Notice2023-04348
CDFI and NACA Program Paperwork Reduction Act (PRA)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 3, 2023
Issuing agencies
Treasury DepartmentCommunity Development Financial Institutions Fund
Abstract
The U.S. Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act (PRA) of 1995. Currently, the Community Development Financial Institutions Fund (CDFI Fund), U.S. Department of the Treasury, is soliciting comments concerning the Community Development Financial Institutions Program (CDFI Program) and the Native American CDFI Assistance Program (NACA Program) Financial Assistance (FA) and Technical Assistance (TA) Applications, for the Fiscal Year (FY) 2023-FY 2025 funding rounds (hereafter, the Application or Applications). The FA Application includes optional questions that addresses Healthy Food Financing Initiative--Financial Assistance (HFFI-FA), Persistent Poverty Counties--Financial Assistance (PPC-FA) and Disability Funds--Financial Assistance (DF-FA). Information on CDFI Program and NACA Program Applications can be found on the CDFI Fund's website at https://www.cdfifund.gov/programs- training/programs/cdfi-program for the CDFI Program and at https:// www.cdfifund.gov/programs-training/programs/native-initiatives for the NACA Program. The CDFI Fund is required by law to make the Applications publicly available for comment prior to submission for a new PRA number.
Full Text
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<title>Federal Register, Volume 88 Issue 42 (Friday, March 3, 2023)</title>
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[Federal Register Volume 88, Number 42 (Friday, March 3, 2023)]
[Notices]
[Pages 13510-13516]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-04348]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
CDFI and NACA Program Paperwork Reduction Act (PRA)
ACTION: Notice and request for public comment.
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SUMMARY: The U.S. Department of the Treasury, as part of its continuing
effort to reduce paperwork and respondent burden, invites the general
public and other Federal agencies to take this opportunity to comment
on proposed and/or continuing information collections, as required by
the Paperwork Reduction Act (PRA) of 1995. Currently, the Community
Development Financial Institutions Fund (CDFI Fund), U.S. Department of
the Treasury, is soliciting comments concerning the Community
Development Financial Institutions Program (CDFI Program) and the
Native American CDFI Assistance Program (NACA Program) Financial
Assistance (FA) and Technical Assistance (TA) Applications, for the
Fiscal Year (FY) 2023-FY 2025 funding rounds (hereafter, the
Application or Applications). The FA Application includes optional
questions that addresses Healthy Food Financing Initiative--Financial
Assistance (HFFI-FA), Persistent Poverty Counties--Financial Assistance
(PPC-FA) and Disability Funds--Financial Assistance (DF-FA).
Information on CDFI Program and NACA Program Applications can be found
on the CDFI Fund's website at <a href="https://www.cdfifund.gov/programs-training/programs/cdfi-program">https://www.cdfifund.gov/programs-training/programs/cdfi-program</a> for the CDFI Program and at <a href="https://www.cdfifund.gov/programs-training/programs/native-initiatives">https://www.cdfifund.gov/programs-training/programs/native-initiatives</a> for the
NACA Program. The CDFI Fund is required by law to make the Applications
publicly available for comment prior to submission for a new PRA
number.
[[Page 13511]]
DATES: Written comments must be received on or before May 12, 2023 to
be assured of consideration.
ADDRESSES: Submit your comments via email to Pooja Patel, CDFI Program
and NACA Program Manager, CDFI Fund, at <a href="/cdn-cgi/l/email-protection#701314161918151c0030131416195e04021511035e171f06"><span class="__cf_email__" data-cfemail="086b6c6e61606d6478486b6c6e61267c7a6d697b266f677e">[email protected]</span></a> or via
Service Request in the Awards Management Information System (AMIS).
FOR FURTHER INFORMATION CONTACT: Pooja P. Patel, CDFI Program and NACA
Program Manager, CDFI Fund, U.S. Department of the Treasury, 1500
Pennsylvania Avenue NW, Washington, DC 20220, or by phone (202) 653-
0421, or email to <a href="/cdn-cgi/l/email-protection#791a1d1f10111c1509391a1d1f10570d0b1c180a571e160f"><span class="__cf_email__" data-cfemail="177473717e7f727b67577473717e39636572766439707861">[email protected]</span></a>. Other information regarding
the CDFI Fund and its programs may be obtained on the CDFI Fund website
at <a href="https://www.cdfifund.gov">https://www.cdfifund.gov</a>.
Two documents are provided to aid the public in providing comments
requested by this Notice. The FA Application and TA Application
Templates, which present the questions that will comprise the online FA
and TA Applications, show revisions relative to the existing
Applications as highlighted in yellow. All documents may be obtained
from the Request for Public Comments page of the CDFI Fund's website at
<a href="https://www.cdfifund.gov/requests-for-comments">https://www.cdfifund.gov/requests-for-comments</a>.
SUPPLEMENTARY INFORMATION:
Title: CDFI Program and NACA Program Financial Assistance and
Technical Assistance Applications.
OMB Number: 1559-0021.
Abstract: The CDFI Program is authorized by the Riegle Community
Development Banking and Financial Institutions Act of 1994 (Pub. L.
103-325, 12 U.S.C. 4701 et seq.). Funding for the CDFI Program and the
NACA Program is made available by Congress to the CDFI Fund through its
annual appropriations. The regulations governing the CDFI Program are
found at 12 CFR parts 1805 and 1815 (the Regulations) and set forth
evaluation criteria and other program requirements. For a complete
understanding of the programs, the CDFI Fund encourages Applicants to
review the Regulations, the Notice of Funds Availability (NOFA) for the
FY 2022 Application round of the CDFI Program (87 FR 8085, February 11,
2022), the NOFA for the FY 2022 Application round of the NACA Program
(87 FR 8107, February 11, 2022), the Applications, and the Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards (2 CFR part 200) (Uniform Administrative
Requirements). Capitalized terms in this Request for Public Comment are
defined in the CDFI Program's authorizing statute, the Regulations, the
FY 2022 CDFI Program and NACA Program NOFAs, the Applications,
Application materials, and the Uniform Administrative Requirements.
Through the CDFI Program and NACA Program's FA and TA awards, the CDFI
Fund invests in and builds the capacity of for-profit and nonprofit
community based lending organizations known as Community Development
Financial Institutions (CDFIs).
CDFI Program and NACA Program award Recipients will be
competitively selected after the CDFI Fund's careful review of their
Applications. The proposed FA Application requires the submission of
quantitative and qualitative information about the Applicant's Business
Strategy, Products and Services, Market and Competitive Analysis,
Management and Staffing, Financial Position, and Growth and
Projections. The proposed TA Application requires the submission of
quantitative and qualitative information about CDFI Certification
Qualifications, an Organizational Overview, Business Strategy, and Use
of Funds. Please refer to the FY 2022 CDFI Program and NACA Program
NOFAs for additional guidance on the review and Application process for
past funding rounds.
This request for public comment seeks to gather information on the
CDFI Program and NACA Program TA and FA Applications, which include the
optional questions for PPC-FA, HFFI-FA and DF-FA.
Current Actions: Renewal of existing Information Collection.
Type of Review: Regular Review.
Affected Public: Businesses or other for-profit institutions, non-
profit entities, and State, local and Tribal entities participating in
CDFI Fund programs.
Estimated Number of Respondents for Financial Assistance: 425.
Estimated Annual Time per Respondent for Financial Assistance
including optional questions: 145 hours.
Estimated Total Annual Burden Hours for Financial Assistance:
61,625.
Estimated Number of Respondents for Technical Assistance: 225.
Estimated Annual Time per Respondent for Technical Assistance: 80
hours.
Estimated Total Annual Burden Hours for Technical Assistance:
18,000.
Requests for Comments: Comments submitted in response to this
notice will be summarized and/or included in the request for Office of
Management and Budget approval. All comments will become a matter of
public record and may be published on the CDFI Fund's website at <a href="http://www.cdfifund.gov">http://www.cdfifund.gov</a>. The CDFI Fund is seeking: (a) specific input on the
content of the FA Application for the CDFI and NACA Programs; (b)
specific input on the content of the TA Application for the CDFI and
NACA Programs; (c) specific input on the content of the Healthy Food
Financing Initiative--Financial Assistance (HFFI-FA) Application; (d)
specific input on the content of the Persistent Poverty Counties--
Financial Assistance (PPC-FA) Application; (e) specific input on the
content of the Disability Funds--Financial Assistance (DF-FA)
Application; (f) general input on other CDFI Program and NACA Program-
related topics and considerations. The Application Templates for
comment may be obtained on the CDFI Fund's website at <a href="https://www.cdfifund.gov/requests-for-comments">https://www.cdfifund.gov/requests-for-comments</a>.
Comments concerning the Applications are invited on: (a) whether
the collection of information is necessary for the proper performance
of the functions of the agency, including whether the information shall
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information to be collected; (d)
ways to minimize the burden of the collection of information on
respondents, including through the use of technology; and (e) estimates
of capital or start-up costs and costs of operation, maintenance, and
purchase of services required to provide information. In addition, the
CDFI Fund requests comments in response to the following general
questions about the Applications. Commenters should ensure that their
comments are clearly labeled corresponding to each section and question
number.
A. Financial Assistance (FA) Application
The following questions are related to the burden and information
requested in the FA Application, and responses may be used to make
modifications to the information being requested in the FA Application.
Commenters should clearly distinguish their comments related to this
section when providing their responses and ensure comments are clearly
labeled corresponding to each section and question number.
1. Is the information that is proposed to be collected by the
Application necessary and appropriate for the CDFI Fund to consider for
the purpose of making award decisions?
2. Are certain data fields, questions or tables redundant or
unnecessary? If yes, which ones and why?
[[Page 13512]]
3. Should any data fields, questions or tables be added to ensure
collection of relevant information?
4. Are there requests for data in the Application that Applicants
do not have readily available and that are burdensome to obtain and/or
calculate?
5. Are any of the questions particularly burdensome or difficult to
answer? If yes, which ones and why?
6. Are there questions that lack clarity as to intent or purpose?
If yes, which questions, and what needs to be clarified in order for
Applicants to provide a comprehensive response?
7. Are the character limitations for narrative responses
appropriate? Should certain questions allow additional or fewer
characters? If yes, please specify.
8. What additional guidance can the CDFI Fund provide in order to
assist Applicants with completing an FA Application?
9. Business Plan. In general, does the data and information
requested in the Application allow an Applicant to demonstrate its
ability explain its business plan and ability to meet the FA Objectives
described in the Application?
10. Business Plan. Is the data and information requested in the
Application to assess the business plan adequate to assess the
different CDFI activities?
11. Business Plan. What, if any, additional data and information
should be collected to assess business plan activities?
12. Beneficiary Data. The CDFI Fund currently collects beneficiary
data by income level in the Beneficiary Snapshot table to assess how
well an organization is serving communities in economic distress.
Reported data in this table combines those receiving Development
Services and those receiving Financial Products/Financial Services and
is only requested for the Applicant's most recent historic fiscal year.
a. The CDFI Fund is proposing to request beneficiary data
separately for (1) Financial Products/Financial Services and (2)
Development Services to provide a more accurate depiction of
beneficiaries served. Is the proposal for separating out the
beneficiary data points between beneficiaries receiving Financial
Products/Financial Services versus those receiving Development Services
appropriate? If not, why not? Will this proposed change be difficult or
overly burdensome to report?
b. The CDFI Fund is considering to request beneficiary data
projections for the three year Period of Performance to help assess the
impact an Applicant's proposed activity with the FA award. Is the
proposal to collect projected beneficiary data appropriate for use in
assessing the impacts of an Applicant's proposed activity with the FA
award? If not, why not? Will this proposed data collection be difficult
or overly burdensome to report?
13. FA Objectives. Currently, FA Applicants can select from the
following list of seven FA Objectives (FAO): 1-1: Increase Volume of
Financial Products, 1-2: Increase Volume of Financial Services, 1-3:
New Geographic Area(s), 1-4: New Financial Product(s), 1-5: New
Financial Service(s), 1-6: New Development Service(s), and 1-7: New
Targeted Population(s). The CDFI Fund proposes to eliminate certain
FAOs that are difficult to measure, evaluate and administer. Further,
these FAOs are rarely selected by Applicants.
a. The CDFI Fund proposes to eliminate FAO 1-1: Increase Volume of
Financial Services from the list of FAOs to select in the FA
Application. However, Financial Services is still an eligible use of
the FA award. Would all types of regulated CDFIs still be interested in
applying if they could no longer select this FA Objective and required
to select another one instead? If no, why not?
b. The CDFI Fund proposes to eliminate FAO 1-5: New Financial
Services from the list of FAOs to select in the FA Application.
However, Financial Services is still an eligible use of the FA award.
Would all types of regulated CDFIs still be interested in applying if
they could no longer select this FA Objective and required to select
another one instead? If no, why not?
c. The CDFI Fund proposes to eliminate FAO 1-6: New Development
Services from the list of FAOs to select in the FA Application.
However, Development Services is still an eligible use of the FA award.
Would all types of CDFIs still be interested in applying if they could
no longer select this FA Objective and required to select another one
instead? If no, why not?
14. FA Objectives. Currently, to select FAO 1-1: Increase Volume of
Financial Products, an Applicant's three years of projected lending
activity must exceed its historic three years of lending activity plus
the FA award amount (``Increase in Volume''). The Increase in Volume
becomes a Performance Goal & Measure (PG&M) in the Assistance
Agreement. The CDFI Fund proposes to change the Increase in Volume
formula for FAO 1-1: Increase Volume of Financial Products to be more
consistent with other FAO PG&Ms and to more directly align with the
amount of the FA award. One option is for the formula to be a
multiplier of the award amount plus the Applicant's historic three
years of lending activity. For example, for a $1 million award, if the
multiplier were 2 and the Applicant's three most recent years of
historic of lending were $10 million, the FAO 1:1: Increase Volume of
Financial Products PG&M would be $12 million ($1 million FA award times
multiplier of 2 plus $10 million historic lending equals $12 million).
For more detailed explanation of the proposed formula, please see
Question 4d in the FA Application Template, found on the CDFI Fund's
website at <a href="https://www.cdfifund.gov/requests-for-comments">https://www.cdfifund.gov/requests-for-comments</a>. The CDFI
Fund is seeking input on the proposed change to FAO 1-1: Increase
Volume of Financial Products. Is a multiplier of the FA award plus
three years of historic lending an appropriate formula for FAO 1-1:
Increase Volume of Financial Products PG&M? If yes, should the CDFI
Fund require a standard multiplier or allow Applicants to propose their
own multiplier as part of the Application? If a standard multiplier,
what should the multiplier be? If a multiplier of the award plus three
years of historic lending is not appropriate, why is it not an
appropriate formula and what should the formula be?
15. Ability to Serve Native Communities. Should the CDFI Fund
adjust its FA Application in order to better collect information and
evaluate an Applicant's ability to serve the unique needs of Native
Communities? If yes, what questions should the CDFI Fund include in the
FA Application and what evaluation factors should the CDFI Fund
consider when evaluating an Applicant's ability to serve the unique
needs of Native Communities?
B. Technical Assistance (TA) Application
The following questions are related to the burden and information
requested in the TA Application, and responses may be used to make
modifications to the information being requested in the TA Application.
Commenters should clearly distinguish their comments related to this
section when providing their responses and ensure comments are clearly
labeled corresponding to each section and question number.
1. Is the information that is proposed to be collected by the
Application necessary and appropriate for the CDFI Fund to consider for
the purpose of making award decisions?
2. Are certain data fields, questions or tables redundant or
unnecessary? If yes, which ones and why?
3. Should any data fields, questions or tables be added to ensure
collection of relevant information?
[[Page 13513]]
4. Are there requests for data in the Application that Applicants
do not have readily available or that are burdensome to obtain and/or
calculate?
5. Are any of the questions particularly burdensome or difficult to
answer? If yes, which ones and why?
6. Are there questions that lack clarity as to intent or purpose?
If yes, which questions, and what needs to be clarified in order for
Applicants to provide a comprehensive response?
7. Are the character limitations for narrative responses
appropriate? Should certain questions allow additional or fewer
characters? If so, please specify.
8. What additional guidance can the CDFI Fund provide in order to
assist Applicants with completing a TA Application?
9. Evaluation Criteria by Application Type. Do the questions in the
TA Application allow the Applicant to clearly address the evaluation
criteria for the following Applicant types? If no, what additional
information should be included in the Application for each Applicant
type?
(a) An Emerging and Certifiable CDFI and its ability to achieve
certification;
(b) A Sponsoring Entity and its ability to create and receive
certification for a new CDFI; and
(c) A Certified CDFI and its ability to build its capacity to
expand operations, offer new products or services, or increase the
volume of current business?
10. Capacity to Serve Target Market(s). The primary purpose of
making a TA award to a Certified CDFI is to increase its capacity to
serve its Target Market(s). How can the CDFI Program and NACA Program
update the TA Application in order to make a more accurate
determination as to whether or not a TA award will increase a Certified
CDFI's capacity to serve its Target Market(s)?
11. Eligible Uses of Funds. Does the current TA Application,
related guidance materials, and NOFAs provide sufficient clarity to
help potential Applicants clearly understand what are, and are not,
eligible uses of TA funds?
12. Ability to Serve Native Communities. Should the CDFI Fund
adjust its TA Application in order to better collect information and
evaluate an Applicant's ability to serve the unique needs of Native
Communities? If yes, what questions should the CDFI Fund include in the
TA Application and what evaluation factors should the CDFI Fund
consider when evaluating an Applicant's ability to serve the unique
needs of Native Communities?
13. Sponsoring Entities. The NACA Program allows organizations that
serve Native Communities, Sponsoring Entities, to apply for TA awards
in order to create a new legal entity that will become a Certified
CDFI. In recent history, Sponsoring Entities have largely struggled to
find success in establishing a Certified CDFI. Between 2013 and 2020,
only two Sponsoring Entities have created new legal entities that
ultimately achieved CDFI Certification.
a. What questions should the Application include in order to better
assess a Sponsoring Entity's ability to successfully create an emerging
CDFI within one year and ensure that the emerging CDFI achieves CDFI
Certification within four years?
b. Should the CDFI Fund require Sponsoring Entities to create the
new legal entity that will become the Certified CDFI before being
eligible to receive a NACA TA award?
C. Healthy Food Financing Initiative--Financial Assistance (HFFI-FA)
Application
The following questions are related to the burden and information
requested in the HFFI-FA Application, and responses may be used to make
modifications to the information being requested in the HFFI-FA
Application. Commenters should clearly distinguish their comments
related to this section when providing their responses and ensure
comments are clearly labeled corresponding to each section and question
number.
1. Is the information being collected sufficient to determine
whether an Applicant (1) is financing eligible Healthy Foods
transactions and (2) can deploy an HFFI-FA award? If no, what other
information should the CDFI Fund collect in order to determine whether
an Applicant is financing eligible Healthy Foods transactions and can
deploy an HFFI-FA award?
D. Persistent Poverty Counties--Financial Assistance (PPC-FA)
Application
The following questions are related to the burden and information
requested in the PPC-FA Application, and responses may be used to make
modifications to the information being requested in the PPC-FA
Application Commenters should clearly distinguish their comments
related to this section when providing their responses and ensure
comments are clearly labeled corresponding to each section and question
number.
1. Is the information collected sufficient to determine whether an
Applicant (1) is providing eligible financing in Persistent Poverty
Counties and (2) can deploy a PPC-FA award? What other information
should the CDFI Fund consider in order to determine whether an
Applicant is providing financing in Persistent Poverty Counties and can
deploy a PPC-FA award?
E. Disability Funds--Financial Assistance (DF-FA) Application
The following questions are related to the burden and information
requested in the DF-FA Application, and responses may be used to make
modifications to the information being requested in the DF-FA
Application. Commenters should clearly distinguish their comments
related to this section when providing their responses and ensure
comments are clearly labeled corresponding to each section and question
number.
1. Is the information collected sufficient to determine whether an
Applicant (1) is financing eligible DF-FA transactions and (2) can
deploy a DF-FA award? What other information should the CDFI Fund
consider in order to determine whether an Applicant is financing
eligible DF-FA transactions and can deploy a DF-FA award?
F. Other CDFI Program and NACA Program-Related Topics and
Considerations
The following questions are related to CDFI Program and NACA
Program policy topics and will not impact the burden or information
requested in the Applications. Responses to these questions may inform
future areas of focus for program design and information requested in
future Applications. Commentators should clearly distinguish their
comments related to this section when providing their responses.
1. Measuring Economic Distress. The CDFI Fund is considering
developing place-based indicators to measure economic distress in the
communities where CDFIs invest their dollars at the census tract level.
a. Are the following indicators appropriate to measure track record
of serving economically distressed communities/populations? What, if
any, other metrics should be used to measure the level of economic
distress of communities/populations served?
i. Median Family Income (MFI): Calculated by dividing MFI of the
census tract by the appropriate benchmark (Metropolitan Statistical
Area MFI, state MFI, national metro MFI, or national non-metro MFI).
For example, if MFI share is 136.9%, it means the census tract has an
MFI that is 36.9% larger than the corresponding geographic benchmark.
The benchmark used to calculate the MFI share of a tract is dependent
on whether the census
[[Page 13514]]
tract is within a metro or non-metro area. Within a metropolitan area,
the Metropolitan Statistical Area MFI or the national metropolitan area
MFI, whichever is greater is used. Outside of a metropolitan area, the
statewide non-metropolitan area MFI or the national non-metropolitan
area MFI, whichever is greater is used.
ii. Unemployment Rate: Represents the number of unemployed people
living in the census tract as a percentage of the labor force (the sum
of the employed and unemployed).
iii. Poverty Rates: The ratio of the number of people living in the
census tract whose income falls below the poverty line (minimum level
of income deemed adequate in a particular area) as a percent of the
population.
iv. Historical Poverty: An average of the poverty rates of people
living in the census tract in the most current and previous two
decennial censuses for the census tract.
v. Percentage of Other Targeted Populations residing in the
underlying census tracts: Represents the number of OTPs living in the
census tract as a percentage of the population.
b. For CDFIs with Low Income Target Population or Other Targeted
Population Target Markets (versus geographically based Target Markets),
are the indicators listed above in Question 1. appropriate to measure
the track record of serving economically distressed communities/
populations? What, if any, other metrics should be used to measure the
level of economic distress of communities/populations served?
2. Deep Impact Lending. In addition to assessing an Applicant's
track record serving economically distressed communities/populations
and creating economic opportunities, the CDFI Fund is interested in
incorporating an Applicant's commitment to ``deep impact'' lending/
investment in its projected activity as part of the evaluation and/or
compliance process. ``Deep impact'' lending/investment is financing
activities that reach the hardest to serve borrowers and most
underserved communities/populations.
a. Please provide input on the proposed definitions/metrics to
qualify as ``deep impact'' lending, as defined by the U.S. Department
of Treasury's Emergency Capital Investment Program (ECIP) Rate
Reduction Incentive Guidelines. Are the following definitions
appropriate to measure ``deep impact'' lending/investment for CDFIs? If
not, why not? What, if any, other definitions/metrics should be used to
qualify as ``deep impact'' lending/investment?
i. Lending/investment to Low-Income Borrowers. Low-Income means
equal to or less than 80% of the area median income.
ii. Mortgage Lending to Other Targeted Populations.
iii. Lending/investment in Persistent Poverty Counties (PPC): PPC
includes any county, including county equivalent areas in Puerto Rico,
that has had 20% or more of its population living in poverty over the
past 30 years, as measured by the 1990 and 2000 decennial censuses and
the 2011-2015 5-year data series available from the American Community
Survey of the Bureau of the Census or any other territory or possession
of the United States that has had 20% or more of its population living
in poverty over the past 30 years, as measured by the 1990, 2000 and
2010 Island Areas Decennial Censuses, or equivalent data, of the Bureau
of the Census.
iv. Lending/investments in Indian Reservations and Native Hawaiian
Homelands.
v. Lending/investments in U.S. Territories: U.S. Territories
include American Samoa, Guam, Northern Mariana Islands, Puerto Rico,
and the U.S. Virgin Islands.
vi. Lending/investments to Underserved Small Businesses: A loan/
investment made to a business with revenues that do not exceed $100,000
or that is majority owned by individual(s) that are low income and/or
from Other Targeted Populations.
vii. Deeply Affordable Housing Financing: Financing for any (1)
affordable housing units restricted to households earning below 30% of
AMI for a period not less than 10 years, prorated based on the
percentage that such units make up the total number of housing units;
or (2) affordable housing development project in a ``high opportunity
area'' as defined by the Federal Housing Finance Agency (FHFA).
viii. Public Welfare and Community Development Investments: Public
Welfare Investments pursuant to 12 U.S.C. 24(eleventh) or 12 U.S.C.
338a if they primarily benefit Low-Income or Minority individuals or
businesses.
b. The CDFI Fund is contemplating adding a CDFI's commitment to
engage in ``deep impact'' lending going forward as part of the
evaluation process and/or compliance process. As such, the CDFI Fund is
considering adding a new PG&M based on an Applicant's projected
activity for ``deep impact'' lending and investment. The new PG&M would
be an additional performance goal and would not replace existing PG&Ms.
Is it appropriate to consider ``deep impact'' lending/investment as
part of the evaluation process? How should such a PG&M be structured--
as a percentage of overall projected activity, a percentage of the FA
award amount, a dollar volume commitment to deep impact lending/
investment, or something else (please describe)?
3. Net Asset Ratio. The CDFI Fund is interested in prioritizing FA
awards to CDFIs that are most effectively leveraging their balance
sheet and the resources they already have available to them, and for
which an FA award is the most essential for the CDFI's growth and
ability to leverage additional funds to serve communities in need. A
CDFI's Net Asset Ratio represents a CDFI's net assets compared to its
total assets and can be a measure of the overall capital structure of
an organization. Is a CDFI's Net Asset Ratio the appropriate measure to
assess if a CDFI is effectively utilizing its balance to leverage
resources? If yes, what should the target Net Asset Ratio be? If not,
what is the appropriate measure(s) and target benchmark(s)?
4. Small and Emerging CDFI Assistance. CDFIs may qualify as Small
and Emerging CDFI Assistance (SECA) Applicants if their asset size does
not exceed a pre-determined maximum amount based on financial
institution type OR if they have conducted financing activities for
four years or less prior to the opening of the funding round. Certified
CDFIs that exceed the pre-determined maximum asset size thresholds and
have more than four years of financing activity are considered as Core
Applicants. Currently, SECA Applicants have different Application
requirements and evaluation parameters than Core Applicants because of
their small and/or emerging status. Mainly, Matching Funds requirements
are typically waived for SECA Applicants. Also, a higher percentage of
the SECA Applicant pool progresses from Step 3 to Step 4 of the award
evaluation process (the top 70% of SECA Applicants versus top 60% of
Core Applicants).
a. The CDFI Fund is seeking input on whether there should there be
a maximum number of three FA awards a CDFI can receive as a SECA
Applicant. In other words, should CDFIs be required to apply as Core
Applicants after they receive a maximum number of three FA awards under
the SECA designation, regardless of asset size or financial activity
start date of the CDFI? If not three, what should that maximum number
of SECA awards be? If there should be no limit on the number of FA
awards that a CDFI can receive as a SECA Applicant, why not?
[[Page 13515]]
b. As noted above, organizations may qualify for SECA if they
started financing activities no more than four years prior to the
opening of the funding round, regardless of asset size. Is the start
date for financing activity to qualify for SECA appropriate? If not,
what should it be? What, if any, other changes would you make to the
financing activity start date component of the SECA definition?
5. Small and Emerging CDFI Assistance. As noted above,
organizations may qualify as SECA Applicants if their asset size does
not exceed a pre-determined maximum amount based on financial
institution type, regardless of financial activity start date. SECA
asset size thresholds have not been uniformly assessed and updated
across all financial institutions types. The CDFI Fund is seeking input
on the SECA maximum total asset size thresholds as follows:
a. Banks: Updating the threshold from $250 million to $346 million
for banks/bank holding companies, which corresponds to the FY 2022
Community Reinvestment Act (CRA) asset size threshold for small banks
set by the Federal bank regulatory agencies. This practice is
consistent with the CDFI Fund's Bank Enterprise Award (BEA) Program,
which uses asset size classes that correspond to CRA asset size
thresholds in determining the cut off for small institutions. Should
the threshold be updated? If yes, is $346 million the appropriate
threshold? If not, what is the appropriate threshold and why? Should
the threshold be updated regularly to correspond with updates to the
CRA asset size threshold for small institutions?
b. Credit Unions: Retaining the current threshold of $100 million
for credit unions, which aligns with the current National Credit Union
Administration (NCUA) definition for small institutions. Should this
threshold be retained? If it should not be retained, what is the
appropriate threshold and why? Should the threshold be updated
regularly to correspond with updates to NCUA's definition for small
institutions?
c. Unregulated Institutions: The SECA asset size threshold for
unregulated institutions is $5 million and has not been updated since
2006. The CDFI Fund is considering updating the SECA asset threshold
for unregulated institutions. One option is to adjust the current $5
million threshold for inflation using the Consumer Price Index for
Urban Wage Earners and Clerical Workers (CPI-W), the same index used by
the Federal Reserve Board and Federal Depository Institution
Corporation (FDIC) in adjusting its threshold amounts for small banks.
Using the CPI-W to adjust the $5 million threshold in 2006 dollars
would represent approximately $7.5 million in 2022 dollars. Should the
threshold be updated? If yes, is $7.5 million the appropriate
threshold? If $7.5 million is not the appropriate threshold, what is
the appropriate threshold and why? If the threshold should not change,
why should it remain $5 million? Should the threshold be updated
regularly? If not, why not? If yes, is the CPI-W the appropriate
inflation factor to use? If not, what source should be used as the
benchmark for the updates?
6. Small and Emerging CDFI Assistance. Per the FY 2022 NOFA, the
maximum FA award request for SECA Applicants is currently $700,000
whereas the maximum FA award request for Core Applicants is $1 million.
Currently an FA Applicant that meets SECA requirements (called ``SECA
qualified Applicant'') may choose to apply as a Core Applicant if the
Applicant wants to request more than the $700,000 SECA maximum award
request (up to the $1 million maximum award request for Core
Applicants). SECA qualified Applicants that apply as Core are treated
as Core Applicants, and are held to the Application requirements and
evaluation parameters of a Core Applicant. The CDFI Fund is considering
removing the option for SECA qualified Applicants to apply as Core
Applicants, therefore only allowing SECA qualified Applicants to apply
under the SECA Application (which would mean all SECA qualified
Applicants would be limited to the lower maximum award request).
a. What feedback do CDFIs have on removing the option for SECA
qualified organizations to apply as Core Applicant?
b. Are there ways the CDFI Fund can implement this change to
minimize impacts to the affected Applicants?
7. Funding Levels for CDFIs. The CDFI Fund is prohibited by statute
from obligating more than $5 million in CDFI and NACA Program awards,
in the aggregate, to any one organization and its Subsidiaries and
Affiliates during any three-year period. Should the $5 million funding
cap be reduced? If yes, what should the funding cap be?
8. Funding Levels for CDFIs. Should larger CDFIs be limited on the
total dollar amount or number of FA awards they receive within a
certain timeframe? If yes, what should be the minimum asset size to be
classified as a larger CDFI for each type of unregulated institution,
bank/bank holding company, and credit union? For the purposes of this
Request for Public Comment, the CDFI Fund proposes the following asset
sizes for ``larger CDFIs'':
<bullet> Banks with assets of more than $1.5 billion
<bullet> Credit Unions with assets of more than $1 billion
<bullet> Unregulated institutions with assets of more than $25 million
9. Funding Levels for CDFIs. Please fill in the blanks for each for
each institution type of unregulated institution, bank/bank holding
company, and credit union: ``CDFIs with asset size over $__ can receive
a maximum of $__ in CDFI and NACA Program FA awards every __ years.''
10. Continued Viability for CDFIs. The Riegle Act requires that
Applicants for FA provide a comprehensive strategic plan for the
organization that contains a business plan of not less than five years
in duration. The plan should demonstrate that the Applicant will be
properly managed and will have the capacity to operate as a CDFI that
will not be dependent upon assistance from the CDFI Fund for continued
viability.
a. To what extent are CDFIs reliant on FA funding from the CDFI
Fund for their continued viability?
b. What do CDFIs need in order to be independent from the CDFI
Fund's assistance for continued viability? Would a program model in
which CDFIs receive significantly larger award sizes for a three- to
five-year period support viability independent from the CDFI Fund? If
not, what would support a CDFI's growth towards such independence?
11. Sponsoring Entities. As noted earlier, the NACA Program allows
organizations that primarily serve Native Communities, Sponsoring
Entities, to apply for TA awards in order to create a new legal entity
that will become a Certified CDFI. In recent history, Sponsoring
Entities have largely struggled to find success in establishing a
Certified CDFI. Between 2013 and 2020, only two Sponsoring Entities
have created new legal entities that ultimately achieved CDFI
Certification. Should the CDFI Fund consider eliminating the Sponsoring
Entity model and focus resources on building the capacity of emerging
Native CDFIs in other ways? If yes, please specify other ways in which
the CDFI Fund can support the creation of new Native CDFIs. If no,
please specify why this model is needed and what enhancements would be
beneficial to increasing the success of Sponsoring Entities creating a
legal entity that achieves CDFI Certification.
[[Page 13516]]
(Authority: Pub. L. 103-325; 12 U.S.C. 4703, 4703 note, 4710, 4717;
31 U.S.C. 321; 12 CFR part 1805)
Jodie L. Harris,
Director, Community Development Financial Institutions Fund.
[FR Doc. 2023-04348 Filed 3-2-23; 8:45 am]
BILLING CODE 4810-05-P
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