Rule2024-13797
Capital Magnet Fund
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
June 25, 2024
Effective
June 25, 2024
Issuing agencies
Treasury DepartmentCommunity Development Financial Institutions Fund
Abstract
The Department of the Treasury is issuing a revised interim rule implementing the Capital Magnet Fund (CMF), administered by the Community Development Financial Institutions Fund (CDFI Fund). This revised interim rule incorporates, among other things: revisions to certain definitions and CMF program requirements to improve the public's understanding and streamline the administration of CMF program requirements; revisions to project level requirements to better align CMF with other Federal housing programs; programmatic updates to address current business practices in the affordable housing industry; and consolidation of Economic Development Activities under a new section for a more comprehensive articulation of the criteria. This revised interim rule also reflects requirements set forth in a final rule, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, adopted by the Department of the Treasury on December 19, 2014 (hereafter referred to as the Uniform Administrative Requirements).
Full Text
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<title>Federal Register, Volume 89 Issue 122 (Tuesday, June 25, 2024)</title>
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[Federal Register Volume 89, Number 122 (Tuesday, June 25, 2024)]
[Rules and Regulations]
[Pages 53004-53025]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-13797]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
12 CFR Part 1807
RIN 1559-AA03
Capital Magnet Fund
AGENCY: Community Development Financial Institutions Fund, Department
of the Treasury.
ACTION: Interim rule with request for public comment.
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SUMMARY: The Department of the Treasury is issuing a revised interim
rule implementing the Capital Magnet Fund (CMF), administered by the
Community Development Financial Institutions Fund (CDFI Fund). This
revised interim rule incorporates, among other things: revisions to
certain definitions and CMF program requirements to improve the
public's understanding and streamline the administration of CMF program
requirements; revisions to project level requirements to better align
CMF with other Federal housing programs; programmatic updates to
address current business practices in the affordable housing industry;
and consolidation of Economic Development Activities under a new
section for a more comprehensive articulation of the criteria. This
revised interim rule also reflects requirements set forth in a final
rule, Uniform Administrative Requirements, Cost Principles and Audit
Requirements for Federal Awards, adopted by the Department of the
Treasury on December 19, 2014 (hereafter referred to as the Uniform
Administrative Requirements).
[[Page 53005]]
DATES: Effective date: June 25, 2024. All comments must be submitted on
or before August 26, 2024. Comments can be submitted electronically via
the e-Rulemaking Portal: <a href="http://www.regulations.gov">www.regulations.gov</a>. The compliance date
requirements for the collection of information in Sec. 1807.902 is
stayed indefinitely, pending Office of Management and Budget approval
and assignment of an OMB control number.
ADDRESSES: You may submit comments concerning this revised interim rule
via the Federal e-Rulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a>. Follow the
instructions on the website for the submission of comments. In general,
all comments will be available for inspection at <a href="http://www.regulations.gov">www.regulations.gov</a>.
Comments, including attachments and other supporting materials, are
part of the public record. Do not submit any information in your
comments or supporting materials that you consider confidential or
inappropriate for public disclosure. Information regarding the CDFI
Fund and its programs may be obtained through the CDFI Fund's website
at <a href="http://www.cdfifund.gov">http://www.cdfifund.gov</a>.
FOR FURTHER INFORMATION CONTACT: Andrew Schlack, Program Manager,
Capital Magnet Fund, Community Development Financial Institutions Fund,
by phone at 202-453-2047 or email at <a href="/cdn-cgi/l/email-protection#4c2f212a0c2f282a2562383e292d3f622b233a"><span class="__cf_email__" data-cfemail="8eede3e8ceedeae8e7a0fafcebeffda0e9e1f8">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
The Capital Magnet Fund (CMF) was established through the Housing
and Economic Recovery Act of 2008 (the Act), Public Law 110-289,
section 1131, as a trust fund to carry out a competitive grant program
administered by the CDFI Fund. The mission of the CDFI Fund is to
increase economic opportunity and promote community development
investments for underserved populations and in distressed communities
in the United States. Its long-term vision is an America in which all
people have access to affordable credit, capital, and financial
services. Between fiscal year 2010 and fiscal year 2023, the CDFI Fund
administered a total of eight CMF Application rounds, obligating nearly
$1.1 billion in total awards. Since the last update to the rule in
2016, there have been changes in business practices in the affordable
housing industry and regulatory requirements in other relevant Federal
affordable housing assistance programs. Accordingly, the CDFI Fund is
promulgating this revised interim rule: to streamline and update terms,
concepts, and provisions in order to improve the public's understanding
and administration of the CMF program requirements; to better align the
CMF with other Federal housing assistance programs; and to better
reflect current business practices in the affordable housing industry.
Through the CMF, the CDFI Fund is authorized to make financial
assistance grants to Certified Community Development Financial
Institutions (CDFIs) and Nonprofit Organizations that have a principal
purpose which is the development or management of affordable housing.
CMF Awards must be used to attract private financing for and increase
investment in the Development, Preservation, Rehabilitation, and
Purchase of Affordable Housing primarily for Extremely Low-Income, Very
Low-Income, and Low-Income Families and Economic Development Activities
which, in conjunction with Affordable Housing Activities, will
stabilize or revitalize a Low-Income Area or Underserved Rural Area.
All capitalized terms herein are defined in the definitions section
of this revised interim rule, as set forth in 12 CFR 1807.104.
II. Comments on the February 8, 2016, Interim Rule
The current version of the rule is an Interim Rule that went into
effect on February 8, 2016. The comment period for the February 8,
2016, Interim Rule (``2016 interim rule'') ended on April 8, 2016. The
CDFI Fund received eight written submissions.
A. 12 CFR 1807.104. Definitions
The CDFI Fund received two comments related to the definition of
``Affordable Housing Fund.'' One commenter suggested that the
definition should be revised to mean a revolving loan, grant, or
investment fund that may be formed as a separate legal entity, managed
by the Recipient and for which its capital is used to finance
Affordable Housing Activities. A second commenter suggested that the
term ``Revolving Fund'' be removed from the definition of ``Affordable
Housing Fund'' since not all Affordable Housing Funds will revolve and
noted there is a separate definition in the 2016 interim rule for a
``Revolving Loan Fund.'' The CDFI Fund appreciates these comments and
incorporates debt, grant, and equity investments into the definition of
``Affordable Housing Fund.'' The CDFI Fund has also removed the phrase
``revolving fund'' from the definition, as reflected in the revised
interim rule. Capitalizing a Revolving Loan Fund is now a separate
Eligible Use, a newly defined term in the revised interim rule, of the
CMF Award. Additionally, the CDFI Fund notes that, under the revised
definition of Affordable Housing Fund, Recipients may continue to
capitalize an Affordable Housing Fund through a single purpose entity--
which must be approved in advance by the CDFI Fund to carry out CMF
activities--as further detailed under the terms of an Assistance
Agreement. One commenter stated that the definition of
``Homeownership'' did not include cooperative or mutual housing. The
CDFI Fund appreciates this comment and notes that under the 2016
interim rule, the definition of ``Homeownership'' includes ownership in
a cooperative housing or mutual housing project as a qualified form of
ownership notwithstanding the fact that the Recipient is required to
determine whether such ownership or membership constitutes
``Homeownership'' under State law. To minimize confusion and alleviate
concerns, the definition of ``Homeownership'' in the revised interim
rule clearly states that Homeownership includes ownership interest in
``condominium, cooperative, mutual housing, or ground lease title
interest,'' as allowed under State law in Single-family housing or
manufactured housing unit.
B. 12 CFR 1807.402--Affordable Housing Homeownership
Several commenters expressed concern that the recoupment and
replacement requirement for Homeownership units sold before the end of
the Affordability Period set forth at 12 CFR 1807.402(a)(5) in the 2016
interim rule could be a barrier when using the CMF Award to support
Homeownership or result in disincentivizing mortgage originators from
using the CMF Award in underwriting loans. One commenter suggested that
deed-restricted sales capping the resale value of the Housing make
selling such mortgages on the secondary market very challenging. The
CDFI Fund appreciates the comments and recognizes the commenters'
concerns related to the recoupment and replacement requirements in the
2016 interim rule. To alleviate some of the commenters' concerns, the
CDFI Fund updated the redesignated 12 CFR 1807.402(a)(1)(vi) in the
revised interim rule to require recoupment and replacement of the
Housing only when the resale to an unqualified Homebuyer occurs any
time during the first five years after the date of Purchase. When the
resale to an unqualified Homebuyer occurs any time during year six
through the end of the Affordability Period, the CMF investment will be
recouped
[[Page 53006]]
proportionally; however, the Recipient is not required to replace the
sold Housing unit with another Housing unit. Recoupment of the CMF
investment is Program Income, as described in the Assistance Agreement.
One commenter suggested that the CDFI Fund create a separate
allocation of the CMF Awards specifically for Homeownership applicants.
The CDFI Fund appreciates the commenter's suggestion, but making an
allocation of the CMF Awards to a select group of applicants is not
authorized under the Act.
C. Economic Development Activities
Two commenters stated that there should not be a limit on the use
of the CMF Award for Economic Development Activities, as the statute
establishing the CMF does not set a limit. The commenters recommended
that if a limit were to be established, it should be clarified in the
Notice of Funds Availability and not in the regulations. The CDFI Fund
appreciates the comments and finds limiting the use of the CMF Award
for Economic Development Activities to no more than 30 percent to be
appropriate and necessary. This ceiling ensures that the CMF Award is
primarily used to maintain and increase affordable housing, which
appears to be the more dominant focus of the Act. Further, this
requirement has not proven to be a barrier to Recipients over the life
of the program. Since the Fiscal Year 2016 CMF round, only $3.5 million
in CMF Awards have financed/supported 11 Projects with Economic
Development Activities. This represents less than one percent of the
CMF Awards disbursed to all CMF Projects. Section 1807.302(c) in the
2016 interim rule, which discusses the limitation on the use of the
Economic Development Activities, has been redesignated as Sec.
1807.403 in the revised interim rule.
One commenter suggested that the definition of ``Economic
Development Activity'' not only apply to physical structures such as
buildings, but also include loans to businesses for working capital and
equipment. The CDFI Fund appreciates the comment and notes that while
extending business loans plays an important role related to Economic
Development Activities, the primary purpose of the CMF is to promote
the increase of affordable housing by assisting Recipients with the
purchase, development, preservation and rehabilitation of structures,
such as Multi-family rental or Single-family housing, and related
Community Service Facilities and real estate properties in order to
revitalize neighborhoods across the country. Accordingly, the CDFI Fund
did not make that change to the definition of ``Economic Development
Activity'' in the revised interim rule at Sec. 1807.104.
Two commenters expressed concern with the definition of ``Concerted
Strategy'' as it relates to Economic Development Activities. The
commenters recommended that the CDFI Fund accept a less formal document
to evidence a Concerted Strategy and remove the requirement that
Economic Development Activities to be located physically proximate to
affordable housing. The CDFI Fund appreciates the comments and notes
that the definition of ``Concerted Strategy'' in the revised interim
rule reinforces the standard that Economic Development Activities must
be part of a local or regional planning document adopted by the
jurisdiction. This ensures that the Economic Development Activities are
consistent with and reflective of the local vision, are part of a
strategy with a geographic focus, and that support synergy amongst
community effort, private investment, and affordable housing. The CDFI
Fund did not change the documentary requirement in the revised interim
rule at Sec. 1807.403(d). The definition of ``Concerted Strategy''
also remains unchanged in the revised interim rule at Sec. 1807.104,
and as further detailed in Sec. 1807.403(c).
D. Preservation
Some commenters opined on the definition of ``Preservation.'' These
comments reflect concern that the current definition of
``Preservation'' could limit activities to only those that involve
refinancing. Another commenter recommended that the current definition
of ``Preservation'' clarify that acquisition-lending to purchase land
or existing housing is an eligible use of the CMF Award. Other
commenters suggested replacing the term ``refinancing'' with
``recapitalizing,'' or adding ``recapitalizing'' to the definition of
``Preservation.'' Other comments suggest allowing CMF Recipients to
combine the CMF Awards with financial assistance from other CDFI Fund
programs, as well as local and State affordable housing programs, as a
way to fully capture all possible ``Preservation'' initiatives. The
CDFI Fund appreciates the comments and notes that the definition of
``Preservation'' in the revised interim rule is modified to add the
term ``recapitalization'' and reflects acquisition, refinancing,
recapitalization, and/or rehabilitation of Multi-family rental housing
or Single-family housing as Eligible Uses of the CMF Award. Recipients
can use the CMF Award in concert with financial assistance from local
and State affordable housing programs, as well as with other CDFI Fund
programs subject to the restrictions provided in the respective
Assistance Agreements designed to avoid duplication or over-
subsidization. The revised interim rule further clarifies that
``Preservation'' activities must involve Projects without prior rent
restrictions, or Projects with existing affordability rent restrictions
that are set to expire during the Investment Period or expire at other
timeframes as determined by the CDFI Fund. For those Projects without
existing affordability rent restrictions, the CMF investment will
impose a new affordability rent restriction of at least 10 years, or
other time period set forth in any applicable NOFA issued by the CDFI
Fund. For those Projects with expiring affordability rent restrictions,
the CMF investment must create at least an additional 10 years of
affordability or other time period set forth in the applicable NOFA
issued by the CDFI Fund. This ensures CMF Awards are used in Projects
that are at an imminent risk of losing their affordability, and also
implements new affordability requirements for those Projects without
existing rent restrictions.
E. Underserved Rural Areas
One commenter suggested that the CDFI Fund change the criteria for
what qualifies as an ``Underserved Rural Area(s)'' as it appears in the
definition in the 2016 interim rule. The commenter suggested that one
of the qualifying factors should be the total prior five years per
capita dollars of all Federal assistance (not specific to the CMF
Award) used to develop or rehabilitate affordable housing. The CDFI
Fund appreciates the comment and notes that this recommendation is not
administratively feasible. The CDFI Fund further notes that the revised
interim rule includes a new definition, ``Rural Area,'' which mirrors
the definition in 12 CFR 1282.1 (Enterprise Duty to Serve Final Rule)
and replaces the term ``Underserved Rural Area.''
F. Miscellaneous Comments
The CDFI Fund considered several comments despite the fact that
they did not pertain to the specific changes being made in the 2016
revised interim rule. Six comments referred to the ``High Housing
Need'' geographic designation which is no longer a part of the CMF
program criteria. Eight comments were about the 2016 CMF Application or
[[Page 53007]]
Application process. The CDFI Fund notes that these Application-related
requirements are set forth in Sec. Sec. 1807.800 and 1807.801 of the
revised interim rule. They remain unchanged except for the deletion of
Sec. Sec. 1807.801(b)(1) through (b)(4) which were deleted due to
redundancy. Two other comments were about the reporting requirements
for Economic Development Activities and Program Income. These
requirements are more appropriate for the CMF Assistance Agreement and
other CMF guidance and materials. Another commenter noted that the 2016
interim rule omits any mention of fair housing which is not correct.
The CDFI Fund refers to fair housing in Sec. 1807.503(b)(2)(i) of the
revised interim rule, which remains unchanged.
III. Comments on the July 7, 2023, Notice and Request for Information
This revised interim rule addresses and incorporates written
comments the CDFI Fund received in response to the Notice and Request
for Information (RFI) that was published in the Federal Register on
July 7, 2023. The CDFI Fund issued the RFI to enhance and improve the
efforts of the CMF program to create and preserve affordable housing
across the country, minimize administrative burden on program
applicants and award recipients, and safeguard public funds. The CDFI
Fund received over 40 pieces of correspondence in response to the RFI.
Public comments that are within the scope of the revised interim rule
are summarized and addressed in the following paragraphs.
Numerous commenters responded to the CDFI Fund's request for input
about how to facilitate CMF program alignment with other Federal
affordable housing programs. They recommended that aligning the CMF
with other Federal programs, particularly the Low-Income Housing Tax
Credit (LIHTC) program, would reduce administration burden and prevent
duplication of compliance reporting requirements. Additional Federal
housing programs that commenters mentioned for alignment included the
HUD HOME Investment Partnership Program, HUD Section 8 Housing Choice
Voucher Program, United States Department of Agriculture (USDA) Rural
Development Section 515 Rural Rental Housing Program, and Section 502
Direct Loan Program. One commenter stated that aligning the CMF with
other Federal housing programs allows for a cohesive structure within
the affordable housing industry and promotes administrative
efficiencies. The CDFI Fund appreciates the comments and the revised
interim rule introduces a new concept, Presumptively Compliant, as set
forth in Sec. 1807.106, and defined as ``Presumptively Compliant'' or
``Presumptive Compliance'' in Sec. 1807.104. Under the Presumptively
Compliant concept, certain CMF Affordable Housing projects that are
also funded under other designated Federal housing programs and subject
to certain rules and restrictions that are similar to those under the
CMF program. Subject to verification by the CDFI Fund and as further
set forth in the Assistance Agreement and guidance, these projects
would be presumed to meet certain CMF rules and requirements, as long
as those projects are deemed compliant under applicable designated
Federal housing programs.
In response to RFI questions about aligning income definitions and
recertifying tenant income, some commenters stated that the definition
of ``Very Low-Income'' should be adjusted from the current definition
of 50 percent of the Area Median Income (AMI) to 60 percent AMI to
align with LIHTC. They suggested this would increase administrative
efficiencies, reduce reporting requirements, and make the CMF more
attractive as an additional funding source for LIHTC projects. Some
commenters also recommended that the CDFI Fund revise CMF income
certification requirements to align with LIHTC to avoid duplicating
reporting requirements and reduce administrative burden. The CDFI Fund
appreciates the comments and in response, changed the definition of
``Very Low-Income'' in the revised interim rule from 50 percent AMI and
below, to 60 percent AMI and below. In addition, the CDFI Fund will no
longer require the annual tenant income recertification for Projects
where 100 percent of the units are subject to CMF affordability
restrictions; the CDFI Fund will set forth additional parameters in the
Assistance Agreement.
In response to a question in the RFI related to Project Commitment
requirements, several commenters requested programmatic flexibility and
expressed support for a new Commitment process. The CDFI Fund
appreciates the comments and accordingly revises the interim rule to
include a new Commitment process in Sec. 1807.501. Under the revised
interim rule, the CMF Award must first be Committed for Use to at least
one of the Eligible Uses set forth in Sec. 1807.301 within two years
of receiving the CMF Award. In addition to the requirement that the CMF
Award be Committed for Use within two years, in order to ensure that
the CMF Awards are committed to specific projects, a Recipient must
make a Project Commitment within three years of receiving the CMF
Award. This change will allow Recipients one additional year to source
qualified projects during the Investment Period.
With respect to the use of Program Income (PI), some commenters
recommended easing the current restrictions which required Recipients
to only engage in activities designated in the Assistance Agreement.
They recommended that the CDFI Fund allow Recipients to use PI for all
CMF ``eligible activities.'' The CDFI Fund appreciates the comments and
notes that Recipients' use of PI will continue to be detailed in the
Assistance Agreement, which gives the CDFI Fund the appropriate
flexibility to implement any updates to its policy on a more frequent
basis and communicate them as such.
A number of commenters recommended changing or eliminating the
limit on the purchase price of Homeownership Housing financed with the
CMF Award. The current limit set forth in the 2016 interim rule is no
more than 95 percent of the area median purchase price as determined by
HUD under the HOME Investment Partnership Program (HOME Program). The
CDFI Fund appreciates the comments and notes that the index used to set
purchase price limits in Sec. Sec. 1807.402(a)(1)(ii) and (b)(1) of
the revised interim rule is revised to mirror the limits set forth in
the HUD FHA Section 203(b) Mortgage Insurance Program. While some
commenters suggested using other indices, such as four times the area
median income or state housing finance agency limits, the CDFI Fund
deems the FHA 203(b) limits to be a more reliable and effective index,
and better reflective of current market conditions.
A few commenters recommended establishing a new minimum compliance
period for Economic Development Activities financed using a CMF Award.
The CDFI Fund appreciates these comments and Sec. 1807.403 in the
revised interim rule now includes a minimum compliance period of three
years for Economic Development Activities. One commenter inquired about
the leveraged costs and the associated calculation to meet the
requirement. The CDFI Fund appreciates the comment and notes that the
requested information appears in the Assistance Agreement.
[[Page 53008]]
IV. Summary of Changes
A. Overview
The revised interim rule strikes and replaces existing 12 CFR part
1807 in its entirety. Principal changes include, among other things, a
clarification of CMF terms, concepts and requirements to improve
Recipients' understanding of their obligations and requirements under
the CMF program; a revision of CMF program requirements to better
address activities and current business practices in the affordable
housing industry; the addition of a new section, Sec. 1807.403,
detailing parameters related to Economic Development Activities; and a
new eligibility requirement regarding Nonprofit Organizations wherein
they are required to be designated as such under the laws of the
organization's State or Indian Tribe of formation, be exempt from
Federal income taxation pursuant to Sec. 501(c)(3) of the Internal
Revenue Code--with the exception of organization affiliated with Indian
Tribes--and be able to demonstrate that a share of its total assets is
dedicated to the development or management of affordable housing. The
revised interim rule also deletes and adds new definitions in Sec.
1807.104, replaces title heading and content in Sec. 1807.106, and
redesignates, adds or deletes subsections in Sec. Sec. 1807.300,
1807.400, 1807.401, 1807.402, 1807.500, 1807.501, 1807.503, 1807.801
and 1807.902. Other changes that provide further clarification and
elimination of redundancies are identified and discussed further below.
The following is a section-by-section overview of the amendments in
this rulemaking.
B. Description of the Revised Interim Rule
The changes to the 2016 interim rule as provided in the revised
interim rule, on a section-by-section basis, are as follows:
Subpart A--General Provisions
The change to Sec. 1807.100 clarifies that CMF activities must
take place in the United States, specifically, ``every State of the
United States, the District of Columbia, or territories of the United
States.'' The revision to Sec. 1807.101(a) clarifies that CDFIs must
be certified by the CDFI Fund. The term ``merit-based'' in Sec.
1807.101(b) is deleted, leaving only ``competitive,'' as a technical
correction. The CMF Application process has always been and remains a
competitive one. The term ``eligible uses'' in Sec. 1807.101(b) is
replaced with the defined term ``Eligible Uses'' in Sec. 1807.104 to
align with the terminology used in the Act, and is further described in
Sec. 1807.301. Section 1807.102 is revised by removing references to
specific CDFI Fund programs to accommodate any future changes or
additions to CDFI Fund programs; a corresponding change is made to
delete the phrase ``Notice of Funds Availability, Notice of Guarantee
Availability, or Notice of Allocation Availability,'' and replaced with
the phrase ``are set forth in the applicable funding notice.''
There are a number of changes to the definitions in Sec. 1807.104.
A new term ``Affordability Period'' is added to establish a period of
at least 10 years or other longer time period set forth in the
applicable NOFA issued by the CDFI Fund. This will give the CDFI Fund
the flexibility to extend the affordability requirement, which was set
at 10 years in the 2016 interim rule. The term ``Affordable Housing
Activities'' is revised to deem Secondary Market Mortgage Purchase, a
new term being introduced in the revised interim rule, as allowable
under the definition. This change codifies a regulatory waiver
articulated in the Fiscal Year 2023 NOFA related to Secondary Market
Mortgage Purchases, to deem the use of a CMF Award for the direct
purchase of Secondary Market Mortgages as allowable pursuant to the CMF
program requirements. The term ``Affordable Housing Fund'' is revised
by clarifying that it is an investment fund consisting of the CMF Award
and any Leveraged Capital that a Recipient manages and uses to finance
Affordable Housing Activities. Specifically, a Recipient may use an
Affordable Housing Fund for leveraging purposes by making any
combination of debt, grant, or equity investments, but excludes the
purchase of stock, securities, or the buy-out of partnership interest.
A new term ``Application'' is added to refer to the CDFI Fund's CMF
application, including any written and verbal information in connection
therewith, and any exhibits, attachments, appendices and/or written or
verbal supplements thereto. A new term ``CMF Unit'' is added to
facilitate the understanding and applicability of program performance
goals and compliance requirements. The definition implements threshold
requirements that units financed with a CMF Award, at a minimum, have
separate kitchen and bath facilities, except for single room
occupancies, assisted living facilities, and group homes. The term
``Committed'' is changed to ``Committed for Use,'' but the definition
remains the same. This change accommodates a new Commitment process for
the CMF Awards, which better reflects the Act and affords Recipients
more time to meet the Project Commitment requirements. The term
``Community Service Facility'' is revised to clarify that the
associated costs and expenses for services rendered at such facilities
must directly benefit nearby residents of affordable housing. Some
examples of such service programs include health care, childcare,
educational programs, job training, food and nutrition services, art
and social services, as further specified in the Assistance Agreement.
The term ``Direct Administrative Expenses'' is revised by clarifying
that they must be related to ``the financing and/or in support of
Projects.'' The term ``Economic Development Activity'' is revised by
deleting the term ``neighborhood based'' in order to allow expanded
revitalization efforts that include and transcend neighborhood-based
businesses; deleting ``which, In Conjunction with Affordable Housing
Activities, implements,'' because the term ``In Conjunction with
Affordable Housing'' is no longer a defined term in the revised interim
rule; and clarifying that a CMF Award must be used to stabilize,
sustain, or revitalize communities and neighborhoods physically
proximate to any affordable housing to benefit a Low-Income Area or
Underserved Rural Area. A new term, ``Economic Development Activity
Fund'' is added to describe an investment fund consisting of the CMF
Award and any Leveraged Capital that a Recipient manages and uses to
finance Economic Development Activities. Specifically, a Recipient may
use Economic Development Activity Fund for leveraging purposes by
making any combination of debt, grant, or equity investment, but
excludes the purchase of stock, securities, or the buy-out of
partnership interests. The term ``Eligible-Income'' is revised by
clarifying that for owner-occupied or rental Housing units, the
qualifying annual income is at 120 percent or below of the AMI,
adjusted for Family size, as determined by HUD. The term ``Eligible
Project Costs'' is revised by deleting ``Leveraged Costs'' and deeming
all development, financing, refinancing, acquisition, relocation, loan
loss reserve, guarantee, predevelopment, and related soft costs
incurred in achieving Project Completion as eligible, as described in
the Assistance Agreement. These costs can be paid using a CMF Award and
any Leveraged Capital. A new term ``Eligible Uses'' is defined and
added. This term replaces
[[Page 53009]]
``Eligible Activities'' in Sec. 1807.301 of the 2016 interim rule and
as applicable, in relevant parts of the revised interim rule, to align
with the terminology used in the Act. The term ``Extremely Low-
Income” is revised to clarify that for owner-occupied or rental
Housing units, the qualifying annual income is at 30 percent or below
of the AMI, adjusted for Family size, as determined by HUD. The term
``Family'' is revised to include both single individuals and a group of
individuals living in the same dwelling unit, who may be related by
birth, marriage or adoption, or otherwise unrelated to each other in a
household. A new term ``Feasibility Determination Expenses'' is added
to create a mechanism by which a Recipient can allocate a portion of
the CMF Award to support expenses disbursed to determine the
feasibility of potential Affordable Housing Activities and/or Economic
Development Activities. The Recipient must incur these expenses before
Project Commitment. Such expenses may include preliminary market
studies, engineering, architectural analyses, and financial feasibility
analyses, which are explicitly excluded from Eligible Project Costs. A
new term ``Homebuyer'' is added to describe a Family that may receive
CMF assistance for Homeownership. This addition to the definitions is
to ensure that Recipients do not use the CMF Awards to assist Families
in buying second homes or multiple homes. The term ``Homeownership'' is
revised to better align with the CMF program requirements by deleting
the CDFI Fund's need to approve equivalent forms of ownership, because
such approval is no longer a program requirement, and replacing it with
a list of additional acceptable types of ownership, including
cooperative, mutual housing, or ground lease title interest, as allowed
under applicable State law; and deleting subsections (1)(i) through
(iii) as they appear in the 2016 interim rule related to specific
ground lease terms for Indian trust or restricted Indian lands, Housing
located in Guam, the Northern Mariana Islands, the U.S. Virgin Island,
and American Samoa, and manufactured housing. The 2016 interim rule
specified terms for ground leases based on the location or type of
housing. The CDFI Fund has decided that such specifications were overly
prescriptive and not necessary for general program administration;
instead, the revised interim rule requires compliance with appliable
State law; redesignating (2) and (3) as (1) and (2), respectively, with
no change to the content in (1); replacing ``restrictions on resale''
in redesignated (2) with ``restrictions on affordability,'' and
deleting ``may only be'' and replacing it with ``is'' to take into
account a possible application of affordability restrictions imposed by
local homeownership programs. A new term ``Homeownership Program'' is
added to codify the general waiver granted to select Recipients in the
Fiscal Year 2018 NOFA, that allowed them to meet the CMF Commitment
requirement for Homeownership, as long as the Recipients' Board of
Directors established a homeownership program and committed the CMF
Award to the program at the time of the Project Commitment. This newly
defined term requires Recipients to establish a program to finance
Purchase by meeting the requirements of Sec. 1807.501, in a form and
substance acceptable to the CDFI Fund. The definition of ``Housing'' is
streamlined to refer to Single-family and Multi-family residential
units, such as manufactured housing, permanent supportive housing,
single-room occupancy housing, assisted living and group homes that are
permanent in nature and not temporary. The term, as revised,
consolidates a list of supportive housing types--identified by specific
population groups--under the single term ``permanent supportive
housing'' in order to ensure that all eligible population groups are
included in the definition; excludes manufactured housing lots as a
type of housing, because CMF is not intended to finance dedicated lots
or lands without associated Housing; adds assisted living as another
eligible type of Housing; removes the reference to elder cottage
housing opportunity (ECHO) because it is no longer eligible to be
financed with the CMF Award; and clarifies that Housing financed with
the CMF Award must be permanent in nature, which is consistent with
similar clarifications made throughout the revised interim rule. The
term ``In Conjunction With Affordable Housing'' is no longer a stand-
alone definition, but instead embedded in the definition of ``Economic
Development Activities'' at Sec. 1807.403 in the revised interim rule.
A new term ``Indian Tribe'' is added to define any Indian Tribe,
pueblo, nation, or other organized group or community, including any
Alaska Native village or regional or village corporation, as defined in
or established pursuant to the Alaska Native Claims Settlement Act (43
U.S.C. 1601 et seq.); each such Indian Tribe must be recognized as
eligible for special programs and services provided by the United
States to Indians because of their status as Indians. The term
``Leveraged Costs'' is replaced with ``Leveraged Capital,'' and the
definition is revised to reflect a type of capital used to finance and
support Affordable Housing Activities and Economic Development
Activities that exceed the dollar amount of the CMF Award, as further
provided in Sec. 1807.500. The term ``Low-Income'' is revised to
clarify that for owner-occupied or rental Housing units, the qualifying
annual income is at 80 percent or below of the AMI, adjusted for Family
size, as determined by HUD. The term ``Low-Income Area (or LIA)'' is
revised by deleting a provision referring to block numbering, because
it is not part of the geographic verification system. The term
``Metropolitan Area'' is revised by adding at the end ``and as made
available by the CDFI Fund for a specific Application funding round''
in order to make this definition consistent with the definition of
``Non-Metropolitan Area,'' as it currently appears in the CMF program
guidance. The term ``Multi-family'' is revised to delete ``townhouse''
from the definition, because a townhouse is a type of building that can
be a Single-family housing, Multi-family housing, or mixed-use
building. The term ``Nonprofit Organization'' is revised to include
those organizations that are designated as a nonprofit or non-for-
profit entity under the laws of the organization's State or Indian
Tribe of formation; exempt from Federal income taxation pursuant to
Sec. 501(c)(3) of the Internal Revenue Code of 1986, with the
exception of organizations affiliated with Indian Tribes; and able to
demonstrate that a share of its total assets are dedicated to the
development or management of affordable housing, as provided for in the
NOFA. This change promotes consistency regarding the identification of
entities within the scope of the definition and consistency with the
statutory terminology, and provides additional clarity regarding the
inclusion of Indian Tribes. Under the revised definition, a Nonprofit
Organization may be an entity controlled by an instrumentality or
subdivision of a state or local government. For transition purposes,
the CDFI Fund is delaying the implementation of the new definition of
``Nonprofit Organization'' until the first NOFA published on or after
January 1, 2026. The term ``Participating Jurisdiction'' is no longer a
defined term because it refers to a jurisdictional area that receives
funding under the HOME program. Given that the revised interim rule
incorporates the price limits set forth in HUD FHA Section 203(b)
[[Page 53010]]
Mortgage Insurance Program and discontinues the use of the limits used
in the HOME program, the term ``Participating Jurisdiction'' is no
longer applicable to the CMF. A new term ``Permanent Housing'' is added
to distinguish it from temporary or transitory housing to reinforce
that a CMF Award must be used to support Housing that is owned or
rented under a written lease with an initial lease term of six months
or longer. The term ``Preservation'' is revised by deleting all content
in (1) through (5) as they appear in the 2016 interim rule and
replacing it with new content. The definition as revised clarifies that
in the case of owner-occupied Single-family housing or Multi-family
rental housing with existing rent restrictions, any Preservation effort
must extend the existing affordability restrictions that are set to
expire within the Investment Period or set to expire at another time as
defined by the CDFI Fund. The extension will be subject to the
Affordability Period or as set forth in the Assistance Agreement. If
the Housing does not have an existing affordability restriction, a new
Affordability Period must be imposed subject to the aforementioned
requirements. This minimizes the risk of an imminent loss of existing
affordability restrictions for projects subject to preservation efforts
using a CMF Award. It also proactively addresses the possible loss of
affordable housing subject to affordability expiration pursuant to
another Federal housing program. A new term ``Presumptively Compliant''
or ``Presumptive Compliance'' is added to describe a mechanism by which
the CDFI Fund deems certain rules, requirements and designations under
other comparable Federal housing programs to meet certain the CMF
requirements. This change is being implemented to better align CMF with
other Federal funding programs, to ease Recipients' administrative
burden and reporting requirements, and to reflect strong support
received from stakeholders in response to the RFI. The term ``Program
Income'' is revised by adding ``and as further specified in the
Recipient's Assistance Agreement'' to the existing definition, in order
to allow the CDFI Fund to use another appropriate source to further
clarify rules regarding Program Income; and replacing ``2 CFR part
1000'' with ``2 CFR part 200'' to incorporate a more accurate
regulatory citation. The term ``Project'' is revised to facilitate
Recipients' understanding of the term used in the CMF program and to
clarify that it refers to a specific Affordable Housing Activity,
Economic Development Activity, or Homeownership Program the Recipient
uses its CMF Award to finance or support, resulting in Project
Completion. A new term ``Project Commitment'' is added to require the
Recipient to provide, in written form and substance acceptable to the
CDFI Fund, a commitment to a Project as set forth in Sec. 1807.501.
The addition of this term complements the new Commitment process in
Sec. 1807.501 and expands on the concept of ``Committed'' in the 2016
interim rule. It also extends the time for Project Commitment. The term
``Purchase'' is revised to describe the use of the CMF Award to provide
financing to a Family for Homeownership that meets the qualifications
set forth in subparts D and E of this part; or, in the case of using
the CMF financing for an acquisition of rental Housing, to a developer
or a project sponsor who also meets the qualifications set forth in
subparts D and E of this part. This is to ensure that the CMF Awards
are used for the Purchase of Affordable Housing to serve Families
meeting these qualifications, or assist developers or project sponsors
who, in turn, ultimately serve such Families. The term ``Revolving Loan
Fund'' is revised to describe an investment fund consisting of the CMF
Award and any Leveraged Capital that the Recipient manages and uses to
finance and/or support Affordable Housing Activities and/or Economic
Development Activities. The repayments on such loans are used to
finance additional loans. The term ``Risk-Sharing Loan'' is revised to
describe loans consisting of the CMF Award and any Leveraged Capital
made for Affordable Housing Activities and/or Economic Development
Activities whereby the risk of borrower default is shared by the
Recipient with other lenders. A new term ``Rural Area'' is added to
refer to a census tract that meets the definition of Rural Area, as
defined in 12 CFR 1282.1. A new term ``Secondary Market Mortgage'' is
added to create qualifications for the purchase of third-party
originated mortgages using a CMF Award. This formalizes the policy
guidance provided in the Fiscal Year 2023 NOFA that the Recipients'
purchase of CMF eligible loans from a third-party originator within 12
months of origination are an allowable activity under the CMF program.
Specifically, the definition restricts the use of the CMF Award for the
purchase of Secondary Market Mortgages to those mortgage(s) originated
by third party lenders and purchased by Recipients within 12 months or
less from the date of their origination as evidenced by an agreement;
for which the source of origination is not the CMF Award; and that
would not have been originated but for the Recipient's purchase. A new
term ``Secondary Market Mortgage Purchase'' is added to describe a
Recipient's purchase of a Secondary Market Mortgage to complement the
definition of ``Secondary Market Mortgage.'' The term ``Service Area''
is revised by adding a national Service Area or other areas further
defined by the CDFI Fund in the applicable NOFA, in order to expand the
scope of the coverage. This allows Recipients to better serve certain
geographic locations such as Rural Areas. The term ``Single-family
housing'' is revised to include mutual housing, a manufactured housing
unit only, or a combination of a manufactured housing unit and its lot.
This ensures that the CMF funded financing requires an affordable
housing unit and prohibits the financing of a manufactured housing lot
only. The term ``State'' is revised to streamline the definition and
accommodate any United States government changes to its territories by
deleting the current list of United States territories ``the
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana
Island, Guam, the U.S. Virgin Islands, American Samoa, the Trust
Territory of the Pacific Islands'' from the definition. All United
States territories, Districts and Commonwealths remain as eligible
geographies. The term ``Subsidiary'' is revised to refer to an entity
that is majority-owned by its parent company. This clarification is to
make a clear distinction between the definitions of Affiliates and
Subsidiaries. The term ``Underserved Rural Area'' is revised because it
needs to be consistent with the definition of ``Rural Area,'' which is
a new term in the revised interim rule. The term “Uniform
Administrative Requirements'' is revised by replacing ``2 CFR part
1000'' with ``2 CFR part 200'' to incorporate a more accurate
regulatory citation. The term ``Very Low-Income'' is revised by
clarifying that for owner-occupied or rental Housing units, the
qualifying annual income is at 60 percent or below of the AMI, adjusted
for Family size, as determined by HUD.
Section 1807.105 is revised by replacing the term ``would'' with
``would not'' to clarify that for individual waivers, the CDFI Fund
will determine that the application of the requirement to be waived
does not adversely affect achieving the purpose
[[Page 53011]]
of the Act. Section 1807.106 is redesignated as ``Presumptive
Compliance with Other Federal Programs,'' and the entire content
removed and replaced with new CMF requirements related to Presumptive
Compliance. Section 1807.107 is revised by deleting the reference to
the prior publication of the interim rule ``February 8, 2016,''
clarifying the applicability of the interim rule to all future uses of
prior CMF Awards and all future CMF Awards granted under any NOFA
published after the publication date of this revised interim rule, and
specifying when the new definition of ``Nonprofit Organization'' will
take effect to facilitate the transition to the new definition.
Subpart B--Eligibility
Section 1807.200(a)(2)(iii) is revised by replacing ``[c]an
demonstrate that'' with ``[d]emonstrates'' as an editorial change, and
by adding relevant CMF program documents at the end of the sentence for
clarification. Section 1807.200(b) is revised by clarifying that for an
Applicant seeking eligibility under Sec. 1807.200(a)(1), the CDFI will
verify that the Applicant is a Certified CDFI pursuant to the guidance
provided in the applicable NOFA.
Subpart C--Eligible Purposes; Eligible Uses: Restrictions
Section 1807.300(b) includes an updated definition for ``Economic
Development Activities,'' as further described in Sec. 1807.403, that
they must be located in a Low-Income Area or Underserved Rural Area;
undertaken in conjunction with any affordable housing that is
authorized as such under applicable local, State or Federal housing
program laws; and reasonably available, physically proximate to, and
benefit residents of such affordable housing. Sections 1807.300(b)(1)
through (3) in the 2016 interim rule are deleted and some of the
concepts contained therein are reorganized in Sec. 1807.403 as new
content.
Section 1807.301 is redesignated as ``Eligible Uses,'' and Sec.
1807.301(d) is revised to incorporate the newly defined term ``Economic
Development Activity Fund.''
Section 1807.302(a)(12) is revised by replacing ``student
dormitories'' with ``dormitories'' to clarify that CMF Awards cannot be
used to fund any types of dormitories, not just student dormitories.
Section 1807.302(b)(1) is revised by adding to the list of businesses
deemed ineligible to receive financing and/or support with a CMF Award
those businesses or activities provided in 13 CFR 120.110(c) through
(p), and other businesses deemed inconsistent with the general purpose
of the Riegle Community Development and Regulatory Improvement Act of
1994 (12 U.S.C. 4701 et seq.; Pub. L. 103-325). Section 1807.302(c) is
revised to state that the restriction on the use of Economic
Development Activities to no more than 30 percent of their CMF Awards
must be approved in the applicable Assistance Agreement. Section
1807.302(d) is revised to clarify that any Affordable Housing financed
and/or supported by Loan Guarantee or Loan Loss Reserves shall be
tracked during the Affordability Period for compliance with the
affordability requirements, as provided in subpart D of this part.
Section 1807.302(e) is revised by clarifying that repayment of loans
made pursuant to Loan Guarantees or Loan Loss Reserves during the
Investment Period must be used as Program Income, subject to the
requirements in the Recipient's Assistance Agreement. Section
1807.302(f) is revised to allow Recipients to use the CMF Award for
Direct Administrative Expenses or Feasibility Determination Expenses at
amounts set forth in the applicable NOFA and corresponding Assistance
Agreement. This change provides additional flexibility on the use of
the CMF Award when Recipients are assessing a project's feasibility as
part of their preliminary analysis prior to Project Commitment. The
expanded guidance further provides that neither Feasibility
Determination Expenses nor Direct Administrative Expenses may be deemed
as Eligible Project Costs.
Section 1807.303(a) is revised by deleting ``for the approved,
eligible CMF Award uses'' and replacing it with ``in the manner as
further set forth in the Assistance Agreement,'' because terms on the
use of Program Income will be provided in the Assistance Agreement.
Section 1807.303(b) is revised by replacing ``2 CFR part 1000'' with
``2 CFR part 200'' to incorporate a more accurate regulatory citation.
Subpart D--Qualifications as Affordable Housing
Section 1807.400 is restructured with the newly designated
subsections 1807.400(a), (b) and (c) and revised with new requirements
by maintaining the current guidance on the use of a CMF Award for
Affordable Housing Activities, including compliance with affordability
qualifications set forth in the applicable NOFA and/or Assistance
Agreement; setting forth new requirements based on the new definition
of Permanent Housing in the revised interim rule; and establishing that
none of the residents of Affordable Housing can be full-time students,
unless they are married filing a joint tax return, receive assistance
under Title IV of the Social Security Act, enrolled in a job training
program, are with dependent children as single parents, as defined in
IRC sec. 152, previously enrolled in a foster care program, or meet
other criteria specified by the CDFI Fund.
The introductory paragraph to Sec. 1807.401 is revised by
clarifying that rental Multi-family housing Projects financed and/or
supported with a CMF Award must have at least 20 percent of the units
rent-restricted to any combination of Low-Income, Very Low-Income, or
Extremely Low-Income Families with specific income levels and meet the
rent limits provided for in the applicable NOFA and Assistance
Agreement in any CMF funding round. Section 1807.401(a) is revised by
deleting all of the content that describes the calculation of CMF
rental units according to a tenant's income category and replacing it
with ``[t]he gross rent limits for Affordable Housing are further
specified in the Assistance Agreement.'' There are no changes to the
content in Sec. 1807.401(b). Section 1807.401(c) is revised to clarify
that the gross rent restrictions are set forth in the Assistance
Agreement and under IRC sec. 42(g)(2), as applicable. Section
1807.401(d) is revised to clarify that Housing under this section must
meet the affordability requirement during the Affordability Period.
Moreover, the affordability restrictions are allowed to terminate upon
foreclosure of the Housing or transfer in lieu of foreclosure. The
affordability requirements must be imposed by deed restrictions,
covenants running with the land, or other recording instruments. A
Recipient may use other types of recording instruments, as further set
forth in the Assistance Agreement, if written approval is obtained from
the CDFI Fund. To the extent allowed under State law, proceeds used to
pay off mortgages financed with a CMF Award in the event of a sale of a
property at a foreclosure sale, transfer in lieu of foreclosure, short
sale, or other types of disposition, will be treated as Program Income
to allow Recipients to engage in additional Affordable Housing
Activities and/or Eligible Uses, except to capitalize an Economic
Development Activity Fund, in Sec. 1807.301. Section 1807.401(e) is
re-titled as ``Standard Lease Terms and Conditions,'' and the entire
content removed and replaced to prescribe that a written lease or
rental agreement, which must be in
[[Page 53012]]
compliance with applicable State or local law, is required for all
tenants occupying rental CMF Units. Section 1807.401(f)(1) is revised
to clarify that at the time of each initial lease and occupancy, the
tenant income will be determined to ascertain income eligibility.
During the Affordability Period, the existing tenant's income will be
re-examined annually based on requirements set forth in the Assistance
Agreement. In addition, ``household'' is replaced with ``Family'' to
incorporate the new term and ``assisted'' with ``supported'' for
clarity as an editorial change. Section 1807.401(f)(3) is deleted, as
it is no longer applicable based on the current HOME regulation in
effect. Section 1807.401(f)(4) in the 2016 interim rule is redesignated
as Sec. 1807.401(f)(3) and is revised by replacing the term ``Low-
Income Family'' with ``Family'' to expand the scope of applicable
Families for the CMF. Section 1807.401(g)(1) is revised to incorporate
the new term ``CMF Unit.'' Section 1807.401(g)(2) is revised by
deleting references to IRC sec. 42(g) and 42(h) to the extent that the
CDFI Fund has not and is not fully adopting the requirements set forth
therein in the revised interim rule, as the rent limitation
determination and calculation will be provided for in the Assistance
Agreement. Moreover, this section incorporates editorial changes to
clarify that the maximum rent for tenants whose incomes no longer
qualify is either 30 percent of the Family's annual income, or the
amount payable by the tenants under State or local law, whichever is
less. Section 1807.401(g)(3) is revised to incorporate the new term
``CMF Unit'' in lieu of ``CMF financed or assisted unit'' and clarifies
that if the income of a tenant of a CMF Unit no longer qualifies, the
Recipient may designate another unit as a rent-restricted replacement
unit, as long as it meets the affordability qualification for the same
income category as the original unit within the same Project. A new
term ``Homebuyer'' is being incorporated throughout Sec. 1807.402 to
prohibit Recipients from using the CMF Awards to assist Families in
buying second homes or multiple homes. Section 1807.402 is restructured
as follows: Sec. 1807.402(a) in the 2016 interim rule is redesignated
as Sec. 1807.402(a)(1); Sec. 1807.402(a)(1) is redesignated as Sec.
1807.402(a)(1)(i) with a new subheading ``Single-family housing'';
Sec. 1807.402(a)(2) is redesignated as Sec. 1807.402(a)(1)(ii) with a
new subheading ``Purchase price limits''; Sec. 1807.402(a)(3) is
redesignated as Sec. &thnsp;1807.402(a)(1)(iii) with a new subheading
``Qualifying Homebuyer''; a new Sec. 1807.402(a)(1)(iv) is added with
new content under subheading ``Eligible-Income requirements''; Sec.
1807.402(a)(4) is redesignated as Sec. 1807.402(a)(1)(v); and Sec.
1807.402(a)(5) is redesignated as Sec. 1807.402(a)(1)(vi)(A) and (B).
The redesignated Sec. 1807.402(a)(1) is revised by clarifying that a
Recipient that uses the CMF Award to finance or support the Purchase of
Housing by a qualified Homebuyer must ensure that the Housing and
Homebuyer meet the affordability requirements in subpart D of this
part. The redesignated Sec. 1807.402(a)(1)(ii) is revised by replacing
the Single-family housing purchase price limits of ``95 percent of the
median purchase price for the area as used in the HOME Program'' with
the purchase price limits for the area under the HUD FHA Section 203(b)
Mortgage Insurance Program, or any other index as designated by the
CDFI Fund. This revision is necessary because the index used in the
2016 interim rule has lagged market conditions, resulting in limited
availability of housing choices for Families, particularly large
Families, and may have had the unintended effect of concentrating
affordable housing to certain geographic areas and communities,
possibly in conflict with the CMF objectives. This section further
requires that the underlying mortgage be originated based on an
assessment of whether the borrower can repay the loan based on terms
and conditions that are transparent and understandable, and the
affordability of the mortgage to the Homebuyer over the life of the
loan. The redesignated Sec. 1807.402(a)(1)(iii) is revised by
replacing ``Family'' with ``Homebuyer'' to incorporate the new term for
accuracy; a similar requirement that ``the Single-family housing must
be the principal residence of the Family throughout the period
described in paragraph (a)(4) of this section'' is now included in
Sec. 1807.402(a)(1)(v). The new Sec. 1807.402(a)(1)(iv) establishes
that a qualifying Homebuyer under this section must have a household
income at Eligible-Income; to determine whether a Family would be
income-eligible under this section, adjusted gross income as defined
under Internal Revenue Service (IRS) Form 1040 series for individual
Federal annual income tax reporting is used, or other methodology for
determining income eligibility as provided in the Assistance Agreement;
and a homeowners of one- to four-unit Single-family housing may rent
the additional unit(s) as Permanent Housing if at least one unit is
maintained as the principal residence of the Homebuyer. This last
requirement is being added to encourage an increase in the overall
number of rental units to help boost the supply of rental housing and
address an unprecedented housing crisis nationwide. The redesignated
Sec. 1807.402(a)(1)(v) is revised by adding the requirement that the
Single-family housing must be the principal residence of the Homebuyer
at the time of Purchase and is subject to the affordability
requirements during the Affordability Period as provided in
redesignated Sec. 1807.402(a)(1)(vi) to ensure the CMF Award is being
used to serve the intended income qualified Homebuyer. It further
explains that the Affordability Period does not apply to additional
units of the Single-family housing being rented as Permanent Housing.
The redesignated Sec. 1807.402(a)(1)(vi) is revised to state that the
Recipient must establish and impose recoupment, replacement and resale
strategies requiring that under new Sec. 1807.402(a)(1)(vi)(A), if the
Housing is sold in five years or less from the date of Purchase, the
Housing must be sold in a manner that meets the qualifications set
forth in Sec. 1807.402, or the CMF Award will be recouped and the
Housing replaced with a replacement unit to satisfy the affordability
requirement for the remainder of the Affordability Period. Under new
Sec. 1807.402(a)(1)(vi)(B), if the Housing is sold any time after five
years from the date of Purchase but before the end of the Affordability
Period, the Housing must be sold to a new Eligible-Income Family or, if
the Housing is not sold to an Eligible-Income Family, a proportionate
share of the CMF investment must be recouped as Program Income. In case
the Housing is not sold to an Eligible-Income Family after five years
from the date of Purchase and the Recipient recoups a proportional
amount of the CMF Awards as Program Income, the Recipient is not
required to replace the sold Housing with another replacement unit.
Additionally, a Recipient's recoupment, replacement, and resale
strategy must meet the requirements of newly designated Sec.
1807.402(a)(1)(vi) for compliance with program requirements and the
terms under the Assistance Agreement. The affordability requirements
are allowed to terminate at the time of foreclosure, transfer in lieu
of foreclosure, or assignment of an FHA-insured mortgage to HUD. The
occurrence of these events will result in the Housing no longer being
subject to an affordability requirement or a recoupment, replacement,
or resale strategy previously imposed by the
[[Page 53013]]
Recipient. The affordability restrictions shall be revised according to
the original terms, however, if during the original Affordability
Period, the owner of record before the termination event obtains an
ownership interest in the Housing. Section 1807.402(b)(1) is revised by
replacing the Single-family housing purchase price limits as used in
the HOME Program with those used in the HUD FHA Section 203(b) Mortgage
Insurance Program, identical to the change made to Sec.
1807.402(a)(1)(ii). Section 1807.402(b)(2) is revised to reinforce that
the Single-family housing must remain the principal residence of the
Family throughout the Affordability Period, as described in Sec.
1807.402(b)(3). Section 1807.402(b)(3) is revised by replacing ``at
least 10 years'' with ``Affordability Period'' to incorporate the new
term, and ``after Rehabilitation is completed'' with ``upon Project
Completion or meet recoupment, replacement, and/or resale'' to
accurately describe the program requirement in Sec. 1807.402(a)(1)(vi)
as referenced herein. A new Sec. 1807.402(b)(4) is added to describe
the allowable uses of permanent additional units as described in the
definition of ``Housing'' for a Homebuyer owning Single-family housing
subject to the requirements under this part. Section 1807.402(c) is
revised to reinforce that any owner of Single-family housing under this
section must meet the definition of ``Homebuyer.'' Section 1807.402(e)
is revised to clarify that when converting rental CMF Units to
Homeownership units by selling, donating, or otherwise conveying the
units to existing tenants, the tenants can only become Homebuyers under
an existing documented rent-to-own program pursuant to the requirements
under this section. The Homeownership units are also subject to a
minimum period of affordability equal to the remaining rental
Affordability Period, as further specified in the Assistance Agreement.
A newly added Sec. 1807.403 comprises CMF program requirements
regarding Economic Development Activities and is now consolidated under
a single section. The 2016 interim rule requirement, located in Sec.
1807.302(c), that no more than 30 percent of a CMF Award for each
individual CMF Award round, may be used for Economic Development
Activities, is repeated in the introductory paragraph of Sec.
1807.403. The introductory paragraph to Sec. 1807.403 also provides
that a CMF Award used for Economic Development Activities must
stabilize, sustain, or revitalize communities and neighborhoods
physically proximate to any affordable housing to meet the requirements
outlined in this section.
Section 1807.403(a) describes the Eligible Uses of a CMF Award to
finance and support Economic Development Activities pursuant to Sec.
1807.301, with the exception of Affordable Housing Fund. This revision
extends all Eligible Uses for Economic Development Activities, which
was not previously articulated in the 2016 interim rule. Section
1807.403(b) provides a new requirement that Recipients who use their
CMF Awards for allowable Economic Development Activities resulting in
real estate and/or physical structures must ensure such are used for a
minimum of three years commencing with Project Completion. This
requirement establishes a new compliance requirement, which is absent
in the 2016 interim rule, that physical structures resulting from
Economic Development Activities retain the intended or similar purpose
for at least three years from Project Completion. Section 1807.403(c)
restates the definitional requirement that the Economic Development
Activities must be undertaken as part of a Concerted Strategy which,
for example, will result in increased education, employment,
transportation, financial services or other opportunities in a Low-
Income Area or Underserved Rural Area. Section 1807.403(d) incorporates
the requirements related to the term ``In Conjunction with Affordable
Housing'' which appears in the 2016 interim rule. This section
establishes that Economic Development Activities must be located in a
Low-Income Area or Underserved Rural Area; undertaken in conjunction
with any affordable housing that is subject to or authorized by local,
State or Federal laws; and reasonably available, physically proximate,
and benefit residents of such affordable housing. This section also
establishes criteria for physical proximity for Metropolitan and Non-
Metropolitan Areas, which are existing provisions in the 2016 interim
rule being reorganized under this section for ease of reference.
Subpart E--Leveraged Capital; Eligible Project Costs; Commitment
Requirements
Section 1807.500(a) is revised under a new subheading ``Eligible
Project Costs'' to clarify that the leverage requirement to generate
Eligible Project Costs in an amount at least 10 times the CMF Award
excludes any Direct Administrative Expenses and Feasibility
Determination Costs, combined, from the calculation. This is to allow
Recipients additional flexibility in the use of the CMF Award in
determining whether to proceed with prospective projects prior to
Project Commitment. In Sec. 1807.500(b)(1), ``percentage'' is replaced
with ``multiplier'' to reflect the update to the term ``Leveraged
Capital,'' and ``private'' is added before ``non-government sources''
for clarity. Sections 1807.500(b)(2)(ii) through (iii) are revised to
reinforce that Leveraged Capital used to finance and/or support
Affordable Housing Activities or Economic Development Activities must
comply with Sec. Sec. 1807.400, 1807.401 and 1807.402 or Sec.
1807.403 in subpart D, respectively, and as further provided in the
Assistance Agreement. Section 1807.500(c) is deleted in its entirety;
any related requirements will be described in the Assistance Agreement.
Section 1807.501, re-titled as ``Commitments,'' establishes a new
Commitment process to better align with the requirements under the Act.
This section also adds new content at Sec. Sec. 1807.501(c)(4) through
(6) to expand the requirements to determine Project Commitment. To
afford Recipients additional time and flexibility in identifying
projects to further CMF objectives, Sec. 1807.501(a) is revised to
establish that pursuant to Sec. 1807.301, the use of a CMF Award must
be Committed for Use by Recipients to one or more Eligible Uses within
two years of the date designated in the Recipient's Assistance
Agreement. The content in Sec. Sec. 1807.501(b)(1) through (3) is
deleted in its entirety and the new content in Sec. 1807.501(b)
provides that the Recipient must achieve Project Commitment within
three years of the date designated in the Recipient's Assistance
Agreement, resulting in a longer timeframe to identify viable projects.
The content in Sec. 1807.501(c) is deleted in its entirety and new
content in the newly designated Sec. Sec. 1807.501(c)(1) through (3)
describes the Commitment requirements for real estate projects, and
replaces ``commitment'' with ``Project Commitment,'' a newly defined
term in the revised interim rule. The newly designated Sec. Sec.
1807.501(c)(4) through (6) set forth the following new, expanded
Commitment requirements: For Secondary Market Mortgage Purchase, the
Recipient must evidence an agreement with a third party lender to
purchase the qualified mortgages and demonstrate that such mortgages
would not have been otherwise originated by the third party lender; for
a qualified Homeownership Program, the Recipient must evidence that a
commitment has been made by the action of the
[[Page 53014]]
Recipient's Board or Directors; and for a Project comprised of a Loan
Guarantee or Loan Loss Reserves, the Recipient must enter into a
guarantee agreement or have established a cash reserve, escrow, or
accounting-based accrual reserve with a lender or investor. These
revisions are a recognition of the breadth of CMF activities and
differing criteria in meeting Project Commitment. Section 1807.501(c)
is deleted in its entirety due to redundancy, as similar content
appears in Sec. 1807.901 and in the NOFA. Section 1807.501(d) is
deleted in its entirety, as this content is set forth in the NOFA and/
or Assistance Agreement.
Section 1807.503(a) is revised by adding ``for Affordable Housing
Activities and Economic Development Activities'' after ``Project
Completion'' to fully capture the Project Completion requirements for
all types of CMF activities. Section 1807.503(a)(4) is revised by
clarifying that for Preservation, Project Completion occurs when the
refinancing of the loan is closed and the underlying real estate is
compliant with all CMF requirements, subject to any additional program
requirements for Rehabilitation as applicable. Section 1807.503(a) adds
new content at Sec. Sec. 1807.503(a)(5) through (7) in the revised
interim rule to expand the Project Completion requirements to include
Secondary Market Mortgage Purchase, Loan Loss Reserve and Loan
Guarantee activities. Section 1807.503(b) is revised by deleting
``which must be met for a period of at least 10 years after the Project
Completion date'' with respect to property standards based on the new
definition of ``Affordability Period,'' which could be extended to more
than 10 years. Section 1807.503(b)(1) is revised by adding a subheading
``Code requirements.'' Section 1807.501(b)(2) is revised by adding a
subheading ``Other requirements.'' Section 1807.503(b)(2)(i) is revised
by adding ``Title VIII of the Civil Rights Act of 1968'' before ``Fair
Housing Act'' for clarity and making editorial changes to clarify that
``Multi-family housing'' as used in this section is equivalent to
``covered multifamily dwellings,'' as defined in 24 CFR 100.201.
Section 1807.503(b)(3)(i) is revised by replacing ``10-year period
of affordability'' with ``Affordability Period'' to incorporate the new
term.
Subpart F--Tracking Funds; Uniform Administrative Requirements; Nature
of Funds
Section 1807.602 is revised by deleting ``CMF Award proceeds retain
their Federal character until the end of the Investment Period'' as
this or similar requirement will be set forth in the Assistance
Agreement and/or other CDFI Fund guidance.
Subpart H--Evaluation and Section of Applications
Section 1807.800(a) is revised by deleting ``on a merit based and''
and adding ``based on the criteria outlined in the NOFA'' as an
editorial change for clarity.
Section 1807.801(b) is revised by deleting Sec. Sec.
1807.801(b)(1) through (b)(4) in their entireties for redundancy, as
they are included in other CDFI Fund guidance materials. Section
1807.801(c) is revised by designating this subsection as ``Other
Factors'' with no change to content.
Subpart I--Terms and Conditions of CMF Award
Section 1807.900(a)(2) is revised by replacing ``uses'' with
``Eligible Uses'' for clarity. Section 1807.900(c) is revised to
clarify that the CDFI Fund will provide a Recipient with reasonable
notice and opportunity to cure any instances of noncompliance prior to
determining whether the Recipient has failed to comply substantially
with the Act, these regulations or an Assistance Agreement.
Section 1807.902(b) is redesignated as ``Beneficiary Demographic
Data'' for clarity and revised by deleting ``must'' and replacing it
with ``may be required to'' to reflect a change in the program
requirements.
Section 1807.902(d) is revised by adding ``and the applicable
NOFA'' at the end for clarity.
Section 1807.902(e)(iii) is revised by updating financial reporting
criteria for regulated financial institutions (i.e., Insured Depository
Institutions, Depository Institution Holding Companies, and Insured
Credit Unions) to align with the CDFI Fund compliance requirements with
respect to completing a Financial Statement Audit report.
Section 1807.902(f) is deleted in its entirety as the requirement
is included in the applicable NOFA and/or the Assistance Agreement.
V. Rulemaking Analysis
A. Executive Order (E.O.) 12866
It has been determined that this interim rule is not a significant
regulatory action under Executive Order 12866, as amended. Accordingly,
a regulatory impact assessment is not required.
B. Regulatory Flexibility Act
Because no notice of proposed rulemaking is required under the
Administrative Procedure Act (5 U.S.C. 553), or any other law, the
Regulatory Flexibility Act does not apply.
C. Paperwork Reduction Act
The collections of information contained in this interim rule will
be reviewed and approved by the Office of Management and Budget (OMB)
in accordance with the Paperwork Reduction Act of 1995 and assigned the
applicable, approved OMB Control Numbers associated with the CDFI Fund
under 1559-XXXX. An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a valid control number assigned by OMB. This document restates
the collections of information without substantive change.
D. National Environmental Policy Act
This interim rule has been reviewed in accordance with the CDFI
Fund's environmental quality regulations (12 CFR part 1815),
promulgated pursuant to the National Environmental Protection Act of
1969 (NEPA), which requires that the CDFI Fund adequately consider the
cumulative impact proposed activities have upon the human environment.
It is the determination of the CDFI Fund that the interim rule does not
constitute a major Federal action significantly affecting the quality
of the human environment and, in accordance with the NEPA and the CDFI
Fund's environmental quality regulations (12 CFR part 1815), neither an
Environmental Assessment nor an Environmental Impact Statement is
required.
E. Administrative Procedure Act
Because the revisions to this revised interim rule relate to loans
and grants, notice and public procedure and a delayed effective date
are not required pursuant to the Administrative Procedure Act, 5 U.S.C.
553(a)(2).
F. Comment
Public comment is solicited on all aspects of this revised interim
rule. The CDFI Fund will consider all comments made on the substance of
this revised interim rule, but it does not intend to hold hearings.
G. Catalogue of Federal Domestic Assistance Number
Capital Magnet Fund--21.011.
List of Subjects in 12 CFR Part 1807
Community development, Grant programs--housing and community
development, Reporting and record keeping requirements.
[[Page 53015]]
0
For the reasons set forth in the preamble, 12 CFR part 1807 is revised
to read as follows:
PART 1807--CAPITAL MAGNET FUND
Subpart A--General Provisions
Sec.
1807.100 Purpose.
1807.101 Summary.
1807.102 Relationship to other CDFI Fund programs.
1807.103 Recipient not instrumentality.
1807.104 Definitions.
1807.105 Waiver authority.
1807.106 Presumptive Compliance with Other Federal Programs.
1807.107 Applicability of regulations for CMF Awards.
Subpart B--Eligibility
1807.200 Applicant eligibility.
1807.201 through 1807.299 [Reserved]
Subpart C--Eligible Purposes; Eligible Uses; Restrictions
1807.300 Eligible purposes.
1807.301 Eligible Uses.
1807.302 Restrictions on use of a CMF Award.
1807.303 Authorized uses of Program Income.
Subpart D--Qualification as Affordable Housing
1807.400 Affordable Housing-general.
1807.401 Affordable Housing-Rental Housing.
1807.402 Affordable Housing-Homeownership.
1807.403 Economic Development Activities.
Subpart E--Leveraged Capital; Eligible Project Costs; Commitment;
Project Completion
1807.500 Leveraged Capital; Eligible Project Costs.
1807.501 Commitments.
1807.502 CMF Award limits.
1807.503 Project Completion; Property standards.
Subpart F--Tracking Funds; Uniform Administrative Requirements; Nature
of Funds
1807.600 Tracking funds.
1807.601 Uniform Administrative Requirements.
1807.602 Nature of funds.
Subpart G--Notice of Funds Availability; Applications
1807.700 Notice of funds availability.
1807.701 through 1807.799 [Reserved]
Subpart H--Evaluation and Selection of Applications
1807.800 Evaluation and selection-general.
1807.801 Evaluation of Applications.
Subpart I--Terms and Conditions of a CMF Award
1807.900 Assistance agreement.
1807.901 Payment of funds.
1807.902 Data collection and reporting.
1807.903 Compliance with government requirements.
1807.904 Lobbying restrictions.
1807.905 Criminal provisions.
1807.906 CDFI Fund deemed not to control.
1807.907 Limitation on liability.
1807.908 Fraud, waste and abuse.
Authority: 12 U.S.C. 4569.
Subpart A--General Provisions
Sec. 1807.100 Purpose.
The purpose of the Capital Magnet Fund (CMF) is to attract private
capital for and increase investment in Affordable Housing Activities
and related Economic Development Activities in every State of the
United States, the District of Columbia, or territories of the United
States.
Sec. 1807.101 Summary.
(a) Through the CMF, the CDFI Fund competitively awards grants to
Certified CDFIs and qualified Nonprofit Organizations to leverage
dollars for:
(1) The Development, Preservation, Rehabilitation or Purchase of
Affordable Housing primarily for Low-Income Families; and
(2) The financing of Economic Development Activities.
(b) The CDFI Fund selects Recipients to receive CMF Awards through
a competitive Application process. CMF Awards may only be used for
Eligible Uses set forth in subpart C of this part. Each Recipient will
enter into an Assistance Agreement that will require it to leverage the
CMF Award amount and abide by other terms and conditions pertinent to
any assistance received under this part.
Sec. 1807.102 Relationship to other CDFI Fund programs.
Restrictions on applying for, receiving, and using the CMF Awards
in conjunction with awards under other programs administered by the
CDFI Fund are set forth in the applicable funding notice.
Sec. 1807.103 Recipient not instrumentality.
No Recipient shall be deemed to be an agency, department, or
instrumentality of the United States.
Sec. 1807.104 Definitions.
For the purpose of this part:
Act means the Housing and Economic Recovery Act of 2008, as
amended, Public Law 110-289, section 1131;
Affiliate means any entity that Controls, is Controlled by, or is
under common Control with, an entity;
Affordability Period means a period of at least 10 years or other
longer time period in the applicable NOFA issued by the CDFI Fund,
during which time the Recipient must ensure the affordability
requirements set forth herein and/or the Assistance Agreement are met
for each Project;
Affordable Housing means housing that meets the requirements set
forth in subpart D of this part;
Affordable Housing Activities means the Development, Preservation,
Rehabilitation, and/or Purchase of Affordable Housing or Secondary
Market Mortgage Purchase;
Affordable Housing Fund means an investment fund consisting of the
CMF Award and any Leveraged Capital that the Recipient:
(1) Manages and makes investment decisions for; and
(2) Uses to finance Affordable Housing Activities in any
combination of debt, grant, or equity investments, which does not
include the purchase of stock, securities, or the buy-out of
partnership interests;
Applicant means any entity submitting an Application for a CMF
Award;
Application means the CDFI Fund's CMF application form, including
any written or verbal information in connection therewith and any
exhibits, attachments, appendices and/or written or verbal supplements
thereto, submitted by an Applicant to the CDFI Fund, in response to the
applicable Notice of Funds Availability (NOFA);
Appropriate Federal Banking Agency has the same meaning as in
section 3 of the Federal Deposit Insurance Act, 12 U.S.C. 1813(q), and
includes, with respect to Insured Credit Unions, the National Credit
Union Administration;
Appropriate State Agency means an agency or instrumentality of a
State that regulates and/or insures the member accounts of a State-
Insured Credit Union;
Assistance Agreement means a formal, written agreement between the
CDFI Fund and a Recipient that specifies the terms and conditions of
assistance under this part;
Capital Magnet Fund (or CMF) means the program authorized by the
Act and implemented under this part;
Certified Community Development Financial Institution (or Certified
CDFI) means an entity that has been determined by the CDFI Fund to meet
the certification requirements set forth in 12 CFR 1805.201;
CMF Award means the financial assistance in the form of a grant
made by the CDFI Fund to a Recipient pursuant to this part;
CMF Unit means
(1) A single residential unit of Housing financed or supported with
a CMF Award, rented or owned by a
[[Page 53016]]
Family, with dedicated kitchen and bath facilities that meets the
requirements of subparts D and E, as applicable; or
(2) A single-room occupancy (SRO) unit, a group home, or an
assisted living facility with shared common kitchen and bath facilities
accompanied by an individual lease for each tenant that meets the
requirements of subparts D and E of this part;
Committed for Use means as set forth in Sec. 1807.501, that the
Recipient is able to demonstrate, in written form and substance that is
acceptable to the CDFI Fund, a commitment for Eligible Use of the CMF
Award;
Community Development Financial Institutions Fund (or CDFI Fund)
means the Community Development Financial Institutions Fund, the U.S.
Department of the Treasury, established pursuant to the Community
Development Banking and Financial Institutions Act of 1994, as amended,
12 U.S.C. 4701 et seq.;
Community Service Facility means the physical structure in which
service programs directly benefit nearby residents of any affordable
housing. These service programs serve residents of affordable housing
and include, but are not limited to, health care, childcare,
educational programs including literacy and after school programs, job
training, food and nutrition services, arts, and/or social services, as
further set forth in the Assistance Agreement;
Concerted Strategy means a formal planning document that evidences
the connection between Affordable Housing Activities and Economic
Development Activities. Such documents include, but are not limited to,
a comprehensive, consolidated, or redevelopment plan, or some other
local or regional planning document adopted or approved by the
jurisdiction;
Control means:
(1) Ownership, control, or power to vote 25 percent or more of the
outstanding shares of any class of Voting Securities of any company,
directly or indirectly or acting through one or more other persons;
(2) Control in any manner over the election of a majority of the
directors, trustees, or general partners (or individuals exercising
similar functions) of any company; or
(3) The power to exercise, directly or indirectly, a controlling
influence over the management, credit or investment decisions, or
policies of any company;
Depository Institution Holding Company means a bank holding company
or a savings and loan holding company as each are defined in the
Federal Deposit Insurance Act, 12 U.S.C. 1813(w);
Development means any combination of the following activities: Land
acquisition, demolition of existing facilities, and construction of new
facilities, which may include site improvement, utilities development
and rehabilitation of utilities, necessary infrastructure, utility
services, conversion, and other related activities resulting in
Affordable Housing;
Direct Administrative Expenses as described in 2 CFR 200.413 of the
Uniform Administrative Requirements, means direct costs incurred by the
Recipient, related to the financing and/or in support of Projects;
Economic Development Activity means the development, preservation,
acquisition and/or rehabilitation of Community Service Facilities and/
or other physical structures in which businesses operate in order to
implement a Concerted Strategy to stabilize, sustain, or revitalize
communities and neighborhoods physically proximate to any affordable
housing benefiting a Low-Income Area or Underserved Rural Area, subject
to subpart D of this part;
Economic Development Activity Fund means an investment fund
consisting of the CMF Award and any Leveraged Capital that the
Recipient:
(1) Manages and makes investment decisions for; and
(2) Uses to finance Economic Development Activities in any
combination of debt, grant, or equity, which does not include the
purchase of stock, securities, or the buy-out of partnership interests;
Effective Date means the date that the Assistance Agreement is
effective; such date is determined by the CDFI Fund after the Recipient
has returned an executed Assistance Agreement, along with all required
supporting documentation, including an opinion from its legal counsel,
if required;
Eligible-Income means having, in the case of owner-occupied or
rental Housing units, annual income at 120 percent or below of the area
median income, adjusted for Family size, in the same manner as HUD
makes these adjustments for its other published income limits;
Eligible Project Costs means all eligible development, financing,
refinancing, acquisition, relocation, loan loss reserve, guarantee,
predevelopment, and related soft costs incurred in the achievement of
Project Completion, as described in the Assistance Agreement, paid
using a CMF Award and any Leveraged Capital;
Eligible Uses means allowable uses of the CMF Award set forth in
Sec. 1807.301;
Extremely Low-Income means, in the case of owner-occupied or rental
Housing units, having income at 30 percent or below of the area median
income, adjusted for Family size, as determined by HUD, except that HUD
may establish income ceilings higher or lower than 30 percent of the
median for the area on the basis of HUD findings that such variations
are necessary because of prevailing levels of construction costs or
fair market rents, or unusually high or low incomes;
Family means a household of one or more persons living in the same
dwelling unit. All persons in a household who are related by birth,
marriage or adoption are regarded as members of the Family. A Family
may also include individuals living in a household who are not related
to each other;
Feasibility Determination Expenses mean direct costs, as defined by
the Uniform Administrative Requirements, and incurred by the Recipient
to determine the feasibility of potential Affordable Housing Activities
and/or Economic Development Activities to implement the CMF Award.
These costs must be incurred before Project Commitment. Costs
designated as Feasibility Determination Expenses cannot be deemed as
Eligible Project Costs. Such expenses may include, but are not limited
to, preliminary market studies, engineering, architectural analyses,
financial feasibility analyses, and other costs as further detailed in
the Assistance Agreement and guidance provided by the CDFI Fund;
Homebuyer means a Family that does not currently own any Single-
family housing or is in the process of selling and replacing their
primary residence. A Homebuyer may not own any other Single-family
housing or Multi-family housing. Notwithstanding this definition, a
Homebuyer includes a Family that owns a manufactured housing unit and
is in the process of replacing or refinancing it, or owns a
manufactured housing unit as part of the conversion of a manufactured
housing park to a tenant-owned park or cooperative;
HOME Program means the HOME Investment Partnership Program
established by the HOME Investment Partnerships Act under title II of
the Cranston-Gonzalez National Affordable Housing Act, as amended, 42
U.S.C. 12701 et seq.;
Homeownership means ownership interest in a home in fee simple, or
by condominium, cooperative, mutual housing, or ground lease title
interest, as allowed under State law, in one- to four-unit Single-
family housing, or
[[Page 53017]]
ownership of a manufactured housing unit. The ownership interest is
subject to the following additional requirements:
(1) Ownership interest may not merely consist of a right of
possession under a contract for deed, installment contract, or land
contract pursuant to which the deed is not given until the final
payment is made; and
(2) Ownership interest is subject to the restrictions on
affordability permitted under the Assistance Agreement and this part;
mortgages, deeds of trust, or other liens or instruments securing debt
on the property; or any other restrictions or encumbrances that do not
impair the good and marketable nature of title to the ownership
interest;
Homeownership Program means an affordable housing program
established by a Recipient for the purpose of providing direct
financing or grants to Homebuyers to purchase Single-family housing.
The Project Commitment requirements of Sec. 1807.501 are satisfied if
the board of directors of the Recipient makes a Project Commitment of
the CMF Award to the Homeownership Program by resolution in a form and
substance acceptable to the CDFI Fund;
Housing means Single-family and Multi-family residential units
including, but not limited to, manufactured housing, permanent
supportive housing, single-room occupancy (SRO) housing, assisted
living, and group homes that are permanent in nature and not temporary,
short term, transitional, or a dormitory, as further set forth by the
CDFI Fund;
HUD means the Department of Housing and Urban Development
established under the Department of Housing and Urban Development Act
of 1965, 42 U.S.C. 3532 et seq.;
Indian Tribe means any Indian Tribe, band, pueblo, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation, as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.).
Each such Indian Tribe must be recognized as eligible for special
programs and services provided by the United States to Indians because
of their status as Indians;
Insured CDFI means a Certified CDFI that is an Insured Depository
Institution or an Insured Credit Union;
Insured Credit Union means any credit union, the member accounts of
which are insured by the National Credit Union Share Insurance Fund by
the National Credit Union Administration pursuant to authority granted
in 12 U.S.C. 1783 et seq.;
Insured Depository Institution means any bank or thrift, the
deposits of which are insured by the Federal Deposit Insurance
Corporation pursuant to authority granted in 12 U.S.C. 1813(c)(2);
Investment Period means the period beginning with the Effective
Date and ending on the fifth year anniversary of the Effective Date, or
such other period as may be established by the CDFI Fund in the
Assistance Agreement;
Leveraged Capital means capital raised to finance the costs for
Affordable Housing Activities and Economic Development Activities that
exceeds the dollar amount of the CMF Award, as further described in
Sec. 1807.500;
Loan Guarantee means the Recipient's use of the CMF Award to
support an agreement to indemnify the holder of a loan for all or a
portion of the unpaid principal balance in case of default by the
borrower. The proceeds of the loan that is guaranteed with the CMF
Award must be used for Affordable Housing Activities and/or Economic
Development Activities;
Loan Loss Reserves means proceeds from the CMF Award that the
Recipient will set aside in the form of cash reserves, or through
accounting-based accrual reserves, to cover losses on loans, accounts,
and notes receivable for Affordable Housing Activities and/or Economic
Development Activities, or for related purposes that the CDFI Fund
deems appropriate;
Low-Income means, in the case of owner-occupied or rental Housing
units, having income at 80 percent or below of the area median income,
adjusted for Family size, as determined by HUD, except that HUD may
establish income ceilings higher or lower than 80 percent of the median
for the area on the basis of HUD findings that such variations are
necessary because of prevailing levels of construction costs or fair
market rents, or unusually high or low Family incomes;
Low-Income Area (or LIA) means a census tract in which the median
family income does not exceed 80 percent of the area median family
income. With respect to a census tract located within a Metropolitan
Area, the median family income shall be at or below 80 percent of the
Metropolitan Area median family income or the national Metropolitan
Area median family income, whichever is greater. In the case of a
census tract located outside of a Metropolitan Area, the median family
income shall be at or below 80 percent of the statewide Non-
Metropolitan Area median family income or the national Non-Metropolitan
Area median family income, whichever is greater;
Low Income Housing Tax Credits (or LIHTCs) means credits against
income tax under section 42 of the Internal Revenue Code of 1986, as
amended, 26 U.S.C. 42;
Metropolitan Area means an area designated as such by the Office of
Management and Budget pursuant to 44 U.S.C. 3504(e) and 31 U.S.C.
1104(d) and Executive Order 10253 (3 CFR, 1949-1953 Comp., p. 758), as
amended, and as made available by the CDFI Fund for a specific
Application funding round;
Multi-family housing means residential properties consisting of
five or more dwelling units, such as a condominium unit, cooperative
unit, or an apartment;
Non-Metropolitan Area means counties that are designated as Non-
Metropolitan Counties by the Office of Management and Budget (OMB)
pursuant to 44 U.S.C. 3504(e) and 31 U.S.C. 1104(d) and Executive Order
10253 (3 CFR, 1949-1953 Comp., p. 758), as amended, and as made
available by the CDFI Fund for a specific Application funding round;
Nonprofit Organization means any corporation, trust, association,
cooperative, or other organization that is:
(1) Designated as a nonprofit or not-for-profit entity under the
laws of the organization's State or Indian Tribe of formation;
(2) Exempt from Federal income taxation pursuant to section
501(c)(3) of the Internal Revenue Code of 1986, with the exception of
organizations affiliated with Indian Tribes; and
(3) Able to demonstrate, as set forth in the NOFA, that a share of
its total assets is dedicated to the development or management of
affordable housing;
Payment means the transmission of CMF Award dollars from the CDFI
Fund to the Recipient;
Permanent Housing means Housing that is owned or is rented under a
written lease with an initial lease term of six months or more;
Preservation means the acquisition, refinancing, recapitalization,
of existing Multi-family rental housing or Single-family housing, with
or without Rehabilitation, to create, maintain, or extend the
affordability requirement as provided in subpart D of this part.
Preservation may include the refinancing of owner-occupied Single-
family housing or Multi-family rental housing to extend the existing
affordability restrictions set to expire during the Investment Period,
or other timeline as defined by the CDFI Fund, by at least an
additional 10-year Affordability Period or as set forth in the
[[Page 53018]]
Assistance Agreement. Preservation may also include the imposition of a
new Affordability Period on Housing not currently subject to
affordability restrictions;
Presumptively Compliant or Presumptive Compliance means certain
rules, requirements and designations under other Federal housing
programs that the CDFI Fund deems to meet certain CMF requirements;
Program Income means gross income as described in 2 CFR part 200
and as further specified in the Recipient's Assistance Agreement;
Project means a specific Affordable Housing Activity, Economic
Development Activity, or Homeownership Program the Recipient uses its
CMF Award to finance or support, resulting in Project Completion;
Project Commitment means that the Recipient is able to demonstrate,
in written form and substance that is acceptable to the CDFI Fund, a
commitment to a Project as set forth in Sec. 1807.501;
Project Completion means that all of the requirements set forth at
Sec. 1807.503 for a Project have been met;
Purchase means to use a CMF Award to provide financing to:
(1) A Family for Homeownership that meet the qualifications set
forth in subparts D and E; or
(2) A developer or project sponsor for the acquisition of rental
Housing that must meet the qualifications set forth in subparts D and E
of this part;
Recipient means an Applicant selected by the CDFI Fund to receive a
CMF Award pursuant to this part;
Rehabilitation means any repairs and/or capital improvements that
contribute to the long-term preservation, current building code
compliance, habitability, sustainability, or energy efficiency of
Affordable Housing;
Revolving Loan Fund means an investment fund consisting of the CMF
Award and any Leveraged Capital that the Recipient:
(1) Manages and approves lending decisions for; and
(2) Uses to finance Affordable Housing Activities and/or Economic
Development Activities wherein the repayments on such loans are used to
finance additional loans;
Risk-Sharing Loan means loans consisting of the CMF Award and any
Leveraged Capital made for Affordable Housing Activities and/or
Economic Development Activities in which the risk of borrower default
is shared by the Recipient with other lenders (e.g., participation
loans);
Rural Area means a census tract that meets the definition of Rural
Area per 12 CFR 1282.1 (Enterprise Duty To Serve Final Rule) that is: A
census tract outside of a Metropolitan Statistical Area as designated
by the Office of Management and Budget; or A census tract in a
Metropolitan Statistical Area as designated by the Office of Management
and Budget that is outside of the Metropolitan Statistical Area's
Urbanized Areas, as designated by the U.S. Department of Agriculture's
(USDA) Rural-Urban Commuting Area (RUCA) Code #1, and outside of tracts
with a housing density of over 64 housing units per square mile for
USDA's RUCA Code #2;
Secondary Market Mortgage means a mortgage:
(1) Originated by a qualified third party lender as defined in
guidance by the CDFI Fund and purchased by the Recipient in 12 months
or less from the date of its origination using a CMF Award and
evidenced by an agreement that meets subparts C, D and E of this part;
(2) For which the source of the origination is not the CMF Award;
and
(3) That would not have been originated but for the Recipient's
Secondary Market Mortgage Purchase;
Secondary Market Mortgage Purchase means the purchase of a
Secondary Market Mortgage;
Service Area means the geographic area in which the Applicant
proposes to use the CMF Award, and the geographic area approved by the
CDFI Fund in which the Recipient must use the CMF Award as set forth in
its Assistance Agreement. Service Area may include a national Service
Area for Rural Areas and additional areas that may be defined by the
CDFI Fund in the applicable NOFA;
Single-family housing means a one- to four- unit Family residence,
a condominium unit, a cooperative unit, mutual housing, a manufactured
housing unit only, or the combination of a manufactured housing unit
and lot;
State means the states of the United States, the District of
Columbia, or any territory of the United States;
State-Insured Credit Union means any credit union that is regulated
by, and/or the member accounts of which are insured by, a State agency
or instrumentality;
Subsidiary means any company that is majority owned, or Controlled
directly, or indirectly, by another company. For purposes of ownership,
a Subsidiary's parent company possesses more than 50 percent ownership
of the Subsidiary;
Underserved Rural Area means all Rural Areas as defined as a census
tract that meets the definition of Rural Area per 12 CFR 1282.1
(Enterprise Duty To Serve Final Rule) that is: A census tract outside
of a Metropolitan Statistical Area as designated by the Office of
Management and Budget; or A census tract in a Metropolitan Statistical
Area as designated by the Office of Management and Budget that is
outside of the Metropolitan Statistical Area's Urbanized Areas, as
designated by the U.S. Department of Agriculture's (USDA) Rural-Urban
Commuting Area (RUCA) Code #1, and outside of tracts with a housing
density of over 64 housing units per square mile for USDA's RUCA Code
#2;
Uniform Administrative Requirements means the Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards (2 CFR part 200);
Very Low-Income means, in the case of owner-occupied or rental
Housing, having income at 60 percent or below of the area median
income, with adjustments for Family size, as determined by HUD, except
that HUD may establish income ceilings higher or lower than 60 percent
of the median for the area on the basis of HUD findings that such
variations are necessary because of prevailing levels of construction
costs or fair market rents, or unusually high or low Family incomes;
Sec. 1807.105 Waiver authority.
The CDFI Fund may waive any requirement of this part that is not
required by law upon a determination of good cause. Each such waiver
shall be in writing and supported by a statement of the facts and the
grounds forming the basis of the waiver. For a waiver in an individual
case, the CDFI Fund must determine that application of the requirement
to be waived would not adversely affect achieving the purposes of the
Act. For waivers of general applicability, the CDFI Fund will publish
notification of granted waivers in the Federal Register.
Sec. 1807.106 Presumptive Compliance with Other Federal Programs.
The CDFI Fund may deem certain other Federal program requirements,
designations and/or reporting criteria as being Presumptively Compliant
with any of the CMF program requirements set forth herein. Recipients
participating in and meeting the program requirements of such
designated Federal programs may be deemed compliant with certain CMF
program requirements, as provided for in the
[[Page 53019]]
Assistance Agreement or other CDFI Fund guidance and materials.
Sec. 1807.107 Applicability of regulations for CMF Awards.
(a) The regulations of this part are applicable for all uncommitted
funds from prior CMF Awards issued as of June 25, 2024, as well as all
CMF Awards made pursuant to all Notices of Funds Availability published
after June 25, 2024.
(b) The definition of ``Nonprofit Organization'' is applicable to
any Notice of Funds Availability published on or after January 1, 2026;
until that time, the definition of ``Nonprofit Organization'' in Sec.
1807.104 of the 2016 interim rule remains in effect.
Subpart B--Eligibility
Sec. 1807.200 Applicant eligibility.
(a) General requirements. An Applicant will be deemed eligible to
apply for a CMF Award if it is:
(1) A Certified CDFI. An entity may meet the requirements described
in this paragraph (a)(1) if it is:
(i) A Certified CDFI, as set forth in 12 CFR 1805.201;
(ii) A Certified CDFI that has been in existence as a legally
formed entity as set forth in the applicable Notice of Funds
Availability (NOFA); or
(2) A Nonprofit Organization having as one of its principal
purposes, the development or management of affordable housing. A
Nonprofit Organization may meet the requirements described in this
paragraph (a)(2) if it:
(i) Has been in existence as a legally formed entity as set forth
in the applicable NOFA;
(ii) Demonstrates, through articles of incorporation, by-laws, or
other board- approved documents, that the development or management of
affordable housing are among its principal purposes; and
(iii) Demonstrates, by providing information described in the
Application, NOFA, and/or supplemental information, as may be requested
by the CDFI Fund, that a certain percentage, set forth in the
applicable NOFA, of the Applicant's total assets are dedicated to the
development or management of affordable housing.
(b) Eligibility verification. An Applicant shall demonstrate that
it meets the eligibility requirements described in paragraph (a)(2) of
this section by providing information described in the Application,
NOFA, and/or supplemental information, as may be requested by the CDFI
Fund. For an Applicant seeking eligibility under paragraph (a)(1) of
this section, the CDFI Fund will verify that the Applicant is a
Certified CDFI as described in the applicable NOFA.
1807.201 Through 1807.299 [Reserved]
Subpart C--Eligible Purposes; Eligible Uses; Restrictions
Sec. 1807.300 Eligible purposes.
Each Recipient must use its CMF Award for the Eligible Uses
described in Sec. 1807.301 so long as such Eligible Uses increase
private capital for and increase investment in:
(a) Development, Preservation, Rehabilitation, and/or Purchase of
Affordable Housing for primarily Extremely Low-Income, Very Low-Income,
and Low-Income Families; and
(b) Economic Development Activities, as further described in Sec.
1807.403, which stabilize, sustain, or revitalize communities and
neighborhoods and must be: located in a Low-Income Area or Underserved
Rural Area; undertaken in conjunction with any affordable housing that
is authorized as such under applicable local, State or Federal housing
program laws, and reasonably available to, physically proximate to, and
beneficial to residents of affordable housing.
Sec. 1807.301 Eligible Uses.
The Recipient must use its CMF Award to finance and support
Affordable Housing Activities and/or Economic Development Activities
through the following Eligible Uses:
(a) To capitalize Loan Loss Reserves;
(b) To capitalize a Revolving Loan Fund;
(c) To capitalize an Affordable Housing Fund;
(d) To capitalize an Economic Development Activity Fund;
(e) To make Risk-Sharing Loans; and
(f) To provide Loan Guarantees.
Sec. 1807.302 Restrictions on use of a CMF Award.
(a) The Recipient may not use its CMF Award for the following:
(1) Political activities;
(2) Advocacy;
(3) Lobbying, whether directly or through other parties;
(4) Counseling services (including Homebuyer or financial
counseling);
(5) Travel expenses;
(6) Preparing or providing advice on tax returns;
(7) Emergency shelters (including shelters for disaster victims);
(8) Nursing homes;
(9) Convalescent homes;
(10) Residential treatment facilities;
(11) Correctional facilities; or
(12) Dormitories.
(b) The Recipient shall not use the CMF Award to finance or support
Projects that include:
(1) The operation of any private or commercial golf course, country
club, massage parlor, hot tub facility, suntan facility, racetrack or
other facility used for gambling, or any store the principal business
of which is the sale of alcoholic beverages for consumption off
premises, or any of the businesses of activities set forth in 13 CFR
120.110(c) through (p), or any other businesses deemed inconsistent
with the general purpose the Riegle Community Development and
Regulatory Improvement Act of 1994 (12 U.S.C. 4701 et seq.); or
(2) Farming activities (within the meaning of the Internal Revenue
Code (IRC) section 2032A(e)(5)(A) or (B)), if, as of the close of the
taxable year of the taxpayer conducting such trade or business, the sum
of the aggregate unadjusted bases (or, if greater, the fair market
value) of the assets owned by the taxpayer that are used in such a
trade or business, and the aggregate value of the assets leased by the
taxpayer that are used in such trade or business, exceeds $500,000.
(c) For each individual CMF Award, the Recipient may not use more
than 30 percent of its CMF Award for Economic Development Activities,
if such use is approved in its applicable Assistance Agreement.
(d) Any Recipient that uses its CMF Award for a Loan Guarantee or
Loan Loss Reserves must ensure that loan(s) made pursuant to a Loan
Guarantee or Loan Loss Reserves finance Affordable Housing Activities
and/or Economic Development Activities. The Affordable Housing
resulting from the Recipient's Loan Guarantee or Loan Loss Reserve
shall be tracked during the Affordability Period for compliance with
the affordability requirements as set forth in subpart D of this part.
(e) If loans that are made pursuant to a Loan Guarantee or Loan
Loss Reserves are repaid during the Investment Period, the Recipient
must use the funds made available by the loan repayment as Program
Income as set forth in the Recipient's Assistance Agreement.
(f) The Recipient may use its CMF Award for Direct Administrative
Expenses or Feasibility Determination Expenses at amounts set forth in
the applicable NOFA and corresponding Assistance Agreement. Neither
Direct Administrative Expenses nor Feasibility Determination Expenses
can be attributable to Eligible Project Costs for a Project.
[[Page 53020]]
Sec. 1807.303 Authorized uses of Program Income.
(a) Program Income earned in the form of principal and equity
repayments must be used by the Recipient in the manner further set
forth in the Assistance Agreement.
(b) Program Income earned in the form of interest payments, and all
other forms of Program Income (except for that which is earned as
described in paragraph (a) of this section), must be used by the
Recipient as set forth in the Assistance Agreement and in accordance
with 2 CFR part 200.
Subpart D--Qualification as Affordable Housing
Sec. 1807.400 Affordable Housing--General.
(a) For any amount of the CMF Award used for Affordable Housing
Activities, 100 percent of such Eligible Project Costs must be
attributable to Affordable Housing, meaning that the Affordable Housing
complies with the affordability qualifications set forth in this
subpart for Eligible-Income Families. Further, as a subset of said 100
percent, greater than 50 percent of the Eligible Project Costs must be
attributable to Affordable Housing that comply with the affordability
qualifications set forth in this subpart for Low-Income, Very Low-
Income, or Extremely Low-Income Families, or as further set forth in
the applicable NOFA and/or Assistance Agreement.
(b) Affordable Housing must be Permanent Housing.
(c) All the occupants of the Affordable Housing must not be full-
time students unless they are:
(1) Married students who file a joint tax return;
(2) Students who receive assistance under Title IV of the Social
Security Act;
(3) Students enrolled in a job training program;
(4) Students who are single parents with children who are their
dependents, as defined in IRC sec. 152;
(5) Students who previously were part of a foster care program; or
(6) Meet other criteria specified by the CDFI Fund.
Sec. 1807.401 Affordable Housing--Rental Housing.
To qualify as Affordable Housing, each rental Multi-family housing
Project financed with a CMF Award must have at least 20 percent of the
units rent-restricted to any combination of Low-Income, Very Low-
Income, or Extremely Low-Income Families and must comply with the rent
limits as set forth in the applicable NOFA and Assistance Agreement in
any CMF funding round. The CDFI Fund may require a greater percentage
of the units per Project to be income-targeted and/or require a
specific targeted income commitment in any given CMF round, as set
forth in the applicable NOFA and Assistance Agreement.
(a) Rent limitations. The gross rent limits for Affordable Housing
are further specified in the Assistance Agreement.
(b) Nondiscrimination against rental assistance subsidy holders.
The Recipient shall require that the owner of a rental unit cannot
refuse to lease the unit to a Section 8 Program certificate or voucher
holder (24 CFR part 982, Section 8 Tenant-Based Assistance: Unified
Rule for Tenant-Based Assistance under the Section 8 Rental Certificate
Program and the Section 8 Rental Voucher Program) or to the holder of a
comparable document evidencing participation in a HOME tenant-based
rental assistance program because of the status of the prospective
tenant as a holder of such certificate, voucher, or comparable HOME
tenant-based assistance document.
(c) Initial rent schedule and utility allowances. The Recipient
shall ensure that utility allowances and submetering rules are
consistent with regulations concerning utility allowances and
submetering in buildings that are subject to gross rent restrictions as
set forth in the Assistance Agreement and under IRC sec. 42(g)(2), as
applicable.
(d) Periods of affordability. Housing under this section must meet
the affordability requirements during the Affordability Period. The
affordability requirements apply without regard to the term of any loan
or mortgage or the transfer of ownership and must be imposed by deed
restrictions, covenants running with the land, or other recording
instruments. Upon receipt of a written approval from the CDFI Fund, a
Recipient may use a different recording instrument as provided for in
the Assistance Agreement. The affordability restrictions are allowed to
terminate upon foreclosure or transfer in lieu of foreclosure. To the
extent allowed under State law, in the event of a sale of property at
foreclosure, transfer in lieu of foreclosure, short sale or other types
of disposition, proceeds available to pay off a mortgage financed with
a CMF Award shall be treated as Program Income.
(e) Standard lease terms and conditions. All tenants occupying
rental CMF Units shall be required to enter into a written lease or
rental agreement setting forth the terms and requirements which are,
but not limited to, compliance with applicable State and local law.
(f) Tenant income determination. (1) At the time of each initial
lease and occupancy, the tenant income shall be determined to ascertain
income eligibility. During the Affordability Period, the existing
tenant income shall be re-examined in a manner as set forth in the
Assistance Agreement. Tenant income examination and verification are
ultimately the responsibility of the Recipient. Tenant income shall
include income from all Family members. The Recipient must require the
Project owner to obtain information on rents and occupancy of
Affordable Housing financed or supported with a CMF Award in order to
demonstrate compliance with this section.
(2) One of the following two definitions of ``annual income'' must
be used to determine whether a Family is income-eligible:
(i) Adjusted gross income as defined for purposes of reporting
under Internal Revenue Service (IRS) Form 1040 series for individual
Federal annual income tax purposes; or
(ii) Annual Income as defined at 24 CFR 5.609 (except that when
determining the income of a homeowner for an owner-occupied
Rehabilitation Project, the value of the homeowner's principal
residence may be excluded from the calculation of ``Net Family
Assets,'' as defined in 24 CFR 5.603).
(3) The CDFI Fund reserves the right to deem certain government
programs, under which a Family is a recipient, as income eligible for
purposes of meeting the tenant income requirements under this section.
(g) Over-income tenants. (1) CMF Units continue to qualify as
Affordable Housing despite a temporary noncompliance caused by
increases in the incomes of existing tenants if actions satisfactory to
the CDFI Fund are being taken to ensure that all vacancies are filled
in accordance with this section until the noncompliance is corrected.
(2) The maximum rent for tenants whose incomes no longer qualify is
either 30 percent of the Family's annual income, or the amount payable
by the tenants under State or local law, whichever is less; however,
tenants whose income exceeds the Eligible-Income level are not required
to pay rent in excess of the market rent for comparable, unassisted
units in the neighborhood.
(3) If the income of a tenant of a CMF Unit no longer qualifies,
the Recipient may designate another unit within the Project as a rent-
restricted replacement unit that meets the affordability
[[Page 53021]]
qualifications for the same income category as the original unit, as
further set forth in the Recipient's Assistance Agreement. If there is
not an available replacement unit, the Recipient must fill the first
available vacancy with a tenant that meets the affordability
qualifications for the same income category of the original unit as
necessary to maintain compliance with the CMF requirements and the
Assistance Agreement.
Sec. 1807.402 Affordable Housing--Homeownership.
(a) Purchase with or without Rehabilitation. (1) A Recipient that
uses the CMF Award to finance or support the Purchase of Housing by a
qualified Homebuyer must ensure that the Housing and Homebuyer meet the
affordability requirements of this subpart as follows:
(i) Single-family housing. The Housing must be a Single-family
housing.
(ii) Purchase price limits. The Single-family housing does not
exceed the purchase price limits for the area under the HUD FHA Section
203(b) Mortgage Insurance Program, or any other index designated by the
CDFI Fund as set forth in the applicable Assistance Agreement; the
related mortgage must be originated based upon an assessment of whether
the Homebuyer can repay the loan based on terms and conditions that are
transparent and understandable to the Homebuyer, and the mortgage is
affordable to the Homebuyer over the life of the loan.
(iii) Qualifying Homebuyer. The Single-family housing must be
purchased by a qualifying Homebuyer.
(iv) Eligible-Income requirements. A qualifying Homebuyer must have
a household income at no greater than Eligible-Income. To determine
whether a Homebuyer qualifies as Eligible Income (or at any other
income level specified in the Assistance Agreement) under this section,
the Recipient must use the Homebuyer's adjusted gross income as defined
under Internal Revenue Service (IRS) Form 1040 series for individual
Federal annual income tax reporting purposes, or other methodology for
determining income eligibility as provided in the Assistance Agreement.
Homebuyers of one- to four- unit Single-family housing may rent the
additional unit(s) as Permanent Housing if at least one unit is
maintained as the principal residence of the Homebuyer.
(v) Periods of affordability. Single-family housing under this
section must become the principal residence of the Homebuyer at the
time of Purchase and is subject to the affordability requirements
during the Affordability Period and as further set forth in Sec.
1807.402(a)(1)(vi). The Affordability Period does not apply to
additional units rented as Permanent Housing, as described in Sec.
1807.402(a)(1)(iv).
(vi) Resale. To ensure that the CMF Awards are being used for
qualifying Families during the Affordability Period, recoupment,
replacement, and/or resale strategies must be established and imposed
by the Recipient. A recoupment, replacement, and/or resale strategy
must ensure that:
(A) In the event the qualifying Family sells the Housing in five
years or less from the date of Purchase, the Housing must be sold to an
Eligible-Income Family meeting the qualifications set forth in Sec.
1807.402. Otherwise, the CMF Award investment must be recouped by the
Recipient and the Housing replaced with a replacement unit to satisfy
the affordability requirement for the remainder of the Affordability
Period. If the Housing is replaced, the replacement unit must be sold
to an Eligible-Income Family and must also meet the qualifications set
forth in Sec. 1807.402.
(B) In the event the qualifying Family sells the Housing any time
after five years from the date of Purchase but before the end of the
Affordability Period, the Housing must either be sold to a new
Eligible-Income Family or, if the Housing is not sold to an Eligible-
Income Family, the CMF investment must be recouped as Program Income in
a proportional amount from net sale proceeds, as further set forth in
the Assistance Agreement. If the Housing is not sold to an Eligible-
Income Family after the five-year anniversary of the Purchase date and
the Recipient recoups a proportional amount of the CMF Awards as
Program Income, the Recipient is not required to replace the sold
Housing with a replacement unit.
(2) The Recipient may design and implement its own recoupment,
replacement, and/or resale strategy, subject to the requirements of
Sec. 1807.402(a)(1)(vi) to maintain compliance with the CMF
requirements and the Assistance Agreement. Deed restrictions, covenants
running with the land, or other similar instruments may be used as the
mechanism to impose a strategy. The Recipient shall report to the CDFI
Fund the event of resale and/or recoupment and redeployment of the CMF
Award, or an equivalent amount, in the manner described in the
Assistance Agreement or other guidance issued by the CDFI Fund.
(3) The affordability restrictions are allowed to terminate upon
occurrence of any of the following termination events: foreclosure,
transfer in lieu of foreclosure, or assignment of an FHA-insured
mortgage to HUD. The termination of the affordability restrictions
pursuant to any of the aforementioned terminating events will result in
the Housing no longer being subject to a recoupment, replacement, and/
or resale strategy as previously imposed by the Recipient. The
Recipient may use purchase options, rights of first refusal or other
preemptive rights to purchase the Housing before foreclosure to
preserve affordability. The affordability restrictions shall be revived
according to the original terms if, during the original Affordability
Period, the owner of record before the termination event obtains an
ownership interest in the Housing.
(b) Rehabilitation not involving purchase. Single-family housing
that is currently owned by a qualifying Family, as set forth in Sec.
1807.400, qualifies as Affordable Housing if it meets the following
requirements of this paragraph (b):
(1) The estimated value of the Single-family housing, after
Rehabilitation, does not exceed the purchase price limits for the area,
as used in the HUD FHA Section 203(b) Mortgage Insurance Program, or
any other index designated by the CDFI Fund. The underlying mortgage(s)
should be affordable for the Homebuyer;
(2) The Single-family housing is owned by a qualifying Family as
set forth in Sec. 1807.400 and is the only principal residence of the
Family at the time of Project Commitment and remains the principal
residence of the Family throughout the Affordability Period as
described in paragraph (b)(3) of this section;
(3) Single-family housing under this paragraph (b) must meet the
affordability requirements during the Affordability Period upon Project
Completion or meet the recoupment, replacement, and/or resale
provisions of paragraph (a)(5) of this section; and
(4) Single-family housing under this paragraph (b) currently owned
by a qualifying Family may be rehabilitated to convert a portion of the
Housing into one to three permanent additional units, each with a
separate means of ingress/egress, kitchen, sleeping area, bathing area,
and bathroom facilities, independent of the primary dwelling. The
additional units may be rented as Permanent Housing as long as the
primary dwelling remains the principal residence of the Family. While
the Affordability Period applies to the primary dwelling, it does not
apply to the additional units discussed in this section.
[[Page 53022]]
(c) Ownership interest. The owner must meet the definition of
Homebuyer and the ownership in the Single-family housing assisted under
this section must meet the definition of Homeownership as defined in
Sec. 1807.104.
(d) New construction without Purchase. Newly constructed Single-
family housing that is built on property currently owned by a Family
that will occupy the Single-family housing upon Project Completion,
qualifies as Affordable Housing if it meets the requirements under
paragraph (a) of this section.
(e) Converting rental units to Homeownership units for existing
tenants. Rental CMF Units may be converted to Homeownership units by
selling, donating, or otherwise conveying the units to the existing
tenants only under an existing documented rent-to-own program to enable
the tenants to become Homebuyers in accordance with the requirements of
this section. The Homeownership units are subject to a minimum period
of affordability equal to the remaining rental Affordability Period, as
further specified in the Assistance Agreement.
Sec. 1807.403 Economic Development Activities.
A CMF Award used for Economic Development Activities must
stabilize, sustain, or revitalize communities and neighborhoods to meet
the requirements set forth herein. For each individual CMF Award round,
the Recipient may use no more than 30 percent of its CMF Award for
Economic Development Activities, if such use is approved in its
applicable Assistance Agreement.
(a) Eligible uses. A Recipient may use its Economic Development
Activity Fund to finance and/or support Economic Development Activities
through any Eligible Use pursuant to Sec. 1807.301 except for
Affordable Housing Fund.
(b) Minimum use Term. Community Service Facilities or physical
structures resulting from Economic Development Activities must be used
for allowable Economic Development Activities for a minimum of three
years commencing with Project Completion.
(c) Concerted strategy. Economic Development Activities must
complement and be undertaken as part of a Concerted Strategy that
includes, but is not limited to, education, employment, transportation,
financial services, commercial goods and services and other
opportunities in a Low-Income Area or Underserved Rural Area.
(d) In Conjunction with Affordable Housing Activities. Economic
Development Activities must be:
(1) Located in a Low-Income Area or Underserved Rural Area;
(2) Undertaken in conjunction with any affordable housing that is
subject to or authorized by local, State or Federal laws; and
(3) Reasonably available, physically proximate, and benefit
residents of such affordable housing. For a Metropolitan Area, the
Economic Development Activities must be located within the same census
tract or within one mile of such affordable housing. For a Non-
Metropolitan Area, Economic Development Activities must be located
within the same county, township, or village, or within 10 miles of
such affordable housing.
Subpart E--Leveraged Capital; Eligible Project Costs; Commitments;
Project Completion
Sec. 1807.500 Leveraged Capital; Eligible Project Costs.
(a) Eligible project costs. Excluding both the total amount of
Direct Administrative Expenses and Feasibility Determination Expenses,
each CMF Award must result in Eligible Project Costs that equals at
least 10 times the amount of the CMF Award, or some higher standard
established by the CDFI Fund in the Recipient's Assistance Agreement.
Such Eligible Project Costs must be for Affordable Housing Activities
and Economic Development Activities, as set forth in the Assistance
Agreement.
(b) Leveraged capital. (1) The applicable NOFA and/or the
Assistance Agreement may set forth a required multiplier of Leveraged
Capital that must be funded by private, non-governmental sources.
(2) The Recipient must report to the CDFI Fund the amount of
Leveraged Capital, with the following limitations:
(i) No costs attributable to prohibited uses, as set forth in Sec.
1807.302(a) and (b), may be reported as Leveraged Capital;
(ii) All uses of Leveraged Capital to finance and/or support
Affordable Housing Activities shall comply with Sec. Sec. 1807.400,
1807.401 and 1807.402, and as further described in the Assistance
Agreement;
(iii) All uses of Leveraged Capital to finance and/or support
Economic Development Activities shall comply with Sec. 1807.403, and
as further described in the Assistance Agreement.
Sec. 1807.501 Commitments.
(a) The CMF Award must be Committed for Use by the Recipient to one
or more Eligible Uses as provided in Sec. 1807.301 within two years
from the Effective Date of the CMF Award, as such date designated in
the Recipient's Assistance Agreement.
(b) The Recipient must achieve Project Commitment of the entire CMF
Award within three years from the Effective Date of the CMF Award as
designated in the Recipient's Assistance Agreement.
(c) The Recipient must evidence a Project Commitment with a
written, legally binding agreement to invest in a Project by providing
the CMF Award proceeds to the qualifying Family, developer or project
sponsor in which:
(1) Construction on real estate can reasonably be expected to start
within 12 months of the Project Commitment agreement date; or
(2) Property title on real estate will be transferred within six
months of the Project Commitment agreement date; or
(3) Construction schedule on real estate ensures Project Completion
within five years of a date specified in the Assistance Agreement; or
(4) The Recipient has entered into a Secondary Market Mortgage
Purchase agreement with a third-party lender to purchase the qualified
mortgages and the subject mortgages would not otherwise have been
originated by the third-party lender absent that agreement; or
(5) A commitment for a qualified Homeownership Program has been
made by the action of the Recipient's Board of Directors; or
(6) The Recipient has entered into a Loan Guarantee agreement or
has established a cash reserve, escrow, or accounting-based accrual
reserve with a lender or investor for a Loan Loss Reserve.
Sec. 1807.502 CMF Award limits.
An eligible Applicant and its Subsidiaries and Affiliates may not
be awarded more than 15 percent of the aggregate funds available for
the CMF Awards during any year.
Sec. 1807.503 Project Completion; Property standards.
(a) Upon Project Completion, the Project must be placed into
service by the date designated in the Assistance Agreement. Project
Completion for Affordable Housing Activities and Economic Development
Activities occurs, as determined by the CDFI Fund, when:
(1) All necessary title transfer requirements and construction work
have been performed;
(2) The property standards of paragraph (b) of this section have
been met;
[[Page 53023]]
(3) The final drawdown of the CMF Award has been made to the
project sponsor or developer;
(4) For Preservation, the refinancing of the loan is closed and the
underlying real estate is in compliance with all CMF requirements and,
if applicable, Rehabilitation is completed and the requirements set
forth in this paragraph (a) are achieved;
(5) For qualified Secondary Market Mortgage Purchase, the loan
purchase transaction is complete, all CMF Secondary Market Mortgage
requirements are met, and the CMF Award is disbursed to the lender
(i.e., seller of the loan);
(6) For Loan Loss Reserves, the Loan Loss Reserve is established
and the CMF Award is disbursed to an escrow, cash reserve, or obligated
to an accounting-based accrual reserve to secure loans for Affordable
Housing or Economic Development Activities that meet the requirements
of subpart D of this part;
(7) For Loan Loss Guarantees, the Loan Guarantee is executed
guaranteeing loans for Affordable Housing or Economic Development
Activities that meet the requirements of subpart D of this part.
(b) By the Project Completion date, the Project must meet the
requirements of this part, including the following property standards:
(1) Code requirements. Projects that are constructed or
Rehabilitated with a CMF Award must meet all applicable State and local
codes, Rehabilitation standards, ordinances, and zoning requirements at
the time of Project Completion or, in the absence of a State or local
building code, the International Residential Code or International
Building Code (as applicable) of the International Code Council.
(2) Other requirements. In addition, Projects must meet the
following requirements:
(i) Accessibility. The Project must meet all applicable
accessibility requirements set forth at 24 CFR part 8, which implements
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and
Titles II and III of the Americans with Disabilities Act (42 U.S.C.
12131 through 12189) implemented at 28 CFR parts 35 and 36, as
applicable. Multi-family housing must meet all applicable design and
construction requirements set forth in 24 CFR 100.205 which implement
Title VIII of the Civil Rights Act of 1968 (Fair Housing Act)(42 U.S.C.
3601-3619). Those design and construction requirements are the same
rules that apply to ``covered multifamily dwellings,'' as defined in 24
CFR 100.201.
(ii) Disaster mitigation. The Project must meet all applicable
State and local codes, ordinances, or other disaster mitigation
requirements (e.g., earthquake, hurricanes, flooding, wild fires), or
other requirements as the Department of Housing and Urban Development
has established in 24 CFR part 93.
(iii) Lead-based paint. The Project must meet all applicable lead-
based paint requirements, including those set forth in 24 CFR part 35.
(3) Rehabilitation standards. In addition, all Rehabilitation
Projects must meet the following requirements:
(i) For rental Housing, if the remaining useful life of one or more
major systems is less than the Affordability Period, the Recipient must
ensure that, at Project Completion, the developer or Project sponsor
establishes a replacement reserve and that monthly payments are made to
the reserve that are adequate to repair or replace the systems as
needed. Major systems include: structural support; roofing; cladding
and weatherproofing (e.g., windows, doors, siding, gutters); plumbing;
electrical; heating, ventilation, and air conditioning.
(ii) For Homeownership Single-family housing, the Recipient must
ensure that, at Project Completion, the Housing is decent, safe,
sanitary, and in good repair. The Recipient must ensure that timely
corrective and remedial actions are taken to address identified life-
threatening deficiencies.
(4) Manufactured housing. All manufactured housing must meet the
Manufactured Home Construction and Safety Standards set forth in 24 CFR
part 3280. These standards preempt State and local laws or codes, which
are not identical to the Federal standards for the new construction of
manufactured housing. The installation of all manufactured housing
units must comply with applicable State and local laws or codes. In the
absence of such laws or codes, the installation must comply with the
manufacturer's written instructions for installation of manufactured
housing units. Manufactured housing that is rehabilitated using a CMF
Award must meet the requirements set out in paragraph (b)(1) of this
section.
Subpart F--Tracking Funds; Uniform Administrative Requirements;
Nature of Funds
Sec. 1807.600 Tracking funds.
The Recipient shall develop and maintain an internal tracking and
reporting system that ensures that the CMF Award is used in accordance
with this part and the Assistance Agreement.
Sec. 1807.601 Uniform Administrative Requirements.
The Uniform Administrative Requirements apply to all CMF Awards.
Sec. 1807.602 Nature of funds.
CMF Awards are Federal financial assistance with regard to the
application of Federal civil rights laws.
Subpart G--Notice of Funds Availability; Applications
Sec. 1807.700 Notice of funds availability.
Each Applicant must submit a CMF Award Application in accordance
with the applicable Notice of Funds Availability (NOFA) published in
the Federal Register. The NOFA will advise prospective Applicants on
how to obtain and complete an Application and will establish deadlines
and other requirements. The NOFA will specify Application evaluation
factors and any limitations, special rules, procedures, and
restrictions for a particular Application round. After receipt of an
Application, the CDFI Fund may request clarifying or technical
information on the materials submitted as part of the Application.
1807.701 Through 1807.799 [Reserved]
Subpart H--Evaluation and Selection of Applications
Sec. 1807.800 Evaluation and selection--general.
Each Applicant will be evaluated and selected, at the sole
discretion of the CDFI Fund, to receive a CMF Award based on a review
process that will include a paper or electronic Application, and may
include an interview(s) and/or site visit(s), and that is intended to:
(a) Ensure that Applicants are evaluated in a fair and consistent
manner based on the criteria outlined in the NOFA;
(b) Ensure that each Recipient can successfully meet its
performance goals and achieve Affordable Housing Activity and Economic
Development Activity impacts;
(c) Ensure that Recipients represent a geographically diverse group
of Applicants serving Metropolitan Areas and Rural Areas across the
United States to address economic distress. Criteria of economic
distress may include:
(1) The percentage of Low-Income Families or the extent of poverty;
(2) The rate of unemployment or underemployment;
(3) The extent of disinvestment;
[[Page 53024]]
(4) Economic Development Activities that target Extremely Low-
Income, Very Low-Income, and Low-Income Families within the Recipient's
Service Area; and
(5) Any other criteria the CDFI Fund shall set forth in the
applicable NOFA; and
(d) Take into consideration other factors as set forth in the
applicable NOFA.
Sec. 1807.801 Evaluation of Applications.
(a) Eligibility and completeness. An Applicant will not be eligible
to receive a CMF Award if it fails to meet the eligibility requirements
described in Sec. 1807.200 and in the applicable NOFA, or if the
Applicant has not submitted complete Application materials. For the
purposes of this paragraph (a), the CDFI Fund reserves the right to
request additional information from the Applicant, if the CDFI Fund
deems it appropriate.
(b) Substantive review. In evaluating and selecting Applications to
receive assistance, the CDFI Fund will evaluate the Applicant's
likelihood of success in meeting the factors set forth in the
applicable NOFA.
(c) Other factors. The CDFI Fund may consider any other factors
that it deems appropriate in reviewing an Application, as set forth in
the applicable NOFA, the Application and related guidance materials.
(d) Consultation with appropriate regulatory agencies. In the case
of an Applicant that is a Federally regulated financial institution,
the CDFI Fund may consult with the Appropriate Federal Banking Agency
or Appropriate State Agency prior to making a final award decision and
prior to entering into an Assistance Agreement.
(e) Recipient selection. The CDFI Fund will select Recipients based
on the criteria described in paragraph (b) of this section and any
other criteria set forth in this part.
Subpart I--Terms and Conditions of a CMF Award
Sec. 1807.900 Assistance agreement.
(a) Each Applicant that is selected to receive a CMF Award must
enter into an Assistance Agreement with the CDFI Fund. The Assistance
Agreement will set forth certain required terms and conditions for the
CMF Award that may include, but are not limited to, the following:
(1) The amount of the CMF Award;
(2) The approved Eligible Uses of the CMF Award;
(3) The approved Service Area;
(4) The time period by which the CMF Award proceeds must be
Committed for Use;
(5) The required documentation to evidence Project Completion; and
(6) Performance goals that have been established by the CDFI Fund
pursuant to this part, the NOFA, and the Recipient's Application.
(b) The Assistance Agreement shall provide that, in the event of
fraud, mismanagement, noncompliance with the Act or these regulations,
or noncompliance with the terms and conditions of the Assistance
Agreement, on the part of the Recipient, the CDFI Fund, in its
discretion, may make a determination to:
(1) Require changes in the performance goals set forth in the
Assistance Agreement;
(2) Revoke approval of the Recipient's Application;
(3) Reduce or terminate the CMF Award;
(4) Require repayment of any CMF Award that have been paid to the
Recipient;
(5) Bar the Recipient from applying for any assistance from the
CDFI Fund; or
(6) Take such other actions as the CDFI Fund deems appropriate or
as set forth in the Assistance Agreement.
(c) Prior to making a determination that the Recipient has failed
to comply substantially with the Act or these regulations or an
Assistance Agreement, the CDFI Fund shall provide the Recipient with
reasonable notice and opportunity to cure any instances of
noncompliance.
Sec. 1807.901 Payment of funds.
CMF Awards provided pursuant to this part may be provided in a lump
sum payment or in some other manner, as determined appropriate by the
CDFI Fund. The CDFI Fund shall not provide any Payment under this part
until a Recipient has satisfied all conditions set forth in the
applicable NOFA and Assistance Agreement.
Sec. 1807.902 Data collection and reporting.
(a) Data; general. The Recipient must maintain such records as may
be prescribed by the CDFI Fund that are necessary to:
(1) Disclose the manner in which the CMF Award is used, including
providing documentation to demonstrate Project Completion;
(2) Demonstrate compliance with the requirements of this part and
the Assistance Agreement; and
(3) Evaluate the impact of the CMF Award.
(b) Beneficiary demographics data. The Recipient may be required to
compile such data on the gender, race, ethnicity, national origin, or
other information on individuals that are benefiting from the CMF
Award, as the CDFI Fund shall prescribe in the Assistance Agreement.
Such data will be used to determine whether residents of the
Recipient's Service Area are adequately served and to evaluate the
impact of the CMF Award.
(c) Access to records. The Recipient must submit financial and
activity reports, records, statements, and documents at such times, in
such forms, and accompanied by such reporting data, as required by the
CDFI Fund or the U.S. Department of the Treasury to ensure compliance
with the requirements of this part and to evaluate the impact of the
CMF Award. The United States Government, including the U.S. Department
of the Treasury, the Comptroller General, and their duly authorized
representatives, shall have full and free access to the Recipient's
offices and facilities and all books, documents, records, and financial
statements relating to use of Federal funds and may copy such documents
as they deem appropriate and audit or provide for an audit at least
annually. The CDFI Fund, if it deems appropriate, may prescribe access
to record requirements for entities that receive a CMF Award from the
Recipient.
(d) Retention of records. The Recipient shall comply with all
applicable record retention requirements set forth in the Uniform
Administrative Requirements (as applicable), the Assistance Agreement
and the applicable NOFA.
(e) Data collection and reporting--(1) Financial reporting. (i) All
nonprofit organization Recipients that are required to have their
financial statements audited pursuant to the Uniform Administrative
Requirements, must submit their single-audits by a time set forth in
the applicable NOFA or Assistance Agreement. Nonprofit organization
Recipients (excluding Insured CDFIs and State-Insured Credit Unions)
that are not required to have financial statements audited pursuant to
the Uniform Administrative Requirements, must submit to the CDFI Fund a
statement signed by the Recipient's authorized representative or
certified public accountant, asserting that the Recipient is not
required to have a single-audit pursuant to the Uniform Administrative
Requirements as indicated in the Assistance Agreement. In such
instances, the CDFI Fund may require additional audits to be performed
and/or submitted to the CDFI Fund as stated in the applicable Notice of
Funds Availability and Assistance Agreement.
[[Page 53025]]
(ii) For-profit Recipients (excluding Insured CDFIs and State-
Insured Credit Unions) must submit to the CDFI Fund financial
statements audited in conformity with generally accepted auditing
standards as promulgated by the American Institute of Certified Public
Accountants by a time set forth in the applicable NOFA or Assistance
Agreement.
(iii) Regulated financial institutions (Insured Depository
Institutions, Depository Institution Holding Companies, and Insured
Credit Unions), including regulated nonprofit organizations, must
submit to the CDFI Fund financial statements audited in conformity with
generally accepted auditing standards as promulgated by the American
Institute of Certified Public Accountants by a time set forth in the
applicable NOFA or Assistance Agreement.
(2) Annual report. (i) The Recipient shall submit a performance and
financial report that shall be specified in the Assistance Agreement
(annual report). The annual report consists of several components which
may include, but are not limited to, a report on performance goals and
measures, explanation of any Recipient noncompliance, and such other
information as may be required by the CDFI Fund. The annual report
components shall be specified and described in the Assistance
Agreement.
(ii) The CDFI Fund will use the annual report to collect data to
assess the Recipient's compliance with its performance goals and the
impact of the CMF and the CDFI industry.
(iii) The Recipient is responsible for the timely and complete
submission of the annual report, even if all or a portion of the
documents actually are completed by another entity. If such other
entities are required to provide information for the annual report, or
such other documentation that the CDFI Fund might require, the
Recipient is responsible for ensuring that the information is submitted
timely and complete. The CDFI Fund reserves the right to contact such
other entities and require that additional information and
documentation be provided.
(iv) The CDFI Fund's review of the compliance of an Insured CDFI, a
Depository Institution Holding Company or a State-Insured Credit Union
with the terms and conditions of its Assistance Agreement may also
include information from the Appropriate Federal Banking Agency or
Appropriate State Agency, as the case may be.
Sec. 1807.903 Compliance with government requirements.
In carrying out its responsibilities pursuant to an Assistance
Agreement, the Recipient shall comply with all applicable Federal,
State, and local laws, regulations, and ordinances, Uniform
Administrative Requirements, and Executive Orders. Furthermore,
Recipients must comply with the CDFI Fund's environmental quality
regulations (12 CFR part 1815), as well as all other Federal
environmental requirements applicable to Federal awards.
Sec. 1807.904 Lobbying restrictions.
No CMF Award may be expended by a Recipient to pay any person to
influence or attempt to influence any agency, elected official, officer
or employee of a State or local government in connection with the
making, award, extension, continuation, renewal, amendment, or
modification of any State or local government contract, grant, loan or
cooperative agreement as such terms are defined in 31 U.S.C. 1352.
Sec. 1807.905 Criminal provisions.
The criminal provisions of 18 U.S.C. 657 regarding embezzlement or
misappropriation of funds are applicable to all Recipients and
insiders.
Sec. 1807.906 CDFI Fund deemed not to control.
The CDFI Fund shall not be deemed to control a Recipient by reason
of any CMF Award provided under the Act for the purpose of any
applicable law.
Sec. 1807.907 Limitation on liability.
The liability of the CDFI Fund and the United States Government
arising out of any CMF Award shall be limited to the amount of the CMF
Award. The CDFI Fund shall be exempt from any assessments and other
liabilities that may be imposed on controlling or principal
shareholders by any Federal law or the law of any State. Nothing in
this section shall affect the application of any Federal tax law.
Sec. 1807.908 Fraud, waste and abuse.
Any person who becomes aware of the existence or apparent existence
of fraud, waste or abuse of a CMF Award should report such incidences
to the Office of Inspector General of the U.S. Department of the
Treasury.
Pravina Raghavan,
Director, Community Development Financial Institutions Fund.
[FR Doc. 2024-13797 Filed 6-24-24; 8:45 am]
BILLING CODE 4810-05-P
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</html>Indexed from Federal Register on June 25, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.