82_FR_57172 82 FR 56942 - Implementation of Revolving Loan Fund Risk Analysis System

82 FR 56942 - Implementation of Revolving Loan Fund Risk Analysis System

DEPARTMENT OF COMMERCE
Economic Development Administration

Federal Register Volume 82, Issue 230 (December 1, 2017)

Page Range56942-56947
FR Document2017-25276

This notice outlines and solicits public comments on the performance measures that the Economic Development Administration (EDA) has selected to implement the Risk Analysis System to monitor the Revolving Loan Fund (RLF) Program. The Risk Analysis System, which is being implemented by concurrent changes to EDA regulations, is designed to lessen reporting and compliance burdens on RLF Recipients while providing for more efficient and effective oversight of the RLF Program. The Risk Analysis System measures are adapted from the Uniform Financial Institutions Rating System and evaluate RLF Recipients based on factors used by that system and data provided by RLF Recipients via the standard RLF Financial Report, Form ED-209. This notice seeks public comment on the measures EDA will use to assess performance under the Risk Analysis System.

Federal Register, Volume 82 Issue 230 (Friday, December 1, 2017) 
[Federal Register Volume 82, Number 230 (Friday, December 1, 2017)]
[Notices]
[Pages 56942-56947]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-25276]


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DEPARTMENT OF COMMERCE

Economic Development Administration


Implementation of Revolving Loan Fund Risk Analysis System

AGENCY: Economic Development Administration, U.S. Department of 
Commerce.

ACTION: Notice of proposed performance measures and request for 
comments.

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SUMMARY: This notice outlines and solicits public comments on the 
performance measures that the Economic Development Administration (EDA) 
has selected to implement the Risk Analysis System to monitor the 
Revolving Loan Fund (RLF) Program. The Risk Analysis System, which is 
being implemented by concurrent changes to EDA regulations, is designed 
to lessen reporting and compliance burdens on RLF Recipients while 
providing for more efficient and effective oversight of the RLF 
Program. The Risk Analysis System measures are adapted from the Uniform 
Financial Institutions Rating System and evaluate RLF Recipients based 
on factors used by that system and data provided by RLF Recipients via 
the standard RLF Financial Report, Form ED-209. This notice seeks 
public comment on the measures EDA will use to assess performance under 
the Risk Analysis System.

DATES: Written comments are due on or before January 2, 2018.

ADDRESSES: Comments on the notice may be submitted through any of the 
following methods:
     Email: [email protected]. Include ``Comments on EDA 
Notice'' and ``Implementation of Revolving Loan Fund Risk Analysis 
System'' in the subject line of the message.
     Fax: (202) 482-5671. Please indicate ``Attention: Office 
of the Chief Counsel,'' ``Comments on EDA Notice,'' and 
``Implementation of Revolving Loan Fund Risk Analysis System'' on the 
cover page.
     Mail: Ryan Servais, Attorney Advisor, Office of the Chief 
Counsel, Economic Development Administration, U.S. Department of 
Commerce, 1401 Constitution Avenue NW., Suite 72023, Washington, DC 
20230. Please indicate ``Comments on EDA Notice'' and ``Implementation 
of Revolving Loan Fund Risk Analysis System'' on the envelope.

FOR FURTHER INFORMATION CONTACT: Mitchell Harrison, Program Analyst, 
Performance and National Programs Division, Economic Development 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW., Mail Stop 71030, Washington, DC 20230 or via email at 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Overview

    Investments to capitalize or recapitalize RLFs are governed by, 
inter alia, the Public Works and Economic Development Act of 1965, as 
amended (PWEDA) (42 U.S.C. 3121 et seq.), the regulations outlined at 
13 CFR part 307, subpart B, and the EDA RLF Standard Terms and 
Conditions attached to RLF grant awards. The purpose of RLF grants is 
to provide regions with a flexible and continuing source of capital, to 
be used with other economic development tools, for creating and 
retaining jobs and inducing private investment that will contribute to 
long-term economic stability and growth. RLF grants are awarded to 
States, regional development organizations, local governments, Indian 
tribes, and non-profit organizations.
    Currently, EDA applies a limited compliance-based approach to 
determine whether RLF Recipients adhere to regulatory requirements and 
fulfill the terms of RLF awards. RLF Recipients found to be non-
compliant are subject to possible corrective action plans (CAPs), 
sequestration, and termination.
    As part of its most recent amendment to the regulations 
implementing PWEDA, which are effectuated through a Final Rule 
published contemporaneously with this notice,\1\ EDA revised its RLF 
regulations to reflect best practices within the financial community 
and to strengthen EDA's efforts to evaluate, monitor, and improve RLF 
performance by moving to a risk-based approach to assess individual 
RLFs. This new approach, known as the Risk Analysis System, is modeled 
on the Uniform Financial Institutions Rating System, commonly known as 
the Capital, Assets, Management, Earnings, Liquidity, and Sensitivity 
(CAMELS) rating system, which has been used since 1979 by a number of 
Federal agencies to assess financial institutions on a uniform basis 
and to identify those in need of additional oversight. The CAMELS 
system produces a composite rating by examining six components: Capital 
adequacy, asset quality, management capability, earnings, liquidity, 
and sensitivity to market risk. The Risk Analysis System uses a set of 
metrics that generally examine these same components. However, because 
of the unique goal of the RLF Program as a driver of critical economic 
development, particularly within distressed communities, EDA has 
developed a modified approach. In addition to assessing RLF Recipients 
based on metrics for capital adequacy, asset quality, management 
capability, earnings, and liquidity, EDA will consider metrics 
examining strategic results, rather than sensitivity to market risk.
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    \1\ The Department notes that the President's Fiscal Year 2018 
Budget calls for the elimination of EDA. The Department considers 
the Final Rule amending the PWEDA implementing regulations to be 
important because the Department would need to continue to 
administer and monitor RLF grants in perpetuity under current 
statutory authorities. The regulatory changes in the Final Rule will 
enable the Department to more efficiently manage the residual RLF 
portfolio going forward.
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    EDA's newly revised regulations include key changes to support this 
shift to the Risk Analysis System and to ease the transition for RLF 
Recipients. These changes include the following:
     Replacing the formerly employed Capital Utilization 
Standard with the new Allowable Cash Percentage (ACP). In the current 
version of the RLF regulation at 13 CFR 307.16(c), the Capital 
Utilization Standard was applicable during the revolving phase of an 
RLF and required RLF Recipients to ``provide that at all times at least 
75 percent of the RLF Capital is loaned or

[[Page 56943]]

committed. . . .'' The new ACP standard is defined as ``the average 
percentage of the RLF Capital Base maintained as RLF Cash Available for 
Lending by RLF Recipients in each EDA regional office's portfolio of 
RLF Grants over the previous year.'' This will be defined annually by 
each EDA regional office for that region's RLF grants based on the 
previous year's average percentage of RLF Cash Available for Lending 
(i.e., funds not currently deployed or committed for new loans) held by 
the region's portfolio of RLFs. The adoption of the ACP also removes 
the requirement for automatic sequestration. Under EDA's previous 
sequestration policy, EDA could require sequestration if an RLF 
Recipient failed to satisfy the Capital Utilization Standard for two 
consecutive Reporting Periods, and EDA generally required sequestration 
after four consecutive Reporting Periods. Instead, under the revised 
regulations, if an RLF's Cash Available for Lending as a percentage of 
the RLF Capital Base reaches 50%, and persists for two years, the RLF 
may be subject to a disallowance of the excess cash.
     Changing the Reporting Period to align with each RLF 
Recipient's fiscal year end in order to ensure consistency between RLF 
financial reports (Form ED-209) submitted to EDA and RLF Recipient 
annual audit reports. Additionally, EDA revised the regulations to 
state that the reporting frequency for an RLF Recipient will be 
determined by EDA. This enables EDA to base reporting frequency on the 
risk assessment of the RLF Recipient. Those RLF Recipients with a high 
rating through the Risk Analysis System will be placed on an annual 
reporting cycle, while RLF Recipients receiving lower ratings will be 
required to maintain semi-annual reporting.
     Adopting a more tailored approach to remedying non-
compliance. The Risk Analysis System will enable EDA to provide 
targeted assistance to RLF Recipients with identified weaknesses. By 
reviewing the Recipient's score under the Risk Analysis System, EDA 
will be able to select from a list of options for intervening with the 
Recipient to achieve compliance, rather than applying the previous one-
size-fits-all approach through sequestration or termination.

II. How EDA's Risk Analysis System Works

    The Risk Analysis System rates each RLF according to the 
performance metrics of the modified CAMELS approach using the data 
reported by the RLF Recipient through the standard RLF financial report 
(Form ED-209), audits, and other submissions. Specifically, it uses 
fifteen defined measures to evaluate a Recipient's administration of 
each RLF's capital, assets, management, earnings, liquidity, and 
strategic results. This approach provides EDA with an internal tool for 
assessing the strengths and weaknesses of each RLF and for identifying 
RLFs that require additional monitoring, technical assistance, or other 
corrective action. It also provides RLF Recipients with a set of 
portfolio management and operational standards to evaluate their RLFs 
and improve performance. EDA believes this new Risk Analysis System 
will provide greater flexibility by assessing each RLF's strengths and 
weaknesses under their own specific and unique circumstances, and that 
information will be used by EDA to prioritize and focus EDA resources 
to those RLFs with substantial challenges.
    The Risk Analysis System rating will be conducted by EDA annually 
at the RLF Recipient's fiscal year end and will be based on audits, RLF 
financial reports (Form ED-209, or a successor electronic system), and 
other submissions. EDA is revising Form ED-209 to streamline reporting 
by seeking only information essential to oversight and to make the 
report more effective by better integrating the Form with other 
information required from RLF Recipients. This revision of the ED-209 
is occurring at the same time that EDA is soliciting public comment on 
the Risk Analysis System performance measures through this notice, and 
EDA will publish a notice seeking comments on the revised Form.
    Because the Risk Analysis System relies heavily on audit results, 
all RLF Recipients will be required to submit independent audits. A 
single audit conducted according to 2 CFR part 200, subpart F, the 
``Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards,'' and the compliance supplement 
thereto, will satisfy this requirement. Those Recipients that are not 
required to arrange for a single audit because they expend less than 
$750,000 in Federal awards annually will be required to submit to EDA 
an independent audit of the RLF grant in the first year of the Risk 
Analysis System and as directed by EDA thereafter. RLF Income may be 
used to pay for such an independent audit of the RLF grant. If an RLF 
Recipient has insufficient RLF Income to pay for such an audit, the 
Recipient should seek EDA approval to use RLF Capital Base funds to 
cover audit costs.

III. Scoring the Metrics

    The Risk Analysis System adapts the CAMELS performance metrics to 
assess RLFs through fifteen performance measures explained in the table 
below. Each of the measures will be scored on a numerical scale ranging 
from 3 to 1, where a ``3'' indicates exceeding the measure, a ``2'' 
indicates an acceptable effort, and a ``1'' indicates a below par 
performance for the indicated measure. The aggregate score will 
determine the RLF's risk rating as ``A'', ``B'', or ``C'', with each of 
the fifteen individual measures weighted equally. EDA will establish 
criteria for rating RLFs as ``A'', ``B'', or ``C'' using data from the 
first set of reports and audits submitted after implementation of the 
Risk Analysis System. EDA aims to establish fixed rating criteria such 
that RLFs are rated against established criteria rather than in 
relation to the performance of other RLFs; however, EDA may change the 
rating criteria from time to time.
    1. Capital: The RLF Capital Base is expected to be maintained, if 
not increased, over time in order to sustain lending activity and to 
carry out the purposes of the RLF Program, to create and/or retain 
jobs, and stimulate private investment in regions of economic distress. 
In addition, sufficient capital is necessary to protect the RLF from 
potential loan losses. The ``capital base index'' measure is determined 
by dividing the current RLF Capital Base by the original RLF Capital 
Base at the time that the RLF was established.
    2. Assets: An RLF Recipient must adhere to prudent lending 
standards to safeguard the quality of the loan portfolio. There are 
four measures within this metric: (1) The ``default rate'' measure 
assesses weakness in loan payments or loan servicing processes. It is 
measured as the RLF Principal Outstanding for Loans in Default as a 
percentage of the RLF Principal Outstanding for Active Loans. EDA 
considers a high default rate as 20% or greater. (2) EDA will also 
measure ``default rate over time'' by looking at how long a high 
default rate has persisted to identify possible weaknesses in 
underwriting, enforcement of loan terms, and/or working with borrowers 
to modify loan payment schedules with the goal of achieving full 
repayment. (3) The ``loan write-off ratio'' measures the number of 
written off loans compared to the number of inactive loans (the number 
of inactive loans is equal to the number of total outstanding loans 
minus the number of active loans). It will be used to identify 
weaknesses in loan underwriting and loan management. (4)

[[Page 56944]]

``Dollars written off'' will identify the financial impact of loan 
losses by comparing the amount of loan losses to the amount of 
principal repaid.
    3. Management: In order to increase the likelihood of a successful 
RLF, the RLF Recipient should have experience managing lending programs 
to be able to satisfy program, audit, RLF Plan, and reporting 
requirements. There are five measures to assess the Management metric: 
(1) The ``financial control'' measure is scored based on audit results 
and audit findings. RLF Recipients subject to the single audit 
requirement pursuant to 2 CFR part 200, subpart F, must demonstrate 
through an independent annual audit that financial controls are in 
place to operate the organization and the RLF according to Generally 
Accepted Accounting Principles, account for RLF assets, secure the use 
of funds, and value the RLF correctly in the audit's Schedule of 
Expenditures of Federal Awards. As discussed in Section II, ``How EDA's 
Risk Analysis System Works,'' RLF Recipients not subject to the single 
audit requirement must submit to EDA an independent audit of the RLF 
grant in the first year of the Risk Analysis System and as directed by 
EDA thereafter. (2) ``Tenure'' assesses the RLF Recipient's collective 
experience with the EDA RLF Program. Managing an RLF requires 
specialized knowledge and experience. The roles critical for a 
successful lending program include: Executive Director, Lending 
Director, Finance Director, and Reporting Official. Vacancies or 
inexperience in any of these positions can lead to program neglect, 
weak loan generation, accounting problems, and late reporting. (3) The 
measure, ``RLF Plan,'' assesses whether the RLF Recipient is operating 
the RLF pursuant to a current, EDA-approved RLF Plan. (4) The 
``financial report'' measure assesses the timeliness and accuracy of 
RLF reporting through the standard RLF Financial Report, Form ED-209. 
(5) ``Timely reporting'' assesses the RLF Recipient's timeliness in 
submitting audits and filings, plus any additional required reporting, 
such as that provided pursuant to a CAP or Federal Financial Reports 
(Form SF-425) for RLFs in the Disbursement Phase. Similarly, when an 
RLF is required to prepare and implement a CAP, the timeliness to 
resolve the issue(s) meriting corrective action will be assessed in 
this measure.
    4. Earnings: An RLF Recipient is expected to manage costs and 
generate net income in order to maintain, if not increase, the RLF 
Capital Base. The ``net RLF income'' measure determines how well a 
Recipient is managing costs and generating net income by dividing the 
portion of RLF Income used for administrative expenses over the life of 
the RLF by total RLF Income, to determine the cumulative percentage of 
RLF Income used for administrative expenses.
    5. Liquidity: RLF Recipients are expected to maintain a robust 
lending pipeline and cash available for lending within a range of the 
ACP. The ACP is a new feature of the RLF Program established by the 
newly revised regulations, and replaces the fixed capital utilization 
standard that ranged from 75% to 85%, according to the size of the RLF 
Capital Base. The ACP is a floating rate, determined annually for each 
EDA region. It is the region's average RLF Cash Available for Lending 
as a percentage of the Capital Base calculated from the previous year's 
reports for each EDA regional office portfolio. It specifies that RLF 
Cash Available for Lending excludes loans that have been committed or 
approved but have not yet been funded. Two measures are used to 
determine liquidity in an effort to identify weaknesses in loan 
generation: (1) ``Cash percentage'' assesses the Recipient's RLF Cash 
Available for Lending as a percentage of its RLF Capital Base compared 
to the ACP for the Recipient's region; and (2) ``cash percentage over 
time,'' which assesses the length of time during which the Recipient's 
cash percentage exceeded the Region's ACP. For example, where the 
applicable ACP is 30%, RLFs that report an RLF Cash Available for 
Lending from 27% to 33% of its RLF Capital Base are scored as a 2 for 
the Cash Percentage measure. An RLF with the same ACP that holds 22% is 
scored as a 3, while an RLF with 40% is scored as a 1 for this measure.
    6. Strategic Results: RLFs must engage in lending designed to 
fulfill the goals of the RLF Program. The Strategic Results component 
assesses whether RLFs are meeting those goals by determining the 
economic impact the RLF is having in its region. It does this by 
looking at two measures: (1) ``cost per job'' and (2) ``leverage 
ratio''. ``Cost per job'' compares the RLF total portfolio performance 
to the target identified in its RLF Plan. It is based on the amount of 
dollars loaned divided by the total number of jobs created and saved. 
The ``leverage ratio'' compares the amount of leveraged capital across 
the entire RLF portfolio to the cumulative amount of RLF dollars 
loaned. EDA regulations require a minimum leverage ratio of two dollars 
of additional investment for every one dollar of RLF funds loaned. EDA 
regulations define leverage requirements, including investment by the 
borrower and other public loan programs.
    The following chart demonstrates the range of scores available for 
each metric.

                                         Performance Metrics & Measures
----------------------------------------------------------------------------------------------------------------
                                                Score
---------------------------------------------------------------
These metrics are calculated using     3......................  2......................  1.
 information from the revised RLF
 Financial Report, Form ED-209. Where
 applicable, the measure's formula is
 presented using references to lines
 in the revised ED-209. Note that EDA
 will publish a notice seeking
 comments on the revised Form.
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                                           Performance Metric: Capital
----------------------------------------------------------------------------------------------------------------
The RLF Capital Base is expected to increase over time in order to sustain lending activity and to carry out the
 purpose of the RLF Program. In addition, sufficient capital is necessary to protect the RLF from potential loan
                                                     losses.
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                                           Measure: Capital Base Index
----------------------------------------------------------------------------------------------------------------
Determined by: RLF Capital Base        Greater than 1.5.......  From 1.0 to 1.5........  Less than 1.0.
 divided by the original RLF Capital
 Base at the time the RLF was
 established. ED-209: II.C.6 / II.A.3.
----------------------------------------------------------------------------------------------------------------

[[Page 56945]]

 
                                           Performance Metric: Assets
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    An RLF Recipient must adhere to prudent lending standards to safeguard the quality of the loan portfolio.
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                                              Measure: Default Rate
----------------------------------------------------------------------------------------------------------------
Determined by: RLF Principal           Less than 10%..........  From 10% to 20%........  Greater than 20%.
 Outstanding for Loans in Default
 divided by RLF Principal Outstanding
 for Total Active Loans. ED-209:
 III.A.3, In Default RLF Principal
 Outstanding / III.A.4, Active RLF
 Principal Outstanding.
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                                         Measure: Default Rate over Time
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Determined by: Number of consecutive   Less than 12 months....  From 12 to 24 months...  More than 24 months.
 months where default rate is over
 20%.
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                                          Measure: Loan Write-Off Ratio
----------------------------------------------------------------------------------------------------------------
Determined by: The ratio of the        Less than 1 out of       From 1 out of every 6    Greater than 1 out of
 number of loans written-off to the     every 6.                 to 1 out of every 4.     every 4.
 number of ``inactive loans''
 (calculated as number of total loans
 minus number of active loans). ED-
 209: III.A.5, Number / (III.A.7,
 Number--III.A..4, Number).
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                                          Measure: Dollars Written-Off
----------------------------------------------------------------------------------------------------------------
Determined by: Loan Losses divided by  Less than 10%..........  From 10% to 20%........  Greater than 20%.
 the difference between Total RLF
 Dollars Loaned and Total RLF
 Principal Outstanding. ED-209:
 III.A.5, Loan Losses / (III.A.7, RLF
 $ Loaned--III.A.7, RLF Principal
 Outstanding).
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                                         Performance Metric: Management
----------------------------------------------------------------------------------------------------------------
   It is critical to the success of the RLF that Management is experienced with the EDA RLF Program, their RLF
   Plan, and reporting requirements. Critical positions include: Executive Director, Lending Director, Finance
 Director, and Reporting Official. Vacancies in any of these positions can lead to program neglect and result in
                          late reporting, weak loan generation, and accounting errors.
----------------------------------------------------------------------------------------------------------------
                                           Measure: Financial Control
----------------------------------------------------------------------------------------------------------------
Determined by: Number and magnitude    No findings............  Minor findings.........  Material findings
 of audit findings.                                                                       pertaining to
                                                                                          Organization,
                                                                                          Questioned Costs,
                                                                                          Solvency, Interrelated
                                                                                          party transactions.
----------------------------------------------------------------------------------------------------------------
                                                 Measure: Tenure
----------------------------------------------------------------------------------------------------------------
Determined by: Shortest tenure of      Greater than 3 years...  From 2 to 3 years......  Vacancy or less than 2
 Executive Director, Lending                                                              years.
 Director, Finance Director, and
 Reporting Official.
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                                                Measure: RLF Plan
----------------------------------------------------------------------------------------------------------------
Determined by: Updated RLF Plan where  RLF Plan up to date,     Updated RLF Plan         RLF Plan expired and
 EDA has not granted a time extension.  updates submitted at     received more than 5     not updated within the
                                        least every 5 years.     years since its last     last 6 years.
                                                                 update but within 6
                                                                 years.
----------------------------------------------------------------------------------------------------------------
                                          Measure: Financial Reporting
----------------------------------------------------------------------------------------------------------------
Determined by: Date RLF Financial      On time with no          Up to 60 days late and/  More than 60 days late;
 Report, ED-209 submitted to EDA.       corrections needed.      or returned to RLF       or sent back for major
                                                                 Recipient for minor      revision.
                                                                 corrections.
----------------------------------------------------------------------------------------------------------------
                                     Measure: Timely and Complete Reporting
----------------------------------------------------------------------------------------------------------------
Determined by: Date audit and/or       On time................  Up to 30 days late.....  Over 30 days late or no
 additional reports (such as SF-425                                                       receipt.
 or Corrective Action Plan) submitted
 to EDA.
----------------------------------------------------------------------------------------------------------------
                                          Performance Metric: Earnings
----------------------------------------------------------------------------------------------------------------
  An RLF Recipient is expected to manage costs and generate income in order to increase the RLF's Capital Base.
----------------------------------------------------------------------------------------------------------------
                                             Measure: Net RLF Income
----------------------------------------------------------------------------------------------------------------
Determined by: Portion of RLF Income   Less than 50%..........  From 50% to 100%.......  More than 100%.
 Used for Administrative Expenses
 divided by Total RLF Income. ED-209:
 II.B.7 / II.B.6.
----------------------------------------------------------------------------------------------------------------
                                          Performance Metric: Liquidity
----------------------------------------------------------------------------------------------------------------
 RLF Recipients are expected to keep a robust lending pipeline and maintain cash within a range of the Region's
                                average cash as a percentage of the Capital Base.
----------------------------------------------------------------------------------------------------------------
                                            Measure: Cash Percentage
----------------------------------------------------------------------------------------------------------------
Determined by: RLF Cash Available for  Less than 90% of the     From 90% to 110% of the  More than 110% of the
 Lending divided by RLF Capital Base.   ACP.                     ACP.                     ACP.
 ED-209: II.D.4 / II.C.6.
----------------------------------------------------------------------------------------------------------------

[[Page 56946]]

 
                                       Measure: Cash Percentage over Time
----------------------------------------------------------------------------------------------------------------
Determined by: Length of time where    Less than 12 months....  From 12 to 24 months...  More than 24 months.
 the Cash Percentage exceeds the
 Region's ACP.
----------------------------------------------------------------------------------------------------------------
                                      Performance Metric: Strategic Results
----------------------------------------------------------------------------------------------------------------
    The purpose of the RLF Program is to provide regions with a flexible and continuing source of capital for
creating and retaining jobs and inducing private investment that will contribute to long-term economic stability
                                                   and growth.
----------------------------------------------------------------------------------------------------------------
                                              Measure: Cost per Job
----------------------------------------------------------------------------------------------------------------
Determined by: RLF Dollars Loaned      Less than 90% of RLF     90% to 110% of RLF Plan  Greater than 110% of
 divided by Total Jobs compared to      Plan target.             target.                  RLF Plan target.
 RLF Plan Target. ED-209: III.A.7,
 RLF $ Loaned / IV.E.5, Total Loans
 as compared to IV.E.6, RLF Plan
 Target.
----------------------------------------------------------------------------------------------------------------
                                             Measure: Leverage Ratio
----------------------------------------------------------------------------------------------------------------
Determined by: Total Dollars           Meets or exceeds         N/A....................  Less than 2:1.
 Leveraged divided by RLF Dollars       required leverage of
 Loaned. ED-209: IV.E.1, Total Loans /  2:1.
  III.A.7, RLF $ Loaned.
----------------------------------------------------------------------------------------------------------------

IV. Ratings and Remedies for Noncompliance

    Following receipt of an RLF Recipient's fiscal-year end RLF 
financial report, the EDA RLF Administrator will notify the RLF 
Recipient of the performance rating, i.e., Risk Analysis rating level 
(A, B, or C) for each RLF. The assigned level will be based upon the 
data and information provided in the most recent RLF financial report, 
the Recipient's overall numeric score on the Risk Analysis System, and 
a determination by the Regional RLF Administrator in consultation with 
the Grants Officer. Risk Levels A, B, and C are defined below:
    1. Level A: RLF Recipients in Level A are managing their RLF award 
soundly and are almost always in compliance with EDA policies and 
regulations. These RLF Recipients exhibit the strongest performance and 
management practices. Any issues that arise are addressed in a timely 
manner. The RLF Administrator may determine that a Level A Recipient 
requires less frequent monitoring. These Recipients may be allowed to 
administer their RLF portfolios and resolve issues without significant 
EDA involvement. Level A Recipients will report to EDA on an annual 
basis within 90 calendar days following the end of their fiscal year.
    2. Level B: RLF Recipients in Level B are fundamentally sound, but 
some deficiencies are present and will take time to resolve. Recipients 
are generally in compliance with EDA regulations and policies. While 
these RLF Recipients exhibit generally satisfactory results, the RLF 
Administrator will provide additional oversight and attention to assist 
the RLF Recipient with improving its performance. Level B Recipients 
will report to EDA on a semi-annual basis within 30 calendar days 
following the end of their fiscal year and again within 30 calendar 
days of the end of the second quarter of their fiscal year.
    3. Level C: RLF Recipients in Level C exhibit performance 
deficiencies requiring additional oversight and intervention by the RLF 
Administrator. In general, multiple measures on the Risk Analysis 
System measures are scored as a ``1''. Recipients may exhibit material 
noncompliance with EDA policies and regulations, which may result in 
the RLF Administrator having to propose formal enforcement actions, 
including suspension, corrective actions, termination, or transfer of 
the RLF Award. Level C Recipients will report to EDA on a semi-annual 
basis within 30 calendar days following the end of their fiscal year 
and again 6 months later.
    For each RLF rated at Level C, the RLF Recipient will be required 
to produce a CAP to address the areas of weakness, which will include, 
at a minimum, an annual corrective action update report to EDA. The RLF 
Recipient will have 60 days, running from the day that the RLF 
Recipient receives notification from EDA of its risk-analysis score, to 
propose its CAP. The RLF Recipient will have a specified timeframe to 
implement the CAP, not to exceed three years, which will run from the 
day that the RLF Recipient receives notification from EDA that EDA 
concurs with the RLF Recipient's proposed CAP. (Note: The exception to 
the three-year limit is for an RLF Recipient that has proposed to 
rebuild its capital base, in which case they may have up to five years 
to reach the target.) The CAP must include measurable targets and dates 
by which improvement will be achieved. The RLF Recipient's CAP must be 
approved in writing by the EDA RLF Administrator, who will monitor the 
RLF Recipient for incremental progress made.
    If any Recipient is unable or unwilling to develop and submit a CAP 
or an annual update report, the RLF Administrator will inform the non-
compliant Recipient that EDA may seek to terminate or transfer the RLF 
award. In addition, if a CAP for a Level C Recipient does not yield the 
intended results, the RLF Administrator may propose termination or 
transfer of the RLF award in consultation with the Grants Officer.

V. Public Input and Future Changes to the Risk Analysis System

    EDA has created this transparent and flexible approach to better 
evaluate and monitor the performance of RLFs. In an effort to ensure 
that the Risk Analysis System is as effective as possible, EDA seeks 
feedback from the public on the Risk Analysis System as described in 
this notice, on the initial measures used to implement the System, and 
how those measures are assessed by EDA. EDA encourages RLF Recipients 
and all interested members of the public to send EDA questions, 
suggestions, and comments on the Risk Analysis System and the measures 
through any of the methods discussed in the ADDRESSES section of this 
notice. In order to further facilitate public comment, EDA will hold a 
public webinar to present and explain the Risk Analysis System and the 
proposed measures, as well as to answer questions. EDA will post 
webinar details on the RLF page of the EDA Web site at www.eda.gov/rlf. 
EDA will thoroughly consider all public input prior to finalizing the 
measures and will post the final guidance on the EDA Web site.
* * * * *


[[Page 56947]]


    Authority:  The Public Works and Economic Development Act of 
1965, as amended (PWEDA) (42 U.S.C. 3121 et seq.).

    Dated: November 15, 2017.
Dennis Alvord,
Deputy Assistant Secretary for Regional Affairs, performing the non-
exclusive duties of the Assistant Secretary of Commerce for Economic 
Development.
[FR Doc. 2017-25276 Filed 11-30-17; 8:45 am]
 BILLING CODE 3510-WH-P

56942 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices generated from this meeting may also be measures EDA will use to assess plans (CAPs), sequestration, and inspected and reproduced at the performance under the Risk Analysis termination. Regional Programs Unit, as they become System. As part of its most recent amendment available, both before and after the to the regulations implementing DATES: Written comments are due on or meeting. Persons interested in the work PWEDA, which are effectuated through before January 2, 2018. of this Committee are directed to the a Final Rule published ADDRESSES: Comments on the notice contemporaneously with this notice,1 Commission’s Web site, http:// www.usccr.gov, or may contact the may be submitted through any of the EDA revised its RLF regulations to Regional Programs Unit at the above following methods: reflect best practices within the email or street address. • Email: regulations@eda.gov. financial community and to strengthen Include ‘‘Comments on EDA Notice’’ EDA’s efforts to evaluate, monitor, and Agenda and ‘‘Implementation of Revolving Loan improve RLF performance by moving to I. Welcome Fund Risk Analysis System’’ in the a risk-based approach to assess II. Discuss Potential Panelists subject line of the message. individual RLFs. This new approach, III. Discuss Potential Panel Categories • Fax: (202) 482–5671. Please known as the Risk Analysis System, is IV. Public Comment indicate ‘‘Attention: Office of the Chief modeled on the Uniform Financial V. Next Steps Counsel,’’ ‘‘Comments on EDA Notice,’’ Institutions Rating System, commonly VI. Adjournment and ‘‘Implementation of Revolving Loan known as the Capital, Assets, Exceptional Circumstance: Pursuant Fund Risk Analysis System’’ on the Management, Earnings, Liquidity, and to 41 CFR 102–3.150, the notice for this cover page. Sensitivity (CAMELS) rating system, meeting is given less than 15 calendar • Mail: Ryan Servais, Attorney which has been used since 1979 by a days prior to the meeting because of the Advisor, Office of the Chief Counsel, number of Federal agencies to assess exceptional circumstance of the Economic Development Administration, financial institutions on a uniform basis Committee needing to plan a briefing on U.S. Department of Commerce, 1401 and to identify those in need of voting rights to satisfy the U.S. Constitution Avenue NW., Suite 72023, additional oversight. The CAMELS Commission on Civil Rights’ 2018 Washington, DC 20230. Please indicate system produces a composite rating by Statutory Enforcement report timeline. ‘‘Comments on EDA Notice’’ and examining six components: Capital Dated: November 27, 2017. ‘‘Implementation of Revolving Loan adequacy, asset quality, management David Mussatt, Fund Risk Analysis System’’ on the capability, earnings, liquidity, and envelope. sensitivity to market risk. The Risk Supervisory Chief, Regional Programs Unit. FOR FURTHER INFORMATION CONTACT: Analysis System uses a set of metrics [FR Doc. 2017–25878 Filed 11–30–17; 8:45 am] Mitchell Harrison, Program Analyst, that generally examine these same BILLING CODE P Performance and National Programs components. However, because of the Division, Economic Development unique goal of the RLF Program as a Administration, U.S. Department of driver of critical economic DEPARTMENT OF COMMERCE development, particularly within Commerce, 1401 Constitution Avenue NW., Mail Stop 71030, Washington, DC distressed communities, EDA has Economic Development Administration developed a modified approach. In 20230 or via email at mharrison@ Implementation of Revolving Loan eda.gov. addition to assessing RLF Recipients Fund Risk Analysis System based on metrics for capital adequacy, SUPPLEMENTARY INFORMATION: asset quality, management capability, AGENCY: Economic Development I. Overview earnings, and liquidity, EDA will Administration, U.S. Department of consider metrics examining strategic Commerce. Investments to capitalize or results, rather than sensitivity to market ACTION: Notice of proposed performance recapitalize RLFs are governed by, inter risk. measures and request for comments. alia, the Public Works and Economic EDA’s newly revised regulations Development Act of 1965, as amended include key changes to support this shift SUMMARY: This notice outlines and (PWEDA) (42 U.S.C. 3121 et seq.), the to the Risk Analysis System and to ease solicits public comments on the regulations outlined at 13 CFR part 307, the transition for RLF Recipients. These performance measures that the subpart B, and the EDA RLF Standard changes include the following: Economic Development Administration Terms and Conditions attached to RLF • Replacing the formerly employed (EDA) has selected to implement the grant awards. The purpose of RLF grants Capital Utilization Standard with the Risk Analysis System to monitor the is to provide regions with a flexible and new Allowable Cash Percentage (ACP). Revolving Loan Fund (RLF) Program. continuing source of capital, to be used In the current version of the RLF The Risk Analysis System, which is with other economic development tools, regulation at 13 CFR 307.16(c), the being implemented by concurrent for creating and retaining jobs and Capital Utilization Standard was changes to EDA regulations, is designed inducing private investment that will applicable during the revolving phase of to lessen reporting and compliance contribute to long-term economic an RLF and required RLF Recipients to burdens on RLF Recipients while stability and growth. RLF grants are ‘‘provide that at all times at least 75 providing for more efficient and awarded to States, regional development percent of the RLF Capital is loaned or effective oversight of the RLF Program. organizations, local governments, Indian The Risk Analysis System measures are tribes, and non-profit organizations. sradovich on DSK3GMQ082PROD with NOTICES 1 The Department notes that the President’s Fiscal adapted from the Uniform Financial Currently, EDA applies a limited Year 2018 Budget calls for the elimination of EDA. The Department considers the Final Rule amending Institutions Rating System and evaluate compliance-based approach to the PWEDA implementing regulations to be RLF Recipients based on factors used by determine whether RLF Recipients important because the Department would need to that system and data provided by RLF adhere to regulatory requirements and continue to administer and monitor RLF grants in perpetuity under current statutory authorities. The Recipients via the standard RLF fulfill the terms of RLF awards. RLF regulatory changes in the Final Rule will enable the Financial Report, Form ED–209. This Recipients found to be non-compliant Department to more efficiently manage the residual notice seeks public comment on the are subject to possible corrective action RLF portfolio going forward. VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00002 Fmt 4703 Sfmt 4703 E:\FR\FM\01DEN1.SGM 01DEN1

Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices 56943 committed. . . .’’ The new ACP financial report (Form ED–209), audits, III. Scoring the Metrics standard is defined as ‘‘the average and other submissions. Specifically, it The Risk Analysis System adapts the percentage of the RLF Capital Base uses fifteen defined measures to CAMELS performance metrics to assess maintained as RLF Cash Available for evaluate a Recipient’s administration of RLFs through fifteen performance Lending by RLF Recipients in each EDA each RLF’s capital, assets, management, measures explained in the table below. regional office’s portfolio of RLF Grants earnings, liquidity, and strategic results. Each of the measures will be scored on over the previous year.’’ This will be This approach provides EDA with an a numerical scale ranging from 3 to 1, defined annually by each EDA regional internal tool for assessing the strengths where a ‘‘3’’ indicates exceeding the office for that region’s RLF grants based and weaknesses of each RLF and for measure, a ‘‘2’’ indicates an acceptable on the previous year’s average identifying RLFs that require additional effort, and a ‘‘1’’ indicates a below par percentage of RLF Cash Available for monitoring, technical assistance, or performance for the indicated measure. Lending (i.e., funds not currently other corrective action. It also provides The aggregate score will determine the deployed or committed for new loans) RLF Recipients with a set of portfolio RLF’s risk rating as ‘‘A’’, ‘‘B’’, or ‘‘C’’, held by the region’s portfolio of RLFs. management and operational standards with each of the fifteen individual The adoption of the ACP also removes to evaluate their RLFs and improve measures weighted equally. EDA will the requirement for automatic performance. EDA believes this new establish criteria for rating RLFs as ‘‘A’’, sequestration. Under EDA’s previous Risk Analysis System will provide ‘‘B’’, or ‘‘C’’ using data from the first set sequestration policy, EDA could require greater flexibility by assessing each of reports and audits submitted after sequestration if an RLF Recipient failed RLF’s strengths and weaknesses under implementation of the Risk Analysis to satisfy the Capital Utilization their own specific and unique System. EDA aims to establish fixed Standard for two consecutive Reporting circumstances, and that information rating criteria such that RLFs are rated Periods, and EDA generally required will be used by EDA to prioritize and against established criteria rather than sequestration after four consecutive focus EDA resources to those RLFs with in relation to the performance of other Reporting Periods. Instead, under the substantial challenges. revised regulations, if an RLF’s Cash RLFs; however, EDA may change the The Risk Analysis System rating will rating criteria from time to time. Available for Lending as a percentage of be conducted by EDA annually at the 1. Capital: The RLF Capital Base is the RLF Capital Base reaches 50%, and RLF Recipient’s fiscal year end and will expected to be maintained, if not persists for two years, the RLF may be be based on audits, RLF financial increased, over time in order to sustain subject to a disallowance of the excess reports (Form ED–209, or a successor lending activity and to carry out the cash. electronic system), and other • Changing the Reporting Period to purposes of the RLF Program, to create submissions. EDA is revising Form ED– and/or retain jobs, and stimulate private align with each RLF Recipient’s fiscal 209 to streamline reporting by seeking investment in regions of economic year end in order to ensure consistency only information essential to oversight distress. In addition, sufficient capital is between RLF financial reports (Form and to make the report more effective by necessary to protect the RLF from ED–209) submitted to EDA and RLF better integrating the Form with other potential loan losses. The ‘‘capital base Recipient annual audit reports. information required from RLF index’’ measure is determined by Additionally, EDA revised the Recipients. This revision of the ED–209 dividing the current RLF Capital Base regulations to state that the reporting is occurring at the same time that EDA by the original RLF Capital Base at the frequency for an RLF Recipient will be determined by EDA. This enables EDA is soliciting public comment on the Risk time that the RLF was established. to base reporting frequency on the risk Analysis System performance measures 2. Assets: An RLF Recipient must assessment of the RLF Recipient. Those through this notice, and EDA will adhere to prudent lending standards to RLF Recipients with a high rating publish a notice seeking comments on safeguard the quality of the loan through the Risk Analysis System will the revised Form. portfolio. There are four measures be placed on an annual reporting cycle, Because the Risk Analysis System within this metric: (1) The ‘‘default while RLF Recipients receiving lower relies heavily on audit results, all RLF rate’’ measure assesses weakness in loan ratings will be required to maintain Recipients will be required to submit payments or loan servicing processes. It semi-annual reporting. independent audits. A single audit is measured as the RLF Principal • Adopting a more tailored approach conducted according to 2 CFR part 200, Outstanding for Loans in Default as a to remedying non-compliance. The Risk subpart F, the ‘‘Uniform Administrative percentage of the RLF Principal Analysis System will enable EDA to Requirements, Cost Principles, and Outstanding for Active Loans. EDA provide targeted assistance to RLF Audit Requirements for Federal considers a high default rate as 20% or Recipients with identified weaknesses. Awards,’’ and the compliance greater. (2) EDA will also measure By reviewing the Recipient’s score supplement thereto, will satisfy this ‘‘default rate over time’’ by looking at under the Risk Analysis System, EDA requirement. Those Recipients that are how long a high default rate has will be able to select from a list of not required to arrange for a single audit persisted to identify possible options for intervening with the because they expend less than $750,000 weaknesses in underwriting, Recipient to achieve compliance, rather in Federal awards annually will be enforcement of loan terms, and/or than applying the previous one-size-fits- required to submit to EDA an working with borrowers to modify loan all approach through sequestration or independent audit of the RLF grant in payment schedules with the goal of termination. the first year of the Risk Analysis achieving full repayment. (3) The ‘‘loan System and as directed by EDA write-off ratio’’ measures the number of sradovich on DSK3GMQ082PROD with NOTICES II. How EDA’s Risk Analysis System thereafter. RLF Income may be used to written off loans compared to the Works pay for such an independent audit of number of inactive loans (the number of The Risk Analysis System rates each the RLF grant. If an RLF Recipient has inactive loans is equal to the number of RLF according to the performance insufficient RLF Income to pay for such total outstanding loans minus the metrics of the modified CAMELS an audit, the Recipient should seek EDA number of active loans). It will be used approach using the data reported by the approval to use RLF Capital Base funds to identify weaknesses in loan RLF Recipient through the standard RLF to cover audit costs. underwriting and loan management. (4) VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00003 Fmt 4703 Sfmt 4703 E:\FR\FM\01DEN1.SGM 01DEN1

56944 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices ‘‘Dollars written off’’ will identify the report’’ measure assesses the timeliness measures are used to determine financial impact of loan losses by and accuracy of RLF reporting through liquidity in an effort to identify comparing the amount of loan losses to the standard RLF Financial Report, weaknesses in loan generation: (1) the amount of principal repaid. Form ED–209. (5) ‘‘Timely reporting’’ ‘‘Cash percentage’’ assesses the 3. Management: In order to increase assesses the RLF Recipient’s timeliness Recipient’s RLF Cash Available for the likelihood of a successful RLF, the in submitting audits and filings, plus Lending as a percentage of its RLF RLF Recipient should have experience any additional required reporting, such Capital Base compared to the ACP for managing lending programs to be able to as that provided pursuant to a CAP or the Recipient’s region; and (2) ‘‘cash satisfy program, audit, RLF Plan, and Federal Financial Reports (Form SF– percentage over time,’’ which assesses reporting requirements. There are five 425) for RLFs in the Disbursement the length of time during which the measures to assess the Management Phase. Similarly, when an RLF is Recipient’s cash percentage exceeded metric: (1) The ‘‘financial control’’ required to prepare and implement a the Region’s ACP. For example, where measure is scored based on audit results CAP, the timeliness to resolve the the applicable ACP is 30%, RLFs that and audit findings. RLF Recipients issue(s) meriting corrective action will report an RLF Cash Available for subject to the single audit requirement be assessed in this measure. Lending from 27% to 33% of its RLF pursuant to 2 CFR part 200, subpart F, 4. Earnings: An RLF Recipient is Capital Base are scored as a 2 for the must demonstrate through an expected to manage costs and generate Cash Percentage measure. An RLF with independent annual audit that financial net income in order to maintain, if not the same ACP that holds 22% is scored controls are in place to operate the increase, the RLF Capital Base. The ‘‘net as a 3, while an RLF with 40% is scored organization and the RLF according to RLF income’’ measure determines how as a 1 for this measure. Generally Accepted Accounting well a Recipient is managing costs and 6. Strategic Results: RLFs must engage Principles, account for RLF assets, generating net income by dividing the in lending designed to fulfill the goals secure the use of funds, and value the portion of RLF Income used for of the RLF Program. The Strategic RLF correctly in the audit’s Schedule of administrative expenses over the life of Results component assesses whether Expenditures of Federal Awards. As the RLF by total RLF Income, to RLFs are meeting those goals by discussed in Section II, ‘‘How EDA’s determine the cumulative percentage of determining the economic impact the Risk Analysis System Works,’’ RLF RLF Income used for administrative RLF is having in its region. It does this Recipients not subject to the single audit expenses. by looking at two measures: (1) ‘‘cost requirement must submit to EDA an 5. Liquidity: RLF Recipients are per job’’ and (2) ‘‘leverage ratio’’. ‘‘Cost independent audit of the RLF grant in expected to maintain a robust lending per job’’ compares the RLF total the first year of the Risk Analysis pipeline and cash available for lending portfolio performance to the target System and as directed by EDA within a range of the ACP. The ACP is identified in its RLF Plan. It is based on thereafter. (2) ‘‘Tenure’’ assesses the a new feature of the RLF Program the amount of dollars loaned divided by RLF Recipient’s collective experience established by the newly revised the total number of jobs created and with the EDA RLF Program. Managing regulations, and replaces the fixed saved. The ‘‘leverage ratio’’ compares an RLF requires specialized knowledge capital utilization standard that ranged the amount of leveraged capital across and experience. The roles critical for a from 75% to 85%, according to the size the entire RLF portfolio to the successful lending program include: of the RLF Capital Base. The ACP is a cumulative amount of RLF dollars Executive Director, Lending Director, floating rate, determined annually for loaned. EDA regulations require a Finance Director, and Reporting each EDA region. It is the region’s minimum leverage ratio of two dollars Official. Vacancies or inexperience in average RLF Cash Available for Lending of additional investment for every one any of these positions can lead to as a percentage of the Capital Base dollar of RLF funds loaned. EDA program neglect, weak loan generation, calculated from the previous year’s regulations define leverage accounting problems, and late reporting. reports for each EDA regional office requirements, including investment by (3) The measure, ‘‘RLF Plan,’’ assesses portfolio. It specifies that RLF Cash the borrower and other public loan whether the RLF Recipient is operating Available for Lending excludes loans programs. the RLF pursuant to a current, EDA- that have been committed or approved The following chart demonstrates the approved RLF Plan. (4) The ‘‘financial but have not yet been funded. Two range of scores available for each metric. PERFORMANCE METRICS & MEASURES Score These metrics are calculated using information from the revised 3 ............................................... 2 ............................................... 1. RLF Financial Report, Form ED–209. Where applicable, the measure’s formula is presented using references to lines in the revised ED–209. Note that EDA will publish a notice seek- ing comments on the revised Form. Performance Metric: Capital The RLF Capital Base is expected to increase over time in order to sustain lending activity and to carry out the purpose of the RLF Program. In addition, sufficient capital is necessary to protect the RLF from potential loan losses. sradovich on DSK3GMQ082PROD with NOTICES Measure: Capital Base Index Determined by: RLF Capital Base divided by the original RLF Greater than 1.5 ....................... From 1.0 to 1.5 ........................ Less than 1.0. Capital Base at the time the RLF was established. ED–209: II.C.6 ÷ II.A.3. VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00004 Fmt 4703 Sfmt 4703 E:\FR\FM\01DEN1.SGM 01DEN1

Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices 56945 PERFORMANCE METRICS & MEASURES—Continued Score Performance Metric: Assets An RLF Recipient must adhere to prudent lending standards to safeguard the quality of the loan portfolio. Measure: Default Rate Determined by: RLF Principal Outstanding for Loans in Default Less than 10% ......................... From 10% to 20% .................... Greater than 20%. divided by RLF Principal Outstanding for Total Active Loans. ED–209: III.A.3, In Default RLF Principal Outstanding ÷ III.A.4, Active RLF Principal Outstanding. Measure: Default Rate over Time Determined by: Number of consecutive months where default Less than 12 months ............... From 12 to 24 months ............. More than 24 months. rate is over 20%. Measure: Loan Write-Off Ratio Determined by: The ratio of the number of loans written-off to Less than 1 out of every 6 ....... From 1 out of every 6 to 1 out Greater than 1 out of every 4. the number of ‘‘inactive loans’’ (calculated as number of total of every 4. loans minus number of active loans). ED–209: III.A.5, Number ÷ (III.A.7, Number—III.A..4, Number). Measure: Dollars Written-Off Determined by: Loan Losses divided by the difference between Less than 10% ......................... From 10% to 20% .................... Greater than 20%. Total RLF Dollars Loaned and Total RLF Principal Out- standing. ED–209: III.A.5, Loan Losses ÷ (III.A.7, RLF $ Loaned—III.A.7, RLF Principal Outstanding). Performance Metric: Management It is critical to the success of the RLF that Management is experienced with the EDA RLF Program, their RLF Plan, and reporting requirements. Critical positions in- clude: Executive Director, Lending Director, Finance Director, and Reporting Official. Vacancies in any of these positions can lead to program neglect and result in late reporting, weak loan generation, and accounting errors. Measure: Financial Control Determined by: Number and magnitude of audit findings ............ No findings ............................... Minor findings ........................... Material findings pertaining to Organization, Questioned Costs, Solvency, Interrelated party transactions. Measure: Tenure Determined by: Shortest tenure of Executive Director, Lending Greater than 3 years ................ From 2 to 3 years .................... Vacancy or less than 2 years. Director, Finance Director, and Reporting Official. Measure: RLF Plan Determined by: Updated RLF Plan where EDA has not granted RLF Plan up to date, updates Updated RLF Plan received RLF Plan expired and not up- a time extension. submitted at least every 5 more than 5 years since its dated within the last 6 years. years. last update but within 6 years. Measure: Financial Reporting Determined by: Date RLF Financial Report, ED–209 submitted On time with no corrections Up to 60 days late and/or re- More than 60 days late; or sent to EDA. needed. turned to RLF Recipient for back for major revision. minor corrections. Measure: Timely and Complete Reporting Determined by: Date audit and/or additional reports (such as On time ..................................... Up to 30 days late ................... Over 30 days late or no re- SF–425 or Corrective Action Plan) submitted to EDA. ceipt. Performance Metric: Earnings An RLF Recipient is expected to manage costs and generate income in order to increase the RLF’s Capital Base. Measure: Net RLF Income Determined by: Portion of RLF Income Used for Administrative Less than 50% ......................... From 50% to 100% .................. More than 100%. Expenses divided by Total RLF Income. ED–209: II.B.7 ÷ sradovich on DSK3GMQ082PROD with NOTICES II.B.6. Performance Metric: Liquidity RLF Recipients are expected to keep a robust lending pipeline and maintain cash within a range of the Region’s average cash as a percentage of the Capital Base. Measure: Cash Percentage Determined by: RLF Cash Available for Lending divided by RLF Less than 90% of the ACP ...... From 90% to 110% of the ACP More than 110% of the ACP. Capital Base. ED–209: II.D.4 ÷ II.C.6. VerDate Sep<11>2014 18:28 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00005 Fmt 4703 Sfmt 4703 E:\FR\FM\01DEN1.SGM 01DEN1

56946 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices PERFORMANCE METRICS & MEASURES—Continued Score Measure: Cash Percentage over Time Determined by: Length of time where the Cash Percentage ex- Less than 12 months ............... From 12 to 24 months ............. More than 24 months. ceeds the Region’s ACP. Performance Metric: Strategic Results The purpose of the RLF Program is to provide regions with a flexible and continuing source of capital for creating and retaining jobs and inducing private investment that will contribute to long-term economic stability and growth. Measure: Cost per Job Determined by: RLF Dollars Loaned divided by Total Jobs com- Less than 90% of RLF Plan 90% to 110% of RLF Plan tar- Greater than 110% of RLF pared to RLF Plan Target. ED–209: III.A.7, RLF $ Loaned ÷ target. get. Plan target. IV.E.5, Total Loans as compared to IV.E.6, RLF Plan Target. Measure: Leverage Ratio Determined by: Total Dollars Leveraged divided by RLF Dollars Meets or exceeds required le- N/A ........................................... Less than 2:1. Loaned. ED–209: IV.E.1, Total Loans ÷ III.A.7, RLF $ Loaned. verage of 2:1. IV. Ratings and Remedies for following the end of their fiscal year and RLF Recipient for incremental progress Noncompliance again within 30 calendar days of the end made. Following receipt of an RLF of the second quarter of their fiscal year. If any Recipient is unable or Recipient’s fiscal-year end RLF financial 3. Level C: RLF Recipients in Level C unwilling to develop and submit a CAP report, the EDA RLF Administrator will exhibit performance deficiencies or an annual update report, the RLF notify the RLF Recipient of the requiring additional oversight and Administrator will inform the non- performance rating, i.e., Risk Analysis intervention by the RLF Administrator. compliant Recipient that EDA may seek rating level (A, B, or C) for each RLF. In general, multiple measures on the to terminate or transfer the RLF award. The assigned level will be based upon Risk Analysis System measures are In addition, if a CAP for a Level C the data and information provided in scored as a ‘‘1’’. Recipients may exhibit Recipient does not yield the intended the most recent RLF financial report, the material noncompliance with EDA results, the RLF Administrator may Recipient’s overall numeric score on the policies and regulations, which may propose termination or transfer of the Risk Analysis System, and a result in the RLF Administrator having RLF award in consultation with the determination by the Regional RLF to propose formal enforcement actions, Grants Officer. Administrator in consultation with the including suspension, corrective Grants Officer. Risk Levels A, B, and C actions, termination, or transfer of the V. Public Input and Future Changes to are defined below: RLF Award. Level C Recipients will the Risk Analysis System 1. Level A: RLF Recipients in Level A report to EDA on a semi-annual basis within 30 calendar days following the EDA has created this transparent and are managing their RLF award soundly end of their fiscal year and again 6 flexible approach to better evaluate and and are almost always in compliance months later. monitor the performance of RLFs. In an with EDA policies and regulations. For each RLF rated at Level C, the effort to ensure that the Risk Analysis These RLF Recipients exhibit the RLF Recipient will be required to System is as effective as possible, EDA strongest performance and management produce a CAP to address the areas of seeks feedback from the public on the practices. Any issues that arise are addressed in a timely manner. The RLF weakness, which will include, at a Risk Analysis System as described in Administrator may determine that a minimum, an annual corrective action this notice, on the initial measures used Level A Recipient requires less frequent update report to EDA. The RLF to implement the System, and how monitoring. These Recipients may be Recipient will have 60 days, running those measures are assessed by EDA. allowed to administer their RLF from the day that the RLF Recipient EDA encourages RLF Recipients and all portfolios and resolve issues without receives notification from EDA of its interested members of the public to significant EDA involvement. Level A risk-analysis score, to propose its CAP. send EDA questions, suggestions, and Recipients will report to EDA on an The RLF Recipient will have a specified comments on the Risk Analysis System annual basis within 90 calendar days timeframe to implement the CAP, not to and the measures through any of the following the end of their fiscal year. exceed three years, which will run from methods discussed in the ADDRESSES 2. Level B: RLF Recipients in Level B the day that the RLF Recipient receives section of this notice. In order to further are fundamentally sound, but some notification from EDA that EDA concurs facilitate public comment, EDA will deficiencies are present and will take with the RLF Recipient’s proposed CAP. hold a public webinar to present and time to resolve. Recipients are generally (Note: The exception to the three-year explain the Risk Analysis System and in compliance with EDA regulations limit is for an RLF Recipient that has the proposed measures, as well as to and policies. While these RLF proposed to rebuild its capital base, in answer questions. EDA will post sradovich on DSK3GMQ082PROD with NOTICES Recipients exhibit generally satisfactory which case they may have up to five webinar details on the RLF page of the results, the RLF Administrator will years to reach the target.) The CAP must EDA Web site at www.eda.gov/rlf. EDA provide additional oversight and include measurable targets and dates by will thoroughly consider all public attention to assist the RLF Recipient which improvement will be achieved. input prior to finalizing the measures with improving its performance. Level B The RLF Recipient’s CAP must be and will post the final guidance on the Recipients will report to EDA on a semi- approved in writing by the EDA RLF EDA Web site. annual basis within 30 calendar days Administrator, who will monitor the * * * * * VerDate Sep<11>2014 18:28 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00006 Fmt 4703 Sfmt 4703 E:\FR\FM\01DEN1.SGM 01DEN1

Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Notices 56947 Authority: The Public Works and (571) 665–6177; email: Karen.Miller- passcode 5957846. To view the slide Economic Development Act of 1965, as Kuwana@firstnet.gov. Please direct presentation, the public may visit the amended (PWEDA) (42 U.S.C. 3121 et seq.). media inquiries to Ryan Oremland at URL: https://www.mymeetings.com/nc/ Dated: November 15, 2017. (571) 665–6186. join/ and enter Conference Number Dennis Alvord, SUPPLEMENTARY INFORMATION: This PWXW5929049 and audience passcode Deputy Assistant Secretary for Regional notice informs the public that the 5957846. Alternatively, members of the Affairs, performing the non-exclusive duties FirstNet Board and Board Committees public may view the slide presentation of the Assistant Secretary of Commerce for will convene a combined meeting open by directly visiting the URL: https:// Economic Development. to the public via teleconference and www.mymeetings.com/nc/ [FR Doc. 2017–25276 Filed 11–30–17; 8:45 am] WebEx only on December 7, 2017. join.php?i=PWXW5929049&p=5957846 BILLING CODE 3510–WH–P Background: The Middle Class Tax &t=c. Relief and Job Creation Act of 2012 (47 If you experience technical difficulty, U.S.C. 1401 et seq.)) (‘‘the Act’’) please contact the Conferencing Center DEPARTMENT OF COMMERCE established FirstNet as an independent customer service at 1–866–900–1011. authority within the National Public access will be limited to listen- National Telecommunications and only. Due to the limited number of Telecommunications and Information Information Administration ports, attendance via teleconference will Administration that is headed by a Board. The Act directs FirstNet to be on a first-come, first-served basis. First Responder Network Authority; ensure the building, deployment, and The FirstNet Board and Combined First Responder Network Authority operation of a nationwide, interoperable Committee Meeting is accessible to Combined Committee and Board public safety broadband network. The people with disabilities. Individuals Meeting FirstNet Board is responsible for making requiring accommodations are asked to AGENCY: First Responder Network strategic decisions regarding FirstNet’s notify Ms. Miller-Kuwana by telephone Authority (‘‘FirstNet’’), U.S. Department operations. The FirstNet Board held its (571) 665–6177 or email at Karen.Miller- of Commerce. first public meeting on September 25, Kuwana@firstnet.gov at least five (5) ACTION: Notice of open public meetings. 2012. business days before the applicable Matters To Be Considered: FirstNet meeting. SUMMARY: The Board of the First will post a detailed agenda for the Records: FirstNet maintains records of Responder Network Authority combined meeting of the Board all FirstNet Board proceedings. Minutes (‘‘FirstNet Board’’) will convene a Committees and FirstNet Board meeting of the FirstNet Board Meeting and the meeting of the FirstNet Board and the on its Web site, http://www.firstnet.gov, Board Committee Meetings will be Committees of the Board of the First prior to the meetings. The agenda topics available at www.firstnet.gov. Responder Network Authority ‘‘Board are subject to change. Please note that Dated: November 27, 2017. Committees’’ that will be open to the the subjects that will be discussed by Karen Miller-Kuwana, public via teleconference and WebEx on the Board Committees and the FirstNet December 7, 2017. Board Secretary, First Responder Network Board may involve commercial or Authority. DATES: A combined meeting of the financial information that is privileged [FR Doc. 2017–25868 Filed 11–30–17; 8:45 am] Board Committees and the FirstNet or confidential or other legal matters BILLING CODE 3510–TL–P Board will be held on December 7, 2017, affecting FirstNet. As such, the Board between 9:00 a.m. and 11:30 a.m., Committee Chairs and Board Chair may Eastern Standard Time (EST). The call for a vote to close the meetings only DEPARTMENT OF COMMERCE meeting of the FirstNet Board and the for the time necessary to preserve the Governance and Personnel, Technology, confidentiality of such information, International Trade Administration Consultation and Outreach, and Finance pursuant to 47 U.S.C. 1424(e)(2). Committees will be open to the public Times and Dates of Meeting: A [A–583–837] via teleconference and WebEx only from combined meeting of the FirstNet Board 9:00 a.m. to 11:30 a.m. EST. Polyethylene Terephthalate Film, and Board Committees will be held on Sheet, and Strip (PET Film) From ADDRESSES: The combined meeting of December 7, 2017, between 9:00 a.m. Taiwan: Final Results of Antidumping the FirstNet Board and Board and 11:30 a.m., Eastern Standard Time Duty Administrative Review; 2015– Committees will be conducted via (EST). The meeting of the FirstNet 2016 teleconference and WebEx only. Board and Board Committees will be Members of the public may listen to the open to the public via teleconference AGENCY: Enforcement and Compliance, meeting by dialing toll free 1–888–566– and WebEx from 9:00 a.m. to 11:30 a.m. International Trade Administration, 5786 and using passcode 5957846. To EST. The times listed above are subject Department of Commerce. view the slide presentation, the public to change. Please refer to FirstNet’s Web SUMMARY: On August 3, 2017, the may visit the URL: https:// site at www.firstnet.gov for the most up- Department of Commerce (the www.mymeetings.com/nc/join/ and to-date information. Department) published the preliminary enter Conference Number Place: The combined meeting of the results of the administrative review of PWXW5929049 and audience passcode FirstNet Board and Board Committees the antidumping duty (AD) order on 5957846. Alternatively, members of the will be conducted via teleconference polyethylene terephthalate film, sheet, public may view the slide presentation and WebEx. and strip (PET Film) from Taiwan. The sradovich on DSK3GMQ082PROD with NOTICES by directly visiting the URL: https:// Other Information: The combined period of review (POR) is July 1, 2015, www.mymeetings.com/nc/join.php?i= meeting of the Board Committees is through June 30, 2016. We received no PWXW5929049&p=5957846&t=c. open to the public via teleconference comments or requests for a hearing. FOR FURTHER INFORMATION CONTACT: and WebEx only. On the date and time Therefore, we have made no changes for Karen Miller-Kuwana, Board Secretary, of the meeting, members of the public the final results and continue to find FirstNet, 12201 Sunrise Valley Drive, may listen to the meeting by dialing toll that sales of subject merchandise by Nan M/S 243, Reston, VA 20192; telephone: free 1–888–566–5786 and using Ya Plastics Corporation (Nan Ya) were VerDate Sep<11>2014 16:44 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00007 Fmt 4703 Sfmt 4703 E:\FR\FM\01DEN1.SGM 01DEN1


Document Created: 2018-10-25 10:43:58
Document Modified: 2018-10-25 10:43:58
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice of proposed performance measures and request for comments.
DatesWritten comments are due on or before January 2, 2018.
ContactMitchell Harrison, Program Analyst, Performance and National Programs Division, Economic Development Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Mail Stop 71030, Washington, DC 20230 or via email at [email protected]
FR Citation82 FR 56942 
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