform Requirements means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 1000), which is the Department of the Treasury’s codification of the Office of Management and Budget (OMB) government-wide framework for grants management at 2 CFR part 200; Voting Securities means shares of common or preferred stock, general or limited partnership shares or interests, or similar interests if the shares or interest, by statute, charter, or in any manner, entitle the holder: (1) To vote for or select directors, trustees, or partners (or persons exercising similar functions of the issuing company); or (2) To vote on or to direct the conduct of the operations or other significant policies of the issuing company. § 1805.105 authority. Uniform Requirements; Waiver (a) Uniform Requirements. The Uniform Requirements will be applied VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 to all awards made pursuant to this part, as applicable. (b) Waiver authority. The CDFI 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 CDFI 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 CDFI Fund will publish notification of granted waivers in the Federal Register. § 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 applicable, approved OMB Control Numbers associated with the CDFI Fund under 1559. Subpart B—Eligibility § 1805.200 Applicant eligibility. (a) General requirements. (1) An entity that meets the requirements described in § 1805.201(b) and paragraph (b) of this section will be considered a CDFI and, subject to paragraph (a)(3) of this section, will be eligible to apply for assistance under this part. (2)(i) An entity that proposes to become a CDFI is eligible to apply for assistance under this part if the CDFI Fund: (A) Receives a complete application for certification from the entity within the time period set forth in an applicable Notice of Funds Availability; and (B) Determines that such entity’s application materials provide a realistic course of action to ensure that it will meet the requirements described in § 1805.201(b) and paragraph (b) of this section within the period set forth in an applicable Notice of Funds Availability. (ii) The CDFI Fund will not, however, make a payment of any financial assistance to such an entity before or unless it meets the requirements described in this section. Moreover, notwithstanding paragraphs (a)(1) and (a)(2)(i)(B) of this section, the CDFI Fund reserves the right to require an entity to have been certified as described in § 1805.201(a) prior to its submission of an application for assistance, as set forth in an applicable Notice of Funds Availability. (3) The CDFI Fund shall require an entity to meet any additional eligibility PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 requirements that the CDFI Fund deems appropriate. (4) The CDFI Fund, in its sole discretion, shall determine whether an entity fulfills the requirements set forth in this section and § 1805.201(b). (b) 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 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 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 this section. (4) For the purposes of paragraphs (b)(1) through (3) of this section, an entity will be considered to be a Subsidiary of any Insured Depository Institution or Depository Institution Holding Company that controls 25 percent or more of any class of the entity’s voting shares, or otherwise controls, in any manner, the election of a majority of directors of the entity. § 1805.201 Certification as a Community Development Financial Institution. (a) General. An entity may apply to the CDFI Fund for certification that it meets the CDFI eligibility requirements regardless of whether it is seeking financial or technical assistance from the CDFI Fund. Entities seeking such certification shall provide the information set forth in the application for certification. Certification by the CDFI Fund will verify that the entity meets the CDFI eligibility requirements. However, such certification shall not constitute an opinion by the CDFI Fund as to the financial viability of the CDFI or that the CDFI will be selected to receive an award from the CDFI Fund. The CDFI Fund, in its sole discretion, shall have the right to decertify a certified entity after a determination that the eligibility requirements of paragraph (b) of this section or § 1805.200(b) are no longer met. (b) Eligibility verification. An entity shall demonstrate whether it meets the eligibility requirements described in this paragraph (b) by providing the information described in the application for certification demonstrating that the entity meets the eligibility requirements described in paragraphs (b)(1) through E:\FR\FM\31AUR1.SGM 31AUR1 rmajette on DSK7SPTVN1PROD with RULES Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations (6) of this section. The CDFI Fund, in its sole discretion, shall determine whether an entity has satisfied the requirements of this paragraph. (1) Primary mission. A CDFI must have a primary mission of promoting community development. In determining whether an entity has such a primary mission, the CDFI Fund will consider whether the activities of the entity are purposefully directed toward improving the social and/or economic conditions of underserved people (which may include Low-Income persons or persons who lack adequate access to capital and/or Financial Services) and/or residents of economically distressed communities (which may include Investment Areas). (2) Financing entity. (i) A CDFI shall be an entity whose predominant business activity is the provision, in arms-length transactions, of Financial Products and/or Financial Services. An entity may demonstrate that it meets this requirement 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 certification application. In conducting such analysis, the CDFI Fund may take into consideration an entity’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 CFR1808), an Affiliate of a Controlling CDFI may be deemed to meet the financing entity requirement of this section 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 armslength if such transaction is by and between the Affiliate and the Controlling CDFI, pursuant to an operating agreement that includes VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 management and ownership provisions and is in form and substance acceptable to the CDFI Fund. (3) Target Market—(i) General. A CDFI must serve a Target Market by virtue of serving one or more Investment Areas and/or Targeted Populations. An entity may demonstrate that it meets this requirement by demonstrating that it provides Financial Products and/or Financial Services in an Investment Areas and/or Targeted Populations as described in this section. An Investment Area shall meet specific geographic and other criteria described in paragraph (b)(3)(ii) of this section, and a Targeted Population shall meet the criteria described in paragraph (b)(3)(iii) of this section. (ii) Investment Area—(A) General. A geographic area will be considered eligible for designation as an Investment Area if it: (1) 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 Virgin Islands, and the Northern Mariana Islands); and either (2) Meets at least one of the objective criteria of economic distress as set forth in paragraph (b)(3)(ii)(D) of this section and has significant unmet needs for loans, Equity Investments, Financial Products or Financial Services as described in paragraph (b)(3)(ii)(E) of this section; or (3) Encompasses (i.e., wholly consists of) or is wholly located within an Empowerment Zone or Enterprise Community designated under section 1391 of the Internal Revenue Code of 1986 (26 U.S.C. 1391). (B) Geographic units. Subject to the remainder of this paragraph (B), an Investment Area shall consist of a geographic unit that is a county (or equivalent area), minor civil division that is a unit of local government, incorporated place, census tract, or Indian Reservation. However, geographic units in Metropolitan Areas that are used to comprise an Investment Area shall be limited to census tracts, and Indian Reservations. An entity may designate one or more Investment Areas as part of a single certification application. (C) Designation. An entity may designate an Investment Area by selecting: (1) A geographic unit(s) that individually meets one of the criteria in paragraph (b)(3)(ii)(D) of this section; or (2) A group of contiguous geographic units that together meet one of the criteria in paragraph (b)(3)(ii)(D) of this PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 52385 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 most recently completed decennial census 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 nonMetropolitan Area median family income or the national nonMetropolitan Area median family income, whichever is greater; (3) The unemployment rate is at least 1.5 times the national average; (4) In counties located outside of a Metropolitan Area, the county population loss during the period between the most recent decennial census and the previous decennial census is at least 10 percent; or (5) In counties located outside of a Metropolitan Area, the county net migration loss during the five-year period preceding the most recent decennial census is at least five percent. (E) Unmet needs. An Investment Area will be deemed to have significant unmet needs for loans or Equity Investments if a narrative analysis provided by the entity demonstrates a pattern of unmet needs for Financial Products or Financial Services within such area. (F) Serving Investment Areas. An entity may serve an Investment Area directly or through borrowers or investees that serve the Investment Area. (iii) Targeted Population—(A) General. Targeted Population shall mean individuals, or an identifiable group of individuals, who are LowIncome persons or lack adequate access to Financial Products or Financial Services in the entity’s Target Market. The members of a Targeted Population shall reside within the boundaries of the United States (which shall encompass any State of the United States, the District of Columbia or any territory of the United States, Puerto Rico, Guam, E:\FR\FM\31AUR1.SGM 31AUR1 52386 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations American Samoa, the Virgin Islands, and the Northern Mariana Islands). (B) Serving Targeted Populations. An entity may serve the members of a Targeted Population directly or indirectly or through borrowers or investees that directly serve such members. (4) Development Services. A CDFI directly, through an Affiliate, or through a contract with another provider, must have a track record of providing Development Services in conjunction with its Financial Products and/or Financial Services. An entity applying for CDFI certification must demonstrate that it meets this requirement. (5) Accountability. A CDFI must maintain accountability to residents of its Investment Area(s) or Targeted Population(s) through representation on its governing board and/or advisory board(s). An entity applying for CDFI certification must demonstrate that it meets this requirement. (6) Non-government. A CDFI shall not be an agency or instrumentality of the United States, or any State or political subdivision thereof. An entity applying for CDFI certification must demonstrate that it meets this requirement. An entity that is created by, or that receives substantial assistance from, one or more government entities may be a CDFI provided it is not Controlled by such entities and maintains independent decision-making power over its activities. (c) Records and Review. The CDFI Fund will review a CDFI’s certification status from time to time, as deemed appropriate by the CDFI Fund, to ensure that it meets the certification requirements of this section, as well as review its organizational capacity, lending activity, community impacts, and such other information that the CDFI Fund deems appropriate. Upon request, a CDFI shall provide such information and documentation to the CDFI Fund as is necessary to undertake such review. Subpart C—Use of Funds/Eligible Activities rmajette on DSK7SPTVN1PROD with RULES § 1805.300 Purposes of financial assistance. The CDFI Fund may provide financial assistance through investment instruments described under subpart D of this part. Such financial assistance is intended to increase available capital and enhance the ability of a Recipient to provide Financial Products, Financial Services, and Development Services. § 1805.301 Eligible activities. Recipients may use financial assistance provided under this part to VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 serve Investment Area(s) or Targeted Population(s) by developing or supporting, through lending, investing, enhancing liquidity, or other means of finance: (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) Increase 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 homeownership 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 CDFI Fund. community impact; or other activities deemed appropriate by the CDFI Fund. The CDFI 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 or Recipient. The CDFI Fund may not provide any technical assistance funding to an Applicant for the purpose of assisting in the preparation of an application for federal assistance. The CDFI Fund may provide technical assistance to a CDFI directly, through grants, or by contracting with organizations that possess the appropriate expertise. (b) The CDFI Fund may provide technical assistance regardless of whether the Recipient also receives financial assistance under this part. Technical assistance provided pursuant to this part is subject to the assistance limits described in § 1805.402. (c) An Applicant seeking technical assistance must meet the eligibility requirements described in § 1805.200 and submit an application as described in § 1805.600. (d) Applicants for technical assistance pursuant to this part will be evaluated pursuant to the merit-based qualitative review criteria in subpart G of this part, except as otherwise may be provided in the applicable Notice of Funds Availability. In addition, the requirements for matching funds are not applicable to technical assistance requests. § 1805.302 Restrictions on use of assistance. Subpart D—Investment Instruments (a) A Recipient shall use assistance provided by the CDFI Fund and its corresponding matching funds only for the eligible activities approved by the CDFI Fund and described in the Assistance Agreement. (b) A Recipient may not distribute assistance to an Affiliate without the CDFI Fund’s consent. (c) Assistance provided upon approval of an application involving a Community Partnership shall only be distributed to the Recipient and shall not be used to fund any activities carried out by a Community Partner or an Affiliate of a Community Partner. § 1805.303 Technical assistance. (a) General. The CDFI Fund may provide technical assistance to build the capacity of a CDFI or an entity that proposes to become 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 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 § 1805.400 general. Investment instruments— The CDFI Fund will provide financial assistance to a Recipient through one or more of the investment instruments described in § 1805.401, and under such terms and conditions as described in this subpart D. The CDFI Fund, in its sole discretion, may provide financial assistance in amounts, through investment instruments, or under rates, terms and conditions that are different from those requested by an Applicant. § 1805.401 Forms of investment instruments. (a) Equity. The CDFI Fund may make non-voting equity investments in a Recipient, including, without limitation, the purchase of non-voting stock. Such stock shall be transferable and, in the discretion of the CDFI Fund, may provide for convertibility to voting stock upon transfer. The CDFI Fund shall not own more than 50 percent of the equity of a Recipient and shall not control its operations. (b) Grants. The CDFI Fund may award grants. E:\FR\FM\31AUR1.SGM 31AUR1 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations (c) Loans. The CDFI Fund may make loans, if and as permitted by applicable law and regulation. (d) Deposits and credit union shares. The CDFI Fund may make deposits (which shall include credit union shares) in Insured CDFIs and StateInsured Credit Unions. Deposits in an Insured CDFI or a State-Insured Credit Union shall not be subject to any requirement for collateral or security. § 1805.402 Assistance limits. (a) General. Except as provided in paragraph (b) of this section, the Fund may not provide, pursuant to this part, more than $5 million, in the aggregate, in financial and technical assistance to a Recipient and its Subsidiaries and Affiliates during any three-year period. (b) Additional amounts. If a Recipient proposes to establish a new Subsidiary or 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 Recipient or its Subsidiaries or Affiliates, the Recipient may receive additional assistance pursuant to this Part up to a maximum of $3.75 million during the same three-year period. Such additional assistance: (1) Shall be used only to finance activities in the new or expanded Investment Area(s) or Targeted Population(s); and (2) Must be distributed to a new Subsidiary or Affiliate that meets the eligibility requirements described in § 1805.200 and is selected for assistance pursuant to subpart G of this part. (c) A Recipient may receive the assistance described in paragraph (b) of this section only if no other application to serve substantially the same Investment Area(s) or Targeted Population(s) that meets the requirements of § 1805.701(a) was submitted to the CDFI Fund prior to the receipt of the application of said Recipient and within the current funding round. § 1805.403 Authority to sell. rmajette on DSK7SPTVN1PROD with RULES The CDFI Fund may, at any time, sell its equity investments and loans, provided the CDFI Fund shall retain the authority to enforce the provisions of the Assistance Agreement until the performance goals specified therein have been met. Subpart E—Matching Funds Requirements § 1805.500 Matching funds—general. All financial assistance awarded under this part shall be matched with funds from sources other than the VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 Federal government. Except as provided in § 1805.502, such matching funds shall be provided on the basis of not less than one dollar for each dollar provided by the CDFI Fund. Funds that have been used to satisfy a legal requirement for obtaining funds under either the CDFI Program or another Federal grant or award program may not be used to satisfy the matching requirements described in this section. Community Development Block Grant Program and other funds provided pursuant to the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5301 et seq.), shall be considered Federal government funds and shall not be used to meet the matching requirements. Matching funds shall be used as provided in the applicable Notice of Funds Availability and/or the corresponding Assistance Agreement. Funds that are used prior to the execution of the Assistance Agreement may nevertheless qualify as matching funds provided they were used as provided in the applicable Notice of Funds Availability and/or Assistance Agreement. § 1805.501 value. Comparability of form and (a) Matching funds shall be at least comparable in form (e.g., equity investments, deposits, credit union shares, loans and grants) and value to financial assistance provided by the CDFI Fund (except as provided in § 1805.502). The CDFI Fund shall have the discretion to determine whether matching funds pledged are comparable in form and value to the financial assistance requested. (b) In the case of a Recipient that raises matching funds from more than one source, through different investment instruments, or under varying terms and conditions, the CDFI Fund may provide financial assistance in a manner that represents the combined characteristics of such instruments. (c) A Recipient may meet all or part of its matching requirements by committing available earnings retained from its operations. § 1805.502 Severe constraints waiver. (a) In the case of an Applicant with severe constraints on available sources of matching funds, the CDFI 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 PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 52387 determined at the discretion of the CDFI 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 under this part in any fiscal year may be matched as described in paragraph (a) of this section. (c) The terms of the severe constraints waiver shall be provided in the applicable Notice of Funds Availability and Assistance Agreement. § 1805.503 Time frame for raising match. Applicants and Recipients shall satisfy matching funds requirements within the period set forth in the applicable Notice of Funds Availability and/or the corresponding Assistance Agreement. § 1805.504 Retained earnings. (a) General. An Applicant or Recipient may use its retained earnings to match a request for a financial assistance grant from the CDFI Fund. An Applicant or Recipient that proposes to meet all or a portion of its matching funds requirements by committing available retained earnings from its operations shall be subject to the restrictions described in this section. Retained earnings shall be calculated as directed by the CDFI Fund in the applicable Notice of Funds Availability, the financial assistance application, and/or related guidance materials. The CDFI Fund shall make the final determination of the eligible amount of retained earnings that an Applicant or Recipient has available as matching funds. (b) Applicants other than Insured Credit Unions, State-Insured Credit Unions and Insured Depository Institutions. In the case of an Applicant or Recipient that is not an Insured Credit Union, State-Insured Credit Union or Insured Depository Institution, retained earnings that may be used for matching funds purposes shall consist of: (1) The increase in retained earnings (meaning, for purposes of § 1805.504(b), revenue minus expenses less any dividend payments) that has occurred over the Applicant’s or Recipient’s fiscal year as set forth in the applicable Notice of Funds Availability; or (2) The annual average of such increases that occurred over the Applicant’s or Recipient’s three consecutive fiscal years as set forth in E:\FR\FM\31AUR1.SGM 31AUR1 52388 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations the applicable Notice of Funds Availability. (c) Insured Credit Unions, StateInsured Credit Unions, and Insured Depository Institutions. (1) In the case of an Applicant or Recipient that is an Insured Credit Union, State-Insured Credit Union or Insured Depository Institution, retained earnings that may be used for matching funds purposes shall consist of: (i) The increase in retained earnings that has occurred over the Applicant’s or Recipient’s fiscal year as set forth in the applicable Notice of Funds Availability; (ii) The annual average of such increases that has occurred over the Applicant’s or Recipient’s three consecutive fiscal years as set forth in the applicable Notice of Funds Availability; or (iii) The entire retained earnings that have been accumulated since the inception of the Applicant or Recipient, provided that the Assistance Agreement shall require that: (A) The Recipient shall increase its member shares, non-member shares, outstanding loans and/or other measurable activity as defined in and by an amount that is set forth in an applicable Notice of Funds Availability; (B) Such increase must be achieved by a date certain set forth in the applicable Notice of Funds Availability; (C) The level from which the achievement of said increases will be measured will be as of the date set forth in the applicable Notice of Funds Availability; and (D) Financial assistance shall be paid by the CDFI Fund only as the amount of increases described in paragraph (c)(1)(iii)(A) of this section is achieved. (2) The CDFI Fund will allow an Applicant or Recipient to utilize the option described in paragraph (c)(1)(iii) of this section for matching funds only if it determines, in its sole discretion, that the Applicant or Recipient will have a high probability of success in achieving said increases to the specified amounts. Subpart F—Applications for Assistance rmajette on DSK7SPTVN1PROD with RULES § 1805.600 Notice of Funds Availability. Each Applicant shall submit an application for financial or technical assistance under this part in accordance with the applicable Notice of Funds Availability published in the Federal Register. The Notice of Funds Availability will advise prospective Applicants on how to obtain an application packet and will establish deadlines and other requirements. The VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 Notice of Funds Availability may specify the application scoring criteria and any limitations, special rules, procedures, and restrictions for a particular funding round. After receipt of an application, the CDFI Fund may request clarifying or technical information on the materials submitted as part of such application. Subpart G—Evaluation and Selection of Applications § 1805.700 general. Evaluation and selection— Applicants will be evaluated and selected, at the sole discretion of the CDFI Fund, to receive assistance based on a review process that may include an interview(s) and/or site visit(s) and that is intended to: (a) Ensure that Applicants are evaluated on a merit basis and in a fair and consistent manner; (b) Consider the unique characteristics of Applicants that vary by institution type, total asset size, stage of organizational development, markets served, products and services provided, and location; (c) Ensure that each Recipient can successfully meet the goals of its Comprehensive Business Plan and achieve community development impact; (d) Ensure that Recipients represent a geographically diverse group of Recipients serving Metropolitan Areas, non-Metropolitan Areas, and Indian Reservations from different regions of the United States; and (e) Consider other factors as described in the applicable Notice of Funds Availability. § 1805.701 Evaluation of applications. (a) Eligibility and completeness. An Applicant will not be eligible to receive assistance pursuant to this part if it fails to meet the eligibility requirements described in § 1805.200 or if it has not submitted complete application materials. For the purposes of this paragraph (a), the CDFI Fund reserves the right to request additional information from the Applicant, if the CDFI Fund deems it appropriate. (b) Substantive review. In evaluating and selecting applications to receive assistance, the CDFI Fund will evaluate the feasibility of the Applicant’s Comprehensive Business Plan goals, the likelihood of the Applicant meeting such goals, and the likelihood of the Applicant achieving its proposed community development impacts, by considering factors such as: (1) Community development track record, including, in the case of an PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 Applicant with a prior history of serving a Target Market, the extent of success in serving such Target Market and whether it will expand its operations into a new Investment Area or serve a new Targeted Population, offer more Development Services, Financial Products and/or Financial Services, or increase the volume of its current business; (2) Operational capacity and risk mitigation strategies; (3) Financial track record and strength; (4) Capacity, skills, experience and background of the management team; (5) Understanding of its market context, including an analysis of the needs of the Investment Area or Targeted Population and a strategy for how the Applicant will attempt to meet those needs; such analysis of current and prospective customers will include the extent of economic distress within the designated Investment Area(s) or the extent of need within the designated Targeted Population(s), as those factors are measured by objective criteria, the extent of need for Loans, Equity Investments, Financial Products, Financial Services and Development Services within the designated Target Market, and the extent of demand within the Target Market for the Applicant’s products and services; (6) Program design and implementation plan, including: A plan to coordinate use of a financial assistance award with existing Federal State, local and Tribal government assistance programs, and private sector financial services; A description of how the Applicant will coordinate with community organizations and financial institutions which will provide equity investments, loans, secondary markets, or other services to the Investment Area or Targeted Population; an assessment of its products and services, marketing and outreach efforts, delivery strategy, and coordination with other institutions and/or a Community Partner, or participation in a secondary market for purposes of increasing the Applicant’s resources. In the case of an Applicant submitting an application with a Community Partner, the CDFI Fund will evaluate: the extent to which the Community Partner will participate in carrying out the activities of the Community Partnership; the extent to which the Community Partner will enhance the likelihood of success of the Comprehensive Business Plan; and the extent to which service to the designated Target Market will be better performed by a Community Partnership than by the Applicant alone; E:\FR\FM\31AUR1.SGM 31AUR1 rmajette on DSK7SPTVN1PROD with RULES Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations (7) Projections for financial performance, capitalization and the raising of needed external resources, including a detailed description of the Applicant’s plans and likely sources of funds to match the amount of financial assistance requested from the CDFI Fund, the amount of firm commitments and matching funds in hand to meet or exceed the matching funds requirements and, if applicable, the likely success of the plan for raising the balance of the matching funds in a timely manner, the extent to which the matching funds are, or will be, derived from private sources, and whether an Applicant is, or will become, an Insured CDFI or a StateInsured Credit Union; (8) Projections for community development impact, including the extent to which an Applicant will concentrate its activities on serving its Target Market(s), the extent of support from the designated Target Market, the extent to which an Applicant is, or will be, Community-Owned or CommunityGoverned, and the extent to which the activities proposed in the Comprehensive Business Plan are consistent with existing economic, community, and housing development plans adopted by or applicable to the Investment Area or Targeted Population and will expand economic opportunities or promote community development within the designated Target Market; (9) The extent of need for the CDFI Fund’s assistance, as demonstrated by the extent of economic distress in the Applicant’s Target Market and the extent to which the Applicant needs the CDFI Fund’s assistance to carry out its Comprehensive Business Plan; (10) In the case of an Applicant that has previously received assistance under the CDFI Program, the CDFI Fund also will consider the Applicant’s level of success in meeting its performance goals, financial soundness covenants (if applicable), and other requirements contained in the previously negotiated and executed Assistance Agreement(s) with the CDFI Fund, the unexpended balance of assistance, and whether the Applicant will, with additional assistance from the CDFI Fund, expand its operations into a new Target Market, offer more products or services, and/or increase the volume of its activities; and (11) The CDFI Fund may consider any other factors, as it deems appropriate, in reviewing an application as set forth in an applicable Notice of Funds Availability. (c) Consultation with Appropriate Federal Banking Agencies. The CDFI Fund will consult with, and consider the views of, the Appropriate Federal VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 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; or (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. (d) Consultation with Appropriate State Agencies. Prior to providing assistance to a State-Insured Credit Union, the CDFI Fund may consult with, and consider the views of, the Appropriate State Agency. (e) Recipient selection. The CDFI Fund will select Recipients based on the criteria described in paragraph (b) of this section and any other criteria set forth in this part or the applicable Notice of Funds Availability. Subpart H—Terms and Conditions of Assistance § 1805.800 Safety and soundness. (a) Regulated institutions. Nothing in this part, or in an Assistance Agreement, shall affect any authority of an Appropriate Federal Banking Agency or Appropriate State Agency to supervise and regulate any institution or company. (b) Non-Regulated CDFIs. The CDFI Fund will, to the maximum extent practicable, ensure that Recipients that are Non-Regulated CDFIs are financially and managerially sound and maintain appropriate internal controls. § 1805.801 Assistance Agreement; sanctions. (a) Prior to providing any Financial or Technical Assistance, the CDFI Fund and a Recipient shall execute an Assistance Agreement that requires a Recipient to comply with performance goals and abide by other terms and conditions of assistance. Such performance goals may be modified at any time by mutual consent of the CDFI Fund and a Recipient or as provided in paragraph (c) of this section. If a Community Partner or an Affiliate 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 CDFI Fund. (b) A Recipient shall comply with performance goals that have been established or negotiated with the CDFI Fund and which are based upon the Comprehensive Business Plan submitted as part of the Recipient’s application. Such performance goals may include measures that require a Recipient to: PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 52389 (1) Be financially sound; (2) Be managerially sound; (3) Maintain appropriate internal controls; and/or (4) Achieve specific lending, investment, and development service objectives. Performance goals for Insured CDFIs shall be determined in consultation with the Appropriate Federal Banking Agency, as applicable. Such goals shall be incorporated in, and enforced under, the Recipient’s Assistance Agreement. Performance goals for State-Insured Credit Unions may be determined in consultation with the Appropriate State Agency, if deemed appropriate by the CDFI Fund. (c) The Assistance Agreement shall provide that, in the event of fraud, mismanagement, noncompliance with the Act and the CDFI Fund’s regulations, or noncompliance with the terms and conditions of the Assistance Agreement on the part of the Recipient (or the Community Partner, if applicable), the CDFI Fund, in its discretion, may: (1) Require changes in the performance goals set forth in the Assistance Agreement; (2) Require changes in the Recipient’s Comprehensive Business Plan; (3) Revoke approval of the Recipient’s application; (4) Reduce or terminate the Recipient’s assistance; (5) Require repayment of any assistance that has been distributed to the Recipient; (6) Bar the Recipient from reapplying for any assistance from the CDFI Fund; or (7) Take such other actions as the CDFI Fund deems appropriate. (d) In the case of an Insured CDFI, the Assistance Agreement shall provide that the provisions of the Act, this part, and the Assistance Agreement shall be enforceable under 12 U.S.C. 1818 of the Federal Deposit Insurance Act by the Appropriate Federal Banking Agency, as applicable, and that any violation of such provisions shall be treated as a violation of the Federal Deposit Insurance Act. Nothing in this paragraph (d) precludes the CDFI Fund from directly enforcing the Assistance Agreement as provided for under the terms of the Act. (e) The CDFI Fund shall notify the Appropriate Federal Banking Agency before imposing any sanctions on an Insured CDFI or other institution that is examined by or subject to the reporting requirements of that agency. The CDFI Fund shall not impose a sanction described in paragraph (c) of this E:\FR\FM\31AUR1.SGM 31AUR1 52390 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations section if the Appropriate Federal Banking Agency, in writing, and to the satisfaction of the CDFI Fund, not later than 30 calendar days after receiving notice from the CDFI Fund: (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 CDFI Fund in securing compliance and deterring future noncompliance. (f) In reviewing the performance of a Recipient in which its Investment Area(s) includes an Indian Reservation or Targeted Population(s) includes an Indian Tribe, the CDFI 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 CDFI Fund shall, to the maximum extent practicable, provide the Recipient (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 a Recipient or Community Partner with the right to any formal or informal hearing or comparable proceeding not otherwise required by law. rmajette on DSK7SPTVN1PROD with RULES § 1805.802 Payment 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 CDFI Fund. The CDFI Fund shall not provide any assistance under this part until a Recipient has satisfied any required conditions set forth in its Assistance Agreement and, if the Recipient is to receive financial assistance, the Recipient has secured in-hand and/or firm commitments for the matching funds required for such assistance pursuant to the applicable Notice of Funds Availability. § 1805.803 Data collection and reporting. (a) Data—General. A Recipient shall maintain such records as may be VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 prescribed by the CDFI Fund that are necessary to: (1) Disclose the manner in which CDFI Fund assistance is used; (2) Demonstrate compliance with the requirements of this part and an Assistance Agreement; and (3) Evaluate the impact of the CDFI Program. (b) Customer profiles. A Recipient (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 CDFI 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 and to evaluate the impact of the CDFI Program. (c) Access to records. A Recipient (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 CDFI Fund or the Department of the Treasury to ensure compliance with the requirements of this part and to evaluate the impact of the CDFI Program. The United States Government, including the Department of the Treasury, the Comptroller General, and their duly authorized representatives, shall have full and free access to the Recipient’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 CDFI Fund, if it deems appropriate, may prescribe access to record requirements for entities that are borrowers of, or that receive investments from a Recipient. (d) Retention of records. A Recipient shall comply with all record retention requirements as set forth in the Uniform Requirements (as applicable). (e) Data collection and reporting. Each Recipient shall submit to the CDFI Fund information and documentation that will permit the CDFI Fund to review the Recipient’s progress (and the progress of its Affiliates, Subsidiaries, and/or Community Partners, if appropriate) in implementing its Comprehensive Business Plan and satisfying the terms and conditions of its Assistance Agreement. The information and documentation shall include, but not be limited to, an audit and an annual report, which shall comprise the following components: (1) Audits and Audited Financial Statements. (i) All non-profit organizations that are required to have PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 their financial statements audited pursuant to the Uniform Requirements, must submit their single-audits no later than nine months after the end of the Recipient’s fiscal year. Non-profit organizations (excluding Insured CDFIs and State-Insured Credit Unions) that are not required to have financial statements audited pursuant to the Uniform Requirements, must submit to the CDFI Fund a statement signed by the Recipient’s Authorized Representative or certified public accountant, asserting that the Recipient is not required to have a single audit pursuant to the Uniform Requirements as indicated in the Assistance Agreement. In such instances, the CDFI Fund may require additional audits to be performed as stated in the applicable Notice of Funds Availability. (ii) For-profit organizations (excluding Insured CDFIs and State-Insured Credit Unions) must submit to the CDFI Fund financial statements audited in conformity with generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants, no later than six months after the end of the Recipient’s fiscal year. (iii) Insured CDFIs are not required to submit financial statements to the CDFI Fund. The CDFI Fund will obtain the necessary information from publicly available sources. State-Insured Credit Unions must submit to the CDFI Fund copies of the financial statements that they submit to the Appropriate State Agency. (iv) If multiple for-profit organizations sign the Assistance Agreement: The Recipient may submit combined financial statements and footnotes for the Recipient and other entities that signed the Assistance Agreement as long as the financial statements of each signatory are shown separately (for example, in combining financial statements). (2) Annual Report. (i) Each Recipient shall submit to the CDFI Fund a performance and financial report at the times that shall be specified in the Assistance Agreement (Annual Report). The Annual Report consists of several components which may include, but are not limited to, an institution level report, transaction level report, use of financial or technical assistance report, explanation of any Recipient noncompliance, and shareholder report. The Annual Report components shall be specified and described in the Assistance Agreement. (ii) The CDFI Fund will use the Annual Report to collect data to assess the Recipient’s compliance with its E:\FR\FM\31AUR1.SGM 31AUR1 rmajette on DSK7SPTVN1PROD with RULES Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations Performance Goals and the impact of the CDFI Program and the CDFI industry. (iii) Recipients are responsible for the timely and complete submission of the Annual Report, even if all or a portion of the documents actually are completed by another entity or signatory to the Assistance Agreement. If such other entities or signatories are required to provide Annual Reports, or other documentation that the CDFI Fund may require, the Recipient is responsible for ensuring that the information is submitted timely and complete. The CDFI Fund reserves the right to contact such additional signatories to the Assistance Agreement and require that additional information and documentation be provided. (3) The CDFI Fund’s review of the progress of an Insured CDFI, a Depository Institution Holding Company or a State-Insured Credit Union in implementing its Comprehensive Business Plan and satisfying the terms and conditions of its Assistance Agreement may also include information from the Appropriate Federal Banking Agency or Appropriate State Agency, as the case may be. (4) Public Access. The CDFI Fund shall make reports described in this section available for public inspection after deleting or redacting any materials necessary to protect privacy or proprietary interests. (f) Exchange of information with Appropriate Federal Banking Agencies and Appropriate State 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 CDFI 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 CDFI Fund. (2) If the information, reports, or records requested by the CDFI 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 CDFI 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 CDFI Fund shall use any information provided by an Appropriate Federal Banking Agency or Appropriate State Agency under this section to the VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 extent practicable to eliminate duplicative requests for information and reports from, and record keeping by, an Insured CDFI, State-Insured Credit Union or other institution that is examined by or subject to the reporting requirements of an Appropriate Federal Banking Agency or Appropriate State Agency. (4) Notwithstanding paragraphs (f)(1) and (2) of this section, the CDFI Fund may require an Insured CDFI, StateInsured Credit Union, or other institution that is examined by or subject to the reporting requirements of an Appropriate Federal Banking Agency or Appropriate State 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 or Appropriate State Agency, as the case may be. (5) Nothing in this part shall be construed to permit the CDFI Fund to require an Insured CDFI, State-Insured Credit Union, or other institution that is examined by or subject to the reporting requirements of an Appropriate Federal Banking Agency or Appropriate State Agency to obtain, maintain, or furnish an examination report of any Appropriate Federal Banking Agency or Appropriate State Agency, or records contained in or related to such report. (6) The CDFI Fund and the Appropriate Federal Banking Agency shall promptly notify each other of material concerns about a Recipient 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 CDFI Fund nor the Appropriate Federal Banking Agency (or Appropriate State Agency, as the case may be) shall disclose confidential information obtained pursuant to this section from any party without the written consent of that party. (8) The CDFI Fund, the Appropriate Federal Banking Agency (or Appropriate State Agency, as the case may be), and any other party providing information under this paragraph (f) 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. PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 § 1805.804 52391 Information. The CDFI 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 Insured CDFIs or other institution that is examined by or subject to the reporting requirements of an Appropriate Federal Banking Agency. § 1805.805 Compliance with government requirements. In carrying out its responsibilities pursuant to an Assistance Agreement, the Recipient shall comply with all applicable Federal, State, and local laws, regulations, and ordinances, OMB Circulars, and Executive Orders. Furthermore, Recipients must comply with the CDFI Fund’s Environmental Quality Regulations (12 CFR part 1815) as well as all other federal environmental requirements applicable to federal awards. § 1805.806 Conflict of interest requirements. (a) Provision of credit to Insiders. (1) A Recipient that is a Non-Regulated CDFI may not use any monies provided to it by the CDFI Fund to make any credit (including loans and Equity Investments) available to an Insider, unless it meets the following restrictions: (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 Recipient shall approve the extension of the credit; and (iv) The credit must be provided in accordance with a policy regarding credit to Insiders that has been approved in advance by the CDFI Fund. (2) A Recipient that is an Insured CDFI, a Depository Institution Holding Company or a State-Insured Credit Union shall comply with the restrictions on Insider activities and any comparable restrictions established by its Appropriate Federal Banking Agency or Appropriate State Agency, as applicable. (b) Recipient standards of conduct. A Recipient that is a Non-Regulated CDFI shall maintain a code or standards of conduct acceptable to the CDFI Fund that shall govern the performance of its Insiders engaged in the awarding and administration of any credit (including loans and Equity Investments) and E:\FR\FM\31AUR1.SGM 31AUR1 52392 Federal Register / Vol. 80, No. 168 / Monday, August 31, 2015 / Rules and Regulations contracts using monies from the CDFI Fund. No Insider of a Recipient shall solicit or accept gratuities, favors, or anything of monetary value from any actual or potential borrowers, owners, or contractors for such credit or contracts. Such policies shall provide for disciplinary actions to be applied for violation of the standards by the Recipient’s Insiders. § 1805.807 Lobbying restrictions. No assistance made available under this part may be expended by a Recipient 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 are defined in 31 U.S.C. 1352. § 1805.808 Criminal provisions. The criminal provisions of 18 U.S.C. 657 regarding embezzlement or misappropriation of funds are applicable to all Recipients and Insiders. § 1805.809 control. CDFI Fund deemed not to The CDFI Fund shall not be deemed to Control a Recipient by reason of any assistance provided under the Act for the purpose of any applicable law. § 1805.810 Limitation on liability. The liability of the CDFI 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 CDFI 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. rmajette on DSK7SPTVN1PROD with RULES § 1805.811 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. Mary Ann Donovan, Director, Community Development Financial Institutions Fund. [FR Doc. 2015–21227 Filed 8–28–15; 8:45 am] BILLING CODE 4810–70–P VerDate Sep<11>2014 13:58 Aug 28, 2015 Jkt 235001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 71 [Docket No. FAA–2015–1623; Airspace Docket No. 15–AWP–10] Amendment of Class E Airspace; Tracy, CA Federal Aviation Administration (FAA), DOT. ACTION: Final rule. AGENCY: This action modifies Class E airspace extending upward from 700 feet above the surface at Tracy Municipal Airport, Tracy, CA. After a review, and the decommissioning of the Manteca VHF omnidirectional radio range and distance measuring equipment (VOR/DME), the FAA found it necessary to amend the airspace area for the safety and management of Standard Instrument Approach Procedures for Instrument Flight Rules (IFR) operations at the airport. DATES: Effective 0901 UTC, October 15, 2015. The Director of the Federal Register approves this incorporation by reference action under title 1, Code of Federal Regulations, part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments. SUMMARY: FAA Order 7400.9Y, Airspace Designations and Reporting Points, and subsequent amendments can be viewed on line at http:// www.faa.gov/airtraffic/publications/. For further information, you can contact the Airspace Policy and ATC Regulations Group, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 29591; Telephone: (202) 267–8783. The Order is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call (202) 741–6030, or go to http://www.archives.gov/ federal_register/code_of_federalregulations/ibr_locations.html. FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15. FOR FURTHER INFORMATION CONTACT: Rob Riedl, Federal Aviation Administration, Operations Support Group, Western Service Center, 1601 Lind Avenue SW., Renton, WA 98057; Telephone: (425) 203–4534. SUPPLEMENTARY INFORMATION: ADDRESSES: PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 Authority for This Rulemaking The FAA’s authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency’s authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends controlled airspace at Tracy, CA. History On June 23, 2015, the FAA published in the Federal Register a notice of proposed rulemaking (NPRM) to modify Class E airspace at Tracy Municipal Airport, Tracy, CA (80 FR 35890) . Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received. Class E airspace designations are published in paragraph 6005, of FAA Order 7400.9Y, dated August 6, 2014, and effective September 15, 2014, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order. Availability and Summary of Documents for Incorporation by Reference This document amends FAA Order 7400.9Y, Airspace Designations and Reporting Points, dated August 6, 2014, and effective September 15, 2014. FAA Order 7400.9Y is publicly available as listed in the ADDRESSES section of this final rule. FAA Order 7400.9Y lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points. The Rule This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 modifies Class E airspace areas extending upward from 700 feet or more above the surface of the earth at Tracy Municipal Airport, Tracy, CA. Decommissioning of the Manteca VOR/ DME and further review of the airspace has made this action necessary for the safety and management of standard instrument approach procedures for IFR operations at the airport. Class E airspace extending upward from 700 feet above the surface is modified to E:\FR\FM\31AUR1.SGM 31AUR1

Agencies

[Federal Register Volume 80, Number 168 (Monday, August 31, 2015)]
[Rules and Regulations]
[Pages 52379-52392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21227]


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DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund

12 CFR Part 1805

RIN 1505-AA92


Community Development Financial Institutions 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 Community Development Financial Institutions Program 
(CDFI Program), administered by the Community Development Financial 
Institutions Fund (CDFI Fund). This interim rule includes revisions 
necessary to implement the Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards published by the 
Department of the Treasury on December 19, 2014, as well as to make 
technical corrections and other updates to the current rule.

DATES: Effective date: August 31, 2015; all comments must be written 
and must be received in the offices of the CDFI Fund on or before 
October 30, 2015.

[[Page 52380]]


ADDRESSES: You may submit comments concerning this interim rule via the 
Federal e-Rulemaking Portal at http://www.regulations.gov (please 
follow the instructions for submitting comments). All submissions 
received must include the agency name and Regulatory Information Number 
(RIN) for this rulemaking. Other information regarding the CDFI Fund 
and its programs may be obtained through the CDFI Fund's Web site at 
http://www.cdfifund.gov.

FOR FURTHER INFORMATION CONTACT: Amber Kuchar, CDFI Program Manager, 
Community Development Financial Institutions Fund, at 
cdfihelp@cdfi.treas.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    The CDFI Fund, Department of the Treasury, was authorized by the 
Community Development Banking and Financial Institutions Act of 1994, 
as amended (12 U.S.C. 4701 et seq.) (the Act). The purpose of the CDFI 
Fund is to promote economic revitalization and community development 
through investment in and assistance to Community Development Financial 
Institutions (CDFIs). The mission of the CDFI Fund is to increase 
economic opportunity and promote community development investments for 
underserved populations and in distressed communities in the United 
States. Its long-term vision is an America in which all people have 
access to affordable credit, capital, and financial services. The 
purpose of the CDFI Fund is to promote economic revitalization and 
community development through investment in and assistance to Community 
Development Financial Institutions (CDFIs). Through the CDFI Program, 
the CDFI Fund directly invests in, supports, and trains CDFIs that 
provide loans, investments, financial services, and technical 
assistance to underserved populations and communities by providing (i) 
financial assistance in the form of grants, loans, equity investments, 
and deposits to CDFIs and (ii) technical assistance grants to CDFIs and 
entities that propose to become CDFIs, for the purpose of increasing 
their capacity to serve their Target Markets. The CDFI Fund provides 
such financial assistance to CDFIs to enhance their ability to make 
loans and investments, and to provide related services for the benefit 
of designated Investment Areas, Targeted Populations, or both. Awards 
are made through a competitive, merit-based application process.
    Through the CDFI Program, the CDFI Fund uses Federal resources to 
invest in CDFIs and to build their capacity to serve low-income people 
and communities that lack access to affordable financial products and 
services. Through the CDFI Program, the CDFI Fund provides two types of 
monetary awards to CDFIs: financial assistance awards and technical 
assistance awards. Applicants participate in the CDFI Program through a 
competitive, merit-based quantitative and qualitative application and 
selection process in which the CDFI Fund makes funding decisions based 
on pre-established evaluation criteria. An entity may receive a CDFI 
Program award only after entering into an Assistance Agreement with the 
CDFI Fund that includes performance goals, matching funds requirements 
(if applicable), and reporting requirements.
    On December 19, 2014, the Department of the Treasury published a 
final rule, Uniform Administrative Requirements, Cost Principles, and 
Audit Requirements for Federal Awards (2 CFR part 1000), which adopted 
the government-wide framework for grants management codified by the 
Office of Management and Budget (OMB) at 2 CFR 200 (the Uniform 
Requirements). The Uniform Requirements combine grant-related OMB 
guidance circulars--reducing the administrative burden for award 
Recipients and reducing the risk of waste, fraud, and abuse of Federal 
financial assistance--and establish financial, administrative, 
procurement, and program management standards for Federal award-making 
agencies, including the CDFI Fund and its award Recipients.
    On April 10, 2015, the CDFI Fund published in the Federal Register 
an amendment to the interim rule (80 FR 19195) modifying the 
certification requirements for CDFI Bond Guarantee Program participants 
seeking to meet the ``financing entity'' criterion of the CDFI 
certification requirements. The deadline for the submission of comments 
on the current rule was June 9, 2015.

II. Comments on the April 10, 2015 Interim Rule

    As of the close of the June 9, 2015 comment period, the CDFI Fund 
received no comments on the current rule.

III. Summary of Changes

    Throughout the rule, the defined term ``Awardee'' has been replaced 
by ``Recipient.'' Further, award funds being transmitted from the CDFI 
Fund to Recipients are referred to as payments, rather than 
disbursements. These changes were made to align the terminology in the 
CDFI Program regulations with the terms used in the Uniform 
Requirements. Other changes to the rule are specified below:

A. Section 1805.102, Relationship to Other CDFI Fund Programs

    This section has been revised to clarify that the restrictions on 
entities applying for, receiving, and using CDFI Program awards, as 
well as awards through other CDFI Fund programs during the same annual 
award application cycle, will be described in the corresponding funding 
notices for those programs.

B. Section 1805.104, Definitions

    As indicated above, the defined term ``Awardee'' has been removed 
and replaced with the defined term ``Recipient''. The defined term 
``Fund'' has been removed and replaced with the defined term 
``Community Development Financial Institutions Fund'' so as to provide 
clear delineation between the CDFI Fund and the Capital Magnet Fund, 
another CDFI Fund program. The definition of ``Comprehensive Business 
Plan'' has been modified to better reflect the Act's requirements for 
Comprehensive Business Plans submitted with funding applications. The 
definition of Development Services has been modified for clarity. The 
definition of ``Financial Product'' has been modified to eliminate 
grants by CDFI Intermediaries to CDFIs and/or emerging CDFIs from the 
definition. The CDFI Fund believes that this change is necessary to 
ensure that Recipients apply their financial assistance award funding 
directly to eligible activities rather than passing their financial 
assistance awards on to other CDFIs. ``Uniform Requirements'' has been 
added as a defined term. In addition, the paragraph numbering has been 
removed to allow for future modifications to the Definitions section 
without the need for re-numbering the entire section.

C. Section 1805.105, Uniform Requirements; Waiver Authority

    Section 1805.105(a), Uniform Requirements, has been added to affirm 
that the Uniform Requirements will be applied to all awards made 
pursuant to this part, as applicable.

D. Section 1805.201, Certification as a Community Development Financial 
Institution

    Section 1805.201(b)(3)(ii)(B), Geographic Units, has been revised 
to better conform the description of eligible Investment Areas to the

[[Page 52381]]

language of the Act. References to ``American Indian or Alaska Native 
area'' have been replaced with ``Indian Reservation.''
    Section 1805.201(b)(4), Development Services, has been revised to 
permit Development Services to be offered in conjunction with Financial 
Services in order to meet the certification requirement that CDFIs must 
provide Development Services. Previously, only Development Services in 
conjunction with Financial Products met this requirement.
    Section 1805.201(b)(5), Accountability, has been revised to require 
that a CDFI must demonstrate accountability to residents of its Target 
Market through representation on either its governing board or advisory 
board. Previously, other means of demonstrating accountability were 
permitted.
    Section 1805.201(c), Records and Review, has been added to clarify 
that each certified CDFI is subject to periodic review by the CDFI Fund 
to ensure continued compliance with the CDFI certification requirements 
in this part, as well as to review the certified CDFI's organizational 
capacity, lending activity, community impacts, and such other 
information that the CDFI Fund deems appropriate. CDFIs will be 
required to provide, upon request, additional information and 
documentation to the CDFI Fund to facilitate this review.

E. Section 1805.502, Severe Constraints Waiver

    Section 1805.502(c) has been revised to indicate that the terms of 
the severe constraints waiver will be set forth in the affected 
Recipient's Assistance Agreement.

F. Section 1805.504, Retained Earnings

    Section 1805.504(a) has been revised to eliminate the restriction 
on Applicants submitting as matching funds those retained earnings that 
have been accumulated by the Applicant after the end of the Applicant's 
most recent fiscal year end prior to the application deadline. The CDFI 
Fund believes that this change will allow Applicants additional 
flexibility in attracting and obtaining matching funds.
    Section 1805.504(c) has been revised to permit Insured Depository 
Institutions to use retained earnings that have been accumulated since 
the inception of the organization as matching funds for financial 
assistance awards. Previously, this option was only available to 
Insured Credit Unions and State-Insured Credit Unions.
    Section 1805.504(c)(1)(iii)(D) has been revised to eliminate the 
July 31 date as a specified deadline for the measurement of required 
increases in member shares, non-member shares, outstanding loans, and 
other measurable activity. Under the current rule, Insured Credit Union 
and State-Insured Credit Union Applicants may use the increase in 
retained earnings since the inception of the organization as matching 
funds so long as they also demonstrate a required amount of increase in 
shares, loans, and other activity as described in the applicable Notice 
of Funds Availability. Due to fluctuations in the timing of the funding 
rounds, the July 31 date being fixed in the regulations made 
administration of this requirement challenging. With this revision, the 
CDFI Fund will have greater flexibility to schedule deadlines in the 
applicable Notice of Funds Availability relative to the application 
deadline therein.

G. Section 1805.701, Evaluation of Applications

    Section 1805.701(b) has been revised to more accurately reflect the 
application and selection requirements of the Act as indicated at 12 
U.S.C. 4704, 4705, and 4706.

H. Section 1805.801, Notice of Award

    This section was removed as the CDFI Fund no longer uses Notices of 
Award (NOAs) that are separate from the Assistance Agreements.

I. Section 1805.803, Data Collection and Reporting

    This section has been revised to accommodate the audit requirements 
of the Uniform Requirements.
    Section 1805.803(e)(1)(i) has been revised to conform to the 
Uniform Requirements. Per the Uniform Requirements and the interim 
rule, all non-profit organizations that are required to have their 
financial statements audited pursuant to the Uniform Requirements, must 
submit their single-audits to the Federal Audit Clearinghouse no later 
than nine months after the end of the Recipient's fiscal year. Under 
this rule, as indicated in the applicable Notice of Funds Availability 
and Assistance Agreement, non-profit organizations that are not 
required to have their financial statements audited pursuant to the 
Uniform Requirements may still be subject to additional audit 
requirements.
    Section 1805.803(e)(2)(A) has been revised and simplified to 
eliminate some outdated report form references in favor of a 
description of the report types to be collected from Recipients on an 
annual basis. Specific reporting requirements using OMB Paperwork 
Reduction Act (PRA) approved information collections will be described 
in the applicable Notices of Funds Availability and Assistance 
Agreements.

IV. Rulemaking Analysis

A. 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.

B. 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.

C. 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 the applicable, approved OMB Control Numbers associated with 
the CDFI Fund under 1559. 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.

D. National Environmental Policy Act

    This interim rule has been reviewed in accordance with the CDFI 
Fund's Environmental Quality regulations (12 CFR part 1815), 
promulgated pursuant to the National Environmental Protection Act of 
1969 (NEPA), which requires 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's Environmental Quality regulations (12 CFR 1815), neither an 
Environmental Assessment nor an Environmental Impact Statement is 
required.

E. Administrative Procedure Act

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

[[Page 52382]]

F. Comment

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

G. Catalog 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.

    For the reasons set forth in the preamble, 12 CFR part 1805 is 
revised to read as follows:

PART 1805--COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS PROGRAM

Sec.
Subpart A--General Provisions
1805.100 Purpose.
1805.101 Summary.
1805.102 Relationship to other CDFI Fund programs.
1805.103 Recipient not instrumentality.
1805.104 Definitions.
1805.105 Uniform Requirements; 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--Use of Funds/Eligible Activities
1805.300 Purposes of financial assistance.
1805.301 Eligible activities.
1805.302 Restrictions on use of assistance.
1805.303 Technical assistance.
Subpart D--Investment Instruments
1805.400 Investment instruments--general.
1805.401 Forms of investment instruments.
1805.402 Assistance limits.
1805.403 Authority to sell.
Subpart E--Matching Funds Requirements
1805.500 Matching funds--general.
1805.501 Comparability of form and value.
1805.502 Severe constraints waiver.
1805.503 Time frame for raising match.
1805.504 Retained earnings.
Subpart F--Applications for Assistance
1805.600 Notice of Funds Availability.
Subpart G--Evaluation and Selection of Applications
1805.700 Evaluation and selection--general.
1805.701 Evaluation of applications.
Subpart H--Terms and Conditions of Assistance
1805.800 Safety and soundness.
1805.801 Assistance Agreement; sanctions.
1805.802 Payment of funds.
1805.803 Data collection and reporting.
1805.804 Information.
1805.805 Compliance with government requirements.
1805.806 Conflict of interest requirements.
1805.807 Lobbying restrictions.
1805.808 Criminal provisions.
1805.809 CDFI Fund deemed not to control.
1805.810 Limitation on liability.
1805.811 Fraud, waste and abuse.

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

Subpart A--General Provisions


Sec.  1805.100  Purpose.

    The purpose of the Community Development Financial Institutions 
(CDFI) Program is to promote economic revitalization and community 
development through investment in and assistance to Community 
Development Financial Institutions.


Sec.  1805.101  Summary.

    Through the Community Development Financial Institutions Program, 
the CDFI Fund provides financial and technical assistance to Recipients 
selected by the CDFI Fund in order to enhance their ability to provide 
Financial Products, Financial Services and Development Services to and 
in their Target Markets. Each Recipient must serve an Investment 
Area(s), a Targeted Population(s), or both. The CDFI Fund will select 
Recipients to receive financial or technical assistance through a 
merit-based, qualitative application process. Each Recipient must enter 
into an Assistance Agreement that requires it to achieve specific 
performance goals and abide by other terms and conditions pertinent to 
any assistance received under this part, as well as the Uniform 
Requirements, as applicable. All CDFI Program awards shall be made 
subject to funding availability.


Sec.  1805.102  Relationship to other CDFI Fund programs.

    Restrictions on applying for, receiving, and using CDFI Program 
awards in conjunction with awards under other programs administered by 
the CDFI Fund (including, but not limited to, the Bank Enterprise Award 
Program, the Capital Magnet Fund, the CDFI Bond Guarantee Program, the 
Native American CDFI Assistance (NACA) Program, and the New Markets Tax 
Credit Program) are as set forth in the applicable Notice of Funds 
Availability, Notice of Guarantee Availability, or Notice of Allocation 
Availability.


Sec.  1805.103  Recipient not instrumentality.

    No Recipient (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, the following terms shall have the 
following definitions:
    Act means the Community Development Banking and Financial 
Institutions Act of 1994, as amended (12 U.S.C. 4701 et se.);
    Affiliate means any company or entity that Controls, is Controlled 
by, or is under common Control with another company;
    Applicant means any entity submitting an application for CDFI 
Program assistance or funding under this part;
    Appropriate Federal Banking Agency has the same meaning as in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), and 
includes, with respect to Insured Credit Unions, the National Credit 
Union Administration;
    Appropriate State Agency means an agency or instrumentality of a 
State that regulates and/or insures the member accounts of a State-
Insured Credit Union;
    Assistance Agreement means a formal agreement between the CDFI Fund 
and a Recipient, which agreement specifies the terms and conditions of 
assistance under this part;
    Community Development Financial Institution (or CDFI) means an 
entity currently meeting the requirements described in Sec.  1805.201;
    Community Development Financial Institutions Fund (or CDFI Fund) 
means the Community Development Financial Institutions Fund established 
pursuant to section 104(a) (12 U.S.C. 4703(a)) of the Act;
    Community Development Financial Institution Intermediary (or CDFI 
Intermediary) means an entity that meets the CDFI Program eligibility 
requirements described in Sec.  1805.200 and whose primary business 
activity is the provision of Financial Products to CDFIs and/or 
emerging CDFIs;
    Community Development Financial Institutions Program (or CDFI 
Program) means the program authorized by sections 105-108 of the Act 
(12 U.S.C. 4704-4707) and implemented under this part;
    Community Facility means a facility where health care, childcare, 
educational, cultural, or social services are provided;

[[Page 52383]]

    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;
    Community-Owned means an entity in which the residents of an 
Investment Area(s) or members of a Targeted Population(s) have an 
aggregate ownership interest of greater than 50 percent;
    Community Partner means a person (other than an individual) that 
provides loans, Equity Investments, or Development Services and enters 
into a Community Partnership with an Applicant or a Recipient. A 
Community Partner may include a Depository Institution Holding Company, 
an Insured Depository Institution, an Insured Credit Union, a State-
Insured Credit Union, a non-profit or for-profit organization, a State 
or local government entity, a quasi-government entity, or an investment 
company authorized pursuant to the Small Business Investment Act of 
1958 (15 U.S.C. 661 et se.);
    Community Partnership means an agreement between an Applicant or 
Recipient and a Community Partner to provide collaboratively Financial 
Products and/or Financial Services or Development Services to an 
Investment Area(s) or a Targeted Population(s);
    Comprehensive Business Plan means a document, covering not less 
than the next five years, that demonstrates that the Applicant will be 
properly managed and will have the capacity to operate as a CDFI that 
will not be dependent upon assistance from the CDFI Fund for continued 
viability, and that meets the requirements described in an applicable 
Notice of Funds Availability;
    Control or Controlling means:
    (1) Ownership, control, or power to vote 25 percent or more of the 
outstanding shares of any class of Voting Securities of any company, 
directly or indirectly or acting through one or more other persons;
    (2) Control in any manner over the election of a majority of the 
directors, trustees, or general partners (or individuals exercising 
similar functions) of any company; or
    (3) Power to exercise, directly or indirectly, a controlling 
influence over the management, credit or investment decisions, or 
policies of any company.
    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. 1813(w)(1));
    Development Services means activities undertaken by a CDFI, its 
Affiliate or contractor that promote community development and shall 
prepare or assist current or potential borrowers or investees to use 
the CDFI's Financial Products or Financial Services. For example, such 
activities include, financial or credit counseling; homeownership 
counseling; and business planning and management assistance;
    Equity Investment means an investment made by a CDFI that, in the 
judgment of the CDFI Fund, supports or enhances activities serving the 
CDFI's 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 CDFI as an Affiliate. Equity 
Investments may comprise a stock purchase, a purchase of a partnership 
interest, a purchase of a limited liability company membership 
interest, a loan made on such terms that it has sufficient 
characteristics of equity (and is considered as such by the CDFI Fund); 
a purchase of secondary capital, or any other investment deemed by the 
CDFI Fund to be an Equity Investment;
    Financial Products means loans, Equity Investments and similar 
financing activities (as determined by the CDFI Fund) including the 
purchase of loans originated by certified CDFIs and the provision of 
loan guarantees; in the case of CDFI Intermediaries, Financial Products 
may also include loans to CDFIs and/or emerging CDFIs and deposits in 
Insured Credit Union CDFIs, emerging Insured Credit Union CDFIs, and/or 
State-Insured Credit Union CDFIs;
    Financial Services means providing checking, savings accounts, 
check cashing, money orders, certified checks, automated teller 
machines, deposit taking, safe deposit box services, and other similar 
services;
    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 or established pursuant to the Alaska Native Claims 
Settlement Act (43 U.S.C. 1602); public domain Indian allotments; and 
former Indian reservations in the State of Oklahoma;
    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 se.). 
Each such Indian Tribe must be recognized as eligible for special 
programs and services provided by the United States to Indians because 
of their status as Indians;
    Insider means any director, officer, employee, principal 
shareholder (owning, individually or in combination 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, Subsidiary, Affiliate, or Community Partner;
    Insured CDFI means a CDFI that is an Insured Depository Institution 
or an Insured Credit Union;
    Insured Credit Union means any credit union, the member accounts of 
which are insured by the National Credit Union Share Insurance Fund;
    Insured Depository Institution means any bank or thrift, the 
deposits of which are insured by the Federal Deposit Insurance 
Corporation;
    Investment Area means a geographic area meeting the requirements of 
Sec.  1805.201(b)(3);
    Low-Income means income, 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;
    Metropolitan Area means an area designated as such by the Office of 
Management and Budget pursuant to 44 U.S.C. 3504(e) and 31 U.S.C. 
1104(d) and Executive Order 10253 (3 CFR, 1949-1953 Comp., p. 758), as 
amended;
    Non-Regulated CDFI means any entity meeting the eligibility 
requirements described in Sec.  1805.200 and that is not a Depository 
Institution Holding Company, Insured Depository Institution, Insured 
Credit Union, or State-Insured Credit Union;
    Nonvoting Securities or Nonvoting Shares. Preferred shares, limited 
partnership shares or interests, or similar interests are Nonvoting 
Securities if:
    (1) Any voting rights associated with the shares or interest are 
limited solely to the type customarily provided by statute with regard 
to matters that would significantly and adversely affect the rights or 
preferences of the security or other interest, such as the issuance of 
additional amounts or classes of senior securities, the modification of 
the terms of the security or interest, the dissolution of the issuing 
company, or the payment of dividends by the issuing

[[Page 52384]]

company when preferred dividends are in arrears:
    (2) The shares or interest represent an essentially passive 
investment or financing device and do not otherwise provide the holder 
with control over the issuing company; and
    (3) The shares or interest do not entitle the holder, by statute, 
charter, or in any manner, to select or to vote for the selection of 
directors, trustees, or partners (or persons exercising similar 
functions) of the issuing company.
    Recipient means an Applicant selected by the CDFI Fund to receive 
assistance pursuant to this part;
    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 Virgin Islands, and the Northern Mariana Islands;
    State-Insured Credit Union means any credit union that is regulated 
by, and/or the member accounts of which are insured by, a State agency 
or instrumentality;
    Subsidiary means any company that is owned or Controlled directly 
or indirectly by another company and includes any service corporation 
owned in whole or part by an Insured Depository Institution or any 
Subsidiary of such a service corporation, except as provided in Sec.  
1805.200(b)(4);
    Targeted Population means individuals or an identifiable group of 
individuals meeting the requirements of Sec.  1805.201(b)(3);
    Target Market means an Investment Area(s) and/or a Targeted 
Population(s);
    Uniform Requirements means the Uniform Administrative Requirements, 
Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 
1000), which is the Department of the Treasury's codification of the 
Office of Management and Budget (OMB) government-wide framework for 
grants management at 2 CFR part 200;
    Voting Securities means shares of common or preferred stock, 
general or limited partnership shares or interests, or similar 
interests if the shares or interest, by statute, charter, or in any 
manner, entitle the holder:
    (1) To vote for or select directors, trustees, or partners (or 
persons exercising similar functions of the issuing company); or
    (2) To vote on or to direct the conduct of the operations or other 
significant policies of the issuing company.


Sec.  1805.105  Uniform Requirements; Waiver authority.

    (a) Uniform Requirements. The Uniform Requirements will be applied 
to all awards made pursuant to this part, as applicable.
    (b) Waiver authority. The CDFI 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 CDFI 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 CDFI Fund will publish notification 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 
applicable, approved OMB Control Numbers associated with the CDFI Fund 
under 1559.

Subpart B--Eligibility


Sec.  1805.200  Applicant eligibility.

    (a) General requirements. (1) An entity that meets the requirements 
described in Sec.  1805.201(b) and paragraph (b) of this section will 
be considered a CDFI and, subject to paragraph (a)(3) of this section, 
will be eligible to apply for assistance under this part.
    (2)(i) An entity that proposes to become a CDFI is eligible to 
apply for assistance under this part if the CDFI Fund:
    (A) Receives a complete application for certification from the 
entity within the time period set forth in an applicable Notice of 
Funds Availability; and
    (B) Determines that such entity's application materials provide a 
realistic course of action to ensure that it will meet the requirements 
described in Sec.  1805.201(b) and paragraph (b) of this section within 
the period set forth in an applicable Notice of Funds Availability.
    (ii) The CDFI Fund will not, however, make a payment of any 
financial assistance to such an entity before or unless it meets the 
requirements described in this section. Moreover, notwithstanding 
paragraphs (a)(1) and (a)(2)(i)(B) of this section, the CDFI Fund 
reserves the right to require an entity to have been certified as 
described in Sec.  1805.201(a) prior to its submission of an 
application for assistance, as set forth in an applicable Notice of 
Funds Availability.
    (3) The CDFI Fund shall require an entity to meet any additional 
eligibility requirements that the CDFI Fund deems appropriate.
    (4) The CDFI Fund, in its sole discretion, shall determine whether 
an entity fulfills the requirements set forth in this section and Sec.  
1805.201(b).
    (b) 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 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 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 this section.
    (4) For the purposes of paragraphs (b)(1) through (3) of this 
section, an entity will be considered to be a Subsidiary of any Insured 
Depository Institution or Depository Institution Holding Company that 
controls 25 percent or more of any class of the entity's voting shares, 
or otherwise controls, in any manner, the election of a majority of 
directors of the entity.


Sec.  1805.201  Certification as a Community Development Financial 
Institution.

    (a) General. An entity may apply to the CDFI Fund for certification 
that it meets the CDFI eligibility requirements regardless of whether 
it is seeking financial or technical assistance from the CDFI Fund. 
Entities seeking such certification shall provide the information set 
forth in the application for certification. Certification by the CDFI 
Fund will verify that the entity meets the CDFI eligibility 
requirements. However, such certification shall not constitute an 
opinion by the CDFI Fund as to the financial viability of the CDFI or 
that the CDFI will be selected to receive an award from the CDFI Fund. 
The CDFI Fund, in its sole discretion, shall have the right to 
decertify a certified entity after a determination that the eligibility 
requirements of paragraph (b) of this section or Sec.  1805.200(b) are 
no longer met.
    (b) Eligibility verification. An entity shall demonstrate whether 
it meets the eligibility requirements described in this paragraph (b) 
by providing the information described in the application for 
certification demonstrating that the entity meets the eligibility 
requirements described in paragraphs (b)(1) through

[[Page 52385]]

(6) of this section. The CDFI Fund, in its sole discretion, shall 
determine whether an entity has satisfied the requirements of this 
paragraph.
    (1) Primary mission. A CDFI must have a primary mission of 
promoting community development. In determining whether an entity has 
such a primary mission, the CDFI Fund will consider whether the 
activities of the entity are purposefully directed toward improving the 
social and/or economic conditions of underserved people (which may 
include Low-Income persons or persons who lack adequate access to 
capital and/or Financial Services) and/or residents of economically 
distressed communities (which may include Investment Areas).
    (2) Financing entity. (i) A CDFI shall be an entity whose 
predominant business activity is the provision, in arms-length 
transactions, of Financial Products and/or Financial Services. An 
entity may demonstrate that it meets this requirement 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 certification application. In conducting 
such analysis, the CDFI Fund may take into consideration an entity'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 CFR1808), an Affiliate of a 
Controlling CDFI may be deemed to meet the financing entity requirement 
of this section 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 acceptable to the 
CDFI Fund.
    (3) Target Market--(i) General. A CDFI must serve a Target Market 
by virtue of serving one or more Investment Areas and/or Targeted 
Populations. An entity may demonstrate that it meets this requirement 
by demonstrating that it provides Financial Products and/or Financial 
Services in an Investment Areas and/or Targeted Populations as 
described in this section. An Investment Area shall meet specific 
geographic and other criteria described in paragraph (b)(3)(ii) of this 
section, and a Targeted Population shall meet the criteria described in 
paragraph (b)(3)(iii) of this section.
    (ii) Investment Area--(A) General. A geographic area will be 
considered eligible for designation as an Investment Area if it:
    (1) 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 Virgin Islands, and the Northern 
Mariana Islands); and either
    (2) Meets at least one of the objective criteria of economic 
distress as set forth in paragraph (b)(3)(ii)(D) of this section and 
has significant unmet needs for loans, Equity Investments, Financial 
Products or Financial Services as described in paragraph (b)(3)(ii)(E) 
of this section; or
    (3) Encompasses (i.e., wholly consists of) or is wholly located 
within an Empowerment Zone or Enterprise Community designated under 
section 1391 of the Internal Revenue Code of 1986 (26 U.S.C. 1391).
    (B) Geographic units. Subject to the remainder of this paragraph 
(B), an Investment Area shall consist of a geographic unit that is a 
county (or equivalent area), minor civil division that is a unit of 
local government, incorporated place, census tract, or Indian 
Reservation. However, geographic units in Metropolitan Areas that are 
used to comprise an Investment Area shall be limited to census tracts, 
and Indian Reservations. An entity may designate one or more Investment 
Areas as part of a single certification application.
    (C) Designation. An entity may designate an Investment Area by 
selecting:
    (1) A geographic unit(s) that individually meets one of the 
criteria in paragraph (b)(3)(ii)(D) of this section; or
    (2) A group of contiguous geographic units that together meet one 
of the criteria in paragraph (b)(3)(ii)(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 most recently 
completed decennial census 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) In counties located outside of a Metropolitan Area, the county 
population loss during the period between the most recent decennial 
census and the previous decennial census is at least 10 percent; or
    (5) In counties located outside of a Metropolitan Area, the county 
net migration loss during the five-year period preceding the most 
recent decennial census is at least five percent.
    (E) Unmet needs. An Investment Area will be deemed to have 
significant unmet needs for loans or Equity Investments if a narrative 
analysis provided by the entity demonstrates a pattern of unmet needs 
for Financial Products or Financial Services within such area.
    (F) Serving Investment Areas. An entity may serve an Investment 
Area directly or through borrowers or investees that serve the 
Investment Area.
    (iii) Targeted Population--(A) General. Targeted Population shall 
mean individuals, or an identifiable group of individuals, who are Low-
Income persons or lack adequate access to Financial Products or 
Financial Services in the entity's Target Market. The members of a 
Targeted Population shall reside within the boundaries of the United 
States (which shall encompass any State of the United States, the 
District of Columbia or any territory of the United States, Puerto 
Rico, Guam,

[[Page 52386]]

American Samoa, the Virgin Islands, and the Northern Mariana Islands).
    (B) Serving Targeted Populations. An entity may serve the members 
of a Targeted Population directly or indirectly or through borrowers or 
investees that directly serve such members.
    (4) Development Services. A CDFI directly, through an Affiliate, or 
through a contract with another provider, must have a track record of 
providing Development Services in conjunction with its Financial 
Products and/or Financial Services. An entity applying for CDFI 
certification must demonstrate that it meets this requirement.
    (5) Accountability. A CDFI must maintain accountability to 
residents of its Investment Area(s) or Targeted Population(s) through 
representation on its governing board and/or advisory board(s). An 
entity applying for CDFI certification must demonstrate that it meets 
this requirement.
    (6) Non-government. A CDFI shall not be an agency or 
instrumentality of the United States, or any State or political 
subdivision thereof. An entity applying for CDFI certification must 
demonstrate that it meets this requirement. An entity that is created 
by, or that receives substantial assistance from, one or more 
government entities may be a CDFI provided it is not Controlled by such 
entities and maintains independent decision-making power over its 
activities.
    (c) Records and Review. The CDFI Fund will review a CDFI's 
certification status from time to time, as deemed appropriate by the 
CDFI Fund, to ensure that it meets the certification requirements of 
this section, as well as review its organizational capacity, lending 
activity, community impacts, and such other information that the CDFI 
Fund deems appropriate. Upon request, a CDFI shall provide such 
information and documentation to the CDFI Fund as is necessary to 
undertake such review.

Subpart C--Use of Funds/Eligible Activities


Sec.  1805.300  Purposes of financial assistance.

    The CDFI Fund may provide financial assistance through investment 
instruments described under subpart D of this part. Such financial 
assistance is intended to increase available capital and enhance the 
ability of a Recipient to provide Financial Products, Financial 
Services, and Development Services.


Sec.  1805.301  Eligible activities.

    Recipients may use financial assistance provided under this part to 
serve Investment Area(s) or Targeted Population(s) by developing or 
supporting, through lending, investing, enhancing liquidity, or other 
means of finance:
    (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) Increase 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 homeownership 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 CDFI Fund.


Sec.  1805.302  Restrictions on use of assistance.

    (a) A Recipient shall use assistance provided by the CDFI Fund and 
its corresponding matching funds only for the eligible activities 
approved by the CDFI Fund and described in the Assistance Agreement.
    (b) A Recipient may not distribute assistance to an Affiliate 
without the CDFI Fund's consent.
    (c) Assistance provided upon approval of an application involving a 
Community Partnership shall only be distributed to the Recipient and 
shall not be used to fund any activities carried out by a Community 
Partner or an Affiliate of a Community Partner.


Sec.  1805.303  Technical assistance.

    (a) General. The CDFI Fund may provide technical assistance to 
build the capacity of a CDFI or an entity that proposes to become 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 
CDFI Fund. The CDFI 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 or Recipient. The CDFI Fund may 
not provide any technical assistance funding to an Applicant for the 
purpose of assisting in the preparation of an application for federal 
assistance. The CDFI Fund may provide technical assistance to a CDFI 
directly, through grants, or by contracting with organizations that 
possess the appropriate expertise.
    (b) The CDFI Fund may provide technical assistance regardless of 
whether the Recipient also receives financial assistance under this 
part. Technical assistance provided pursuant to this part is subject to 
the assistance limits described in Sec.  1805.402.
    (c) An Applicant seeking technical assistance must meet the 
eligibility requirements described in Sec.  1805.200 and submit an 
application as described in Sec.  1805.600.
    (d) Applicants for technical assistance pursuant to this part will 
be evaluated pursuant to the merit-based qualitative review criteria in 
subpart G of this part, except as otherwise may be provided in the 
applicable Notice of Funds Availability. In addition, the requirements 
for matching funds are not applicable to technical assistance requests.

Subpart D--Investment Instruments


Sec.  1805.400  Investment instruments--general.

    The CDFI Fund will provide financial assistance to a Recipient 
through one or more of the investment instruments described in Sec.  
1805.401, and under such terms and conditions as described in this 
subpart D. The CDFI Fund, in its sole discretion, may provide financial 
assistance in amounts, through investment instruments, or under rates, 
terms and conditions that are different from those requested by an 
Applicant.


Sec.  1805.401  Forms of investment instruments.

    (a) Equity. The CDFI Fund may make non-voting equity investments in 
a Recipient, including, without limitation, the purchase of non-voting 
stock. Such stock shall be transferable and, in the discretion of the 
CDFI Fund, may provide for convertibility to voting stock upon 
transfer. The CDFI Fund shall not own more than 50 percent of the 
equity of a Recipient and shall not control its operations.
    (b) Grants. The CDFI Fund may award grants.

[[Page 52387]]

    (c) Loans. The CDFI Fund may make loans, if and as permitted by 
applicable law and regulation.
    (d) Deposits and credit union shares. The CDFI Fund may make 
deposits (which shall include credit union shares) in Insured CDFIs and 
State-Insured Credit Unions. Deposits in an Insured CDFI or a State-
Insured Credit Union shall not be subject to any requirement for 
collateral or security.


Sec.  1805.402  Assistance limits.

    (a) General. Except as provided in paragraph (b) of this section, 
the Fund may not provide, pursuant to this part, more than $5 million, 
in the aggregate, in financial and technical assistance to a Recipient 
and its Subsidiaries and Affiliates during any three-year period.
    (b) Additional amounts. If a Recipient proposes to establish a new 
Subsidiary or 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 Recipient or its Subsidiaries or 
Affiliates, the Recipient may receive additional assistance pursuant to 
this Part up to a maximum of $3.75 million during the same three-year 
period. Such additional assistance:
    (1) Shall be used only to finance activities in the new or expanded 
Investment Area(s) or Targeted Population(s); and
    (2) Must be distributed to a new Subsidiary or Affiliate that meets 
the eligibility requirements described in Sec.  1805.200 and is 
selected for assistance pursuant to subpart G of this part.
    (c) A Recipient may receive the assistance described in paragraph 
(b) of this section only if no other application to serve substantially 
the same Investment Area(s) or Targeted Population(s) that meets the 
requirements of Sec.  1805.701(a) was submitted to the CDFI Fund prior 
to the receipt of the application of said Recipient and within the 
current funding round.


Sec.  1805.403  Authority to sell.

    The CDFI Fund may, at any time, sell its equity investments and 
loans, provided the CDFI Fund shall retain the authority to enforce the 
provisions of the Assistance Agreement until the performance goals 
specified therein have been met.

Subpart E--Matching Funds Requirements


Sec.  1805.500  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.  1805.502, such matching funds shall be provided on 
the basis of not less than one dollar for each dollar provided by the 
CDFI Fund. Funds that have been used to satisfy a legal requirement for 
obtaining funds under either the CDFI Program or another Federal grant 
or award program may not be used to satisfy the matching requirements 
described in this section. Community Development Block Grant Program 
and other funds provided pursuant to the Housing and Community 
Development Act of 1974, as amended (42 U.S.C. 5301 et seq.), shall be 
considered Federal government funds and shall not be used to meet the 
matching requirements. Matching funds shall be used as provided in the 
applicable Notice of Funds Availability and/or the corresponding 
Assistance Agreement. Funds that are used prior to the execution of the 
Assistance Agreement may nevertheless qualify as matching funds 
provided they were used as provided in the applicable Notice of Funds 
Availability and/or Assistance Agreement.


Sec.  1805.501  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 CDFI Fund (except as 
provided in Sec.  1805.502). The CDFI Fund shall have the discretion to 
determine whether matching funds pledged are comparable in form and 
value to the financial assistance requested.
    (b) In the case of a Recipient that raises matching funds from more 
than one source, through different investment instruments, or under 
varying terms and conditions, the CDFI Fund may provide financial 
assistance in a manner that represents the combined characteristics of 
such instruments.
    (c) A Recipient may meet all or part of its matching requirements 
by committing available earnings retained from its operations.


Sec.  1805.502  Severe constraints waiver.

    (a) In the case of an Applicant with severe constraints on 
available sources of matching funds, the CDFI 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 CDFI 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 under this part in any fiscal year may be matched as 
described in paragraph (a) of this section.
    (c) The terms of the severe constraints waiver shall be provided in 
the applicable Notice of Funds Availability and Assistance Agreement.


Sec.  1805.503  Time frame for raising match.

    Applicants and Recipients shall satisfy matching funds requirements 
within the period set forth in the applicable Notice of Funds 
Availability and/or the corresponding Assistance Agreement.


Sec.  1805.504  Retained earnings.

    (a) General. An Applicant or Recipient may use its retained 
earnings to match a request for a financial assistance grant from the 
CDFI Fund. An Applicant or Recipient that proposes to meet all or a 
portion of its matching funds requirements by committing available 
retained earnings from its operations shall be subject to the 
restrictions described in this section. Retained earnings shall be 
calculated as directed by the CDFI Fund in the applicable Notice of 
Funds Availability, the financial assistance application, and/or 
related guidance materials. The CDFI Fund shall make the final 
determination of the eligible amount of retained earnings that an 
Applicant or Recipient has available as matching funds.
    (b) Applicants other than Insured Credit Unions, State-Insured 
Credit Unions and Insured Depository Institutions. In the case of an 
Applicant or Recipient that is not an Insured Credit Union, State-
Insured Credit Union or Insured Depository Institution, retained 
earnings that may be used for matching funds purposes shall consist of:
    (1) The increase in retained earnings (meaning, for purposes of 
Sec.  1805.504(b), revenue minus expenses less any dividend payments) 
that has occurred over the Applicant's or Recipient's fiscal year as 
set forth in the applicable Notice of Funds Availability; or
    (2) The annual average of such increases that occurred over the 
Applicant's or Recipient's three consecutive fiscal years as set forth 
in

[[Page 52388]]

the applicable Notice of Funds Availability.
    (c) Insured Credit Unions, State-Insured Credit Unions, and Insured 
Depository Institutions. (1) In the case of an Applicant or Recipient 
that is an Insured Credit Union, State-Insured Credit Union or Insured 
Depository Institution, retained earnings that may be used for matching 
funds purposes shall consist of:
    (i) The increase in retained earnings that has occurred over the 
Applicant's or Recipient's fiscal year as set forth in the applicable 
Notice of Funds Availability;
    (ii) The annual average of such increases that has occurred over 
the Applicant's or Recipient's three consecutive fiscal years as set 
forth in the applicable Notice of Funds Availability; or
    (iii) The entire retained earnings that have been accumulated since 
the inception of the Applicant or Recipient, provided that the 
Assistance Agreement shall require that:
    (A) The Recipient shall increase its member shares, non-member 
shares, outstanding loans and/or other measurable activity as defined 
in and by an amount that is set forth in an applicable Notice of Funds 
Availability;
    (B) Such increase must be achieved by a date certain set forth in 
the applicable Notice of Funds Availability;
    (C) The level from which the achievement of said increases will be 
measured will be as of the date set forth in the applicable Notice of 
Funds Availability; and
    (D) Financial assistance shall be paid by the CDFI Fund only as the 
amount of increases described in paragraph (c)(1)(iii)(A) of this 
section is achieved.
    (2) The CDFI Fund will allow an Applicant or Recipient to utilize 
the option described in paragraph (c)(1)(iii) of this section for 
matching funds only if it determines, in its sole discretion, that the 
Applicant or Recipient will have a high probability of success in 
achieving said increases to the specified amounts.

Subpart F--Applications for Assistance


Sec.  1805.600  Notice of Funds Availability.

    Each Applicant shall submit an application for financial or 
technical assistance under this part in accordance with the applicable 
Notice of Funds Availability published in the Federal Register. The 
Notice of Funds Availability will advise prospective Applicants on how 
to obtain an application packet and will establish deadlines and other 
requirements. The Notice of Funds Availability may specify the 
application scoring criteria and any limitations, special rules, 
procedures, and restrictions for a particular funding round. After 
receipt of an application, the CDFI Fund may request clarifying or 
technical information on the materials submitted as part of such 
application.

Subpart G--Evaluation and Selection of Applications


Sec.  1805.700  Evaluation and selection--general.

    Applicants will be evaluated and selected, at the sole discretion 
of the CDFI Fund, to receive assistance based on a review process that 
may include an interview(s) and/or site visit(s) and that is intended 
to:
    (a) Ensure that Applicants are evaluated on a merit basis and in a 
fair and consistent manner;
    (b) Consider the unique characteristics of Applicants that vary by 
institution type, total asset size, stage of organizational 
development, markets served, products and services provided, and 
location;
    (c) Ensure that each Recipient can successfully meet the goals of 
its Comprehensive Business Plan and achieve community development 
impact;
    (d) Ensure that Recipients represent a geographically diverse group 
of Recipients serving Metropolitan Areas, non-Metropolitan Areas, and 
Indian Reservations from different regions of the United States; and
    (e) Consider other factors as described in the applicable Notice of 
Funds Availability.


Sec.  1805.701  Evaluation of applications.

    (a) Eligibility and completeness. An Applicant will not be eligible 
to receive assistance pursuant to this part if it fails to meet the 
eligibility requirements described in Sec.  1805.200 or if it has not 
submitted complete application materials. For the purposes of this 
paragraph (a), the CDFI Fund reserves the right to request additional 
information from the Applicant, if the CDFI Fund deems it appropriate.
    (b) Substantive review. In evaluating and selecting applications to 
receive assistance, the CDFI Fund will evaluate the feasibility of the 
Applicant's Comprehensive Business Plan goals, the likelihood of the 
Applicant meeting such goals, and the likelihood of the Applicant 
achieving its proposed community development impacts, by considering 
factors such as:
    (1) Community development track record, including, in the case of 
an Applicant with a prior history of serving a Target Market, the 
extent of success in serving such Target Market and whether it will 
expand its operations into a new Investment Area or serve a new 
Targeted Population, offer more Development Services, Financial 
Products and/or Financial Services, or increase the volume of its 
current business;
    (2) Operational capacity and risk mitigation strategies;
    (3) Financial track record and strength;
    (4) Capacity, skills, experience and background of the management 
team;
    (5) Understanding of its market context, including an analysis of 
the needs of the Investment Area or Targeted Population and a strategy 
for how the Applicant will attempt to meet those needs; such analysis 
of current and prospective customers will include the extent of 
economic distress within the designated Investment Area(s) or the 
extent of need within the designated Targeted Population(s), as those 
factors are measured by objective criteria, the extent of need for 
Loans, Equity Investments, Financial Products, Financial Services and 
Development Services within the designated Target Market, and the 
extent of demand within the Target Market for the Applicant's products 
and services;
    (6) Program design and implementation plan, including: A plan to 
coordinate use of a financial assistance award with existing Federal 
State, local and Tribal government assistance programs, and private 
sector financial services; A description of how the Applicant will 
coordinate with community organizations and financial institutions 
which will provide equity investments, loans, secondary markets, or 
other services to the Investment Area or Targeted Population; an 
assessment of its products and services, marketing and outreach 
efforts, delivery strategy, and coordination with other institutions 
and/or a Community Partner, or participation in a secondary market for 
purposes of increasing the Applicant's resources. In the case of an 
Applicant submitting an application with a Community Partner, the CDFI 
Fund will evaluate: the extent to which the Community Partner will 
participate in carrying out the activities of the Community 
Partnership; the extent to which the Community Partner will enhance the 
likelihood of success of the Comprehensive Business Plan; and the 
extent to which service to the designated Target Market will be better 
performed by a Community Partnership than by the Applicant alone;

[[Page 52389]]

    (7) Projections for financial performance, capitalization and the 
raising of needed external resources, including a detailed description 
of the Applicant's plans and likely sources of funds to match the 
amount of financial assistance requested from the CDFI Fund, the amount 
of firm commitments and matching funds in hand to meet or exceed the 
matching funds requirements and, if applicable, the likely success of 
the plan for raising the balance of the matching funds in a timely 
manner, the extent to which the matching funds are, or will be, derived 
from private sources, and whether an Applicant is, or will become, an 
Insured CDFI or a State-Insured Credit Union;
    (8) Projections for community development impact, including the 
extent to which an Applicant will concentrate its activities on serving 
its Target Market(s), the extent of support from the designated Target 
Market, the extent to which an Applicant is, or will be, Community-
Owned or Community-Governed, and the extent to which the activities 
proposed in the Comprehensive Business Plan are consistent with 
existing economic, community, and housing development plans adopted by 
or applicable to the Investment Area or Targeted Population and will 
expand economic opportunities or promote community development within 
the designated Target Market;
    (9) The extent of need for the CDFI Fund's assistance, as 
demonstrated by the extent of economic distress in the Applicant's 
Target Market and the extent to which the Applicant needs the CDFI 
Fund's assistance to carry out its Comprehensive Business Plan;
    (10) In the case of an Applicant that has previously received 
assistance under the CDFI Program, the CDFI Fund also will consider the 
Applicant's level of success in meeting its performance goals, 
financial soundness covenants (if applicable), and other requirements 
contained in the previously negotiated and executed Assistance 
Agreement(s) with the CDFI Fund, the unexpended balance of assistance, 
and whether the Applicant will, with additional assistance from the 
CDFI Fund, expand its operations into a new Target Market, offer more 
products or services, and/or increase the volume of its activities; and
    (11) The CDFI Fund may consider any other factors, as it deems 
appropriate, in reviewing an application as set forth in an applicable 
Notice of Funds Availability.
    (c) Consultation with Appropriate Federal Banking Agencies. The 
CDFI Fund will 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; or
    (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.
    (d) Consultation with Appropriate State Agencies. Prior to 
providing assistance to a State-Insured Credit Union, the CDFI Fund may 
consult with, and consider the views of, the Appropriate State Agency.
    (e) Recipient selection. The CDFI Fund will select Recipients based 
on the criteria described in paragraph (b) of this section and any 
other criteria set forth in this part or the applicable Notice of Funds 
Availability.

Subpart H--Terms and Conditions of Assistance


Sec.  1805.800  Safety and soundness.

    (a) Regulated institutions. Nothing in this part, or in an 
Assistance Agreement, shall affect any authority of an Appropriate 
Federal Banking Agency or Appropriate State Agency to supervise and 
regulate any institution or company.
    (b) Non-Regulated CDFIs. The CDFI Fund will, to the maximum extent 
practicable, ensure that Recipients that are Non-Regulated CDFIs are 
financially and managerially sound and maintain appropriate internal 
controls.


Sec.  1805.801  Assistance Agreement; sanctions.

    (a) Prior to providing any Financial or Technical Assistance, the 
CDFI Fund and a Recipient shall execute an Assistance Agreement that 
requires a Recipient to comply with performance goals and abide by 
other terms and conditions of assistance. Such performance goals may be 
modified at any time by mutual consent of the CDFI Fund and a Recipient 
or as provided in paragraph (c) of this section. If a Community Partner 
or an Affiliate 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 CDFI Fund.
    (b) A Recipient shall comply with performance goals that have been 
established or negotiated with the CDFI Fund and which are based upon 
the Comprehensive Business Plan submitted as part of the Recipient's 
application. Such performance goals may include measures that require a 
Recipient to:
    (1) Be financially sound;
    (2) Be managerially sound;
    (3) Maintain appropriate internal controls; and/or
    (4) Achieve specific lending, investment, and development service 
objectives.


Performance goals for Insured CDFIs shall be determined in consultation 
with the Appropriate Federal Banking Agency, as applicable. Such goals 
shall be incorporated in, and enforced under, the Recipient's 
Assistance Agreement. Performance goals for State-Insured Credit Unions 
may be determined in consultation with the Appropriate State Agency, if 
deemed appropriate by the CDFI Fund.
    (c) The Assistance Agreement shall provide that, in the event of 
fraud, mismanagement, noncompliance with the Act and the CDFI Fund's 
regulations, or noncompliance with the terms and conditions of the 
Assistance Agreement on the part of the Recipient (or the Community 
Partner, if applicable), the CDFI Fund, in its discretion, may:
    (1) Require changes in the performance goals set forth in the 
Assistance Agreement;
    (2) Require changes in the Recipient's Comprehensive Business Plan;
    (3) Revoke approval of the Recipient's application;
    (4) Reduce or terminate the Recipient's assistance;
    (5) Require repayment of any assistance that has been distributed 
to the Recipient;
    (6) Bar the Recipient from reapplying for any assistance from the 
CDFI Fund; or
    (7) Take such other actions as the CDFI Fund deems appropriate.
    (d) In the case of an Insured CDFI, the Assistance Agreement shall 
provide that the provisions of the Act, this part, and the Assistance 
Agreement shall be enforceable under 12 U.S.C. 1818 of the Federal 
Deposit Insurance Act by the Appropriate Federal Banking Agency, as 
applicable, and that any violation of such provisions shall be treated 
as a violation of the Federal Deposit Insurance Act. Nothing in this 
paragraph (d) precludes the CDFI Fund from directly enforcing the 
Assistance Agreement as provided for under the terms of the Act.
    (e) The CDFI Fund shall notify the Appropriate Federal Banking 
Agency before imposing any sanctions on an Insured CDFI or other 
institution that is examined by or subject to the reporting 
requirements of that agency. The CDFI Fund shall not impose a sanction 
described in paragraph (c) of this

[[Page 52390]]

section if the Appropriate Federal Banking Agency, in writing, and to 
the satisfaction of the CDFI Fund, not later than 30 calendar days 
after receiving notice from the CDFI Fund:
    (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 CDFI Fund in securing compliance and deterring future 
noncompliance.
    (f) In reviewing the performance of a Recipient in which its 
Investment Area(s) includes an Indian Reservation or Targeted 
Population(s) includes an Indian Tribe, the CDFI 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 CDFI Fund shall, to the maximum extent 
practicable, provide the Recipient (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 
a Recipient or Community Partner with the right to any formal or 
informal hearing or comparable proceeding not otherwise required by 
law.


Sec.  1805.802  Payment 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 CDFI 
Fund. The CDFI Fund shall not provide any assistance under this part 
until a Recipient has satisfied any required conditions set forth in 
its Assistance Agreement and, if the Recipient is to receive financial 
assistance, the Recipient has secured in-hand and/or firm commitments 
for the matching funds required for such assistance pursuant to the 
applicable Notice of Funds Availability.


Sec.  1805.803  Data collection and reporting.

    (a) Data--General. A Recipient shall maintain such records as may 
be prescribed by the CDFI Fund that are necessary to:
    (1) Disclose the manner in which CDFI Fund assistance is used;
    (2) Demonstrate compliance with the requirements of this part and 
an Assistance Agreement; and
    (3) Evaluate the impact of the CDFI Program.
    (b) Customer profiles. A Recipient (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 CDFI 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 and to evaluate the impact of the CDFI Program.
    (c) Access to records. A Recipient (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 CDFI Fund or the Department 
of the Treasury to ensure compliance with the requirements of this part 
and to evaluate the impact of the CDFI Program. The United States 
Government, including the Department of the Treasury, the Comptroller 
General, and their duly authorized representatives, shall have full and 
free access to the Recipient'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 CDFI 
Fund, if it deems appropriate, may prescribe access to record 
requirements for entities that are borrowers of, or that receive 
investments from a Recipient.
    (d) Retention of records. A Recipient shall comply with all record 
retention requirements as set forth in the Uniform Requirements (as 
applicable).
    (e) Data collection and reporting. Each Recipient shall submit to 
the CDFI Fund information and documentation that will permit the CDFI 
Fund to review the Recipient's progress (and the progress of its 
Affiliates, Subsidiaries, and/or Community Partners, if appropriate) in 
implementing its Comprehensive Business Plan and satisfying the terms 
and conditions of its Assistance Agreement. The information and 
documentation shall include, but not be limited to, an audit and an 
annual report, which shall comprise the following components:
    (1) Audits and Audited Financial Statements. (i) All non-profit 
organizations that are required to have their financial statements 
audited pursuant to the Uniform Requirements, must submit their single-
audits no later than nine months after the end of the Recipient's 
fiscal year. Non-profit organizations (excluding Insured CDFIs and 
State-Insured Credit Unions) that are not required to have financial 
statements audited pursuant to the Uniform Requirements, must submit to 
the CDFI Fund a statement signed by the Recipient's Authorized 
Representative or certified public accountant, asserting that the 
Recipient is not required to have a single audit pursuant to the 
Uniform Requirements as indicated in the Assistance Agreement. In such 
instances, the CDFI Fund may require additional audits to be performed 
as stated in the applicable Notice of Funds Availability.
    (ii) For-profit organizations (excluding Insured CDFIs and State-
Insured Credit Unions) must submit to the CDFI Fund financial 
statements audited in conformity with generally accepted auditing 
standards as promulgated by the American Institute of Certified Public 
Accountants, no later than six months after the end of the Recipient's 
fiscal year.
    (iii) Insured CDFIs are not required to submit financial statements 
to the CDFI Fund. The CDFI Fund will obtain the necessary information 
from publicly available sources. State-Insured Credit Unions must 
submit to the CDFI Fund copies of the financial statements that they 
submit to the Appropriate State Agency.
    (iv) If multiple for-profit organizations sign the Assistance 
Agreement: The Recipient may submit combined financial statements and 
footnotes for the Recipient and other entities that signed the 
Assistance Agreement as long as the financial statements of each 
signatory are shown separately (for example, in combining financial 
statements).
    (2) Annual Report. (i) Each Recipient shall submit to the CDFI Fund 
a performance and financial report at the times that shall be specified 
in the Assistance Agreement (Annual Report). The Annual Report consists 
of several components which may include, but are not limited to, an 
institution level report, transaction level report, use of financial or 
technical assistance report, explanation of any Recipient 
noncompliance, and shareholder report. The Annual Report components 
shall be specified and described in the Assistance Agreement.
    (ii) The CDFI Fund will use the Annual Report to collect data to 
assess the Recipient's compliance with its

[[Page 52391]]

Performance Goals and the impact of the CDFI Program and the CDFI 
industry.
    (iii) Recipients are responsible for the timely and complete 
submission of the Annual Report, even if all or a portion of the 
documents actually are completed by another entity or signatory to the 
Assistance Agreement. If such other entities or signatories are 
required to provide Annual Reports, or other documentation that the 
CDFI Fund may require, the Recipient is responsible for ensuring that 
the information is submitted timely and complete. The CDFI Fund 
reserves the right to contact such additional signatories to the 
Assistance Agreement and require that additional information and 
documentation be provided.
    (3) The CDFI Fund's review of the progress of an Insured CDFI, a 
Depository Institution Holding Company or a State-Insured Credit Union 
in implementing its Comprehensive Business Plan and satisfying the 
terms and conditions of its Assistance Agreement may also include 
information from the Appropriate Federal Banking Agency or Appropriate 
State Agency, as the case may be.
    (4) Public Access. The CDFI Fund shall make reports described in 
this section available for public inspection after deleting or 
redacting any materials necessary to protect privacy or proprietary 
interests.
    (f) Exchange of information with Appropriate Federal Banking 
Agencies and Appropriate State 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 CDFI 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 
CDFI Fund.
    (2) If the information, reports, or records requested by the CDFI 
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 CDFI 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 CDFI Fund shall use any information provided by an 
Appropriate Federal Banking Agency or Appropriate State Agency under 
this section to the extent practicable to eliminate duplicative 
requests for information and reports from, and record keeping by, an 
Insured CDFI, State-Insured Credit Union or other institution that is 
examined by or subject to the reporting requirements of an Appropriate 
Federal Banking Agency or Appropriate State Agency.
    (4) Notwithstanding paragraphs (f)(1) and (2) of this section, the 
CDFI Fund may require an Insured CDFI, State-Insured Credit Union, or 
other institution that is examined by or subject to the reporting 
requirements of an Appropriate Federal Banking Agency or Appropriate 
State 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 or Appropriate State Agency, as the 
case may be.
    (5) Nothing in this part shall be construed to permit the CDFI Fund 
to require an Insured CDFI, State-Insured Credit Union, or other 
institution that is examined by or subject to the reporting 
requirements of an Appropriate Federal Banking Agency or Appropriate 
State Agency to obtain, maintain, or furnish an examination report of 
any Appropriate Federal Banking Agency or Appropriate State Agency, or 
records contained in or related to such report.
    (6) The CDFI Fund and the Appropriate Federal Banking Agency shall 
promptly notify each other of material concerns about a Recipient 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 CDFI Fund nor the Appropriate Federal Banking 
Agency (or Appropriate State Agency, as the case may be) shall disclose 
confidential information obtained pursuant to this section from any 
party without the written consent of that party.
    (8) The CDFI Fund, the Appropriate Federal Banking Agency (or 
Appropriate State Agency, as the case may be), and any other party 
providing information under this paragraph (f) 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.


Sec.  1805.804  Information.

    The CDFI 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 Insured CDFIs or other institution that is 
examined by or subject to the reporting requirements of an Appropriate 
Federal Banking Agency.


Sec.  1805.805  Compliance with government requirements.

    In carrying out its responsibilities pursuant to an Assistance 
Agreement, the Recipient shall comply with all applicable Federal, 
State, and local laws, regulations, and ordinances, OMB Circulars, and 
Executive Orders. Furthermore, Recipients must comply with the CDFI 
Fund's Environmental Quality Regulations (12 CFR part 1815) as well as 
all other federal environmental requirements applicable to federal 
awards.


Sec.  1805.806  Conflict of interest requirements.

    (a) Provision of credit to Insiders. (1) A Recipient that is a Non-
Regulated CDFI may not use any monies provided to it by the CDFI Fund 
to make any credit (including loans and Equity Investments) available 
to an Insider, unless it meets the following restrictions:
    (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 
Recipient shall approve the extension of the credit; and
    (iv) The credit must be provided in accordance with a policy 
regarding credit to Insiders that has been approved in advance by the 
CDFI Fund.
    (2) A Recipient that is an Insured CDFI, a Depository Institution 
Holding Company or a State-Insured Credit Union shall comply with the 
restrictions on Insider activities and any comparable restrictions 
established by its Appropriate Federal Banking Agency or Appropriate 
State Agency, as applicable.
    (b) Recipient standards of conduct. A Recipient that is a Non-
Regulated CDFI shall maintain a code or standards of conduct acceptable 
to the CDFI Fund that shall govern the performance of its Insiders 
engaged in the awarding and administration of any credit (including 
loans and Equity Investments) and

[[Page 52392]]

contracts using monies from the CDFI Fund. No Insider of a Recipient 
shall solicit or accept gratuities, favors, or anything of monetary 
value from any actual or potential borrowers, owners, or contractors 
for such credit or contracts. Such policies shall provide for 
disciplinary actions to be applied for violation of the standards by 
the Recipient's Insiders.


Sec.  1805.807  Lobbying restrictions.

    No assistance made available under this part may be expended by a 
Recipient 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 
are defined in 31 U.S.C. 1352.


Sec.  1805.808  Criminal provisions.

    The criminal provisions of 18 U.S.C. 657 regarding embezzlement or 
misappropriation of funds are applicable to all Recipients and 
Insiders.


Sec.  1805.809  CDFI Fund deemed not to control.

    The CDFI Fund shall not be deemed to Control a Recipient by reason 
of any assistance provided under the Act for the purpose of any 
applicable law.


Sec.  1805.810  Limitation on liability.

    The liability of the CDFI 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 CDFI 
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.  1805.811  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.

Mary Ann Donovan,
Director, Community Development Financial Institutions Fund.
[FR Doc. 2015-21227 Filed 8-28-15; 8:45 am]
 BILLING CODE 4810-70-P