81_FR_6459 81 FR 6434 - Capital Magnet Fund

81 FR 6434 - Capital Magnet Fund

DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund

Federal Register Volume 81, Issue 25 (February 8, 2016)

Page Range6434-6447
FR Document2016-02132

The Department of the Treasury is issuing an interim rule implementing the Capital Magnet Fund (CMF), administered by the Community Development Financial Institutions Fund (CDFI Fund). This interim rule incorporates updates to the definitions, requirements and parameters for CMF implementation and administration. In addition, sections of the CMF interim rule regarding certain definitions and project level requirements are revised in order to facilitate alignment with other federal housing programs and ease of administration. These revisions are modeled after the credit requirements for Low Income Housing Credits (LIHTCs) under section 42 of the Internal Revenue Code of 1986, as amended, and the program requirements of the HOME Investment Partnership Program (HOME Program) authorized under Title II of the Cranston-Gonzalez National Affordable Housing Act, as amended, and the HOME Program final rule published on July 24, 2013. This interim rule also reflects requirements set forth in a final rule, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, adopted by the Department of the Treasury on December 19, 2014 (hereafter referred to as the Uniform Administrative Requirements). The Uniform Administrative Requirements constitute a government-wide framework for grants management codified by the Office of Management and Budget (OMB), combining several OMB grants management circulars aimed at reducing the administrative burden for Recipients, and reducing the risk of waste, fraud and abuse of Federal financial assistance. The Uniform Administrative Requirements establish financial, administrative, procurement, and program management standards with which Federal award-making programs, including those administered by the CDFI Fund, and Recipients must comply. Accordingly, this interim rule includes revisions necessary to implement the Uniform Administrative Requirements, as well as to make certain technical corrections and certain programmatic updates, as well as provide clarifying language to existing program requirements.

Federal Register, Volume 81 Issue 25 (Monday, February 8, 2016)
[Federal Register Volume 81, Number 25 (Monday, February 8, 2016)]
[Rules and Regulations]
[Pages 6434-6447]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-02132]



[[Page 6434]]

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DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund

12 CFR Part 1807

RIN 1559-AA00


Capital Magnet Fund

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

ACTION: Interim rule with request for public comment.

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SUMMARY: The Department of the Treasury is issuing an interim rule 
implementing the Capital Magnet Fund (CMF), administered by the 
Community Development Financial Institutions Fund (CDFI Fund). This 
interim rule incorporates updates to the definitions, requirements and 
parameters for CMF implementation and administration. In addition, 
sections of the CMF interim rule regarding certain definitions and 
project level requirements are revised in order to facilitate alignment 
with other federal housing programs and ease of administration. These 
revisions are modeled after the credit requirements for Low Income 
Housing Credits (LIHTCs) under section 42 of the Internal Revenue Code 
of 1986, as amended, and the program requirements of the HOME 
Investment Partnership Program (HOME Program) authorized under Title II 
of the Cranston-Gonzalez National Affordable Housing Act, as amended, 
and the HOME Program final rule published on July 24, 2013.
    This interim rule also reflects requirements set forth in a final 
rule, Uniform Administrative Requirements, Cost Principles and Audit 
Requirements for Federal Awards, adopted by the Department of the 
Treasury on December 19, 2014 (hereafter referred to as the Uniform 
Administrative Requirements). The Uniform Administrative Requirements 
constitute a government-wide framework for grants management codified 
by the Office of Management and Budget (OMB), combining several OMB 
grants management circulars aimed at reducing the administrative burden 
for Recipients, and reducing the risk of waste, fraud and abuse of 
Federal financial assistance. The Uniform Administrative Requirements 
establish financial, administrative, procurement, and program 
management standards with which Federal award-making programs, 
including those administered by the CDFI Fund, and Recipients must 
comply. Accordingly, this interim rule includes revisions necessary to 
implement the Uniform Administrative Requirements, as well as to make 
certain technical corrections and certain programmatic updates, as well 
as provide clarifying language to existing program requirements.

DATES: Effective date: February 8, 2016. All comments must be written 
and must be received in the offices of the CDFI Fund on or before April 
8, 2016. The compliance date requirements for the collection of 
information in Sec.  1807.902 is stayed indefinitely, pending Office of 
Management and Budget approval and assignment of an OMB control number.

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 must 
include the agency name and Regulatory Information Number (RIN) for 
this rulemaking. 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: Marcia Sigal, CMF Program Manager, 
Community Development Financial Institutions Fund, at 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    The Capital Magnet Fund (CMF) was established through the Housing 
and Economic Recovery Act of 2008 (the Act), Public Law 110-289, 
section 1131, as a trust fund, the appropriation to which was used to 
carry out a competitive grant program administered by the CDFI Fund. 
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 Act requires Fannie Mae and Freddie Mac to set aside an amount 
equal to 4.2 basis points for each dollar of their unpaid principal 
balances of total new business purchases to be allocated to the Housing 
Trust Fund (administered by the Department of Housing and Urban 
Development) and the Capital Magnet Fund. The Act also provides the 
Federal Housing Finance Agency (FHFA) with the authority to temporarily 
suspend these allocations upon certain findings. On November 13, 2008, 
the Director of the FHFA temporarily suspended the allocation of funds. 
On December 11, 2014, the Director of the FHFA terminated the temporary 
suspension of those allocations, directing Fannie Mae and Freddie Mac 
to begin setting aside and allocating funds to the Housing Trust Fund 
and the Capital Magnet Fund. Accordingly, the CDFI Fund is promulgating 
this revised interim rule in anticipation of future Capital Magnet Fund 
application rounds.
    Through the CMF, the CDFI Fund is authorized to make financial 
assistance grants to Certified Community Development Financial 
Institutions (CDFIs) and Nonprofit Organizations (if one of their 
principal purposes is the development or management of affordable 
housing). CMF Awards must be used to attract private financing for and 
increase investment in: (i) The Development, Preservation, 
Rehabilitation, and Purchase of Affordable Housing for primarily 
Extremely Low-, Very Low-, and Low-Income Families; and (ii) Economic 
Development Activities which, In Conjunction With Affordable Housing 
Activities will implement a Concerted Strategy to stabilize or 
revitalize a Low-Income Area or Underserved Rural Area.
    All capitalized terms herein are defined in the definitions section 
of the interim rule, as set forth in 12 CFR 1807.104.

II. Comments on the December 3, 2010, Interim Rule

    The comment period for the December 3, 2010, Interim Rule ended on 
February 1, 2011. The CDFI Fund received one written comment. The 
commenter asserted that the December 3, 2010, Interim Rule did not 
allow market-based Section 8 vouchers to be used to satisfy CMF 
affordability requirements and that the interim rule should make clear 
that, in the event a tenant or a unit in a Multi-family housing project 
receives a Federal or State rental subsidy, the maximum rent that can 
be charged is the amount allowable under such program. The commenter 
suggested that the interim rule should provide for a rent floor of the 
project's initial rents, in the event median incomes decrease. The 
commenter also suggested that the rent limitation should be adjusted by 
the number of bedrooms in the unit.
    In this revised interim rule (at 12 CFR 1807.401(a) and (e)), the 
CDFI Fund incorporates the commenter's suggestions regarding Federal or 
State rental subsidy and the creation of a rent floor for projects. The 
CDFI Fund also adopts the commenter's suggestion that rent limitations 
be adjusted by the

[[Page 6435]]

number of bedrooms in the unit (12 CFR 1807.401(a)).

III. Summary of Changes

    Substantive revisions to the interim rule (meaning, revisions other 
than the insertion of new language that clarifies existing program 
requirements) fall generally into three categories: (i) Adoption of 
policy priorities, programmatic changes/clarifications, and technical 
corrections; (ii) alignment with the Uniform Administrative 
Requirements; and (iii) alignment with HOME Program requirements and 
with requirements to qualify for LIHTCs.
    Recent efforts supported by the White House Rental Housing Policy 
Working Group, which established joint working groups comprised of 
staff from the U.S. Department of Housing and Urban Development (HUD), 
the U.S. Department of Agriculture (USDA), and the U.S. Department of 
the Treasury have highlighted the need for alignment amongst federally 
subsidized affordable housing program requirements. The CDFI Fund has 
determined that Recipients' use of CMF Awards better aligns with LIHTCs 
(as opposed to benefits under the HOME Program) in several key 
respects, specifically with regard to Project-level requirements. Thus, 
this interim rule incorporates some requirements to qualify for LIHTCs 
and removes certain requirements that, in the December 10, 2010, CMF 
Program interim rule, were modeled after the HOME Program.
    A. Section 1807.101, Summary: ``Community Service Facilities'' has 
been stricken as a stand-alone activity; instead, Community Service 
Facilities is embedded in the definition of Economic Development 
Activities. Per the Uniform Administrative Requirements, the use of the 
word ``Awardee'' is replaced with ``Recipient,'' and any reference to a 
CMF grant is replaced with ``CMF Award'' as defined in the definitions 
section, 12 CFR 1807.104.
    B. Section 1807.102, Relationship to other CDFI Programs: The 
requirement for a Certified CDFI to be an operating entity for three 
years prior to the application deadline has been deleted; instead, this 
subsection establishes that restrictions for using CMF Awards in 
conjunction with other CDFI Program awards will be set forth in the 
applicable notices of funds, guarantee, or allocation availability.
    C. Section 1807.104, Definitions: As noted above, the defined term 
``Awardee'' is deleted and replaced with the new defined term 
``Recipient.'' The term ``Applicant'' is now defined. The term ``CMF 
Award'' is now defined. The term ``Development'' is revised to clarify 
that any combination of the listed activities that result in Affordable 
Housing is ``Development.'' The term ``Direct Administrative Expenses'' 
is now defined. The definition of the term ``Economic Development 
Activity'' is revised by striking ``purchase''; the term 
``acquisition'' is used instead. The term ``Effective Date'' is now 
defined. ``Eligible Income'' is revised to provide adjustments for 
Family size. ``Eligible Project Costs'' is revised to strike 
``operations'' as an eligible use of CMF Awards. ``Extremely Low-
Income'' is revised to align with income limits published by HUD, 
including adjustments for Family size in the case of Homeownership. The 
defined term ``Family'' or ``Families'' is revised by removing the 
income categories to describe the household. The defined term 
``Homeownership'' is updated and restructured based on HOME Program 
regulations. The defined term ``Housing'' is also revised to reflect 
HOME Program regulation updates. The defined term ``Housing'' is used 
in several places throughout the regulations to signify the intent of 
the defined term. Some of the structures and facilities excluded from 
the definition of Housing may meet the definition of Community Service 
Facilities. The term ``In Conjunction With Affordable Housing 
Activities'' has been modified in order to be consistent with standards 
in other CDFI Fund Programs that fund projects and activities based on 
proximity to intended beneficiaries and/or assessment of access to 
services for individuals intended to benefit from such programs (e.g., 
Healthy Foods Financing Initiative Financial Assistance under the CDFI 
Program). The term ``Investment Period'' is defined in Sec.  1807.104. 
The term ``Leveraged Costs'' is revised to clarify that such costs are 
limited to Affordable Housing Activities and Economic Development 
Activities that exceed the dollar amount of the CMF Award. ``Loan 
Guarantee'' is revised to clarify that a loan that is guaranteed with 
the CMF Award must be used for Affordable Housing Activities and/or 
Economic Development Activities. ``Loan Loss Reserves'' is revised to 
clarify that cash reserves set aside to cover losses must be for 
Affordable Housing Activities and/or Economic Development Activities. 
The term ``Low-Income'' is revised to align with income limits 
published by HUD, including adjustments for Family size in the case of 
Homeownership. In the case of rental Housing, ``Low-Income'' is revised 
to allow for circumstances in which the qualifying Family occupies a 
unit that has a Federal or State rental subsidy. The term ``Non-
Metropolitan Area'' is revised to align with and accommodate the OMB 
definition, which is periodically updated. The term ``Non-Regulated 
CDFI'' is deleted because it is not used in the interim rule. The term 
``Operations'' is deleted in Sec.  1807.104 since it is no longer an 
eligible activity in Sec.  1807.301; a new term ``Direct Administrative 
Expenses'' is defined in Sec.  1807.104. A new term, ``Payment'' is 
defined to describe the transmission of CMF Award dollars from the CDFI 
Fund to the Recipient. ``Preservation'' is revised to specify that 
refinancing must extend the existing affordability and use restrictions 
on the property by a minimum of 10 years or as otherwise specified in 
the Assistance Agreement. ``Program Income'' is defined to align with 
the Uniform Administrative Requirements. ``Project'' is defined to mean 
the Affordable Housing Activity and/or Economic Development Activity 
that is financed with a CMF Award. The term ``Purchase'' is revised to 
clarify that the purchasing Family and Single-family housing must meet 
the qualifications set forth in subparts D and E. ``Underserved Rural 
Area'' is restructured and revised to serve intended populations per 
the statute and allow the CDFI Fund to set forth an alternative 
definition of ``Underserved Rural Area'' for any given application 
round in the applicable NOFA and/or Assistance Agreement. ``Uniform 
Administrative Requirements'' is defined in Sec.  1807.104 to reflect 
the Department of the Treasury's codification of the Office of 
Management and Budget's government-wide framework for grants 
management. The definition of the term ``Very Low-Income'' is revised 
to align with income limits published by HUD, including adjustments for 
Family size in the case of Homeownership.
    D. Section 1807.107, Applicability of regulations for CMF awards: 
Section 1807.107 was added to address the applicability of this rule to 
the FY 2010 CMF application round and subsequent application rounds. 
The CDFI Fund has determined that this rule applies only to those CMF 
awards made pursuant to Notices of Funds Availability (NOFAs) published 
after the effective date of this interim rule, except for Sec.  
1807.902(e)(1)(i) regarding audited financial statements of Nonprofit 
Organization Recipients. As indicated at 2 CFR 200.110, the Uniform 
Administrative Requirements, subpart F--Audit Requirements applies to 
audits of Nonprofits of fiscal years

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beginning on or after December 26, 2014.
    E. Section 1807.200, Applicant eligibility: In Sec.  
1807.200(a)(1), the eligibility requirement that a certifiable CDFI can 
apply is deleted because the CDFI Fund has determined that most 
Applicants can meet the program's eligibility requirements by being 
either a Certified CDFI or a Nonprofit Organization. The eligibility 
requirements for a Nonprofit Organization are revised in Sec.  
1807.200(a)(2)(iii) to no longer allow an entity to demonstrate its 
principal purpose of development or management of affordable housing 
through its staffing. Section 1807.200(a)(2)(iii) also states that the 
applicable Notice of Funds Availability (NOFA) will indicate the 
percentage of a Nonprofit Organization Applicant's assets that must be 
dedicated to the development or management of affordable housing. 
Section 1807.200(b) is also revised to reflect these eligibility 
modifications.
    F. Subpart C, Use of Funds/Eligible activities: Section 1807.300 is 
revised to clarify that Recipients must use their CMF Awards for the 
financing-related eligible activities set forth in Sec.  1807.301 to 
attract private capital and increase investment in those activities in 
Sec.  1807.300(a) and (b). Revisions to Sec.  1807.300(b) reinforce the 
requirement that when a Recipient undertakes Economic Development 
Activities In Conjunction With Affordable Housing Activities, the 
Recipient must track and report on such Affordable Housing Activities 
if it was financed with a CMF Award. Sections 1807.300 and 1807.301 are 
revised by deleting ``Community Service Facilities'' as a stand-alone 
eligible activity; instead, ``Community Service Facilities'' is 
embedded in the definition of Economic Development Activities. As such, 
this term is deleted as a technical correction throughout the interim 
rule, when appropriate. Sections 1807.301 and 1807.302 are revised to 
eliminate ``operations'' as an eligible activity. The content of former 
Sec.  1807.302(c) is now located in Sec.  1807.302(b); the content of 
Sec.  1807.302(d) is now located in Sec.  1807.302(c). New Sec.  
1807.302(d) and (e) are added to clarify certain tracking and repayment 
requirements for Recipients that use CMF Award for Loan Guarantees or 
Loan Loss Reserves. Section 1807.302(f) states that Recipients may not 
use more than five (5) percent of its CMF Award for Direct 
Administrative Expenses. Section 1807.303 is added to address Program 
Income requirements.
    G. Subpart D, Qualification as Affordable Housing: Section 1807.400 
is revised to indicate that the CDFI Fund may establish greater 
commitments for deeper income targeting attributable to Eligible 
Project Costs in the applicable NOFA and/or Assistance Agreement. 
Section 1807.401 is revised in order to make general program 
clarifications and establish certain program requirements, many of 
which align with the requirements of the LIHTC Program and the HOME 
Program. For example, language was added to Sec.  1807.401 to allow the 
CDFI Fund to set forth in the applicable NOFA requirements for 
successful applicants to serve targeted incomes that exceed the 
requirements of Sec.  1807.401. The rent limitation in Sec.  
1807.401(a) is revised to align with requirements to qualify for LIHTCs 
and to account for rental subsidies in each of the income categories. 
Section 1807.401(c) and (e) are revised to align with requirements to 
qualify for LIHTCs. Section 1807.401(f) is revised to align with the 
HOME Program regulations' elimination of the U.S. Census long form for 
annual income determinations. Thus, the content of the former Sec.  
1807.401(f)(2)(i) is deleted and the content of the former Sec.  
1807.401(f)(2)(ii) is now located in Sec.  1807.401(f)(2)(i). 
Similarly, the content of the former Sec.  1807.401(f)(2)(iii) has 
moved up and is now located in Sec.  1807.401(f)(2)(ii). Section 
1807.401(g)(2) is revised to clarify rent restrictions when rent is 
subject to IRC sections 42(g)(2) and 42(h)(6). Section 1807.401(g)(3) 
is revised to clarify that any replacement unit must meet the 
affordability qualifications for the income category of the unit that 
is being replaced. Section 1807.402(a) and (b) are revised by replacing 
``acquisition'' with ``Purchase'' to reflect the use of the new defined 
term. Section 1807.402(a)(5) is revised to clarify that, in the event 
of resale of CMF-financed Single-family housing to a non-qualifying 
family before the 10-year affordability period ends, the Recipient must 
use an equivalent amount of the CMF Award used for the applicable 
Affordable Housing Activity, whether recouped or not, to finance 
additional Affordable Housing Activities for a qualifying Family in the 
same income category for Homeownership.
    H. Subpart E, Leveraging and Commitment Requirement: Section 
1807.500(b) is revised to include the Assistance Agreement as a source 
for the required percentage of Leveraged Costs that must be funded by 
non-governmental sources. Section 1807.500(a)(1) is deleted because 
``operations'' is no longer an eligible activity and defined term. 
Accordingly, the former Sec.  1807.500(a)(2) is now Sec.  
1807.500(b)(2) and former Sec.  1807.500(a)(3) is now Sec.  
1807.500(b)(2)(ii). Section 1807.500(b)(2)(iii) was added to address 
eligible Leveraged Costs for Economic Development Activities. The 
content of former Sec.  1807.500(b) is deleted. Section 1807.501(a) is 
revised and section 1807.501(b) is added to account for the eligible 
activity ``Purchase'' to a qualifying Family, and Sec.  1807.501(b)(3) 
is added to provide more accountability regarding Project Completion. 
Section 1807.501(c) and (d) are added to align with the Uniform 
Administrative Requirements regarding Payments. Section 1807.503 is 
revised to include property standards necessary to ensure that CMF 
Awards are invested in structures and units that are sound, decent, 
safe and sanitary; such standards are largely adopted from the HOME 
Program and the requirements to qualify for LIHTCs. Section 
1807.503(a)(4) is added to address Project Completion in the case of 
Preservation. The content of the former Sec.  1807.503(b)(2) is now 
located in Sec.  1807.503(b)(2)(i) and a new Sec.  1807.503(b)(2)(ii) 
is added to address disaster mitigation in regards to Project 
Completion. Section 1807.503(b)(2)(iii) is added to address lead-based 
paint. The content of former Sec.  1807.503(b)(3) is now moved to Sec.  
1807.503(b)(4) and incorporates recent HOME Program updates. Thus, 
Sec.  1807.503(b)(3) contains new content regarding Rehabilitation 
standards. The content of former Sec.  1807.503(c) is moved to Sec.  
1807.503(a)(3).
    I. Subpart F, Tracking Requirements: Section 1807.601 is renamed 
and revised to reflect that the Uniform Administrative Requirements 
apply to all CMF Awards and sets forth the CDFI Fund's policy that 
indirect costs are not allowed. Section 1807.602 also establishes the 
circumstances in which a CMF Award loses its so-called ``Federal 
character.'' Section 1807.602 is also revised to clarify that CMF 
Awards are Federal financial assistance for purposes of the 
applicability of Federal civil rights laws.
    J. Subpart H, Evaluation and Selection of Applications: In Sec.  
1807.800(c)(3) ``blight'' is deleted as an ambiguous term.
    K. Subpart I, Terms and Conditions of Assistance: Section 
1807.900(c) is revised to clarify statutory requirements regarding 
notice and hearing. To align with the Uniform Administrative 
Requirements, Sec.  1807.901 ``Disbursement of funds'' is renamed 
``Payment of funds'' to reflect the transmission of CMF Award dollars

[[Page 6437]]

from the CDFI Fund to the Recipient as a ``Payment.'' Section 
1807.902(d) and (e) are revised to accommodate the audit requirements 
of the Uniform Administrative Requirements. Pursuant to revised Sec.  
1807.902(e)(1), Nonprofit Organizations that are not required to have 
their financial statements audited pursuant to the Uniform 
Administrative Requirements may still be subject to additional audit 
requirements, which will be set forth in the applicable NOFA and 
Assistance Agreement. In addition, Sec.  1807.902(e)(2), ``Performance 
Goal Reporting,'' is renamed as ``Annual Report'' and revised to 
clarify and require the submission of performance and financial 
reporting in the form of an annual report, as further specified in the 
Assistance Agreement. Section 1807.902(e)(3) is added to clarify the 
compliance requirements for Insured CDFIs, Depository Institution 
Holding Companies, and State-Insured Credit Unions. Section 
1807.902(e)(4) is added to convey that any reports under Sec.  1807.902 
may be subject to public inspection per the Freedom of Information Act. 
Section 1807.903 is revised to specify that in addition to all other 
Federal, state, and local laws, Recipients shall also comply with all 
applicable Federal environmental requirements.

IV. Rulemaking Analysis

A. Executive Order (E.O.) 12866

    It has been determined that this interim rule is not a significant 
regulatory action under Executive Order 12866. Accordingly, a 
regulatory impact 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 will 
be 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-XXXX. 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 part 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, 5 U.S.C. 
553(a)(2).

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. Catalogue of Federal Domestic Assistance Number

    Capital Magnet Fund--21.011.

List of Subjects in 12 CFR Part 1807

    Community development, Grant programs--housing and community 
development, Reporting and record keeping requirements.


0
For the reasons set forth in the preamble, 12 CFR part 1807 is revised 
to read as follows:

PART 1807--CAPITAL MAGNET FUND

Subpart A--General Provisions
Sec.
1807.100 Purpose.
1807.101 Summary.
1807.102 Relationship to other CDFI Fund programs.
1807.103 Recipient not instrumentality.
1807.104 Definitions.
1807.105 Waiver authority.
1807.106 OMB control number.
1807.107 Applicability of regulations for CMF Awards.
Subpart B--Eligibility
1807.200 Applicant eligibility.
Subpart C--Eligible Purposes; Eligible Activities; Restrictions
1807.300 Eligible purposes.
1807.301 Eligible activities.
1807.302 Restrictions on use of CMF Award.
1807.303 Authorized uses of Program Income.
Subpart D--Qualification as Affordable Housing
1807.400 Affordable Housing--general.
1807.401 Affordable Housing--Rental Housing.
1807.402 Affordable Housing--Homeownership.
Subpart E--Leveraged Costs; Eligible Project Costs; Commitment 
Requirements
1807.500 Leveraged Costs; Eligible Project Costs.
1807.501 Commitments; Payments.
1807.502 CMF Award limits.
1807.503 Projection Completion; Property standards.
Subpart F--Tracking Funds; Uniform Administrative Requirements; Nature 
of Funds
1807.600 Tracking funds.
1807.601 Uniform Administrative Requirements.
1807.602 Nature of funds.
Subpart G--Notice of Funds Availability; Applications
1807.700 Notice of funds availability.
Subpart H--Evaluation and Selection of Applications
1807.800 Evaluation and selection--general.
1807.801 Evaluation of applications.
Subpart I--Terms and Conditions of CMF Award
1807.900 Assistance agreement.
1807.901 Payment of funds.
1807.902 Data collection and reporting.
1807.903 Compliance with government requirements.
1807.904 Lobbying restrictions.
1807.905 Criminal provisions.
1807.906 CDFI Fund deemed not to control.
1807.907 Limitation on liability.
1807.908 Fraud, waste and abuse.

    Authority:  12 U.S.C. 4569.

Subpart A--General Provisions


Sec.  1807.100  Purpose.

    The purpose of the Capital Magnet Fund (CMF) is to attract private 
capital for and increase investment in Affordable Housing Activities 
and related Economic Development Activities.


Sec.  1807.101  Summary.

    (a) Through the CMF, the CDFI Fund competitively awards grants to 
CDFIs and qualified Nonprofit Organizations to leverage dollars for:
    (1) The Development, Preservation, Rehabilitation or Purchase of 
Affordable Housing primarily for Low-Income Families; and

[[Page 6438]]

    (2) Financing Economic Development Activities.
    (b) The CDFI Fund will select Recipients to receive CMF Awards 
through a merit-based, competitive application process. CMF Awards may 
only be used for eligible uses set forth in subpart C of this part. 
Each Recipient will enter into an Assistance Agreement that will 
require it to leverage the CMF Award amount and abide by other terms 
and conditions pertinent to any assistance received under this part.


Sec.  1807.102  Relationship to other CDFI Fund programs.

    Restrictions on applying for, receiving, and using CMF Awards in 
conjunction with awards under other programs administered by the CDFI 
Fund (including, but not limited to, the Bank Enterprise Award Program, 
the CDFI Program, 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.  1807.103  Recipient not instrumentality.

    No Recipient shall be deemed to be an agency, department, or 
instrumentality of the United States.


Sec.  1807.104  Definitions.

    For the purpose of this part:
    Act means the Housing and Economic Recovery Act of 2008, as 
amended, Public Law 110-289, section 1131;
    Affiliate means any entity that Controls, is Controlled by, or is 
under common Control with, an entity;
    Affordable Housing means housing that meets the requirements set 
forth in subpart D of this part;
    Affordable Housing Activities means the Development, Preservation, 
Rehabilitation, and/or Purchase of Affordable Housing;
    Affordable Housing Fund means a revolving loan, grant or investment 
fund that is:
    (1) Managed by the Recipient; and
    (2) Uses its capital to finance Affordable Housing Activities;
    Applicant means any entity submitting an application for a CMF 
Award;
    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, written agreement between the 
CDFI Fund and a Recipient, which agreement specifies the terms and 
conditions of assistance under this part;
    Capital Magnet Fund (or CMF) means the program authorized by the 
Act and implemented under this part;
    CMF Award means the financial assistance in the form of a grant 
made by the CDFI Fund to a Recipient pursuant to this part;
    Certified Community Development Financial Institution (or Certified 
CDFI) means an entity that has been determined by the CDFI Fund to meet 
the certification requirements set forth in 12 CFR 1805.201;
    Committed means that the Recipient is able to demonstrate, in 
written form and substance that is acceptable to the CDFI Fund, a 
commitment for use of CMF Award, as set forth in Sec.  1807.501;
    Community Development Financial Institutions Fund (or CDFI Fund) 
means the Community Development Financial Institutions Fund, the U.S. 
Department of the Treasury, established pursuant to the Community 
Development Banking and Financial Institutions Act of 1994, as amended, 
12 U.S.C. 4701 et seq.;
    Community Service Facility means the physical structure in which 
service programs for residents or service programs for the broader 
community (including, but not limited to, health care, childcare, 
educational programs including literacy and after school programs, job 
training, food and nutrition services, cultural programs, and/or social 
services) operate that, In Conjunction With Affordable Housing 
Activities, implements a Concerted Strategy to stabilize or revitalize 
a Low-Income Area or Underserved Rural Area;
    Concerted Strategy means a formal planning document that evidences 
the connection between Affordable Housing Activities and Economic 
Development Activities. Such documents include, but are not limited to, 
a comprehensive, consolidated, or redevelopment plan, or some other 
local or regional planning document adopted or approved by the 
jurisdiction;
    Control 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) The 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 each are defined in the 
Federal Deposit Insurance Act, 12 U.S.C. 1813(w);
    Development means any combination of the following Project 
activities: Land acquisition, demolition of existing facilities, and 
construction of new facilities, which may include site improvement, 
utilities development and rehabilitation of utilities, necessary 
infrastructure, utility services, conversion, and other related 
activities resulting in Affordable Housing;
    Direct Administrative Expenses means direct costs incurred by the 
Recipient, related to the financing of the Project as described in 2 
CFR 200.413 of the Uniform Administrative Requirements;
    Economic Development Activity means the development, preservation, 
acquisition and/or rehabilitation of Community Service Facilities and/
or other physical structures in which neighborhood-based businesses 
operate which, In Conjunction With Affordable Housing Activities, 
implements a Concerted Strategy to stabilize or revitalize a Low-Income 
Area or Underserved Rural Area;
    Effective Date means the date that the Assistance Agreement is 
effective; such date is determined by the CDFI Fund after the Recipient 
has returned an executed, original Assistance Agreement, along with all 
required supporting documentation, including the opinion of counsel, if 
required;
    Eligible-Income means:
    (1) Having, in the case of owner-occupied Housing units, annual 
income not in excess of 120 percent of the area median income adjusted 
for Family size in the same manner as HUD makes these adjustments for 
its other published income limits; and
    (2) Having, in the case of rental Housing units, annual income not 
in excess of 120 percent of the area median income, adjusted for Family 
size in the same manner as HUD makes these adjustments for its 
published income limits;
    Eligible Project Costs means Leveraged Costs plus those costs 
funded directly by a CMF Award;
    Extremely Low-Income means:
    (1) Having, in the case of owner-occupied Housing units, income not 
in excess of 30 percent of the area median

[[Page 6439]]

income, adjusted for Family size, as determined by HUD, except that HUD 
may establish income ceilings higher or lower than 30 percent of the 
median for the area on the basis of HUD findings that such variations 
are necessary because of prevailing levels of construction costs or 
fair market rents, or unusually high or low Family incomes and
    (2) Having, in the case of rental Housing units, income not in 
excess of 30 percent of the area median income, adjusted for Family 
size, as determined by HUD, except that HUD may establish income 
ceilings higher or lower than 30 percent of the median for the area on 
the basis of HUD findings that such variations are necessary because of 
prevailing levels of construction costs or fair market rents, or 
unusually high or low Family incomes;
    Family or Families means households that reside within the 
boundaries of the United Sates (which shall encompass any State of the 
United States, the District of Columbia or any territory of the United 
States, including Puerto Rico, Guam, American Samoa, the U. S. Virgin 
Islands, and the Northern Mariana Islands);
    HOME Program means the HOME Investment Partnership Program 
established by the HOME Investment Partnerships Act under title II of 
the Cranston-Gonzalez National Affordable Housing Act, as amended, 42 
U.S.C. 12701 et seq.;
    Homeownership means ownership in fee simple title interest in one- 
to four-unit Housing or in a condominium unit, or equivalent form of 
ownership approved by the CDFI Fund. The Recipient must determine 
whether ownership or membership in a cooperative or mutual housing 
project constitutes Homeownership under State law. The ownership 
interest is subject to the following additional requirements:
    (1) Except as otherwise provided in paragraphs (1)(i), (ii), and 
(iii) of this definition, the land may be owned in fee simple or the 
homeowner may have a 99-year ground lease;
    (i) For Housing located on Indian trust or restricted Indian lands, 
the ground lease must be for 50 years or more;
    (ii) For Housing located in Guam, the Northern Mariana Islands, the 
U. S. Virgin Islands, and American Samoa, the ground lease must be 40 
years or more;
    (iii) For manufactured housing, the ground lease must be for a 
minimum period of 10 years or such other applicable time period 
regarding location set forth in this definition of Homeownership at the 
time of purchase by the homeowner;
    (2) Ownership interest may not merely consist of a right to 
possession under a contract for deed, installment contract, or land 
contract (pursuant to which the deed is not given until the final 
payment is made);
    (3) Ownership interest may only be subject to the restrictions on 
resale permitted under the Assistance Agreement and this part; 
mortgages, deeds of trust, or other liens or instruments securing debt 
on the property; or any other restrictions or encumbrances that do not 
impair the good and marketable nature of title to the ownership 
interest;
    Housing means Single-family and Multi-family residential units 
including, but not limited to, manufactured housing and manufactured 
housing lots, permanent housing for disabled and/or homeless persons, 
transitional housing, single-room occupancy housing, and group homes. 
Housing also includes elder cottage housing opportunity (ECHO) units 
that are small, free- standing, barrier-free, energy-efficient, 
removable, and designed to be installed adjacent to existing single-
family dwellings. Housing does not include emergency shelters 
(including shelters for disaster victims) or facilities such as nursing 
homes, convalescent homes, hospitals, residential treatment facilities, 
correctional facilities, halfway houses, housing for students, or 
dormitories (including farmworker dormitories);
    HUD means the Department of Housing and Urban Development 
established under the Department of Housing and Urban Development Act 
of 1965, 42 U.S.C. 3532 et seq.;
    In Conjunction With Affordable Housing means:
    (1) Physically proximate to; and
    (2) Reasonably available to residents of Affordable Housing that is 
subject to Affordable Housing Activities. For a Metropolitan Area, In 
Conjunction With means located within the same census tract or within 1 
mile of such Affordable Housing. For a Non-Metropolitan Area, In 
Conjunction With means located within the same county, township, or 
village, or within 10 miles of such Affordable Housing;
    Insured CDFI means a Certified 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 by 
the National Credit Union Administration pursuant to authority granted 
in 12 U.S.C. 1783 et seq.;
    Insured Depository Institution means any bank or thrift, the 
deposits of which are insured by the Federal Deposit Insurance 
Corporation as determined in 12 U.S.C. 1813(c)(2);
    Investment Period means the period beginning with the Effective 
Date and ending on the fifth year anniversary of the Effective Date, or 
such other period as may be established by the CDFI Fund in the 
Assistance Agreement;
    Leveraged Costs means costs for Affordable Housing Activities and 
Economic Development Activities that exceed the dollar amount of the 
CMF Award, as further described in Sec.  1807.500;
    Loan Guarantee means the Recipient's use of CMF Award to support an 
agreement to indemnify the holder of a loan all or a portion of the 
unpaid principal balance in case of default by the borrower. The 
proceeds of the loan that is guaranteed with the CMF Award must be used 
for Affordable Housing Activities and/or Economic Development 
Activities;
    Loan Loss Reserves means proceeds from the CMF Award that the 
Recipient will set aside in the form of cash reserves, or through 
accounting-based accrual reserves, to cover losses on loans, accounts, 
and notes receivable for Affordable Housing Activities and/or Economic 
Development Activities, or for related purposes that the CDFI Fund 
deems appropriate;
    Low-Income means:
    (1) Having, in the case of owner-occupied Housing units, income not 
in excess of 80 percent of area median income, adjusted for Family 
size, as determined by HUD, except that HUD may establish income 
ceilings higher or lower than 80 percent of the median for the area on 
the basis of HUD findings that such variations are necessary because of 
prevailing levels of construction costs or fair market rents, or 
unusually high or low Family incomes; and
    (2) Having, in the case of rental Housing units, income not in 
excess of 80 percent of area median income, adjusted for Family size, 
as determined by HUD, except that HUD may establish income ceilings 
higher or lower than 80 percent of the median for the area on the basis 
of HUD findings that such variations are necessary because of 
prevailing levels of construction costs or fair market rents, or 
unusually high or low Family incomes;
    Low-Income Area or LIA means a census tract or block numbering area 
in which the median income does not exceed 80 percent of the median 
income for the area in which such census tract or block numbering area 
is located. With respect to a census tract or block numbering area 
located within a

[[Page 6440]]

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. In the 
case of a census tract or block numbering area located 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;
    Low Income Housing Credits (or LIHTCs) means credits against income 
tax under section 42 of the Internal Revenue Code of 1986, as amended, 
26 U.S.C. 42;
    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;
    Multi-family housing means residential properties consisting of 
five or more dwelling units, such as a condominium unit, cooperative 
unit, apartment, or townhouse;
    Non-Metropolitan Area means counties that are designated as Non-
Metropolitan Counties by the Office of Management and Budget (OMB) 
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, and as made 
available by the CDFI Fund for a specific application funding round;
    Nonprofit Organization means any corporation, trust, association, 
cooperative, or other organization that is:
    (1) Designated as a nonprofit or not-for-profit entity under the 
laws of the organization's State of formation; and
    (2) Exempt from Federal income taxation pursuant to the Internal 
Revenue Code of 1986;
    Participating Jurisdiction means a jurisdiction designated by HUD 
as such under the HOME Program in accordance with the requirements of 
24 CFR 92.105;
    Payment means the transmission of CMF Award dollars from the CDFI 
Fund to the Recipient;
    Preservation means:
    (1) Activities to refinance, with or without Rehabilitation, 
Single-family housing or Multi-family housing (rental) mortgages that, 
at the time of refinancing, are subject to affordability and use 
restrictions under the LIHTC statute or under State or Federal 
affordable housing programs, including but not limited to, the HOME 
Program, properties with Federal project-based rental assistance, or 
the USDA rental housing programs, hereinafter referred to as ``similar 
State or Federal affordable housing programs,'' where such refinancing 
has the effect of extending the term of any existing affordability and 
use restrictions on the properties by a minimum 10 years or as 
otherwise specified in the Assistance Agreement;
    (2) Activities to refinance and acquire Single-family housing or 
Multi-family housing that, at the time of refinancing or acquisition, 
were subject to affordability and use restrictions under similar State 
or Federal affordable housing programs or under the LIHTC statute, by 
the former tenants of such properties, where such refinancing has the 
effect of extending the term of any existing affordability and use 
restrictions on the properties by a minimum 10 years or as otherwise 
specified in the Assistance Agreement;
    (3) Activities to refinance the mortgages of owner-occupied, 
Single-family housing that, at the time of refinancing, are subject to 
affordability and use restrictions under similar State or Federal 
affordable housing programs, where such refinancing has the effect of 
extending the term of any existing affordability and use restrictions 
on the properties by a minimum 10 years or as otherwise specified in 
the Assistance Agreement;
    (4) Activities to acquire Single-family housing or Multi-family 
housing, with or without Rehabilitation, with the commitment to subject 
the properties to the affordability qualifications set forth in subpart 
D of this part; or
    (5) Activities to refinance, with or without Rehabilitation, 
Single-family housing or Multi-family housing, with the commitment to 
subject the properties to the affordability qualifications set forth in 
subpart D of this part;
    Program Income means gross income, as further described in 2 CFR 
part 1000;
    Project means the Affordable Housing Activity and/or Economic 
Development Activity that is financed with the CMF Award;
    Project Completion means that all of the requirements set forth at 
Sec.  1807.503 for a Project have been met;
    Purchase means to provide direct financing to a Family for purposes 
of Homeownership. Before the Recipient provides any financing to a 
Family for Homeownership purposes, the Recipient must verify that the 
Family and the Single-family housing meet the qualifications set forth 
in subparts D and E of this part;
    Recipient means an Applicant selected by the CDFI Fund to receive a 
CMF Award pursuant to this part;
    Rehabilitation means any repairs and/or capital improvements that 
contribute to the long-term preservation, current building code 
compliance, habitability, sustainability, or energy efficiency of 
Affordable Housing;
    Revolving Loan Fund means a pool of funds managed by the Applicant 
or the Recipient wherein repayments on loans for Affordable Housing 
Activities or Economic Development Activities are used to refinance 
additional loans;
    Risk-Sharing Loan means loans for Affordable Housing Activities 
and/or Economic Development Activities in which the risk of borrower 
default is shared by the Applicant or Recipient with other lenders 
(e.g., participation loans);
    Service Area means the geographic area in which the Applicant 
proposes to use the CMF Award, and the geographic area approved by the 
CDFI Fund in which the Recipient must use the CMF Award as set forth in 
its Assistance Agreement;
    Single-family housing means a one- to four-Family residence, a 
condominium unit, a cooperative unit, a combination of manufactured 
housing and lot, or a manufactured housing lot;
    State means the states of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Island, Guam, the U.S. Virgin Islands, American Samoa, 
the Trust Territory of the Pacific Islands, and any other territory of 
the United States;
    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;
    Underserved Rural Area means:
    (1) A Non-Metropolitan Area that:
    (i) Qualifies as a Low-Income Area; and
    (ii) Is experiencing economic distress evidenced by 30 percent or 
more of resident households with one or more of these four housing 
conditions in the most recent census for which data are available:
    (A) Lacking complete plumbing;
    (B) Lacking complete kitchen;
    (C) Paying 30 percent or more of income for owner costs or tenant 
rent; or
    (D) Having more than 1 person per room;
    (2) An area as specified in the applicable NOFA and/or Assistance 
Agreement;
    Uniform Administrative Requirements means the Uniform 
Administrative

[[Page 6441]]

Requirements, Cost Principles, and Audit Requirements for Federal 
Awards (2 CFR part 1000);
    Very Low-Income means:
    (1) Having, in the case of owner-occupied Housing, income not 
greater than 50 percent of the area median income with adjustments for 
Family size, as determined by HUD, except that HUD may establish income 
ceilings higher or lower than 50 percent of the median for the area on 
the basis of HUD findings that such variations are necessary because of 
prevailing levels of construction costs or fair market rents, or 
unusually high or low Family incomes; and
    (2) Having, in the case of rental Housing, income not greater than 
50 percent of the area median income, with adjustments for Family size, 
as determined by HUD, except that HUD may establish income ceilings 
higher or lower than 50 percent of the median for the area on the basis 
of HUD findings that such variations are necessary because of 
prevailing levels of construction costs or fair market rents, or 
unusually high or low Family incomes.


Sec.  1807.105  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.  1807.106  OMB control number.

    The OMB control number for the CMF Award application is 1559-0036. 
The compliance date requirements for the collection of information in 
Sec.  1807.902 is stayed indefinitely, pending Office of Management and 
Budget approval and assignment of an OMB control number.


Sec.  1807.107  Applicability of regulations for CMF Awards.

    As of February 8, 2016, the regulations of this part are applicable 
for CMF Awards made pursuant to Notices of Funds Availability published 
after February 8, 2016.

Subpart B--Eligibility


Sec.  1807.200  Applicant eligibility.

    (a) General requirements. An Applicant will be deemed eligible to 
apply for a CMF Award if it is:
    (1) A Certified CDFI. An entity may meet the requirements described 
in this paragraph (a)(1) if it is:
    (i) A Certified CDFI, as set forth in 12 CFR 1805.201,
    (ii) A Certified CDFI that has been in existence as a legally 
formed entity as set forth in the applicable Notice of Funds 
Availability (NOFA); or
    (2) A Nonprofit Organization having as one of its principal 
purposes the development or management of affordable housing. An entity 
may meet the requirements described in this paragraph (a)(2) if it:
    (i) Has been in existence as a legally formed entity as set forth 
in the applicable NOFA;
    (ii) Demonstrates, through articles of incorporation, by-laws, or 
other board-approved documents, that the development or management of 
affordable housing are among its principal purposes; and
    (iii) Can demonstrate that a certain percentage, set forth in the 
applicable NOFA, of the Applicant's total assets are dedicated to the 
development or management of affordable housing.
    (b) Eligibility verification. An Applicant shall demonstrate that 
it meets the eligibility requirements described in paragraph (a)(2) of 
this section by providing information described in the application, 
NOFA, and/or supplemental information, as may be requested by the CDFI 
Fund. For an Applicant seeking eligibility under paragraph (a)(1) of 
this section, the CDFI Fund will verify that the Applicant is a 
Certified CDFI during the application eligibility review.

Subpart C--Eligible Purposes; Eligible Activities; Restrictions


Sec.  1807.300  Eligible purposes.

    Each Recipient must use its CMF Award for the eligible activities 
described in Sec.  1807.301 so long as such eligible activities 
increase private capital for and increase investment in:
    (a) Development, Preservation, Rehabilitation, and/or Purchase of 
Affordable Housing for primarily Extremely Low-Income, Very Low-Income, 
and Low-Income Families; and/or
    (b) Economic Development Activities.
    (1) Economic Development Activity must support Affordable Housing;
    (2) The Recipient may undertake Economic Development Activity In 
Conjunction With Affordable Housing Activities that are undertaken by 
parties other than the Recipient;
    (3) If the Recipient uses its CMF Award to fund an Economic 
Development Activity In Conjunction With Affordable Housing Activity, 
it must track the resulting Affordable Housing, as set forth in subpart 
D of this part, to the extent the Affordable Housing was financed by 
the CMF Award. For the purposes of meeting the 10-year affordability 
period requirement, Recipients are not required to track Affordable 
Housing that was financed by sources other than the CMF Award.


Sec.  1807.301  Eligible activities.

    The Recipient must use its CMF Award to finance and support 
Affordable Housing Activities and/or Economic Development Activities 
through the following eligible activities:
    (a) To capitalize Loan Loss Reserves;
    (b) To capitalize a Revolving Loan Fund;
    (c) To capitalize an Affordable Housing Fund;
    (d) To capitalize a fund to support Economic Development 
Activities;
    (e) To make Risk-Sharing Loans; and
    (f) To provide Loan Guarantees.


Sec.  1807.302  Restrictions on use of CMF Award.

    (a) The Recipient may not use its CMF Award for the following:
    (1) Political activities;
    (2) Advocacy;
    (3) Lobbying, whether directly or through other parties;
    (4) Counseling services (including homebuyer or financial 
counseling);
    (5) Travel expenses;
    (6) Preparing or providing advice on tax returns;
    (7) Emergency shelters (including shelters for disaster victims);
    (8) Nursing homes;
    (9) Convalescent homes;
    (10) Residential treatment facilities;
    (11) Correctional facilities; or
    (12) Student dormitories.
    (b) The Recipient shall not use the CMF Award to finance or support 
Projects that include:
    (1) The operation of any private or commercial golf course, country 
club, massage parlor, hot tub facility, suntan facility, racetrack or 
other facility used for gambling, or any store the principal business 
of which is the sale of alcoholic beverages for consumption off 
premises; or
    (2) Farming activities (within the meaning of Internal Revenue Code 
(IRC) section 2032A(e)(5)(A) or (B)), if, as of the close of the 
taxable year of the

[[Page 6442]]

taxpayer conducting such trade or business, the sum of the aggregate 
unadjusted bases (or, if greater, the fair market value) of the assets 
owned by the taxpayer that are used in such a trade or business, and 
the aggregate value of the assets leased by the taxpayer that are used 
in such a trade or business, exceeds $500,000.
    (c) In any given application round, no more than 30 percent of a 
CMF Award may be used for Economic Development Activities.
    (d) Any Recipient that uses its CMF Award for a Loan Guarantee or 
Loan Loss Reserves must ensure the underlying loan(s) are made to 
support Affordable Housing Activities and Economic Development 
Activities. The Affordable Housing resulting from the Recipient's Loan 
Guarantee or Loan Loss Reserve shall be tracked for 10 years, as set 
forth in subpart D of this part.
    (e) If loans that are made pursuant to a Loan Guarantee or Loan 
Loss Reserves are repaid during the Investment Period, the Recipient 
must use the repaid funds for Loan Guarantees or Loan Loss Reserves 
targeted to the income population (Extremely Low-Income, Very Low-
Income, Low-Income) set forth in the Recipient's Assistance Agreement, 
for the duration of the Investment Period.
    (f) The Recipient may not use more than five (5) percent of its CMF 
Award for Direct Administrative Expenses.


Sec.  1807.303  Authorized uses of Program Income.

    (a) Program Income earned in the form of principal and equity 
repayments must be used by the Recipient for the approved, eligible CMF 
Award uses as further set forth in the Assistance Agreement for the 
duration of the Investment Period.
    (b) Program Income earned in the form of interest payments, and all 
other forms of Program Income (except for that which is earned as 
described in paragraph (a) of this section, must be used by the 
Recipient as set forth in the Assistance Agreement and in accordance 
with 2 CFR part 1000.

Subpart D--Qualification as Affordable Housing


Sec.  1807.400  Affordable Housing--general.

    Each Recipient that uses its CMF Award for Affordable Housing 
Activities must ensure that 100 percent of Eligible Project Costs are 
attributable to Affordable Housing; meaning, that they comply with the 
affordability qualifications set forth in this subpart for Eligible-
Income Families. Further, as a subset of said 100 percent, greater than 
50 percent of the Eligible Project Costs must be attributable to 
Affordable Housing that comply with the affordability qualifications 
set forth in this subpart for Low-Income, Very Low-Income, or Extremely 
Low-Income Families, or as further set forth in the applicable NOFA 
and/or Assistance Agreement.


Sec.  1807.401  Affordable Housing--Rental Housing.

    To qualify as Affordable Housing, each rental Multi-family housing 
Project financed with CMF Award must have at least 20 percent of the 
units occupied by any combination of Low-Income, Very Low-Income, or 
Extremely Low-Income Families and must comply with the rent limits set 
forth herein. However, the CDFI Fund may require a greater percentage 
of the units per Project to be income-targeted and/or require a 
specific targeted income commitment in any given application round, as 
set forth in the NOFA and Assistance Agreement for that application 
round.
    (a) Rent limitation. The gross rent limits for Affordable Housing 
are determined under the provisions in IRC section 42(g)(2). In this 
determination, if this part imposes an income restriction on a unit 
that is greater than 60 percent of area median income, adjusted for 
Family size, then the provisions of IRC section 42(g)(2) are applied as 
if that income restriction on the unit satisfied IRC section 42(g)(1). 
The maximum rent is a rent that does not exceed:
    (1) For an Eligible-Income Family, 30 percent of the annual income 
of a Family whose annual income equals 120 percent of the area median 
income, with adjustments for number of bedrooms in the unit, as set 
forth in IRC section 42(g)(2).
    (2) For a Low-Income Family, 30 percent of the annual income of a 
Family whose annual income equals 80 percent of the area median income, 
with adjustments for number of bedrooms in the unit, as set forth in 
IRC section 42(g)(2). If the unit or tenant receives Federal or State 
rental subsidy, and the Family pays as a contribution towards rent not 
more than 30 percent of the Family's income, the maximum rent (i.e., 
tenant contribution plus rental subsidy) is the rent allowable under 
the Federal or State rental subsidy program;
    (3) For a Very Low-Income Family, 30 percent of the annual income 
of a Family whose annual income equals 50 percent of the area median 
income, with adjustments for number of bedrooms in the unit as 
described in paragraph (a) of this section. If the unit or tenant 
receives Federal or State rental subsidy, and the Family pays as a 
contribution towards rent not more than 30 percent of the Family's 
income, the maximum rent (i.e., tenant contribution plus rental 
subsidy) is the rent allowable under the Federal or State rental 
subsidy program; or
    (4) For an Extremely Low-Income Family, 30 percent of the annual 
income of a Family whose annual income equals 30 percent of the area 
median income, with adjustments for number of bedrooms in the unit as 
described in paragraph (a) of this section. If the unit or tenant 
receives Federal or State rental subsidy, and the Family pays as a 
contribution toward rent not more than 30 percent of the Family's 
income, the maximum rent (i.e., tenant contribution plus rental 
subsidy) is the rent allowable under the Federal or State rental 
subsidy program.
    (b) Nondiscrimination against rental assistance subsidy holders. 
The Recipient shall require that the owner of a rental unit cannot 
refuse to lease the unit to a Section 8 Program certificate or voucher 
holder (24 CFR part 982, Section 8 Tenant-Based Assistance: Unified 
Rule for Tenant-Based Assistance under the Section 8 Rental Certificate 
Program and the Section 8 Rental Voucher Program) or to the holder of a 
comparable document evidencing participation in a HOME tenant-based 
rental assistance program because of the status of the prospective 
tenant as a holder of such certificate, voucher, or comparable HOME 
tenant-based assistance document.
    (c) Initial rent schedule and utility allowances. The Recipient 
shall ensure that utility allowances and submetering rules are 
consistent with regulations concerning utility allowances and 
submetering in buildings that are subject to gross rent restrictions 
under IRC section 42(g)(2).
    (d) Periods of affordability. Housing under this section must meet 
the affordability requirements for not less than 10 years, beginning 
after Project Completion and at initial occupancy. The affordability 
requirements apply without regard to the term of any loan or mortgage 
or the transfer of ownership and must be imposed by deed restrictions, 
covenants running with the land, or other recordable mechanisms. Other 
recordable mechanisms must be approved in writing and in advance by the 
CDFI Fund. The affordability restrictions may terminate upon 
foreclosure or transfer in lieu of foreclosure. However, the 
affordability restrictions shall be revived according to the original 
terms if, during the original affordability period, the owner of record 
before the foreclosure, or deed in lieu of

[[Page 6443]]

foreclosure, or any entity that includes the former owner or those with 
whom the former owner has or had family or business ties, obtains an 
ownership interest in the Project.
    (e) Subsequent rents during the affordability period. Any increase 
in rent for a CMF-financed unit requires that tenants of those units be 
given at least 30 days prior written notice before the implementation 
of the rent increase. Regardless of changes in annual rents and in 
median income over time, the CMF rents for a Project are not required 
to be lower than the CMF rent limits for the Project in effect at the 
time when the Project is Committed for use.
    (f) Tenant income determination. (1) Each year during the period of 
affordability, the tenant's income shall be re-examined; tenant income 
examination and verification is ultimately the responsibility of the 
Recipient. Annual income shall include income from all household 
members. The Recipient must require the Project owner to obtain 
information on rents and occupancy of Affordable Housing financed or 
assisted with a CMF Award in order to demonstrate compliance with this 
section.
    (2) One of the following two definitions of ``annual income'' must 
be used to determine whether a Family is income-eligible:
    (i) Adjusted gross income as defined for purposes of reporting 
under Internal Revenue Service (IRS) Form 1040 series for individual 
Federal annual income tax purposes; or
    (ii) ``Annual Income'' as defined at 24 CFR 5.609 (except that when 
determining the income of a homeowner for an owner-occupied 
Rehabilitation Project, the value of the homeowner's principal 
residence may be excluded from the calculation of Net Family Assets, as 
defined in 24 CFR 5.603).
    (3) Although either of the above two definitions of ``annual 
income'' is permitted, in order to calculate adjusted income, 
exclusions from income set forth at 24 CFR 5.611 shall be applied.
    (4) The CDFI Fund reserves the right to deem certain government 
programs, under which a Low-Income Family is a recipient, as income 
eligible for purposes of meeting the tenant income requirements under 
this section.
    (g) Over-income tenants. (1) CMF-financed or assisted units 
continue to qualify as Affordable Housing despite a temporary 
noncompliance caused by increases in the incomes of existing tenants if 
actions satisfactory to the CDFI Fund are being taken to ensure that 
all vacancies are filled in accordance with this section until the 
noncompliance is corrected.
    (2) Tenants whose incomes no longer qualify must pay rent no 
greater than the lesser of the amount payable by the tenant under State 
or local law or 30 percent of the Family's annual income, except if the 
gross rent of a unit is subject to the restrictions in IRC section 
42(g)(2) or the restrictions in an extended low-income housing 
commitment under IRC section 42(h)(6), then the tenants of that unit 
must pay rent governed by those restrictions. Tenants who no longer 
qualify as Eligible-Income are not required to pay rent in excess of 
the market rent for comparable, unassisted units in the neighborhood.
    (3) If the income of a tenant of a CMF-financed or assisted unit no 
longer qualifies, the Recipient may designate another unit, within the 
CMF-financed or assisted Project, as a replacement unit that meets the 
affordability qualifications for the same income category as the 
original unit, as further set forth in the Recipient's Assistance 
Agreement. If there is not an available replacement unit, the Recipient 
must fill the first available vacancy with a tenant that meets the 
affordability qualifications for the same income category of the 
original unit as necessary to maintain compliance with the CMF 
requirements and the Assistance Agreement.


Sec.  1807.402  Affordable Housing--Homeownership.

    (a) Purchase with or without Rehabilitation. A Recipient that uses 
the CMF Award for the eligible activities set forth in Sec.  1807.301 
for Purchase must ensure the purchasing Family and Housing meets the 
affordability requirements of this subpart.
    (1) The Housing must be Single-family housing.
    (2) The Single-family housing price does not exceed 95 percent of 
the median purchase price for the area as used in the HOME Program and 
as determined by HUD and the applicable Participating Jurisdiction.
    (3) The Single-family housing must be purchased by a qualifying 
Family as set forth in Sec.  1807.400. The Single-family housing must 
be the principal residence of the Family throughout the period 
described in paragraph (a)(4) of this section.
    (4) Periods of affordability. Single-family housing under this 
section must meet the affordability requirements for at least 10 years 
at the time of purchase by the Family.
    (5) Resale. To ensure that CMF Awards are being used for qualifying 
Families for the entire 10-year affordability period, recoupment and 
redeployment or resale strategies must be imposed by the Recipient. A 
recoupment strategy must ensure that, in the event the qualifying 
homeowner sells the Housing before the end of the 10-year affordability 
period and the new homeowner does not meet the affordability 
qualifications set forth in Sec.  1807.400, an amount equal to the 
amount of the CMF Award investment in the Housing, whether recouped or 
not, is used to finance additional Affordable Housing Activities for a 
qualifying Family in the same income category for Affordable Housing 
Homeownership in the manner set forth in this section, except that the 
Housing must meet the affordability requirements only for the remaining 
duration of the affordability period. The Recipient may design and 
implement its own recoupment strategy. Deed restrictions, covenants 
running with the land, or other similar mechanisms may be used as the 
mechanism to impose a resale strategy. The Recipient shall report to 
the CDFI Fund the event of resale and/or recoupment and redeployment of 
the CMF Award, or an equivalent amount, in the manner described in the 
Assistance Agreement. The affordability restrictions may terminate upon 
occurrence of any of the following termination events: Foreclosure, 
transfer in lieu of foreclosure, or assignment of an FHA-insured 
mortgage to HUD. The Recipient may use purchase options, rights of 
first refusal or other preemptive rights to purchase the Housing before 
foreclosure to preserve affordability. The affordability restrictions 
shall be revived according to the original terms if, during the 
original affordability period, the owner of record before the 
termination event, obtains an ownership interest in the Housing. If 
there is a sale of Single-family housing funded by a CMF Award prior to 
the completion of the 10-year affordability period, the Recipient must 
demonstrate that it placed into service Single-family housing targeting 
the same income population (i.e., Extremely Low-Income, Very Low-
Income, Low-Income) as the original Single-family housing, as set forth 
in the Assistance Agreement, financed with an equivalent amount to the 
recouped portion of the CMF Award, that will be tracked for the 
duration of the affordability period of the original Single-family 
housing.
    (b) Rehabilitation not involving Purchase. Single-family housing 
that is currently owned by a qualifying Family, as set forth in Sec.  
1807.400, qualifies as Affordable Housing if it meets the requirements 
of this paragraph (b).
    (1) The estimated value of the Single-family housing, after 
Rehabilitation,

[[Page 6444]]

does not exceed 95 percent of the median purchase price for the area, 
as used in the HOME Program and as determined by the applicable 
Participating Jurisdiction; or
    (2) The Single-family housing is the principal residence of a 
qualifying Family as set forth in Sec.  1807.400, at the time that the 
CMF Award is Committed to the Single-family housing.
    (3) Single-family housing under this paragraph (b) must meet the 
affordability requirements for at least 10 years after Rehabilitation 
is completed or meet the resale provisions of paragraph (a)(5) of this 
section.
    (c) Ownership interest. The ownership in the Single-family housing 
assisted under this section must meet the definition of Homeownership 
as defined in Sec.  1807.104.
    (d) New construction without Purchase. Newly constructed Single-
family housing that is built on property currently owned by a Family 
that will occupy the Single-family housing upon completion, qualifies 
as Affordable Housing if it meets the requirements under paragraph (a) 
of this section.
    (e) Converting rental units to Homeownership units for existing 
tenants. CMF-financed rental units may be converted to Homeownership 
units by selling, donating, or otherwise conveying the units to the 
existing tenants to enable the tenants to become homeowners in 
accordance with the requirements of this section. The Homeownership 
units are subject to a minimum period of affordability equal to the 
remaining affordability period.

Subpart E--Leveraged Costs; Eligible Project Costs; Commitment 
Requirements


Sec.  1807.500  Leveraged Costs; Eligible Project Costs.

    (a) Each CMF Award must result in Eligible Project Costs in an 
amount that equals at least 10 times the amount of the CMF Award or 
some higher standard established by the CDFI Fund in the Recipient's 
Assistance Agreement. Such Eligible Project Costs must be for 
Affordable Housing Activities and Economic Development Activities, as 
set forth in the Assistance Agreement.
    (b) Leveraged Costs. (1) The applicable NOFA and/or the Assistance 
Agreement may set forth a required percentage of Leveraged Costs that 
must be funded by non-governmental sources.
    (2) The Recipient must report to the CDFI Fund all Leveraged Costs, 
with the following limitations:
    (i) No costs attributable to prohibited uses as set forth in Sec.  
1807.302(a) and (b) may be reported as Leveraged Costs;
    (ii) All Leveraged Costs attributable to Affordable Housing 
Activities must be for Affordable Housing, as set forth in Sec.  
1807.401 or Sec.  1807.402, and as further described in the Assistance 
Agreement;
    (iii) All eligible Leveraged Costs attributable to Economic 
Development Activities shall be described in the Assistance Agreement.
    (c) Recipients must report Leveraged Costs information through 
forms or electronic systems provided by the CDFI Fund. Consequently, 
Recipients must maintain appropriate documentation, such as audited 
financial statements, wire transfers documents, pro-formas, and other 
relevant records, to support such reports.


Sec.  1807.501  Commitments; Payments.

    (a) The CMF Award must be Committed by the Recipient for use by the 
date designated in its Assistance Agreement.
    (b) The Recipient must evidence such commitment with a written, 
legally binding agreement to provide CMF Award proceeds to the 
qualifying Family, developer or project sponsor for a Project whose:
    (1) Construction can reasonably be expected to start within 12 
months of the commitment agreement date;
    (2) Property title will be transferred within 6 months of the 
commitment agreement date; or
    (3) Construction schedule ensures Project Completion within 5 years 
of a date specified in the Assistance Agreement.
    (c) The CDFI Fund will make Payment of CMF Award based on a 
deployment schedule contained in the CMF Award application, in addition 
to any other documentation and/or forms that the CDFI Fund may require.
    (d) Upon receipt of CMF Award, the Recipient must make an initial 
disbursement of said CMF Award by the date designated in its Assistance 
Agreement. The CDFI Fund may make Payment of CMF Award in a lump sum or 
other manner, as determined appropriate by the CDFI Fund. The CDFI Fund 
will not provide any Payment until the Recipient has satisfied all 
conditions set forth in the applicable NOFA and Assistance Agreement.


Sec.  1807.502  CMF Award limits.

    An eligible Applicant and its Subsidiaries and Affiliates may not 
be awarded more than 15 percent of the aggregate funds available for 
CMF Awards during any year.


Sec.  1807.503  Project Completion; Property standards.

    (a) Upon Project Completion, the Project must be placed into 
service by the date designated in the Assistance Agreement. Project 
Completion occurs, as determined by the CDFI Fund, when:
    (1) All necessary title transfer requirements and construction work 
have been performed;
    (2) The property standards of paragraph (b) of this section have 
been met; and
    (3) The final drawdown of the CMF Award has been made to the 
project sponsor or developer;
    (4) When a CMF Award is used for Preservation, Project Completion 
occurs when the refinance and/or Rehabilitation is completed in 
addition to the requirements set forth in this paragraph (a).
    (b) By the Project Completion date, the Project must meet the 
requirements of this part, including the following property standards 
(which must be met for a period of at least 10 years after the Project 
Completion date):
    (1) Projects that are constructed or Rehabilitated with a CMF Award 
must meet all applicable State and local codes, Rehabilitation 
standards, ordinances, and zoning requirements at the time of Project 
Completion or, in the absence of a State or local building code, the 
International Residential Code or International Building Code (as 
applicable) of the International Code Council.
    (2) In addition, Projects must meet the following requirements:
    (i) Accessibility. The Project must meet all applicable 
accessibility requirements set forth at 24 CFR part 8, which implements 
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and 
Titles II and III of the Americans with Disabilities Act (42 U.S.C. 
12131-12189) implemented at 28 CFR parts 35 and 36, as applicable. 
Multi-family housing, as defined in 24 CFR 100.201, must also meet all 
applicable design and construction requirements set forth in 24 CFR 
100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619).
    (ii) Disaster mitigation. The Project must meet all applicable 
State and local codes, ordinances, or other disaster mitigation 
requirements (e.g., earthquake, hurricanes, flooding, wild fires), or 
other requirements as the Department of Housing and Urban Development 
has established in 24 CFR part 93.
    (iii) Lead-based paint. The Project must meet all applicable lead-
based paint requirements, including those set forth in 24 CFR part 35.

[[Page 6445]]

    (3) Rehabilitation standards. In addition, all Rehabilitation that 
is financed with a CMF Award must meet the following requirements:
    (i) For rental Housing, if the remaining useful life of one or more 
major systems is less than the 10-year period of affordability, the 
Recipient must ensure that, at Project Completion, the developer or 
Project sponsor establishes a replacement reserve and that monthly 
payments are made to the reserve that are adequate to repair or replace 
the systems as needed. Major systems include: Structural support; 
roofing; cladding and weatherproofing (e.g., windows, doors, siding, 
gutters); plumbing; electrical; heating, ventilation, and air 
conditioning.
    (ii) For Homeownership Single-family housing, the Recipient must 
ensure that, at Project Completion, the Housing is decent, safe, 
sanitary, and in good repair. The Recipient must ensure that timely 
corrective and remedial actions are taken by the Project owner to 
address identified life threatening deficiencies.
    (4) Manufactured housing. Construction of all manufactured housing 
must meet the Manufactured Home Construction and Safety Standards set 
forth in 24 CFR part 3280. These standards preempt State and local laws 
or codes, which are not identical to the Federal standards for the new 
construction of manufactured housing. The installation of all 
manufactured housing units must comply with applicable State and local 
laws or codes. In the absence of such laws or codes, the installation 
must comply with the manufacturer's written instructions for 
installation of manufactured housing units. Manufactured housing that 
is rehabilitated using a CMF Award must meet the requirements set out 
in paragraph (b)(1) of this section.

Subpart F--Tracking Funds; Uniform Administrative Requirements; 
Nature of Funds


Sec.  1807.600  Tracking funds.

    The Recipient shall develop and maintain an internal tracking and 
reporting system that ensures that the CMF Award is used in accordance 
with this part and the Assistance Agreement.


Sec.  1807.601  Uniform Administrative Requirements.

    The Uniform Administrative Requirements apply to all CMF Awards.


Sec.  1807.602  Nature of funds.

    CMF Awards are Federal financial assistance with regard to the 
application of Federal civil rights laws. CMF Award funds retain their 
Federal character until the end of the Investment Period.

Subpart G--Notice of Funds Availability; Applications


Sec.  1807.700  Notice of funds availability.

    Each Applicant must submit a CMF Award application in accordance 
with the applicable Notice of Funds Availability (NOFA) published in 
the Federal Register. The NOFA will advise prospective Applicants on 
how to obtain and complete an application and will establish deadlines 
and other requirements. The NOFA will specify application evaluation 
factors and any limitations, special rules, procedures, and 
restrictions for a particular application round. After receipt of an 
application, the CDFI Fund may request clarifying or technical 
information on the materials submitted as part of the application.

Subpart H--Evaluation and Selection of Applications


Sec.  1807.800  Evaluation and selection--general.

    Each Applicant will be evaluated and selected, at the sole 
discretion of the CDFI Fund, to receive a CMF Award based on a review 
process that will include a paper or electronic application, and 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) Ensure that each Recipient can successfully meet its leveraging 
goals and achieve Affordable Housing Activity and Economic Development 
Activity impacts;
    (c) Ensure that Recipients represent a geographically diverse group 
of Applicants serving Metropolitan Areas and Underserved Rural Areas 
across the United States that meet criteria of economic distress, which 
may include:
    (1) The percentage of Low-Income Families or the extent of poverty;
    (2) The rate of unemployment or underemployment;
    (3) The extent of disinvestment;
    (4) Economic Development Activities that target Extremely Low-
Income, Very Low-Income, and Low-Income Families within the Recipient's 
Service Area; and
    (5) Any other criteria the CDFI Fund shall set forth in the 
applicable NOFA; and
    (d) Take into consideration other factors as set forth in the 
applicable NOFA.


Sec.  1807.801  Evaluation of applications.

    (a) Eligibility and completeness. An Applicant will not be eligible 
to receive a CMF Award if it fails to meet the eligibility requirements 
described in Sec.  1807.200 and in the applicable NOFA, or if the 
Applicant 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 Applicant's 
likelihood of success in meeting the factors set forth in the 
applicable NOFA including, but not limited to:
    (1) The Applicant's ability to use a CMF Award to generate 
additional investments, including private sources of funding;
    (2) The need for affordable housing in the Applicant's Service 
Area;
    (3) The ability of the Applicant to obligate amounts and undertake 
activities in a timely manner; and
    (4) In the case of an Applicant that has previously received 
assistance under any CDFI Fund program, the Applicant's level of 
success in meeting its performance goals, reporting requirements, and 
other requirements contained in the previously negotiated and executed 
assistance, allocation or award agreement(s) with the CDFI Fund, any 
undisbursed balance of assistance, and compliance with applicable 
Federal laws.
    (c) The CDFI Fund may consider any other factors that it deems 
appropriate in reviewing an application, as set forth in the applicable 
NOFA, the application and related guidance materials.
    (d) Consultation with appropriate regulatory agencies. In the case 
of an Applicant that is a Federally regulated financial institution, 
the CDFI Fund may consult with the Appropriate Federal Banking Agency 
or Appropriate State Agency prior to making a final award decision and 
prior to entering into an Assistance Agreement.
    (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 NOFA.

Subpart I--Terms and Conditions of CMF Award


Sec.  1807.900  Assistance agreement.

    (a) Each Applicant that is selected to receive a CMF Award must 
enter into an Assistance Agreement with the CDFI

[[Page 6446]]

Fund. The Assistance Agreement will set forth certain required terms 
and conditions for the CMF Award that may include, but are not limited 
to, the following:
    (1) The amount of the CMF Award;
    (2) The approved uses of the CMF Award;
    (3) The approved Service Area;
    (4) The time period by which the CMF Award proceeds must be 
Committed;
    (5) The required documentation to evidence Project Completion; and
    (6) Performance goals that have been established by the CDFI Fund 
pursuant to this part, the NOFA, and the Recipient's application.
    (b) The Assistance Agreement shall provide that, in the event of 
fraud, mismanagement, noncompliance with the Act or these regulations, 
or noncompliance with the terms and conditions of the Assistance 
Agreement, on the part of the Recipient, the CDFI Fund, in its 
discretion, may make a determination to:
    (1) Require changes in the performance goals set forth in the 
Assistance Agreement;
    (2) Revoke approval of the Recipient's application;
    (3) Reduce or terminate the CMF Award;
    (4) Require repayment of any CMF Award that have been paid to the 
Recipient;
    (5) Bar the Recipient from applying for any assistance from the 
CDFI Fund; or
    (6) Take such other actions as the CDFI Fund deems appropriate or 
as set forth in the Assistance Agreement.
    (c) Prior to making a determination that the Recipient has failed 
to comply substantially with the Act or these regulations or an 
Assistance Agreement, the CDFI Fund shall provide the Recipient with 
reasonable notice and opportunity for hearing.


Sec.  1807.901  Payment of funds.

    CMF Awards provided pursuant to this part may be provided in a lump 
sum payment or in some other manner, as determined appropriate by the 
CDFI Fund. The CDFI Fund shall not provide any Payment under this part 
until a Recipient has satisfied all conditions set forth in the 
applicable NOFA and Assistance Agreement.


Sec.  1807.902  Data collection and reporting.

    (a) Data; General. The Recipient must maintain such records as may 
be prescribed by the CDFI Fund that are necessary to:
    (1) Disclose the manner in which the CMF Award is used, including 
providing documentation to demonstrate Project Completion;
    (2) Demonstrate compliance with the requirements of this part and 
the Assistance Agreement; and
    (3) Evaluate the impact of the CMF Award.
    (b) Customer profiles. The Recipient must compile such data on the 
gender, race, ethnicity, national origin, or other information on 
individuals that are benefiting from the CMF Award, as the CDFI Fund 
shall prescribe in the Assistance Agreement. Such data will be used to 
determine whether residents of the Recipient's Service Area are 
adequately served and to evaluate the impact of the CMF Award.
    (c) Access to records. The Recipient 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 U.S. Department of the Treasury to ensure compliance 
with the requirements of this part and to evaluate the impact of the 
CMF Award. The United States Government, including the U.S. 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 and audit or provide for an audit at least 
annually. The CDFI Fund, if it deems appropriate, may prescribe access 
to record requirements for entities that receive a CMF Award from the 
Recipient.
    (d) Retention of records. The Recipient shall comply with all 
applicable record retention requirements set forth in the Uniform 
Administrative Requirements (as applicable) and the Assistance 
Agreement.
    (e) Data collection and reporting--(1) Financial reporting, (i) All 
Nonprofit Organization Recipients that are required to have their 
financial statements audited pursuant to the Uniform Administrative 
Requirements, must submit their single-audits by a time set forth in 
the applicable NOFA or Assistance Agreement. Nonprofit Organization 
Recipients (excluding Insured CDFIs and State-Insured Credit Unions) 
that are not required to have financial statements audited pursuant to 
the Uniform Administrative 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 Administrative 
Requirements as indicated in the Assistance Agreement. In such 
instances, the CDFI Fund may require additional audits to be performed 
and/or submitted to the CDFI Fund as stated in the applicable Notice of 
Funds Availability and Assistance Agreement.
    (ii) For-profit Recipients (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 by a time set forth in the applicable NOFA or Assistance 
Agreement.
    (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.
    (2) Annual report. (i) The Recipient shall submit a performance and 
financial report 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, a report on performance goals and 
measures, explanation of any Recipient noncompliance, and such other 
information as may be required by the CDFI Fund. 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 performance goals and the 
impact of the CMF and the CDFI industry.
    (iii) The Recipient is 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. If such other 
entities are required to provide information for the annual report, or 
such other documentation that the CDFI Fund might require, the 
Recipient is responsible for ensuring that the information is submitted 
timely and complete. The CDFI Fund reserves the right to contact such 
other entities and require that additional information and 
documentation be provided.
    (iv) The CDFI Fund's review of the compliance of an Insured CDFI, a 
Depository Institution Holding Company or a State-Insured Credit Union 
with the terms and conditions of its Assistance Agreement may also 
include information from the Appropriate Federal Banking Agency or

[[Page 6447]]

Appropriate State Agency, as the case may be.
    (f) 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.


Sec.  1807.903  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, Uniform 
Administrative Requirements, 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.  1807.904  Lobbying restrictions.

    No CMF Award 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.  1807.905  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.  1807.906  CDFI Fund deemed not to control.

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


Sec.  1807.907  Limitation on liability.

    The liability of the CDFI Fund and the United States Government 
arising out of any CMF Award shall be limited to the amount of the CMF 
Award. 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.  1807.908  Fraud, waste and abuse.

    Any person who becomes aware of the existence or apparent existence 
of fraud, waste or abuse of a CMF Award 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. 2016-02132 Filed 2-3-16; 4:15 pm]
 BILLING CODE 4810-70-P



                                                  6434              Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations

                                                  DEPARTMENT OF THE TREASURY                              implement the Uniform Administrative                  Director of the FHFA terminated the
                                                                                                          Requirements, as well as to make certain              temporary suspension of those
                                                  Community Development Financial                         technical corrections and certain                     allocations, directing Fannie Mae and
                                                  Institutions Fund                                       programmatic updates, as well as                      Freddie Mac to begin setting aside and
                                                                                                          provide clarifying language to existing               allocating funds to the Housing Trust
                                                  12 CFR Part 1807                                        program requirements.                                 Fund and the Capital Magnet Fund.
                                                  RIN 1559–AA00                                           DATES: Effective date: February 8, 2016.              Accordingly, the CDFI Fund is
                                                                                                          All comments must be written and must                 promulgating this revised interim rule
                                                  Capital Magnet Fund                                     be received in the offices of the CDFI                in anticipation of future Capital Magnet
                                                                                                          Fund on or before April 8, 2016. The                  Fund application rounds.
                                                  AGENCY:  Community Development                          compliance date requirements for the                     Through the CMF, the CDFI Fund is
                                                  Financial Institutions Fund, Department                 collection of information in § 1807.902               authorized to make financial assistance
                                                  of the Treasury.                                        is stayed indefinitely, pending Office of             grants to Certified Community
                                                  ACTION: Interim rule with request for                   Management and Budget approval and                    Development Financial Institutions
                                                  public comment.                                         assignment of an OMB control number.                  (CDFIs) and Nonprofit Organizations (if
                                                  SUMMARY:   The Department of the                        ADDRESSES: You may submit comments                    one of their principal purposes is the
                                                  Treasury is issuing an interim rule                     concerning this interim rule via the                  development or management of
                                                  implementing the Capital Magnet Fund                    Federal e-Rulemaking Portal at http://                affordable housing). CMF Awards must
                                                  (CMF), administered by the Community                    www.regulations.gov (please follow the                be used to attract private financing for
                                                  Development Financial Institutions                      instructions for submitting comments).                and increase investment in: (i) The
                                                  Fund (CDFI Fund). This interim rule                     All submissions must include the                      Development, Preservation,
                                                  incorporates updates to the definitions,                agency name and Regulatory                            Rehabilitation, and Purchase of
                                                  requirements and parameters for CMF                     Information Number (RIN) for this                     Affordable Housing for primarily
                                                  implementation and administration. In                   rulemaking. Information regarding the                 Extremely Low-, Very Low-, and Low-
                                                  addition, sections of the CMF interim                   CDFI Fund and its programs may be                     Income Families; and (ii) Economic
                                                  rule regarding certain definitions and                  obtained through the CDFI Fund’s Web                  Development Activities which, In
                                                  project level requirements are revised in               site at http://www.cdfifund.gov.                      Conjunction With Affordable Housing
                                                  order to facilitate alignment with other                FOR FURTHER INFORMATION CONTACT:                      Activities will implement a Concerted
                                                  federal housing programs and ease of                    Marcia Sigal, CMF Program Manager,                    Strategy to stabilize or revitalize a Low-
                                                  administration. These revisions are                     Community Development Financial                       Income Area or Underserved Rural
                                                  modeled after the credit requirements                   Institutions Fund, at cdfihelp@                       Area.
                                                  for Low Income Housing Credits                          cdfi.treas.gov.                                          All capitalized terms herein are
                                                  (LIHTCs) under section 42 of the                        SUPPLEMENTARY INFORMATION:                            defined in the definitions section of the
                                                  Internal Revenue Code of 1986, as                                                                             interim rule, as set forth in 12 CFR
                                                  amended, and the program requirements                   I. Background                                         1807.104.
                                                  of the HOME Investment Partnership                         The Capital Magnet Fund (CMF) was                  II. Comments on the December 3, 2010,
                                                  Program (HOME Program) authorized                       established through the Housing and                   Interim Rule
                                                  under Title II of the Cranston-Gonzalez                 Economic Recovery Act of 2008 (the
                                                  National Affordable Housing Act, as                     Act), Public Law 110–289, section 1131,                  The comment period for the
                                                  amended, and the HOME Program final                     as a trust fund, the appropriation to                 December 3, 2010, Interim Rule ended
                                                  rule published on July 24, 2013.                        which was used to carry out a                         on February 1, 2011. The CDFI Fund
                                                     This interim rule also reflects                      competitive grant program administered                received one written comment. The
                                                  requirements set forth in a final rule,                 by the CDFI Fund. The mission of the                  commenter asserted that the December
                                                  Uniform Administrative Requirements,                    CDFI Fund is to increase economic                     3, 2010, Interim Rule did not allow
                                                  Cost Principles and Audit Requirements                  opportunity and promote community                     market-based Section 8 vouchers to be
                                                  for Federal Awards, adopted by the                      development investments for                           used to satisfy CMF affordability
                                                  Department of the Treasury on                           underserved populations and in                        requirements and that the interim rule
                                                  December 19, 2014 (hereafter referred to                distressed communities in the United                  should make clear that, in the event a
                                                  as the Uniform Administrative                           States. Its long term vision is an                    tenant or a unit in a Multi-family
                                                  Requirements). The Uniform                              America in which all people have                      housing project receives a Federal or
                                                  Administrative Requirements constitute                  access to affordable credit, capital and              State rental subsidy, the maximum rent
                                                  a government-wide framework for grants                  financial services.                                   that can be charged is the amount
                                                  management codified by the Office of                       The Act requires Fannie Mae and                    allowable under such program. The
                                                  Management and Budget (OMB),                            Freddie Mac to set aside an amount                    commenter suggested that the interim
                                                  combining several OMB grants                            equal to 4.2 basis points for each dollar             rule should provide for a rent floor of
                                                  management circulars aimed at reducing                  of their unpaid principal balances of                 the project’s initial rents, in the event
                                                  the administrative burden for                           total new business purchases to be                    median incomes decrease. The
                                                  Recipients, and reducing the risk of                    allocated to the Housing Trust Fund                   commenter also suggested that the rent
                                                  waste, fraud and abuse of Federal                       (administered by the Department of                    limitation should be adjusted by the
                                                  financial assistance. The Uniform                       Housing and Urban Development) and                    number of bedrooms in the unit.
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                                                  Administrative Requirements establish                   the Capital Magnet Fund. The Act also                    In this revised interim rule (at 12 CFR
                                                  financial, administrative, procurement,                 provides the Federal Housing Finance                  1807.401(a) and (e)), the CDFI Fund
                                                  and program management standards                        Agency (FHFA) with the authority to                   incorporates the commenter’s
                                                  with which Federal award-making                         temporarily suspend these allocations                 suggestions regarding Federal or State
                                                  programs, including those administered                  upon certain findings. On November 13,                rental subsidy and the creation of a rent
                                                  by the CDFI Fund, and Recipients must                   2008, the Director of the FHFA                        floor for projects. The CDFI Fund also
                                                  comply. Accordingly, this interim rule                  temporarily suspended the allocation of               adopts the commenter’s suggestion that
                                                  includes revisions necessary to                         funds. On December 11, 2014, the                      rent limitations be adjusted by the


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                                                                    Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations                                           6435

                                                  number of bedrooms in the unit (12 CFR                  that any combination of the listed                    qualifying Family occupies a unit that
                                                  1807.401(a)).                                           activities that result in Affordable                  has a Federal or State rental subsidy.
                                                                                                          Housing is ‘‘Development.’’ The term                  The term ‘‘Non-Metropolitan Area’’ is
                                                  III. Summary of Changes
                                                                                                          ‘‘Direct Administrative Expenses’’ is                 revised to align with and accommodate
                                                     Substantive revisions to the interim                 now defined. The definition of the term               the OMB definition, which is
                                                  rule (meaning, revisions other than the                 ‘‘Economic Development Activity’’ is                  periodically updated. The term ‘‘Non-
                                                  insertion of new language that clarifies                revised by striking ‘‘purchase’’; the term            Regulated CDFI’’ is deleted because it is
                                                  existing program requirements) fall                     ‘‘acquisition’’ is used instead. The term             not used in the interim rule. The term
                                                  generally into three categories: (i)                    ‘‘Effective Date’’ is now defined.                    ‘‘Operations’’ is deleted in § 1807.104
                                                  Adoption of policy priorities,                          ‘‘Eligible Income’’ is revised to provide             since it is no longer an eligible activity
                                                  programmatic changes/clarifications,                    adjustments for Family size. ‘‘Eligible               in § 1807.301; a new term ‘‘Direct
                                                  and technical corrections; (ii) alignment               Project Costs’’ is revised to strike                  Administrative Expenses’’ is defined in
                                                  with the Uniform Administrative                         ‘‘operations’’ as an eligible use of CMF              § 1807.104. A new term, ‘‘Payment’’ is
                                                  Requirements; and (iii) alignment with                  Awards. ‘‘Extremely Low-Income’’ is                   defined to describe the transmission of
                                                  HOME Program requirements and with                      revised to align with income limits                   CMF Award dollars from the CDFI Fund
                                                  requirements to qualify for LIHTCs.                                                                           to the Recipient. ‘‘Preservation’’ is
                                                                                                          published by HUD, including
                                                     Recent efforts supported by the White                                                                      revised to specify that refinancing must
                                                  House Rental Housing Policy Working                     adjustments for Family size in the case
                                                                                                          of Homeownership. The defined term                    extend the existing affordability and use
                                                  Group, which established joint working                                                                        restrictions on the property by a
                                                  groups comprised of staff from the U.S.                 ‘‘Family’’ or ‘‘Families’’ is revised by
                                                                                                          removing the income categories to                     minimum of 10 years or as otherwise
                                                  Department of Housing and Urban                                                                               specified in the Assistance Agreement.
                                                  Development (HUD), the U.S.                             describe the household. The defined
                                                                                                          term ‘‘Homeownership’’ is updated and                 ‘‘Program Income’’ is defined to align
                                                  Department of Agriculture (USDA), and                                                                         with the Uniform Administrative
                                                  the U.S. Department of the Treasury                     restructured based on HOME Program
                                                                                                          regulations. The defined term                         Requirements. ‘‘Project’’ is defined to
                                                  have highlighted the need for alignment
                                                                                                          ‘‘Housing’’ is also revised to reflect                mean the Affordable Housing Activity
                                                  amongst federally subsidized affordable
                                                                                                          HOME Program regulation updates. The                  and/or Economic Development Activity
                                                  housing program requirements. The
                                                                                                          defined term ‘‘Housing’’ is used in                   that is financed with a CMF Award. The
                                                  CDFI Fund has determined that
                                                                                                          several places throughout the                         term ‘‘Purchase’’ is revised to clarify
                                                  Recipients’ use of CMF Awards better
                                                                                                          regulations to signify the intent of the              that the purchasing Family and Single-
                                                  aligns with LIHTCs (as opposed to
                                                                                                          defined term. Some of the structures                  family housing must meet the
                                                  benefits under the HOME Program) in
                                                                                                          and facilities excluded from the                      qualifications set forth in subparts D
                                                  several key respects, specifically with
                                                                                                          definition of Housing may meet the                    and E. ‘‘Underserved Rural Area’’ is
                                                  regard to Project-level requirements.
                                                                                                          definition of Community Service                       restructured and revised to serve
                                                  Thus, this interim rule incorporates
                                                                                                          Facilities. The term ‘‘In Conjunction                 intended populations per the statute
                                                  some requirements to qualify for
                                                                                                          With Affordable Housing Activities’’ has              and allow the CDFI Fund to set forth an
                                                  LIHTCs and removes certain
                                                                                                          been modified in order to be consistent               alternative definition of ‘‘Underserved
                                                  requirements that, in the December 10,
                                                                                                          with standards in other CDFI Fund                     Rural Area’’ for any given application
                                                  2010, CMF Program interim rule, were
                                                                                                          Programs that fund projects and                       round in the applicable NOFA and/or
                                                  modeled after the HOME Program.
                                                     A. Section 1807.101, Summary:                        activities based on proximity to                      Assistance Agreement. ‘‘Uniform
                                                  ‘‘Community Service Facilities’’ has                    intended beneficiaries and/or                         Administrative Requirements’’ is
                                                  been stricken as a stand-alone activity;                assessment of access to services for                  defined in § 1807.104 to reflect the
                                                  instead, Community Service Facilities is                individuals intended to benefit from                  Department of the Treasury’s
                                                  embedded in the definition of Economic                  such programs (e.g., Healthy Foods                    codification of the Office of
                                                  Development Activities. Per the                         Financing Initiative Financial                        Management and Budget’s government-
                                                  Uniform Administrative Requirements,                    Assistance under the CDFI Program).                   wide framework for grants management.
                                                  the use of the word ‘‘Awardee’’ is                      The term ‘‘Investment Period’’ is                     The definition of the term ‘‘Very Low-
                                                  replaced with ‘‘Recipient,’’ and any                    defined in § 1807.104. The term                       Income’’ is revised to align with income
                                                  reference to a CMF grant is replaced                    ‘‘Leveraged Costs’’ is revised to clarify             limits published by HUD, including
                                                  with ‘‘CMF Award’’ as defined in the                    that such costs are limited to Affordable             adjustments for Family size in the case
                                                  definitions section, 12 CFR 1807.104.                   Housing Activities and Economic                       of Homeownership.
                                                     B. Section 1807.102, Relationship to                 Development Activities that exceed the                   D. Section 1807.107, Applicability of
                                                  other CDFI Programs: The requirement                    dollar amount of the CMF Award. ‘‘Loan                regulations for CMF awards: Section
                                                  for a Certified CDFI to be an operating                 Guarantee’’ is revised to clarify that a              1807.107 was added to address the
                                                  entity for three years prior to the                     loan that is guaranteed with the CMF                  applicability of this rule to the FY 2010
                                                  application deadline has been deleted;                  Award must be used for Affordable                     CMF application round and subsequent
                                                  instead, this subsection establishes that               Housing Activities and/or Economic                    application rounds. The CDFI Fund has
                                                  restrictions for using CMF Awards in                    Development Activities. ‘‘Loan Loss                   determined that this rule applies only to
                                                  conjunction with other CDFI Program                     Reserves’’ is revised to clarify that cash            those CMF awards made pursuant to
                                                  awards will be set forth in the                         reserves set aside to cover losses must               Notices of Funds Availability (NOFAs)
                                                  applicable notices of funds, guarantee,                 be for Affordable Housing Activities                  published after the effective date of this
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                                                  or allocation availability.                             and/or Economic Development                           interim rule, except for
                                                     C. Section 1807.104, Definitions: As                 Activities. The term ‘‘Low-Income’’ is                § 1807.902(e)(1)(i) regarding audited
                                                  noted above, the defined term                           revised to align with income limits                   financial statements of Nonprofit
                                                  ‘‘Awardee’’ is deleted and replaced with                published by HUD, including                           Organization Recipients. As indicated at
                                                  the new defined term ‘‘Recipient.’’ The                 adjustments for Family size in the case               2 CFR 200.110, the Uniform
                                                  term ‘‘Applicant’’ is now defined. The                  of Homeownership. In the case of rental               Administrative Requirements, subpart
                                                  term ‘‘CMF Award’’ is now defined. The                  Housing, ‘‘Low-Income’’ is revised to                 F—Audit Requirements applies to
                                                  term ‘‘Development’’ is revised to clarify              allow for circumstances in which the                  audits of Nonprofits of fiscal years


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                                                  6436              Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations

                                                  beginning on or after December 26,                      revised to indicate that the CDFI Fund                the former § 1807.500(a)(2) is now
                                                  2014.                                                   may establish greater commitments for                 § 1807.500(b)(2) and former
                                                     E. Section 1807.200, Applicant                       deeper income targeting attributable to               § 1807.500(a)(3) is now
                                                  eligibility: In § 1807.200(a)(1), the                   Eligible Project Costs in the applicable              § 1807.500(b)(2)(ii). Section
                                                  eligibility requirement that a certifiable              NOFA and/or Assistance Agreement.                     1807.500(b)(2)(iii) was added to address
                                                  CDFI can apply is deleted because the                   Section 1807.401 is revised in order to               eligible Leveraged Costs for Economic
                                                  CDFI Fund has determined that most                      make general program clarifications and               Development Activities. The content of
                                                  Applicants can meet the program’s                       establish certain program requirements,               former § 1807.500(b) is deleted. Section
                                                  eligibility requirements by being either                many of which align with the                          1807.501(a) is revised and section
                                                  a Certified CDFI or a Nonprofit                         requirements of the LIHTC Program and                 1807.501(b) is added to account for the
                                                  Organization. The eligibility                           the HOME Program. For example,                        eligible activity ‘‘Purchase’’ to a
                                                  requirements for a Nonprofit                            language was added to § 1807.401 to                   qualifying Family, and § 1807.501(b)(3)
                                                  Organization are revised in                             allow the CDFI Fund to set forth in the               is added to provide more accountability
                                                  § 1807.200(a)(2)(iii) to no longer allow                applicable NOFA requirements for                      regarding Project Completion. Section
                                                  an entity to demonstrate its principal                  successful applicants to serve targeted               1807.501(c) and (d) are added to align
                                                  purpose of development or management                    incomes that exceed the requirements of               with the Uniform Administrative
                                                  of affordable housing through its                       § 1807.401. The rent limitation in                    Requirements regarding Payments.
                                                  staffing. Section 1807.200(a)(2)(iii) also              § 1807.401(a) is revised to align with                Section 1807.503 is revised to include
                                                  states that the applicable Notice of                    requirements to qualify for LIHTCs and                property standards necessary to ensure
                                                  Funds Availability (NOFA) will indicate                 to account for rental subsidies in each               that CMF Awards are invested in
                                                  the percentage of a Nonprofit                           of the income categories. Section                     structures and units that are sound,
                                                  Organization Applicant’s assets that                    1807.401(c) and (e) are revised to align              decent, safe and sanitary; such
                                                  must be dedicated to the development                    with requirements to qualify for                      standards are largely adopted from the
                                                  or management of affordable housing.                    LIHTCs. Section 1807.401(f) is revised                HOME Program and the requirements to
                                                  Section 1807.200(b) is also revised to                  to align with the HOME Program                        qualify for LIHTCs. Section
                                                  reflect these eligibility modifications.                regulations’ elimination of the U.S.                  1807.503(a)(4) is added to address
                                                     F. Subpart C, Use of Funds/Eligible                  Census long form for annual income                    Project Completion in the case of
                                                  activities: Section 1807.300 is revised to              determinations. Thus, the content of the              Preservation. The content of the former
                                                  clarify that Recipients must use their                  former § 1807.401(f)(2)(i) is deleted and             § 1807.503(b)(2) is now located in
                                                  CMF Awards for the financing-related                    the content of the former                             § 1807.503(b)(2)(i) and a new
                                                  eligible activities set forth in § 1807.301             § 1807.401(f)(2)(ii) is now located in                § 1807.503(b)(2)(ii) is added to address
                                                  to attract private capital and increase                 § 1807.401(f)(2)(i). Similarly, the content           disaster mitigation in regards to Project
                                                  investment in those activities in                                                                             Completion. Section 1807.503(b)(2)(iii)
                                                                                                          of the former § 1807.401(f)(2)(iii) has
                                                  § 1807.300(a) and (b). Revisions to                                                                           is added to address lead-based paint.
                                                                                                          moved up and is now located in
                                                  § 1807.300(b) reinforce the requirement                                                                       The content of former § 1807.503(b)(3) is
                                                                                                          § 1807.401(f)(2)(ii). Section
                                                  that when a Recipient undertakes                                                                              now moved to § 1807.503(b)(4) and
                                                                                                          1807.401(g)(2) is revised to clarify rent
                                                  Economic Development Activities In                                                                            incorporates recent HOME Program
                                                                                                          restrictions when rent is subject to IRC
                                                  Conjunction With Affordable Housing                                                                           updates. Thus, § 1807.503(b)(3) contains
                                                                                                          sections 42(g)(2) and 42(h)(6). Section
                                                  Activities, the Recipient must track and                                                                      new content regarding Rehabilitation
                                                                                                          1807.401(g)(3) is revised to clarify that
                                                  report on such Affordable Housing                                                                             standards. The content of former
                                                                                                          any replacement unit must meet the
                                                  Activities if it was financed with a CMF                                                                      § 1807.503(c) is moved to
                                                                                                          affordability qualifications for the
                                                  Award. Sections 1807.300 and 1807.301                                                                         § 1807.503(a)(3).
                                                  are revised by deleting ‘‘Community                     income category of the unit that is being
                                                                                                                                                                   I. Subpart F, Tracking Requirements:
                                                  Service Facilities’’ as a stand-alone                   replaced. Section 1807.402(a) and (b)
                                                                                                                                                                Section 1807.601 is renamed and
                                                  eligible activity; instead, ‘‘Community                 are revised by replacing ‘‘acquisition’’
                                                                                                                                                                revised to reflect that the Uniform
                                                  Service Facilities’’ is embedded in the                 with ‘‘Purchase’’ to reflect the use of the
                                                                                                                                                                Administrative Requirements apply to
                                                  definition of Economic Development                      new defined term. Section
                                                                                                                                                                all CMF Awards and sets forth the CDFI
                                                  Activities. As such, this term is deleted               1807.402(a)(5) is revised to clarify that,
                                                                                                                                                                Fund’s policy that indirect costs are not
                                                  as a technical correction throughout the                in the event of resale of CMF-financed                allowed. Section 1807.602 also
                                                  interim rule, when appropriate. Sections                Single-family housing to a non-                       establishes the circumstances in which
                                                  1807.301 and 1807.302 are revised to                    qualifying family before the 10-year                  a CMF Award loses its so-called
                                                  eliminate ‘‘operations’’ as an eligible                 affordability period ends, the Recipient              ‘‘Federal character.’’ Section 1807.602 is
                                                  activity. The content of former                         must use an equivalent amount of the                  also revised to clarify that CMF Awards
                                                  § 1807.302(c) is now located in                         CMF Award used for the applicable                     are Federal financial assistance for
                                                  § 1807.302(b); the content of                           Affordable Housing Activity, whether                  purposes of the applicability of Federal
                                                  § 1807.302(d) is now located in                         recouped or not, to finance additional                civil rights laws.
                                                  § 1807.302(c). New § 1807.302(d) and (e)                Affordable Housing Activities for a                      J. Subpart H, Evaluation and
                                                  are added to clarify certain tracking and               qualifying Family in the same income                  Selection of Applications: In
                                                  repayment requirements for Recipients                   category for Homeownership.                           § 1807.800(c)(3) ‘‘blight’’ is deleted as an
                                                  that use CMF Award for Loan                                H. Subpart E, Leveraging and                       ambiguous term.
                                                  Guarantees or Loan Loss Reserves.                       Commitment Requirement: Section                          K. Subpart I, Terms and Conditions of
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                                                  Section 1807.302(f) states that                         1807.500(b) is revised to include the                 Assistance: Section 1807.900(c) is
                                                  Recipients may not use more than five                   Assistance Agreement as a source for                  revised to clarify statutory requirements
                                                  (5) percent of its CMF Award for Direct                 the required percentage of Leveraged                  regarding notice and hearing. To align
                                                  Administrative Expenses. Section                        Costs that must be funded by non-                     with the Uniform Administrative
                                                  1807.303 is added to address Program                    governmental sources. Section                         Requirements, § 1807.901
                                                  Income requirements.                                    1807.500(a)(1) is deleted because                     ‘‘Disbursement of funds’’ is renamed
                                                     G. Subpart D, Qualification as                       ‘‘operations’’ is no longer an eligible               ‘‘Payment of funds’’ to reflect the
                                                  Affordable Housing: Section 1807.400 is                 activity and defined term. Accordingly,               transmission of CMF Award dollars


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                                                                    Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations                                             6437

                                                  from the CDFI Fund to the Recipient as                  D. National Environmental Policy Act                  1807.301 Eligible activities.
                                                  a ‘‘Payment.’’ Section 1807.902(d) and                                                                        1807.302 Restrictions on use of CMF
                                                                                                            This interim rule has been reviewed                     Award.
                                                  (e) are revised to accommodate the audit                in accordance with the CDFI Fund’s                    1807.303 Authorized uses of Program
                                                  requirements of the Uniform                             environmental quality regulations (12                     Income.
                                                  Administrative Requirements. Pursuant                   CFR part 1815), promulgated pursuant
                                                  to revised § 1807.902(e)(1), Nonprofit                                                                        Subpart D—Qualification as Affordable
                                                                                                          to the National Environmental
                                                  Organizations that are not required to                                                                        Housing
                                                                                                          Protection Act of 1969 (NEPA), which
                                                  have their financial statements audited                 requires that the CDFI Fund adequately                1807.400 Affordable Housing—general.
                                                  pursuant to the Uniform Administrative                                                                        1807.401 Affordable Housing—Rental
                                                                                                          consider the cumulative impact
                                                  Requirements may still be subject to                                                                              Housing.
                                                                                                          proposed activities have upon the                     1807.402 Affordable Housing—
                                                  additional audit requirements, which                    human environment. It is the                              Homeownership.
                                                  will be set forth in the applicable NOFA                determination of the CDFI Fund that the
                                                  and Assistance Agreement. In addition,                  interim rule does not constitute a major              Subpart E—Leveraged Costs; Eligible
                                                  § 1807.902(e)(2), ‘‘Performance Goal                                                                          Project Costs; Commitment Requirements
                                                                                                          federal action significantly affecting the
                                                  Reporting,’’ is renamed as ‘‘Annual                     quality of the human environment and,                 1807.500 Leveraged Costs; Eligible Project
                                                  Report’’ and revised to clarify and                     in accordance with the NEPA and the                       Costs.
                                                                                                                                                                1807.501 Commitments; Payments.
                                                  require the submission of performance                   CDFI Fund’s environmental quality
                                                                                                                                                                1807.502 CMF Award limits.
                                                  and financial reporting in the form of an               regulations (12 CFR part 1815), neither               1807.503 Projection Completion; Property
                                                  annual report, as further specified in the              an Environmental Assessment nor an                        standards.
                                                  Assistance Agreement. Section                           Environmental Impact Statement is
                                                  1807.902(e)(3) is added to clarify the                  required.                                             Subpart F—Tracking Funds; Uniform
                                                                                                                                                                Administrative Requirements; Nature of
                                                  compliance requirements for Insured                     E. Administrative Procedure Act                       Funds
                                                  CDFIs, Depository Institution Holding
                                                  Companies, and State-Insured Credit                        Because the revisions to this interim              1807.600 Tracking funds.
                                                                                                          rule relate to loans and grants, notice               1807.601 Uniform Administrative
                                                  Unions. Section 1807.902(e)(4) is added                                                                           Requirements.
                                                  to convey that any reports under                        and public procedure and a delayed
                                                                                                                                                                1807.602 Nature of funds.
                                                  § 1807.902 may be subject to public                     effective date are not required pursuant
                                                  inspection per the Freedom of                           to the Administrative Procedure Act, 5                Subpart G—Notice of Funds Availability;
                                                                                                          U.S.C. 553(a)(2).                                     Applications
                                                  Information Act. Section 1807.903 is
                                                  revised to specify that in addition to all              F. Comment                                            1807.700 Notice of funds availability.
                                                  other Federal, state, and local laws,                      Public comment is solicited on all                 Subpart H—Evaluation and Selection of
                                                  Recipients shall also comply with all                   aspects of this interim rule. The CDFI                Applications
                                                  applicable Federal environmental                        Fund will consider all comments made                  1807.800 Evaluation and selection—
                                                  requirements.                                           on the substance of this interim rule, but                general.
                                                                                                                                                                1807.801 Evaluation of applications.
                                                  IV. Rulemaking Analysis                                 it does not intend to hold hearings.
                                                                                                                                                                Subpart I—Terms and Conditions of CMF
                                                  A. Executive Order (E.O.) 12866                         G. Catalogue of Federal Domestic                      Award
                                                                                                          Assistance Number
                                                    It has been determined that this                                                                            1807.900 Assistance agreement.
                                                                                                            Capital Magnet Fund—21.011.                         1807.901 Payment of funds.
                                                  interim rule is not a significant                                                                             1807.902 Data collection and reporting.
                                                  regulatory action under Executive Order                 List of Subjects in 12 CFR Part 1807
                                                                                                                                                                1807.903 Compliance with government
                                                  12866. Accordingly, a regulatory impact                   Community development, Grant                            requirements.
                                                  assessment is not required.                             programs—housing and community                        1807.904 Lobbying restrictions.
                                                                                                          development, Reporting and record                     1807.905 Criminal provisions.
                                                  B. Regulatory Flexibility Act                                                                                 1807.906 CDFI Fund deemed not to control.
                                                                                                          keeping requirements.
                                                                                                                                                                1807.907 Limitation on liability.
                                                    Because no notice of proposed                         ■ For the reasons set forth in the                    1807.908 Fraud, waste and abuse.
                                                  rulemaking is required under the                        preamble, 12 CFR part 1807 is revised
                                                  Administrative Procedure Act (5 U.S.C                                                                           Authority: 12 U.S.C. 4569.
                                                                                                          to read as follows:
                                                  553), or any other law, the Regulatory
                                                                                                          PART 1807—CAPITAL MAGNET FUND                         Subpart A—General Provisions
                                                  Flexibility Act does not apply.
                                                                                                          Subpart A—General Provisions                          § 1807.100    Purpose.
                                                  C. Paperwork Reduction Act
                                                                                                          Sec.                                                    The purpose of the Capital Magnet
                                                    The collections of information                        1807.100 Purpose.                                     Fund (CMF) is to attract private capital
                                                  contained in this interim rule will be                  1807.101 Summary.                                     for and increase investment in
                                                  reviewed and approved by the Office of                  1807.102 Relationship to other CDFI Fund              Affordable Housing Activities and
                                                  Management and Budget (OMB) in                               programs.                                        related Economic Development
                                                  accordance with the Paperwork                           1807.103 Recipient not instrumentality.               Activities.
                                                                                                          1807.104 Definitions.
                                                  Reduction Act of 1995 and assigned the                  1807.105 Waiver authority.
                                                  applicable, approved OMB Control                                                                              § 1807.101    Summary.
                                                                                                          1807.106 OMB control number.
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                                                  Numbers associated with the CDFI Fund                   1807.107 Applicability of regulations for               (a) Through the CMF, the CDFI Fund
                                                  under 1559–XXXX. An agency may not                           CMF Awards.                                      competitively awards grants to CDFIs
                                                  conduct or sponsor, and a person is not                                                                       and qualified Nonprofit Organizations
                                                                                                          Subpart B—Eligibility
                                                  required to respond to, a collection of                                                                       to leverage dollars for:
                                                                                                          1807.200 Applicant eligibility.
                                                  information unless it displays a valid                                                                          (1) The Development, Preservation,
                                                  control number assigned by OMB. This                    Subpart C—Eligible Purposes; Eligible                 Rehabilitation or Purchase of Affordable
                                                  document restates the collections of                    Activities; Restrictions                              Housing primarily for Low-Income
                                                  information without substantive change.                 1807.300 Eligible purposes.                           Families; and


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                                                  6438                Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations

                                                    (2) Financing Economic Development                      accounts of a State-Insured Credit                    individuals exercising similar functions)
                                                  Activities.                                               Union;                                                of any company; or
                                                    (b) The CDFI Fund will select                              Assistance Agreement means a                          (3) The power to exercise, directly or
                                                  Recipients to receive CMF Awards                          formal, written agreement between the                 indirectly, a controlling influence over
                                                  through a merit-based, competitive                        CDFI Fund and a Recipient, which                      the management, credit or investment
                                                  application process. CMF Awards may                       agreement specifies the terms and                     decisions, or policies of any company;
                                                  only be used for eligible uses set forth                  conditions of assistance under this part;                Depository Institution Holding
                                                  in subpart C of this part. Each Recipient                    Capital Magnet Fund (or CMF) means                 Company means a bank holding
                                                  will enter into an Assistance Agreement                   the program authorized by the Act and                 company or a savings and loan holding
                                                  that will require it to leverage the CMF                  implemented under this part;                          company as each are defined in the
                                                  Award amount and abide by other terms                        CMF Award means the financial                      Federal Deposit Insurance Act, 12
                                                  and conditions pertinent to any                           assistance in the form of a grant made                U.S.C. 1813(w);
                                                  assistance received under this part.                      by the CDFI Fund to a Recipient                          Development means any combination
                                                                                                            pursuant to this part;                                of the following Project activities: Land
                                                  § 1807.102 Relationship to other CDFI                                                                           acquisition, demolition of existing
                                                  Fund programs.
                                                                                                               Certified Community Development
                                                                                                            Financial Institution (or Certified CDFI)             facilities, and construction of new
                                                    Restrictions on applying for,                           means an entity that has been                         facilities, which may include site
                                                  receiving, and using CMF Awards in                        determined by the CDFI Fund to meet                   improvement, utilities development and
                                                  conjunction with awards under other                       the certification requirements set forth              rehabilitation of utilities, necessary
                                                  programs administered by the CDFI                         in 12 CFR 1805.201;                                   infrastructure, utility services,
                                                  Fund (including, but not limited to, the                     Committed means that the Recipient                 conversion, and other related activities
                                                  Bank Enterprise Award Program, the                        is able to demonstrate, in written form               resulting in Affordable Housing;
                                                  CDFI Program, the CDFI Bond                               and substance that is acceptable to the                  Direct Administrative Expenses
                                                  Guarantee Program, the Native                             CDFI Fund, a commitment for use of                    means direct costs incurred by the
                                                  American CDFI Assistance (NACA)                           CMF Award, as set forth in § 1807.501;                Recipient, related to the financing of the
                                                  Program, and the New Markets Tax                             Community Development Financial                    Project as described in 2 CFR 200.413 of
                                                  Credit Program) are as set forth in the                   Institutions Fund (or CDFI Fund) means                the Uniform Administrative
                                                  applicable Notice of Funds Availability,                  the Community Development Financial                   Requirements;
                                                  Notice of Guarantee Availability, or                                                                               Economic Development Activity
                                                                                                            Institutions Fund, the U.S. Department
                                                  Notice of Allocation Availability.                                                                              means the development, preservation,
                                                                                                            of the Treasury, established pursuant to
                                                                                                                                                                  acquisition and/or rehabilitation of
                                                  § 1807.103       Recipient not instrumentality.           the Community Development Banking
                                                                                                                                                                  Community Service Facilities and/or
                                                    No Recipient shall be deemed to be an                   and Financial Institutions Act of 1994,
                                                                                                                                                                  other physical structures in which
                                                  agency, department, or instrumentality                    as amended, 12 U.S.C. 4701 et seq.;
                                                                                                                                                                  neighborhood-based businesses operate
                                                  of the United States.                                        Community Service Facility means the
                                                                                                                                                                  which, In Conjunction With Affordable
                                                                                                            physical structure in which service
                                                                                                                                                                  Housing Activities, implements a
                                                  § 1807.104       Definitions.                             programs for residents or service
                                                                                                                                                                  Concerted Strategy to stabilize or
                                                    For the purpose of this part:                           programs for the broader community
                                                                                                                                                                  revitalize a Low-Income Area or
                                                    Act means the Housing and Economic                      (including, but not limited to, health
                                                                                                                                                                  Underserved Rural Area;
                                                  Recovery Act of 2008, as amended,                         care, childcare, educational programs                    Effective Date means the date that the
                                                  Public Law 110–289, section 1131;                         including literacy and after school                   Assistance Agreement is effective; such
                                                    Affiliate means any entity that                         programs, job training, food and                      date is determined by the CDFI Fund
                                                  Controls, is Controlled by, or is under                   nutrition services, cultural programs,                after the Recipient has returned an
                                                  common Control with, an entity;                           and/or social services) operate that, In              executed, original Assistance
                                                    Affordable Housing means housing                        Conjunction With Affordable Housing                   Agreement, along with all required
                                                  that meets the requirements set forth in                  Activities, implements a Concerted                    supporting documentation, including
                                                  subpart D of this part;                                   Strategy to stabilize or revitalize a Low-            the opinion of counsel, if required;
                                                    Affordable Housing Activities means                     Income Area or Underserved Rural                         Eligible-Income means:
                                                  the Development, Preservation,                            Area;                                                    (1) Having, in the case of owner-
                                                  Rehabilitation, and/or Purchase of                           Concerted Strategy means a formal                  occupied Housing units, annual income
                                                  Affordable Housing;                                       planning document that evidences the                  not in excess of 120 percent of the area
                                                    Affordable Housing Fund means a                         connection between Affordable Housing                 median income adjusted for Family size
                                                  revolving loan, grant or investment fund                  Activities and Economic Development                   in the same manner as HUD makes these
                                                  that is:                                                  Activities. Such documents include, but               adjustments for its other published
                                                    (1) Managed by the Recipient; and                       are not limited to, a comprehensive,                  income limits; and
                                                    (2) Uses its capital to finance                         consolidated, or redevelopment plan, or                  (2) Having, in the case of rental
                                                  Affordable Housing Activities;                            some other local or regional planning                 Housing units, annual income not in
                                                    Applicant means any entity                              document adopted or approved by the                   excess of 120 percent of the area median
                                                  submitting an application for a CMF                       jurisdiction;                                         income, adjusted for Family size in the
                                                  Award;                                                       Control means:                                     same manner as HUD makes these
                                                    Appropriate Federal Banking Agency                         (1) Ownership, control, or power to                adjustments for its published income
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                                                  has the same meaning as in section 3 of                   vote 25 percent or more of the                        limits;
                                                  the Federal Deposit Insurance Act, 12                     outstanding shares of any class of                       Eligible Project Costs means
                                                  U.S.C. 1813(q), and includes, with                        Voting Securities of any company,                     Leveraged Costs plus those costs funded
                                                  respect to Insured Credit Unions, the                     directly or indirectly or acting through              directly by a CMF Award;
                                                  National Credit Union Administration;                     one or more other persons;                               Extremely Low-Income means:
                                                    Appropriate State Agency means an                          (2) Control in any manner over the                    (1) Having, in the case of owner-
                                                  agency or instrumentality of a State that                 election of a majority of the directors,              occupied Housing units, income not in
                                                  regulates and/or insures the member                       trustees, or general partners (or                     excess of 30 percent of the area median


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                                                                    Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations                                          6439

                                                  income, adjusted for Family size, as                       (2) Ownership interest may not                     are insured by the Federal Deposit
                                                  determined by HUD, except that HUD                      merely consist of a right to possession               Insurance Corporation as determined in
                                                  may establish income ceilings higher or                 under a contract for deed, installment                12 U.S.C. 1813(c)(2);
                                                  lower than 30 percent of the median for                 contract, or land contract (pursuant to                  Investment Period means the period
                                                  the area on the basis of HUD findings                   which the deed is not given until the                 beginning with the Effective Date and
                                                  that such variations are necessary                      final payment is made);                               ending on the fifth year anniversary of
                                                  because of prevailing levels of                            (3) Ownership interest may only be                 the Effective Date, or such other period
                                                  construction costs or fair market rents,                subject to the restrictions on resale                 as may be established by the CDFI Fund
                                                  or unusually high or low Family                         permitted under the Assistance                        in the Assistance Agreement;
                                                  incomes and                                             Agreement and this part; mortgages,                      Leveraged Costs means costs for
                                                     (2) Having, in the case of rental                    deeds of trust, or other liens or                     Affordable Housing Activities and
                                                  Housing units, income not in excess of                  instruments securing debt on the                      Economic Development Activities that
                                                  30 percent of the area median income,                   property; or any other restrictions or                exceed the dollar amount of the CMF
                                                  adjusted for Family size, as determined                 encumbrances that do not impair the                   Award, as further described in
                                                  by HUD, except that HUD may establish                   good and marketable nature of title to                § 1807.500;
                                                  income ceilings higher or lower than 30                 the ownership interest;                                  Loan Guarantee means the Recipient’s
                                                  percent of the median for the area on the                  Housing means Single-family and                    use of CMF Award to support an
                                                  basis of HUD findings that such                         Multi-family residential units including,             agreement to indemnify the holder of a
                                                  variations are necessary because of                     but not limited to, manufactured                      loan all or a portion of the unpaid
                                                  prevailing levels of construction costs or              housing and manufactured housing lots,                principal balance in case of default by
                                                  fair market rents, or unusually high or                 permanent housing for disabled and/or                 the borrower. The proceeds of the loan
                                                  low Family incomes;                                     homeless persons, transitional housing,               that is guaranteed with the CMF Award
                                                     Family or Families means households                  single-room occupancy housing, and                    must be used for Affordable Housing
                                                  that reside within the boundaries of the                group homes. Housing also includes                    Activities and/or Economic
                                                  United Sates (which shall encompass                     elder cottage housing opportunity                     Development Activities;
                                                  any State of the United States, the                     (ECHO) units that are small, free-                       Loan Loss Reserves means proceeds
                                                  District of Columbia or any territory of                standing, barrier-free, energy-efficient,             from the CMF Award that the Recipient
                                                  the United States, including Puerto                     removable, and designed to be installed               will set aside in the form of cash
                                                  Rico, Guam, American Samoa, the U. S.                   adjacent to existing single-family                    reserves, or through accounting-based
                                                  Virgin Islands, and the Northern                        dwellings. Housing does not include                   accrual reserves, to cover losses on
                                                  Mariana Islands);                                       emergency shelters (including shelters                loans, accounts, and notes receivable for
                                                     HOME Program means the HOME                          for disaster victims) or facilities such as           Affordable Housing Activities and/or
                                                  Investment Partnership Program                          nursing homes, convalescent homes,                    Economic Development Activities, or
                                                  established by the HOME Investment                      hospitals, residential treatment                      for related purposes that the CDFI Fund
                                                  Partnerships Act under title II of the                  facilities, correctional facilities, halfway          deems appropriate;
                                                  Cranston-Gonzalez National Affordable                   houses, housing for students, or                         Low-Income means:
                                                  Housing Act, as amended, 42 U.S.C.                      dormitories (including farmworker                        (1) Having, in the case of owner-
                                                  12701 et seq.;                                          dormitories);                                         occupied Housing units, income not in
                                                     Homeownership means ownership in                        HUD means the Department of                        excess of 80 percent of area median
                                                  fee simple title interest in one- to four-              Housing and Urban Development                         income, adjusted for Family size, as
                                                  unit Housing or in a condominium unit,                  established under the Department of                   determined by HUD, except that HUD
                                                  or equivalent form of ownership                         Housing and Urban Development Act of                  may establish income ceilings higher or
                                                  approved by the CDFI Fund. The                          1965, 42 U.S.C. 3532 et seq.;                         lower than 80 percent of the median for
                                                  Recipient must determine whether                           In Conjunction With Affordable                     the area on the basis of HUD findings
                                                  ownership or membership in a                            Housing means:                                        that such variations are necessary
                                                  cooperative or mutual housing project                      (1) Physically proximate to; and                   because of prevailing levels of
                                                  constitutes Homeownership under State                      (2) Reasonably available to residents              construction costs or fair market rents,
                                                  law. The ownership interest is subject to               of Affordable Housing that is subject to              or unusually high or low Family
                                                  the following additional requirements:                  Affordable Housing Activities. For a                  incomes; and
                                                     (1) Except as otherwise provided in                  Metropolitan Area, In Conjunction With                   (2) Having, in the case of rental
                                                  paragraphs (1)(i), (ii), and (iii) of this              means located within the same census                  Housing units, income not in excess of
                                                  definition, the land may be owned in fee                tract or within 1 mile of such Affordable             80 percent of area median income,
                                                  simple or the homeowner may have a                      Housing. For a Non-Metropolitan Area,                 adjusted for Family size, as determined
                                                  99-year ground lease;                                   In Conjunction With means located                     by HUD, except that HUD may establish
                                                     (i) For Housing located on Indian trust              within the same county, township, or                  income ceilings higher or lower than 80
                                                  or restricted Indian lands, the ground                  village, or within 10 miles of such                   percent of the median for the area on the
                                                  lease must be for 50 years or more;                     Affordable Housing;                                   basis of HUD findings that such
                                                     (ii) For Housing located in Guam, the                   Insured CDFI means a Certified CDFI                variations are necessary because of
                                                  Northern Mariana Islands, the U. S.                     that is an Insured Depository Institution             prevailing levels of construction costs or
                                                  Virgin Islands, and American Samoa,                     or an Insured Credit Union;                           fair market rents, or unusually high or
                                                  the ground lease must be 40 years or                       Insured Credit Union means any                     low Family incomes;
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                                                  more;                                                   credit union, the member accounts of                     Low-Income Area or LIA means a
                                                     (iii) For manufactured housing, the                  which are insured by the National                     census tract or block numbering area in
                                                  ground lease must be for a minimum                      Credit Union Share Insurance Fund by                  which the median income does not
                                                  period of 10 years or such other                        the National Credit Union                             exceed 80 percent of the median income
                                                  applicable time period regarding                        Administration pursuant to authority                  for the area in which such census tract
                                                  location set forth in this definition of                granted in 12 U.S.C. 1783 et seq.;                    or block numbering area is located. With
                                                  Homeownership at the time of purchase                      Insured Depository Institution means               respect to a census tract or block
                                                  by the homeowner;                                       any bank or thrift, the deposits of which             numbering area located within a


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                                                  6440              Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations

                                                  Metropolitan Area, the median Family                    housing programs, hereinafter referred                   Rehabilitation means any repairs and/
                                                  income shall be at or below 80 percent                  to as ‘‘similar State or Federal affordable           or capital improvements that contribute
                                                  of the Metropolitan Area median Family                  housing programs,’’ where such                        to the long-term preservation, current
                                                  income or the national Metropolitan                     refinancing has the effect of extending               building code compliance, habitability,
                                                  Area median Family income, whichever                    the term of any existing affordability                sustainability, or energy efficiency of
                                                  is greater. In the case of a census tract               and use restrictions on the properties by             Affordable Housing;
                                                  or block numbering area located outside                 a minimum 10 years or as otherwise                       Revolving Loan Fund means a pool of
                                                  of a Metropolitan Area, the median                      specified in the Assistance Agreement;                funds managed by the Applicant or the
                                                  Family income shall be at or below 80                      (2) Activities to refinance and acquire            Recipient wherein repayments on loans
                                                  percent of the statewide Non-                           Single-family housing or Multi-family                 for Affordable Housing Activities or
                                                  Metropolitan Area median Family                         housing that, at the time of refinancing              Economic Development Activities are
                                                  income or the national Non-                             or acquisition, were subject to                       used to refinance additional loans;
                                                  Metropolitan Area median Family                         affordability and use restrictions under                 Risk-Sharing Loan means loans for
                                                  income, whichever is greater;                           similar State or Federal affordable                   Affordable Housing Activities and/or
                                                     Low Income Housing Credits (or                       housing programs or under the LIHTC                   Economic Development Activities in
                                                  LIHTCs) means credits against income                    statute, by the former tenants of such                which the risk of borrower default is
                                                  tax under section 42 of the Internal                    properties, where such refinancing has                shared by the Applicant or Recipient
                                                  Revenue Code of 1986, as amended, 26                    the effect of extending the term of any               with other lenders (e.g., participation
                                                  U.S.C. 42;                                              existing affordability and use                        loans);
                                                     Metropolitan Area means an area                      restrictions on the properties by a                      Service Area means the geographic
                                                  designated as such by the Office of                     minimum 10 years or as otherwise                      area in which the Applicant proposes to
                                                  Management and Budget pursuant to 44                    specified in the Assistance Agreement;                use the CMF Award, and the geographic
                                                  U.S.C. 3504(e) and 31 U.S.C. 1104(d)                       (3) Activities to refinance the                    area approved by the CDFI Fund in
                                                  and Executive Order 10253 (3 CFR,                       mortgages of owner-occupied, Single-                  which the Recipient must use the CMF
                                                  1949–1953 Comp., p. 758), as amended;                   family housing that, at the time of                   Award as set forth in its Assistance
                                                     Multi-family housing means                           refinancing, are subject to affordability             Agreement;
                                                  residential properties consisting of five               and use restrictions under similar State                 Single-family housing means a one- to
                                                  or more dwelling units, such as a                       or Federal affordable housing programs,               four-Family residence, a condominium
                                                  condominium unit, cooperative unit,                     where such refinancing has the effect of              unit, a cooperative unit, a combination
                                                  apartment, or townhouse;                                extending the term of any existing                    of manufactured housing and lot, or a
                                                     Non-Metropolitan Area means                          affordability and use restrictions on the             manufactured housing lot;
                                                  counties that are designated as Non-                    properties by a minimum 10 years or as                   State means the states of the United
                                                  Metropolitan Counties by the Office of                  otherwise specified in the Assistance                 States, the District of Columbia, the
                                                  Management and Budget (OMB)                             Agreement;                                            Commonwealth of Puerto Rico, the
                                                  pursuant to 44 U.S.C. 3504(e) and 31                       (4) Activities to acquire Single-family            Commonwealth of the Northern Mariana
                                                  U.S.C. 1104(d) and Executive Order                      housing or Multi-family housing, with                 Island, Guam, the U.S. Virgin Islands,
                                                  10253 (3 CFR, 1949–1953 Comp., p.                       or without Rehabilitation, with the                   American Samoa, the Trust Territory of
                                                  758), as amended, and as made available                 commitment to subject the properties to               the Pacific Islands, and any other
                                                  by the CDFI Fund for a specific                         the affordability qualifications set forth            territory of the United States;
                                                  application funding round;                              in subpart D of this part; or                            State-Insured Credit Union means any
                                                     Nonprofit Organization means any                                                                           credit union that is regulated by, and/
                                                                                                             (5) Activities to refinance, with or
                                                  corporation, trust, association,                                                                              or the member accounts of which are
                                                                                                          without Rehabilitation, Single-family
                                                  cooperative, or other organization that                                                                       insured by, a State agency or
                                                                                                          housing or Multi-family housing, with
                                                  is:                                                                                                           instrumentality;
                                                                                                          the commitment to subject the
                                                     (1) Designated as a nonprofit or not-                                                                         Subsidiary means any company that
                                                                                                          properties to the affordability
                                                  for-profit entity under the laws of the                                                                       is owned or Controlled directly or
                                                                                                          qualifications set forth in subpart D of
                                                  organization’s State of formation; and                                                                        indirectly by another company;
                                                     (2) Exempt from Federal income                       this part;
                                                                                                                                                                   Underserved Rural Area means:
                                                  taxation pursuant to the Internal                          Program Income means gross income,                    (1) A Non-Metropolitan Area that:
                                                  Revenue Code of 1986;                                   as further described in 2 CFR part 1000;                 (i) Qualifies as a Low-Income Area;
                                                     Participating Jurisdiction means a                      Project means the Affordable Housing               and
                                                  jurisdiction designated by HUD as such                  Activity and/or Economic Development                     (ii) Is experiencing economic distress
                                                  under the HOME Program in accordance                    Activity that is financed with the CMF                evidenced by 30 percent or more of
                                                  with the requirements of 24 CFR 92.105;                 Award;                                                resident households with one or more of
                                                     Payment means the transmission of                       Project Completion means that all of               these four housing conditions in the
                                                  CMF Award dollars from the CDFI Fund                    the requirements set forth at § 1807.503              most recent census for which data are
                                                  to the Recipient;                                       for a Project have been met;                          available:
                                                     Preservation means:                                     Purchase means to provide direct                      (A) Lacking complete plumbing;
                                                     (1) Activities to refinance, with or                 financing to a Family for purposes of                    (B) Lacking complete kitchen;
                                                  without Rehabilitation, Single-family                   Homeownership. Before the Recipient                      (C) Paying 30 percent or more of
                                                  housing or Multi-family housing (rental)                provides any financing to a Family for                income for owner costs or tenant rent;
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                                                  mortgages that, at the time of                          Homeownership purposes, the                           or
                                                  refinancing, are subject to affordability               Recipient must verify that the Family                    (D) Having more than 1 person per
                                                  and use restrictions under the LIHTC                    and the Single-family housing meet the                room;
                                                  statute or under State or Federal                       qualifications set forth in subparts D                   (2) An area as specified in the
                                                  affordable housing programs, including                  and E of this part;                                   applicable NOFA and/or Assistance
                                                  but not limited to, the HOME Program,                      Recipient means an Applicant                       Agreement;
                                                  properties with Federal project-based                   selected by the CDFI Fund to receive a                   Uniform Administrative Requirements
                                                  rental assistance, or the USDA rental                   CMF Award pursuant to this part;                      means the Uniform Administrative


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                                                                      Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations                                             6441

                                                  Requirements, Cost Principles, and                        Subpart B—Eligibility                                 Conjunction With Affordable Housing
                                                  Audit Requirements for Federal Awards                                                                           Activities that are undertaken by parties
                                                  (2 CFR part 1000);                                        § 1807.200    Applicant eligibility.                  other than the Recipient;
                                                                                                               (a) General requirements. An                          (3) If the Recipient uses its CMF
                                                     Very Low-Income means:
                                                                                                            Applicant will be deemed eligible to                  Award to fund an Economic
                                                     (1) Having, in the case of owner-                      apply for a CMF Award if it is:                       Development Activity In Conjunction
                                                  occupied Housing, income not greater                         (1) A Certified CDFI. An entity may                With Affordable Housing Activity, it
                                                  than 50 percent of the area median                        meet the requirements described in this               must track the resulting Affordable
                                                  income with adjustments for Family                        paragraph (a)(1) if it is:                            Housing, as set forth in subpart D of this
                                                  size, as determined by HUD, except that                      (i) A Certified CDFI, as set forth in 12           part, to the extent the Affordable
                                                  HUD may establish income ceilings                         CFR 1805.201,                                         Housing was financed by the CMF
                                                  higher or lower than 50 percent of the                       (ii) A Certified CDFI that has been in             Award. For the purposes of meeting the
                                                  median for the area on the basis of HUD                   existence as a legally formed entity as               10-year affordability period
                                                  findings that such variations are                         set forth in the applicable Notice of                 requirement, Recipients are not required
                                                  necessary because of prevailing levels of                 Funds Availability (NOFA); or                         to track Affordable Housing that was
                                                  construction costs or fair market rents,                     (2) A Nonprofit Organization having                financed by sources other than the CMF
                                                  or unusually high or low Family                           as one of its principal purposes the                  Award.
                                                  incomes; and                                              development or management of
                                                                                                            affordable housing. An entity may meet                § 1807.301    Eligible activities.
                                                     (2) Having, in the case of rental                      the requirements described in this                      The Recipient must use its CMF
                                                  Housing, income not greater than 50                       paragraph (a)(2) if it:                               Award to finance and support
                                                  percent of the area median income, with                      (i) Has been in existence as a legally             Affordable Housing Activities and/or
                                                  adjustments for Family size, as                           formed entity as set forth in the                     Economic Development Activities
                                                  determined by HUD, except that HUD                        applicable NOFA;                                      through the following eligible activities:
                                                  may establish income ceilings higher or                      (ii) Demonstrates, through articles of               (a) To capitalize Loan Loss Reserves;
                                                  lower than 50 percent of the median for                   incorporation, by-laws, or other board-                 (b) To capitalize a Revolving Loan
                                                  the area on the basis of HUD findings                     approved documents, that the                          Fund;
                                                  that such variations are necessary                        development or management of                            (c) To capitalize an Affordable
                                                  because of prevailing levels of                           affordable housing are among its                      Housing Fund;
                                                  construction costs or fair market rents,                  principal purposes; and                                 (d) To capitalize a fund to support
                                                  or unusually high or low Family                              (iii) Can demonstrate that a certain               Economic Development Activities;
                                                  incomes.                                                  percentage, set forth in the applicable                 (e) To make Risk-Sharing Loans; and
                                                                                                            NOFA, of the Applicant’s total assets are               (f) To provide Loan Guarantees.
                                                  § 1807.105       Waiver authority.                        dedicated to the development or
                                                                                                                                                                  § 1807.302    Restrictions on use of CMF
                                                                                                            management of affordable housing.
                                                    The CDFI Fund may waive any                                                                                   Award.
                                                                                                               (b) Eligibility verification. An
                                                  requirement of this part that is not                                                                              (a) The Recipient may not use its CMF
                                                                                                            Applicant shall demonstrate that it
                                                  required by law upon a determination of                   meets the eligibility requirements                    Award for the following:
                                                  good cause. Each such waiver shall be                     described in paragraph (a)(2) of this                   (1) Political activities;
                                                  in writing and supported by a statement                   section by providing information                        (2) Advocacy;
                                                  of the facts and the grounds forming the                  described in the application, NOFA,                     (3) Lobbying, whether directly or
                                                  basis of the waiver. For a waiver in an                   and/or supplemental information, as                   through other parties;
                                                  individual case, the CDFI Fund must                       may be requested by the CDFI Fund. For                  (4) Counseling services (including
                                                  determine that application of the                         an Applicant seeking eligibility under                homebuyer or financial counseling);
                                                  requirement to be waived would                            paragraph (a)(1) of this section, the CDFI              (5) Travel expenses;
                                                  adversely affect the achievement of the                   Fund will verify that the Applicant is a                (6) Preparing or providing advice on
                                                  purposes of the Act. For waivers of                       Certified CDFI during the application                 tax returns;
                                                  general applicability, the CDFI Fund                      eligibility review.                                     (7) Emergency shelters (including
                                                  will publish notification of granted                                                                            shelters for disaster victims);
                                                                                                            Subpart C—Eligible Purposes; Eligible                   (8) Nursing homes;
                                                  waivers in the Federal Register.
                                                                                                            Activities; Restrictions                                (9) Convalescent homes;
                                                  § 1807.106       OMB control number.                                                                              (10) Residential treatment facilities;
                                                                                                            § 1807.300    Eligible purposes.                        (11) Correctional facilities; or
                                                     The OMB control number for the CMF                        Each Recipient must use its CMF                      (12) Student dormitories.
                                                  Award application is 1559–0036. The                       Award for the eligible activities                       (b) The Recipient shall not use the
                                                  compliance date requirements for the                      described in § 1807.301 so long as such               CMF Award to finance or support
                                                  collection of information in § 1807.902                   eligible activities increase private                  Projects that include:
                                                  is stayed indefinitely, pending Office of                 capital for and increase investment in:                 (1) The operation of any private or
                                                  Management and Budget approval and                           (a) Development, Preservation,                     commercial golf course, country club,
                                                  assignment of an OMB control number.                      Rehabilitation, and/or Purchase of                    massage parlor, hot tub facility, suntan
                                                                                                            Affordable Housing for primarily                      facility, racetrack or other facility used
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                                                  § 1807.107 Applicability of regulations for               Extremely Low-Income, Very Low-                       for gambling, or any store the principal
                                                  CMF Awards.                                                                                                     business of which is the sale of
                                                                                                            Income, and Low-Income Families; and/
                                                    As of February 8, 2016, the                             or                                                    alcoholic beverages for consumption off
                                                  regulations of this part are applicable for                  (b) Economic Development Activities.               premises; or
                                                  CMF Awards made pursuant to Notices                          (1) Economic Development Activity                    (2) Farming activities (within the
                                                  of Funds Availability published after                     must support Affordable Housing;                      meaning of Internal Revenue Code (IRC)
                                                  February 8, 2016.                                            (2) The Recipient may undertake                    section 2032A(e)(5)(A) or (B)), if, as of
                                                                                                            Economic Development Activity In                      the close of the taxable year of the


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                                                  6442                Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations

                                                  taxpayer conducting such trade or                        a subset of said 100 percent, greater than            and the Family pays as a contribution
                                                  business, the sum of the aggregate                       50 percent of the Eligible Project Costs              towards rent not more than 30 percent
                                                  unadjusted bases (or, if greater, the fair               must be attributable to Affordable                    of the Family’s income, the maximum
                                                  market value) of the assets owned by the                 Housing that comply with the                          rent (i.e., tenant contribution plus rental
                                                  taxpayer that are used in such a trade or                affordability qualifications set forth in             subsidy) is the rent allowable under the
                                                  business, and the aggregate value of the                 this subpart for Low-Income, Very Low-                Federal or State rental subsidy program;
                                                  assets leased by the taxpayer that are                   Income, or Extremely Low-Income                       or
                                                  used in such a trade or business,                        Families, or as further set forth in the                 (4) For an Extremely Low-Income
                                                  exceeds $500,000.                                        applicable NOFA and/or Assistance                     Family, 30 percent of the annual income
                                                    (c) In any given application round, no                 Agreement.                                            of a Family whose annual income
                                                  more than 30 percent of a CMF Award                                                                            equals 30 percent of the area median
                                                                                                           § 1807.401    Affordable Housing—Rental               income, with adjustments for number of
                                                  may be used for Economic Development                     Housing.
                                                  Activities.                                                                                                    bedrooms in the unit as described in
                                                    (d) Any Recipient that uses its CMF                       To qualify as Affordable Housing,                  paragraph (a) of this section. If the unit
                                                  Award for a Loan Guarantee or Loan                       each rental Multi-family housing Project              or tenant receives Federal or State rental
                                                  Loss Reserves must ensure the                            financed with CMF Award must have at                  subsidy, and the Family pays as a
                                                  underlying loan(s) are made to support                   least 20 percent of the units occupied by             contribution toward rent not more than
                                                  Affordable Housing Activities and                        any combination of Low-Income, Very                   30 percent of the Family’s income, the
                                                  Economic Development Activities. The                     Low-Income, or Extremely Low-Income                   maximum rent (i.e., tenant contribution
                                                  Affordable Housing resulting from the                    Families and must comply with the rent                plus rental subsidy) is the rent
                                                  Recipient’s Loan Guarantee or Loan                       limits set forth herein. However, the                 allowable under the Federal or State
                                                  Loss Reserve shall be tracked for 10                     CDFI Fund may require a greater                       rental subsidy program.
                                                  years, as set forth in subpart D of this                 percentage of the units per Project to be                (b) Nondiscrimination against rental
                                                  part.                                                    income-targeted and/or require a                      assistance subsidy holders. The
                                                    (e) If loans that are made pursuant to                 specific targeted income commitment in                Recipient shall require that the owner of
                                                  a Loan Guarantee or Loan Loss Reserves                   any given application round, as set forth             a rental unit cannot refuse to lease the
                                                  are repaid during the Investment Period,                 in the NOFA and Assistance Agreement                  unit to a Section 8 Program certificate or
                                                  the Recipient must use the repaid funds                  for that application round.                           voucher holder (24 CFR part 982,
                                                                                                              (a) Rent limitation. The gross rent                Section 8 Tenant-Based Assistance:
                                                  for Loan Guarantees or Loan Loss
                                                                                                           limits for Affordable Housing are                     Unified Rule for Tenant-Based
                                                  Reserves targeted to the income
                                                                                                           determined under the provisions in IRC                Assistance under the Section 8 Rental
                                                  population (Extremely Low-Income,
                                                                                                           section 42(g)(2). In this determination, if           Certificate Program and the Section 8
                                                  Very Low-Income, Low-Income) set
                                                                                                           this part imposes an income restriction               Rental Voucher Program) or to the
                                                  forth in the Recipient’s Assistance
                                                                                                           on a unit that is greater than 60 percent             holder of a comparable document
                                                  Agreement, for the duration of the
                                                                                                           of area median income, adjusted for                   evidencing participation in a HOME
                                                  Investment Period.
                                                                                                           Family size, then the provisions of IRC               tenant-based rental assistance program
                                                    (f) The Recipient may not use more
                                                                                                           section 42(g)(2) are applied as if that               because of the status of the prospective
                                                  than five (5) percent of its CMF Award
                                                                                                           income restriction on the unit satisfied              tenant as a holder of such certificate,
                                                  for Direct Administrative Expenses.
                                                                                                           IRC section 42(g)(1). The maximum rent                voucher, or comparable HOME tenant-
                                                  § 1807.303       Authorized uses of Program              is a rent that does not exceed:                       based assistance document.
                                                  Income.                                                     (1) For an Eligible-Income Family, 30                 (c) Initial rent schedule and utility
                                                    (a) Program Income earned in the                       percent of the annual income of a                     allowances. The Recipient shall ensure
                                                  form of principal and equity repayments                  Family whose annual income equals                     that utility allowances and submetering
                                                  must be used by the Recipient for the                    120 percent of the area median income,                rules are consistent with regulations
                                                  approved, eligible CMF Award uses as                     with adjustments for number of                        concerning utility allowances and
                                                  further set forth in the Assistance                      bedrooms in the unit, as set forth in IRC             submetering in buildings that are
                                                  Agreement for the duration of the                        section 42(g)(2).                                     subject to gross rent restrictions under
                                                  Investment Period.                                          (2) For a Low-Income Family, 30                    IRC section 42(g)(2).
                                                    (b) Program Income earned in the                       percent of the annual income of a                        (d) Periods of affordability. Housing
                                                  form of interest payments, and all other                 Family whose annual income equals 80                  under this section must meet the
                                                  forms of Program Income (except for                      percent of the area median income, with               affordability requirements for not less
                                                  that which is earned as described in                     adjustments for number of bedrooms in                 than 10 years, beginning after Project
                                                  paragraph (a) of this section, must be                   the unit, as set forth in IRC section                 Completion and at initial occupancy.
                                                  used by the Recipient as set forth in the                42(g)(2). If the unit or tenant receives              The affordability requirements apply
                                                  Assistance Agreement and in                              Federal or State rental subsidy, and the              without regard to the term of any loan
                                                  accordance with 2 CFR part 1000.                         Family pays as a contribution towards                 or mortgage or the transfer of ownership
                                                                                                           rent not more than 30 percent of the                  and must be imposed by deed
                                                  Subpart D—Qualification as Affordable                    Family’s income, the maximum rent                     restrictions, covenants running with the
                                                  Housing                                                  (i.e., tenant contribution plus rental                land, or other recordable mechanisms.
                                                                                                           subsidy) is the rent allowable under the              Other recordable mechanisms must be
                                                  § 1807.400       Affordable Housing—general.             Federal or State rental subsidy program;              approved in writing and in advance by
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                                                    Each Recipient that uses its CMF                          (3) For a Very Low-Income Family, 30               the CDFI Fund. The affordability
                                                  Award for Affordable Housing Activities                  percent of the annual income of a                     restrictions may terminate upon
                                                  must ensure that 100 percent of Eligible                 Family whose annual income equals 50                  foreclosure or transfer in lieu of
                                                  Project Costs are attributable to                        percent of the area median income, with               foreclosure. However, the affordability
                                                  Affordable Housing; meaning, that they                   adjustments for number of bedrooms in                 restrictions shall be revived according to
                                                  comply with the affordability                            the unit as described in paragraph (a) of             the original terms if, during the original
                                                  qualifications set forth in this subpart                 this section. If the unit or tenant                   affordability period, the owner of record
                                                  for Eligible-Income Families. Further, as                receives Federal or State rental subsidy,             before the foreclosure, or deed in lieu of


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                                                                    Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations                                           6443

                                                  foreclosure, or any entity that includes                   (2) Tenants whose incomes no longer                redeployment or resale strategies must
                                                  the former owner or those with whom                     qualify must pay rent no greater than                 be imposed by the Recipient. A
                                                  the former owner has or had family or                   the lesser of the amount payable by the               recoupment strategy must ensure that,
                                                  business ties, obtains an ownership                     tenant under State or local law or 30                 in the event the qualifying homeowner
                                                  interest in the Project.                                percent of the Family’s annual income,                sells the Housing before the end of the
                                                     (e) Subsequent rents during the                      except if the gross rent of a unit is                 10-year affordability period and the new
                                                  affordability period. Any increase in                   subject to the restrictions in IRC section            homeowner does not meet the
                                                  rent for a CMF-financed unit requires                   42(g)(2) or the restrictions in an                    affordability qualifications set forth in
                                                  that tenants of those units be given at                 extended low-income housing                           § 1807.400, an amount equal to the
                                                  least 30 days prior written notice before               commitment under IRC section 42(h)(6),                amount of the CMF Award investment
                                                  the implementation of the rent increase.                then the tenants of that unit must pay                in the Housing, whether recouped or
                                                  Regardless of changes in annual rents                   rent governed by those restrictions.                  not, is used to finance additional
                                                  and in median income over time, the                     Tenants who no longer qualify as                      Affordable Housing Activities for a
                                                  CMF rents for a Project are not required                Eligible-Income are not required to pay               qualifying Family in the same income
                                                  to be lower than the CMF rent limits for                rent in excess of the market rent for                 category for Affordable Housing
                                                  the Project in effect at the time when the              comparable, unassisted units in the                   Homeownership in the manner set forth
                                                  Project is Committed for use.                           neighborhood.                                         in this section, except that the Housing
                                                     (f) Tenant income determination. (1)                    (3) If the income of a tenant of a CMF-            must meet the affordability
                                                  Each year during the period of                          financed or assisted unit no longer                   requirements only for the remaining
                                                  affordability, the tenant’s income shall                qualifies, the Recipient may designate                duration of the affordability period. The
                                                  be re-examined; tenant income                           another unit, within the CMF-financed                 Recipient may design and implement its
                                                  examination and verification is                         or assisted Project, as a replacement unit            own recoupment strategy. Deed
                                                  ultimately the responsibility of the                    that meets the affordability                          restrictions, covenants running with the
                                                  Recipient. Annual income shall include                  qualifications for the same income                    land, or other similar mechanisms may
                                                  income from all household members.                      category as the original unit, as further             be used as the mechanism to impose a
                                                  The Recipient must require the Project                  set forth in the Recipient’s Assistance               resale strategy. The Recipient shall
                                                  owner to obtain information on rents                    Agreement. If there is not an available               report to the CDFI Fund the event of
                                                  and occupancy of Affordable Housing                     replacement unit, the Recipient must fill             resale and/or recoupment and
                                                  financed or assisted with a CMF Award                   the first available vacancy with a tenant             redeployment of the CMF Award, or an
                                                  in order to demonstrate compliance                      that meets the affordability                          equivalent amount, in the manner
                                                  with this section.                                      qualifications for the same income                    described in the Assistance Agreement.
                                                     (2) One of the following two                         category of the original unit as necessary            The affordability restrictions may
                                                  definitions of ‘‘annual income’’ must be                to maintain compliance with the CMF                   terminate upon occurrence of any of the
                                                  used to determine whether a Family is                   requirements and the Assistance                       following termination events:
                                                  income-eligible:                                        Agreement.                                            Foreclosure, transfer in lieu of
                                                     (i) Adjusted gross income as defined                                                                       foreclosure, or assignment of an FHA-
                                                  for purposes of reporting under Internal                § 1807.402 Affordable Housing—                        insured mortgage to HUD. The Recipient
                                                  Revenue Service (IRS) Form 1040 series                  Homeownership.                                        may use purchase options, rights of first
                                                  for individual Federal annual income                       (a) Purchase with or without                       refusal or other preemptive rights to
                                                  tax purposes; or                                        Rehabilitation. A Recipient that uses the             purchase the Housing before foreclosure
                                                     (ii) ‘‘Annual Income’’ as defined at 24              CMF Award for the eligible activities set             to preserve affordability. The
                                                  CFR 5.609 (except that when                             forth in § 1807.301 for Purchase must                 affordability restrictions shall be revived
                                                  determining the income of a homeowner                   ensure the purchasing Family and                      according to the original terms if, during
                                                  for an owner-occupied Rehabilitation                    Housing meets the affordability                       the original affordability period, the
                                                  Project, the value of the homeowner’s                   requirements of this subpart.                         owner of record before the termination
                                                  principal residence may be excluded                        (1) The Housing must be Single-                    event, obtains an ownership interest in
                                                  from the calculation of Net Family                      family housing.                                       the Housing. If there is a sale of Single-
                                                  Assets, as defined in 24 CFR 5.603).                       (2) The Single-family housing price                family housing funded by a CMF Award
                                                     (3) Although either of the above two                 does not exceed 95 percent of the                     prior to the completion of the 10-year
                                                  definitions of ‘‘annual income’’ is                     median purchase price for the area as                 affordability period, the Recipient must
                                                  permitted, in order to calculate adjusted               used in the HOME Program and as                       demonstrate that it placed into service
                                                  income, exclusions from income set                      determined by HUD and the applicable                  Single-family housing targeting the
                                                  forth at 24 CFR 5.611 shall be applied.                 Participating Jurisdiction.                           same income population (i.e., Extremely
                                                     (4) The CDFI Fund reserves the right                    (3) The Single-family housing must be              Low-Income, Very Low-Income, Low-
                                                  to deem certain government programs,                    purchased by a qualifying Family as set               Income) as the original Single-family
                                                  under which a Low-Income Family is a                    forth in § 1807.400. The Single-family                housing, as set forth in the Assistance
                                                  recipient, as income eligible for                       housing must be the principal residence               Agreement, financed with an equivalent
                                                  purposes of meeting the tenant income                   of the Family throughout the period                   amount to the recouped portion of the
                                                  requirements under this section.                        described in paragraph (a)(4) of this                 CMF Award, that will be tracked for the
                                                     (g) Over-income tenants. (1) CMF-                    section.                                              duration of the affordability period of
                                                  financed or assisted units continue to                     (4) Periods of affordability. Single-              the original Single-family housing.
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                                                  qualify as Affordable Housing despite a                 family housing under this section must                   (b) Rehabilitation not involving
                                                  temporary noncompliance caused by                       meet the affordability requirements for               Purchase. Single-family housing that is
                                                  increases in the incomes of existing                    at least 10 years at the time of purchase             currently owned by a qualifying Family,
                                                  tenants if actions satisfactory to the                  by the Family.                                        as set forth in § 1807.400, qualifies as
                                                  CDFI Fund are being taken to ensure                        (5) Resale. To ensure that CMF                     Affordable Housing if it meets the
                                                  that all vacancies are filled in                        Awards are being used for qualifying                  requirements of this paragraph (b).
                                                  accordance with this section until the                  Families for the entire 10-year                          (1) The estimated value of the Single-
                                                  noncompliance is corrected.                             affordability period, recoupment and                  family housing, after Rehabilitation,


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                                                  6444              Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations

                                                  does not exceed 95 percent of the                          (ii) All Leveraged Costs attributable to           § 1807.503 Project Completion; Property
                                                  median purchase price for the area, as                  Affordable Housing Activities must be                 standards.
                                                  used in the HOME Program and as                         for Affordable Housing, as set forth in                  (a) Upon Project Completion, the
                                                  determined by the applicable                            § 1807.401 or § 1807.402, and as further              Project must be placed into service by
                                                  Participating Jurisdiction; or                          described in the Assistance Agreement;                the date designated in the Assistance
                                                     (2) The Single-family housing is the                    (iii) All eligible Leveraged Costs                 Agreement. Project Completion occurs,
                                                  principal residence of a qualifying                     attributable to Economic Development                  as determined by the CDFI Fund, when:
                                                  Family as set forth in § 1807.400, at the               Activities shall be described in the                     (1) All necessary title transfer
                                                  time that the CMF Award is Committed                    Assistance Agreement.                                 requirements and construction work
                                                  to the Single-family housing.                                                                                 have been performed;
                                                     (3) Single-family housing under this                    (c) Recipients must report Leveraged                  (2) The property standards of
                                                  paragraph (b) must meet the                             Costs information through forms or                    paragraph (b) of this section have been
                                                  affordability requirements for at least 10              electronic systems provided by the CDFI               met; and
                                                  years after Rehabilitation is completed                 Fund. Consequently, Recipients must                      (3) The final drawdown of the CMF
                                                  or meet the resale provisions of                        maintain appropriate documentation,                   Award has been made to the project
                                                  paragraph (a)(5) of this section.                       such as audited financial statements,                 sponsor or developer;
                                                     (c) Ownership interest. The ownership                wire transfers documents, pro-formas,                    (4) When a CMF Award is used for
                                                  in the Single-family housing assisted                   and other relevant records, to support                Preservation, Project Completion occurs
                                                  under this section must meet the                        such reports.                                         when the refinance and/or
                                                  definition of Homeownership as defined                                                                        Rehabilitation is completed in addition
                                                                                                          § 1807.501    Commitments; Payments.
                                                  in § 1807.104.                                                                                                to the requirements set forth in this
                                                     (d) New construction without                           (a) The CMF Award must be                           paragraph (a).
                                                  Purchase. Newly constructed Single-                     Committed by the Recipient for use by                    (b) By the Project Completion date,
                                                  family housing that is built on property                the date designated in its Assistance                 the Project must meet the requirements
                                                  currently owned by a Family that will                   Agreement.                                            of this part, including the following
                                                  occupy the Single-family housing upon                     (b) The Recipient must evidence such                property standards (which must be met
                                                  completion, qualifies as Affordable                     commitment with a written, legally                    for a period of at least 10 years after the
                                                  Housing if it meets the requirements                    binding agreement to provide CMF                      Project Completion date):
                                                  under paragraph (a) of this section.                    Award proceeds to the qualifying                         (1) Projects that are constructed or
                                                     (e) Converting rental units to                                                                             Rehabilitated with a CMF Award must
                                                                                                          Family, developer or project sponsor for
                                                  Homeownership units for existing                                                                              meet all applicable State and local
                                                                                                          a Project whose:
                                                  tenants. CMF-financed rental units may                                                                        codes, Rehabilitation standards,
                                                  be converted to Homeownership units                       (1) Construction can reasonably be                  ordinances, and zoning requirements at
                                                  by selling, donating, or otherwise                      expected to start within 12 months of                 the time of Project Completion or, in the
                                                  conveying the units to the existing                     the commitment agreement date;                        absence of a State or local building
                                                  tenants to enable the tenants to become                   (2) Property title will be transferred              code, the International Residential Code
                                                  homeowners in accordance with the                       within 6 months of the commitment                     or International Building Code (as
                                                  requirements of this section. The                       agreement date; or                                    applicable) of the International Code
                                                  Homeownership units are subject to a                      (3) Construction schedule ensures                   Council.
                                                  minimum period of affordability equal                   Project Completion within 5 years of a                   (2) In addition, Projects must meet the
                                                  to the remaining affordability period.                  date specified in the Assistance                      following requirements:
                                                                                                          Agreement.                                               (i) Accessibility. The Project must
                                                  Subpart E—Leveraged Costs; Eligible                                                                           meet all applicable accessibility
                                                  Project Costs; Commitment                                 (c) The CDFI Fund will make Payment
                                                                                                                                                                requirements set forth at 24 CFR part 8,
                                                  Requirements                                            of CMF Award based on a deployment
                                                                                                                                                                which implements section 504 of the
                                                                                                          schedule contained in the CMF Award
                                                  § 1807.500 Leveraged Costs; Eligible                                                                          Rehabilitation Act of 1973 (29 U.S.C.
                                                                                                          application, in addition to any other
                                                  Project Costs.                                                                                                794), and Titles II and III of the
                                                                                                          documentation and/or forms that the
                                                    (a) Each CMF Award must result in                                                                           Americans with Disabilities Act (42
                                                                                                          CDFI Fund may require.
                                                  Eligible Project Costs in an amount that                                                                      U.S.C. 12131–12189) implemented at 28
                                                  equals at least 10 times the amount of                    (d) Upon receipt of CMF Award, the                  CFR parts 35 and 36, as applicable.
                                                  the CMF Award or some higher                            Recipient must make an initial                        Multi-family housing, as defined in 24
                                                  standard established by the CDFI Fund                   disbursement of said CMF Award by the                 CFR 100.201, must also meet all
                                                  in the Recipient’s Assistance                           date designated in its Assistance                     applicable design and construction
                                                  Agreement. Such Eligible Project Costs                  Agreement. The CDFI Fund may make                     requirements set forth in 24 CFR
                                                  must be for Affordable Housing                          Payment of CMF Award in a lump sum                    100.205, which implements the Fair
                                                  Activities and Economic Development                     or other manner, as determined                        Housing Act (42 U.S.C. 3601–3619).
                                                  Activities, as set forth in the Assistance              appropriate by the CDFI Fund. The                        (ii) Disaster mitigation. The Project
                                                  Agreement.                                              CDFI Fund will not provide any                        must meet all applicable State and local
                                                    (b) Leveraged Costs. (1) The                          Payment until the Recipient has                       codes, ordinances, or other disaster
                                                  applicable NOFA and/or the Assistance                   satisfied all conditions set forth in the             mitigation requirements (e.g.,
                                                  Agreement may set forth a required                      applicable NOFA and Assistance                        earthquake, hurricanes, flooding, wild
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                                                  percentage of Leveraged Costs that must                 Agreement.                                            fires), or other requirements as the
                                                  be funded by non-governmental sources.                                                                        Department of Housing and Urban
                                                                                                          § 1807.502    CMF Award limits.
                                                    (2) The Recipient must report to the                                                                        Development has established in 24 CFR
                                                  CDFI Fund all Leveraged Costs, with the                   An eligible Applicant and its                       part 93.
                                                  following limitations:                                  Subsidiaries and Affiliates may not be                   (iii) Lead-based paint. The Project
                                                    (i) No costs attributable to prohibited               awarded more than 15 percent of the                   must meet all applicable lead-based
                                                  uses as set forth in § 1807.302(a) and (b)              aggregate funds available for CMF                     paint requirements, including those set
                                                  may be reported as Leveraged Costs;                     Awards during any year.                               forth in 24 CFR part 35.


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                                                                      Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations                                              6445

                                                     (3) Rehabilitation standards. In                       funds retain their Federal character                  § 1807.801    Evaluation of applications.
                                                  addition, all Rehabilitation that is                      until the end of the Investment Period.                  (a) Eligibility and completeness. An
                                                  financed with a CMF Award must meet                                                                             Applicant will not be eligible to receive
                                                  the following requirements:                               Subpart G—Notice of Funds                             a CMF Award if it fails to meet the
                                                     (i) For rental Housing, if the                         Availability; Applications                            eligibility requirements described in
                                                  remaining useful life of one or more                      § 1807.700    Notice of funds availability.           § 1807.200 and in the applicable NOFA,
                                                  major systems is less than the 10-year                                                                          or if the Applicant has not submitted
                                                  period of affordability, the Recipient                      Each Applicant must submit a CMF                    complete application materials. For the
                                                  must ensure that, at Project Completion,                  Award application in accordance with                  purposes of this paragraph (a), the CDFI
                                                  the developer or Project sponsor                          the applicable Notice of Funds                        Fund reserves the right to request
                                                  establishes a replacement reserve and                     Availability (NOFA) published in the                  additional information from the
                                                  that monthly payments are made to the                     Federal Register. The NOFA will advise                Applicant, if the CDFI Fund deems it
                                                  reserve that are adequate to repair or                    prospective Applicants on how to                      appropriate.
                                                  replace the systems as needed. Major                      obtain and complete an application and                   (b) Substantive review. In evaluating
                                                  systems include: Structural support;                      will establish deadlines and other                    and selecting applications to receive
                                                  roofing; cladding and weatherproofing                     requirements. The NOFA will specify                   assistance, the CDFI Fund will evaluate
                                                  (e.g., windows, doors, siding, gutters);                  application evaluation factors and any                the Applicant’s likelihood of success in
                                                  plumbing; electrical; heating,                            limitations, special rules, procedures,               meeting the factors set forth in the
                                                  ventilation, and air conditioning.                        and restrictions for a particular                     applicable NOFA including, but not
                                                     (ii) For Homeownership Single-family                   application round. After receipt of an                limited to:
                                                  housing, the Recipient must ensure that,                  application, the CDFI Fund may request                   (1) The Applicant’s ability to use a
                                                  at Project Completion, the Housing is                     clarifying or technical information on                CMF Award to generate additional
                                                  decent, safe, sanitary, and in good                       the materials submitted as part of the                investments, including private sources
                                                  repair. The Recipient must ensure that                    application.                                          of funding;
                                                  timely corrective and remedial actions                                                                             (2) The need for affordable housing in
                                                  are taken by the Project owner to                         Subpart H—Evaluation and Selection                    the Applicant’s Service Area;
                                                  address identified life threatening                       of Applications                                          (3) The ability of the Applicant to
                                                  deficiencies.                                             § 1807.800    Evaluation and selection—               obligate amounts and undertake
                                                     (4) Manufactured housing.                              general.                                              activities in a timely manner; and
                                                  Construction of all manufactured                                                                                   (4) In the case of an Applicant that
                                                                                                               Each Applicant will be evaluated and               has previously received assistance
                                                  housing must meet the Manufactured                        selected, at the sole discretion of the
                                                  Home Construction and Safety                                                                                    under any CDFI Fund program, the
                                                                                                            CDFI Fund, to receive a CMF Award                     Applicant’s level of success in meeting
                                                  Standards set forth in 24 CFR part 3280.                  based on a review process that will
                                                  These standards preempt State and local                                                                         its performance goals, reporting
                                                                                                            include a paper or electronic                         requirements, and other requirements
                                                  laws or codes, which are not identical                    application, and may include an
                                                  to the Federal standards for the new                                                                            contained in the previously negotiated
                                                                                                            interview(s) and/or site visit(s), and that           and executed assistance, allocation or
                                                  construction of manufactured housing.                     is intended to:
                                                  The installation of all manufactured                                                                            award agreement(s) with the CDFI Fund,
                                                  housing units must comply with                               (a) Ensure that Applicants are                     any undisbursed balance of assistance,
                                                  applicable State and local laws or codes.                 evaluated on a merit basis and in a fair              and compliance with applicable Federal
                                                  In the absence of such laws or codes, the                 and consistent manner;                                laws.
                                                  installation must comply with the                            (b) Ensure that each Recipient can                    (c) The CDFI Fund may consider any
                                                  manufacturer’s written instructions for                   successfully meet its leveraging goals                other factors that it deems appropriate
                                                  installation of manufactured housing                      and achieve Affordable Housing                        in reviewing an application, as set forth
                                                  units. Manufactured housing that is                       Activity and Economic Development                     in the applicable NOFA, the application
                                                  rehabilitated using a CMF Award must                      Activity impacts;                                     and related guidance materials.
                                                  meet the requirements set out in                             (c) Ensure that Recipients represent a                (d) Consultation with appropriate
                                                  paragraph (b)(1) of this section.                         geographically diverse group of                       regulatory agencies. In the case of an
                                                                                                            Applicants serving Metropolitan Areas                 Applicant that is a Federally regulated
                                                  Subpart F—Tracking Funds; Uniform                         and Underserved Rural Areas across the                financial institution, the CDFI Fund
                                                  Administrative Requirements; Nature                       United States that meet criteria of                   may consult with the Appropriate
                                                  of Funds                                                  economic distress, which may include:                 Federal Banking Agency or Appropriate
                                                                                                                                                                  State Agency prior to making a final
                                                  § 1807.600       Tracking funds.                             (1) The percentage of Low-Income
                                                                                                                                                                  award decision and prior to entering
                                                    The Recipient shall develop and                         Families or the extent of poverty;
                                                                                                                                                                  into an Assistance Agreement.
                                                  maintain an internal tracking and                            (2) The rate of unemployment or                       (e) Recipient selection. The CDFI
                                                  reporting system that ensures that the                    underemployment;                                      Fund will select Recipients based on the
                                                  CMF Award is used in accordance with                         (3) The extent of disinvestment;                   criteria described in paragraph (b) of
                                                  this part and the Assistance Agreement.                      (4) Economic Development Activities                this section and any other criteria set
                                                                                                            that target Extremely Low-Income, Very                forth in this part or the applicable
                                                  § 1807.601 Uniform Administrative                                                                               NOFA.
                                                                                                            Low-Income, and Low-Income Families
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                                                  Requirements.
                                                                                                            within the Recipient’s Service Area; and
                                                    The Uniform Administrative                                                                                    Subpart I—Terms and Conditions of
                                                  Requirements apply to all CMF Awards.                        (5) Any other criteria the CDFI Fund               CMF Award
                                                                                                            shall set forth in the applicable NOFA;
                                                  § 1807.602       Nature of funds.                         and                                                   § 1807.900    Assistance agreement.
                                                    CMF Awards are Federal financial                           (d) Take into consideration other                    (a) Each Applicant that is selected to
                                                  assistance with regard to the application                 factors as set forth in the applicable                receive a CMF Award must enter into an
                                                  of Federal civil rights laws. CMF Award                   NOFA.                                                 Assistance Agreement with the CDFI


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                                                  6446                Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations

                                                  Fund. The Assistance Agreement will                          (2) Demonstrate compliance with the                as indicated in the Assistance
                                                  set forth certain required terms and                      requirements of this part and the                     Agreement. In such instances, the CDFI
                                                  conditions for the CMF Award that may                     Assistance Agreement; and                             Fund may require additional audits to
                                                  include, but are not limited to, the                         (3) Evaluate the impact of the CMF                 be performed and/or submitted to the
                                                  following:                                                Award.                                                CDFI Fund as stated in the applicable
                                                     (1) The amount of the CMF Award;                          (b) Customer profiles. The Recipient               Notice of Funds Availability and
                                                     (2) The approved uses of the CMF                       must compile such data on the gender,                 Assistance Agreement.
                                                  Award;                                                    race, ethnicity, national origin, or other               (ii) For-profit Recipients (excluding
                                                     (3) The approved Service Area;                         information on individuals that are                   Insured CDFIs and State-Insured Credit
                                                     (4) The time period by which the CMF                   benefiting from the CMF Award, as the                 Unions) must submit to the CDFI Fund
                                                  Award proceeds must be Committed;                         CDFI Fund shall prescribe in the                      financial statements audited in
                                                     (5) The required documentation to                      Assistance Agreement. Such data will                  conformity with generally accepted
                                                  evidence Project Completion; and                          be used to determine whether residents                auditing standards as promulgated by
                                                     (6) Performance goals that have been                   of the Recipient’s Service Area are                   the American Institute of Certified
                                                  established by the CDFI Fund pursuant                     adequately served and to evaluate the                 Public Accountants by a time set forth
                                                  to this part, the NOFA, and the                           impact of the CMF Award.                              in the applicable NOFA or Assistance
                                                  Recipient’s application.                                     (c) Access to records. The Recipient
                                                     (b) The Assistance Agreement shall                                                                           Agreement.
                                                                                                            must submit such financial and activity
                                                  provide that, in the event of fraud,                                                                               (iii) Insured CDFIs are not required to
                                                                                                            reports, records, statements, and
                                                  mismanagement, noncompliance with                                                                               submit financial statements to the CDFI
                                                                                                            documents at such times, in such forms,
                                                  the Act or these regulations, or                                                                                Fund. The CDFI Fund will obtain the
                                                                                                            and accompanied by such reporting
                                                  noncompliance with the terms and                                                                                necessary information from publicly
                                                                                                            data, as required by the CDFI Fund or
                                                  conditions of the Assistance Agreement,                                                                         available sources. State-Insured Credit
                                                                                                            the U.S. Department of the Treasury to
                                                  on the part of the Recipient, the CDFI                                                                          Unions must submit to the CDFI Fund
                                                                                                            ensure compliance with the
                                                  Fund, in its discretion, may make a                                                                             copies of the financial statements that
                                                                                                            requirements of this part and to evaluate
                                                  determination to:                                                                                               they submit to the Appropriate State
                                                                                                            the impact of the CMF Award. The
                                                     (1) Require changes in the                                                                                   Agency.
                                                                                                            United States Government, including
                                                  performance goals set forth in the                        the U.S. Department of the Treasury, the                 (2) Annual report. (i) The Recipient
                                                  Assistance Agreement;                                     Comptroller General, and their duly                   shall submit a performance and
                                                     (2) Revoke approval of the Recipient’s                 authorized representatives, shall have                financial report that shall be specified in
                                                  application;                                              full and free access to the Recipient’s               the Assistance Agreement (annual
                                                     (3) Reduce or terminate the CMF                        offices and facilities and all books,                 report). The annual report consists of
                                                  Award;                                                    documents, records, and financial                     several components which may include,
                                                     (4) Require repayment of any CMF                       statements relating to use of Federal                 but are not limited to, a report on
                                                  Award that have been paid to the                          funds and may copy such documents as                  performance goals and measures,
                                                  Recipient;                                                they deem appropriate and audit or                    explanation of any Recipient
                                                     (5) Bar the Recipient from applying                    provide for an audit at least annually.               noncompliance, and such other
                                                  for any assistance from the CDFI Fund;                    The CDFI Fund, if it deems appropriate,               information as may be required by the
                                                  or                                                        may prescribe access to record                        CDFI Fund. The annual report
                                                     (6) Take such other actions as the                     requirements for entities that receive a              components shall be specified and
                                                  CDFI Fund deems appropriate or as set                     CMF Award from the Recipient.                         described in the Assistance Agreement.
                                                  forth in the Assistance Agreement.                           (d) Retention of records. The                         (ii) The CDFI Fund will use the
                                                     (c) Prior to making a determination                    Recipient shall comply with all                       annual report to collect data to assess
                                                  that the Recipient has failed to comply                   applicable record retention                           the Recipient’s compliance with its
                                                  substantially with the Act or these                       requirements set forth in the Uniform                 performance goals and the impact of the
                                                  regulations or an Assistance Agreement,                   Administrative Requirements (as                       CMF and the CDFI industry.
                                                  the CDFI Fund shall provide the                           applicable) and the Assistance                           (iii) The Recipient is responsible for
                                                  Recipient with reasonable notice and                      Agreement.                                            the timely and complete submission of
                                                  opportunity for hearing.                                     (e) Data collection and reporting—(1)              the annual report, even if all or a
                                                  § 1807.901       Payment of funds.                        Financial reporting, (i) All Nonprofit                portion of the documents actually are
                                                    CMF Awards provided pursuant to                         Organization Recipients that are                      completed by another entity. If such
                                                  this part may be provided in a lump                       required to have their financial                      other entities are required to provide
                                                  sum payment or in some other manner,                      statements audited pursuant to the                    information for the annual report, or
                                                  as determined appropriate by the CDFI                     Uniform Administrative Requirements,                  such other documentation that the CDFI
                                                  Fund. The CDFI Fund shall not provide                     must submit their single-audits by a                  Fund might require, the Recipient is
                                                  any Payment under this part until a                       time set forth in the applicable NOFA or              responsible for ensuring that the
                                                  Recipient has satisfied all conditions set                Assistance Agreement. Nonprofit                       information is submitted timely and
                                                  forth in the applicable NOFA and                          Organization Recipients (excluding                    complete. The CDFI Fund reserves the
                                                  Assistance Agreement.                                     Insured CDFIs and State-Insured Credit                right to contact such other entities and
                                                                                                            Unions) that are not required to have                 require that additional information and
                                                  § 1807.902       Data collection and reporting.           financial statements audited pursuant to              documentation be provided.
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                                                    (a) Data; General. The Recipient must                   the Uniform Administrative                               (iv) The CDFI Fund’s review of the
                                                  maintain such records as may be                           Requirements, must submit to the CDFI                 compliance of an Insured CDFI, a
                                                  prescribed by the CDFI Fund that are                      Fund a statement signed by the                        Depository Institution Holding
                                                  necessary to:                                             Recipient’s authorized representative or              Company or a State-Insured Credit
                                                    (1) Disclose the manner in which the                    certified public accountant, asserting                Union with the terms and conditions of
                                                  CMF Award is used, including                              that the Recipient is not required to                 its Assistance Agreement may also
                                                  providing documentation to                                have a single-audit pursuant to the                   include information from the
                                                  demonstrate Project Completion;                           Uniform Administrative Requirements                   Appropriate Federal Banking Agency or


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                                                                      Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Rules and Regulations                                            6447

                                                  Appropriate State Agency, as the case                     should report such incidences to the                  FOR FURTHER INFORMATION CONTACT:
                                                  may be.                                                   Office of Inspector General of the U.S.               Jeffrey Claypool, Federal Aviation
                                                    (f) Public access. The CDFI Fund shall                  Department of the Treasury.                           Administration, Operations Support
                                                  make reports described in this section                                                                          Group, Central Service Center, 10101
                                                                                                            Mary Ann Donovan,
                                                  available for public inspection after                                                                           Hillwood Parkway, Fort Worth, TX
                                                  deleting or redacting any materials                       Director, Community Development Financial             76177; telephone (817) 222–5711.
                                                                                                            Institutions Fund.
                                                  necessary to protect privacy or
                                                                                                            [FR Doc. 2016–02132 Filed 2–3–16; 4:15 pm]            SUPPLEMENTARY INFORMATION:
                                                  proprietary interests.
                                                                                                            BILLING CODE 4810–70–P                                Authority for This Rulemaking
                                                  § 1807.903 Compliance with government
                                                  requirements.                                                                                                     The FAA’s authority to issue rules
                                                    In carrying out its responsibilities                    DEPARTMENT OF TRANSPORTATION                          regarding aviation safety is found in
                                                  pursuant to an Assistance Agreement,                                                                            Title 49 of the United States Code.
                                                  the Recipient shall comply with all                       Federal Aviation Administration                       Subtitle I, Section 106 describes the
                                                  applicable Federal, State, and local                                                                            authority of the FAA Administrator.
                                                  laws, regulations, and ordinances,                        14 CFR Part 71                                        Subtitle VII, Aviation Programs,
                                                  Uniform Administrative Requirements,                                                                            describes in more detail the scope of the
                                                  and Executive Orders. Furthermore,                        [Docket No. FAA–2015–7483; Airspace                   agency’s authority. This rulemaking is
                                                  Recipients must comply with the CDFI                      Docket No. 15–AGL–23]                                 promulgated under the authority
                                                  Fund’s environmental quality                                                                                    described in Subtitle VII, Part A,
                                                                                                            Amendment of Class E Airspace for
                                                  regulations (12 CFR part 1815) as well                                                                          Subpart I, Section 40103. Under that
                                                                                                            the Following Michigan Towns:
                                                  as all other Federal environmental                                                                              section, the FAA is charged with
                                                                                                            Alpena, MI; and Muskegon, MI
                                                  requirements applicable to Federal                                                                              prescribing regulations to assign the use
                                                  awards.                                                   AGENCY:  Federal Aviation                             of airspace necessary to ensure the
                                                                                                            Administration (FAA), DOT.                            safety of aircraft and the efficient use of
                                                  § 1807.904       Lobbying restrictions.
                                                                                                            ACTION: Final rule.                                   airspace. This regulation is within the
                                                    No CMF Award may be expended by                                                                               scope of that authority as it amends
                                                  a Recipient to pay any person to                          SUMMARY:  This action amends the legal                controlled airspace at Alpena County
                                                  influence or attempt to influence any                     description of the Class E surface area               Regional Airport, Alpena, MI, and
                                                  agency, elected official, officer or                      airspace and Class E airspace designated              Muskegon County Airport, Muskegon,
                                                  employee of a State or local government                   as an extension at Alpena County                      MI.
                                                  in connection with the making, award,                     Regional Airport, Alpena, MI, and
                                                  extension, continuation, renewal,                                                                               History
                                                                                                            Muskegon County Airport, Muskegon,
                                                  amendment, or modification of any                         MI, eliminating the Notice to Airmen                    In a review of the airspace, the FAA
                                                  State or local government contract,                       (NOTAM) part-time status, and updates                 found the airspace for Alpena County
                                                  grant, loan or cooperative agreement as                   the geographic coordinates of Muskegon                Regional Airport, Alpena, MI, and
                                                  such terms are defined in 31 U.S.C.                       County Airport, to coincide with the                  Muskegon County Airport, Muskegon,
                                                  1352.                                                     FAA’s aeronautical database.                          MI, as published in FAA Order 7400.9Z,
                                                  § 1807.905       Criminal provisions.                     DATES: Effective 0901 UTC, March 31,                  Airspace Designations and Reporting
                                                    The criminal provisions of 18 U.S.C.                    2016. The Director of the Federal                     Points, does not require part time status.
                                                  657 regarding embezzlement or                             Register approves this incorporation by               This is an administrative change
                                                  misappropriation of funds are                             reference action under Title 1, Code of               removing the part time NOTAM
                                                  applicable to all Recipients and                          Federal Regulations, part 51, subject to              information from the legal descriptions
                                                  insiders.                                                 the annual revision of FAA Order                      for the above airports.
                                                                                                            7400.9 and publication of conforming                    Class E airspace designations are
                                                  § 1807.906       CDFI Fund deemed not to                  amendments.                                           published in paragraph 6002 and 6004,
                                                  control.
                                                                                                            ADDRESSES:   FAA Order 7400.9Z,                       respectively, of FAA Order 7400.9Z
                                                    The CDFI Fund shall not be deemed                                                                             dated August 6, 2015, and effective
                                                                                                            Airspace Designations and Reporting
                                                  to control a Recipient by reason of any                                                                         September 15, 2015, which is
                                                                                                            Points, and subsequent amendments can
                                                  CMF Award provided under the Act for                                                                            incorporated by reference in 14 CFR
                                                                                                            be viewed online at http://www.faa.gov/
                                                  the purpose of any applicable law.                                                                              part 71.1. The Class E airspace
                                                                                                            air_traffic/publications/. For further
                                                  § 1807.907       Limitation on liability.                 information, you can contact the                      designations listed in this document
                                                    The liability of the CDFI Fund and the                  Airspace Policy Group, Federal Aviation               will be published subsequently in the
                                                  United States Government arising out of                   Administration, 800 Independence                      Order.
                                                  any CMF Award shall be limited to the                     Avenue SW., Washington, DC 29591;                     Availability and Summary of
                                                  amount of the CMF Award. The CDFI                         telephone: 202–267–8783. The Order is                 Documents for Incorporation by
                                                  Fund shall be exempt from any                             also available for inspection at the                  Reference
                                                  assessments and other liabilities that                    National Archives and Records
                                                  may be imposed on controlling or                          Administration (NARA). For                               This document amends FAA Order
                                                  principal shareholders by any Federal                     information on the availability of FAA                7400.9Z, Airspace Designations and
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                                                  law or the law of any State. Nothing in                   Order 7400.9Z at NARA, call 202–741–                  Reporting Points, dated August 6, 2015,
                                                  this section shall affect the application                 6030, or go to http://www.archives.gov/               and effective September 15, 2015. FAA
                                                  of any Federal tax law.                                   federal_register/code_of_federal-                     Order 7400.9Z is publicly available as
                                                                                                            regulations/ibr_locations.html.                       listed in the ADDRESSES section of this
                                                  § 1807.908       Fraud, waste and abuse.                     FAA Order 7400.9, Airspace                         document. FAA Order 7400.9Z lists
                                                     Any person who becomes aware of                        Designations and Reporting Points, is                 Class A, B, C, D, and E airspace areas,
                                                  the existence or apparent existence of                    published yearly and effective on                     air traffic service routes, and reporting
                                                  fraud, waste or abuse of a CMF Award                      September 15.                                         points.


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Document Created: 2016-02-06 00:24:50
Document Modified: 2016-02-06 00:24:50
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionInterim rule with request for public comment.
ContactMarcia Sigal, CMF Program Manager, Community Development Financial Institutions Fund, at [email protected]
FR Citation81 FR 6434 
RIN Number1559-AA00
CFR AssociatedCommunity Development; Grant Programs-Housing and Community Development and Reporting and Record Keeping Requirements

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