[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1565 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1565

To license America's Private Investment Companies and provide enhanced 
 credit to stimulate private investment in low-income communities, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 5, 1999

   Mr. Sarbanes (for himself, Mr. Edwards, Mr. Bayh, and Mr. Kerry) 
introduced the following bill; which was read twice and referred to the 
            Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To license America's Private Investment Companies and provide enhanced 
 credit to stimulate private investment in low-income communities, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``America's Private Investment 
Companies Act''.

SEC. 2. CONGRESSIONAL FINDINGS AND PURPOSES.

    (a) Congressional Findings.--Congress makes the following findings:
            (1) People living in distressed areas, both urban and 
        rural, characterized by high levels of joblessness, poverty, 
        and low incomes continue to miss out on the economic expansion 
        experienced by the Nation as a whole.
            (2) Unequal access to economic opportunities continues to 
        make the social costs of joblessness and poverty to our Nation 
        very high.
            (3) There are significant untapped markets in our Nation, 
        and many of these are in areas that are underserved by 
        institutions that can make equity and credit investments.
    (b) Purpose.--The purposes of this Act are to:
            (1) license private for profit community development 
        entities that will focus on making equity and credit 
        investments for large-scale business developments that benefit 
        low-income communities;
            (2) provide credit enhancement for those entities for use 
        in low-income communities; and
            (3) provide a vehicle under which the economic and social 
        returns on financial investments made pursuant to this Act may 
        be available both to the investors in these entities and to the 
        residents of the low-income communities.

SEC. 3. DEFINITIONS.

    As used in this Act, certain terms have the respective meanings set 
forth herein:
            (1) ``Agency'' is an entity as defined in section 551(1) of 
        title 5, United States Code.
            (2) ``APIC'' means an America's Private Investment Company, 
        a business entity that has been licensed under the terms of 
        this Act, and the license of which has not been revoked.
            (3) ``Administrator'' means the Administrator of the Small 
        Business Administration.
            (4) ``Community development entities'' are entities whose 
        primary mission must be serving or providing investment capital 
        for low-income communities or low-income persons, maintain 
accountability to residents of low-income communities, and have 60 
percent of their aggregate gross assets invested in low-income 
community investments or residential property located in low-income 
communities.
            (5) ``Cost'' has the meaning set forth in section 502(5) of 
        the Federal Credit Reform Act of 1990.
            (6) ``Debentures'' means debt instruments the terms of any 
        of which may be specified by the Secretary.
            (7) ``HUD'' means the Secretary of Housing and Urban 
        Development or the Department of Housing and Urban Development, 
        as the context requires.
            (8) ``Low-income communities'' are census tracts with 
        either (1) poverty rates of at least 20 percent, based on the 
        most recent census data; or (2) median family income that does 
        not exceed 80 percent of the greater of (A) metropolitan area 
        median family income or (B) statewide median family income.
            (9) ``Qualified low-income community investments'' means 
        equity investments in, or loans to, qualified active businesses 
        located in low-income communities.
            (10) ``Qualified active business'' means a business or 
        trade--
                    (A) at least 50 percent of the gross income of 
                which is derived from conduct of trade or business 
                activities in low-income communities;
                    (B) a substantial portion of the use of the 
                tangible property of which is used within low-income 
                communities;
                    (C) a substantial portion of the services that the 
                employees of which perform are performed in low-income 
                communities;
                    (D) less than 5 percent of the aggregate unadjusted 
                bases of the property of which is attributable to 
                certain financial property, as the Secretary shall set 
                forth in regulations, or in collectibles, other than 
                collectibles held primarily for sale to customers.
            (11) ``Secretary'' means the Secretary of Housing and Urban 
        Development, unless otherwise specified in this Act.

SEC. 4. AUTHORIZATION.

    (a) Licenses.--The Secretary is authorized to license America's 
Private Investment Companies, in accordance with the terms of this Act.
    (b) Regulations.--The Secretary is authorized to regulate APICs for 
compliance with sound financial management practices, and the program 
and procedural goals of this and other related Acts, and other purposes 
as required or authorized by this Act, or determined by the Secretary. 
The Secretary may issue regulations, Federal Register notices, and 
other guidance or directives to carry out licensing and regulatory and 
other duties under this Act.
    (c) Use of Credit Subsidy for Licenses.--
            (1) Number of licenses.--The Secretary is authorized to 
        have outstanding at any one time the number of licenses for 
        APICs that may be supported by the amount of the budget 
        authority appropriated in accordance with the Federal Credit 
        Reform Act of 1990 for the subsidy cost and the investment 
        strategies of such APICs.
            (2) Use of credit subsidy after initial appropriation to 
        hud.--With respect to any appropriation of budget authority for 
        the credit costs after the initial appropriation, the Secretary 
        may license additional APICs, or as hereinafter provided, 
        increase the credit subsidy allocated to an APIC as an award 
        for high performance under this Act.
    (d) Cooperation and Coordination.--
            (1) Program policies.--The Secretary is authorized to 
        coordinate and cooperate, through memoranda of understanding, 
        an APIC liaison committee, or otherwise, with the 
        Administrator, the Secretary of the Treasury, and other 
        agencies in the discretion of the Secretary, on implementation 
        of this Act, including regulation, examination, and monitoring 
        of APICs under this Act.
            (2) Operations.--The Secretary may carry out this Act--
                    (A) directly, through agreements with other Federal 
                entities under section 1535 of title 31, United States 
                Code, or otherwise, or
                    (B) indirectly, under contracts or agreements, as 
                the Secretary shall determine.
    (e) Fees and Charges for Administrative Costs.--To the extent 
provided in appropriations Acts, the Secretary is authorized to impose 
fees and charges for application, review, licensing, and regulation, or 
other actions under this Act, and to pay for the costs of such 
activities from the fees and charges collected.
    (f) Guarantee Fees.--The Secretary is authorized to set and collect 
fees for loan guarantee commitments and loan guarantees that the 
Secretary makes under this Act.
    (g) Funding.--
            (1) Authorization for appropriation of cost of annual loan 
        guarantee commitment.--For each of fiscal years 2000, 2001, 
        2002, and 2003, there is authorized to be appropriated up to 
        $36,000,000 for the cost of annual loan guarantee commitments 
        under this Act. The Secretary may make commitments to guarantee 
        loans only to the extent that the total loan principal, any 
        part of which is guaranteed, will not exceed $1,000,000,000, or 
        the amount specified in appropriations Acts in each such fiscal 
        year. Amounts appropriated under this paragraph shall remain 
        available for 5 years.
            (2) Authorization for appropriation of administrative 
        expenses.--For each of the fiscal years 2000, 2001, 2002, and 
        2003, there is authorized to be appropriated $1,000,000 for 
        administrative expenses for carrying out this Act. The 
        Secretary may transfer amounts appropriated under this 
        paragraph to any appropriation account of HUD or another 
        agency, to carry out the program under this Act. Any agency to 
        which the Secretary may transfer amounts under this Act is 
        authorized to accept such transferred amounts in any 
        appropriation account of such agency.

SEC. 5. SELECTION OF APIC'S.

    (a) Notice of Competitions.--The Secretary shall select APICs for 
licensing on the basis of competitions. Such competitions shall be 
announced by a Federal Register notice that invites applications for 
APIC licenses. Each such notice shall set forth application 
requirements, and such other terms of the competition not otherwise 
provided for, as determined by the Secretary.
    (b) Licensee Selection Criteria.--The Secretary shall select among 
applicants for licenses on the basis of the extent to which an 
applicant may be expected to achieve the goals of the Act by satisfying 
the requirements set forth in this subsection--
            (1) The applicant shall be a private for profit entity that 
        qualifies as a community development entity for the purposes of 
        New Markets Tax Credits.
            (2) The entity must, as of the time that the license is 
        approved, have reasonably available to it, as determined by the 
        Secretary, a minimum of $25,000,000 in equity capital, as 
        determined by the Secretary.
            (3) The entity must demonstrate that its managers are 
        qualified, and have the knowledge, experience, and capability 
        necessary to raise large amounts of capital and make 
        investments for community economic development in distressed 
        areas.
            (4) The entity must demonstrate that, as a matter of sound 
        financial management practices, it is structured to preclude 
        financial conflict of interest between the APIC and a manager 
        or investor.
            (5) The entity must prepare and submit an investment 
        strategy that includes benchmarks for evaluation of its 
        progress.
            (6) The entity must prepare and submit a statement of 
        public purpose goals. The statement shall include elements 
        specified by the Secretary, including proposed measurements and 
        strategies for meeting the goals. The goals shall promote 
        community and economic development, and include at least--
                    (A) making investments that are qualified 
                investments in low-income communities;
                    (B) creation of jobs that pay decent wages in low-
                income communities and for residents of such areas; and
                    (C) involvement of community-based organizations 
                and residents in community development activities.
            (7) The entity must demonstrate a capacity to cooperate 
        with States or units of general local government and with 
        community-based organizations and residents of low-income 
        communities.
            (8) The entity must agree to comply with applicable laws, 
        including Federal executive orders, Office of Management and 
        Budget circulars, and Treasury requirements, and such operating 
and regulatory requirements as the Secretary may impose from time to 
time.
            (9) The entity must satisfy other application requirements 
        that the Secretary may impose by regulation or Federal Register 
        notice.
    (c) Communications Between HUD and Applicants During Selection 
Process.--
            (1) The Secretary shall set forth in regulations the 
        procedures under which HUD, on the one hand, and applicants for 
        APIC licenses, and others, on the other hand, may communicate. 
        Such regulations shall--
                    (A) specify by position the HUD officers and 
                employees who may communicate with such applicants and 
                others;
                    (B) permit such officers and employees to request 
                and discuss with the applicant and others (such as 
                banks or other credit or business references, or 
                potential investors, that the applicant specifies in 
                writing) any more detailed information that may be 
                desirable to facilitate HUD's review of the applicant's 
                application;
                    (C) restrict such officers and employees from 
                revealing to any applicant--
                            (i) the fact or chances of award of a 
                        license to such applicant, unless there has 
                        been a public announcement of the results of 
                        the competition; and
                            (ii) any information with respect to any 
                        other applicant; and
                    (D) set forth requirements for making and keeping 
                records of any communications conducted under this 
                subsection, including requirements for making such 
                records available to the public after the award of 
                licenses under an initial or subsequent notice, as 
                appropriate, under subsection (a).
            (2) Regulations under this subsection may be issued as 
        interim rules for effect on or before the date of publication 
        of the first notice under subsection (a), and shall apply only 
        with respect to applications under such notice. Regulations to 
        implement this subsection with respect to any notice after the 
        first such notice shall be subject to notice and comment 
        rulemaking.
            (3) Section 12(e)(2) of the Department of Housing and Urban 
        Development Act is amended by inserting before the period at 
        the end a comma and ``or any license provided under the 
        America's Private Investment Companies Act''.

SEC. 6. OPERATIONS OF APIC'S.

    (a) In General.--
            (1) An APIC shall have any powers or authorities--
                    (A) that the APIC derives from the jurisdiction in 
                which it is organized, or that the APIC otherwise has;
                    (B) as may be conferred by a license under this 
                Act; and
                    (C) as the Secretary may prescribe by regulation.
            (2) Nothing in this Act shall preclude an APIC or its 
        investors from receiving an allocation of New Market Tax 
        Credits if the APIC satisfies the applicable terms and 
        conditions under the Internal Revenue Code of 1986.
    (b) Investment Limitations.--
            (1) Qualified low-income community investments.--
        Substantially all investments that an APIC makes must be 
        qualified low-income community investments if the investments 
        are financed with--
                    (A) amounts available from the proceeds of the 
                issuance of an APIC's debenture guaranteed under this 
                Act;
                    (B) proceeds of the sale of obligations described 
                under subsection (c)(3)(C)(iii); or
                    (C) the use of equity capital, as determined by the 
                Secretary, in an amount specified in the APIC's 
                license.
            (2) Investment limit.--An APIC shall not, as a matter of 
        sound financial practice, invest in any one business, an amount 
        that exceeds an amount equal to 35 percent of the sum of--
                    (A) the APIC's equity capital, plus
                    (B) an amount equal to the percentage limit that 
                the Secretary determines that APIC may have outstanding 
                at any one time, under subsection (c)(2)(A).
    (c) Borrowing Powers--Debentures.--
            (1) Issuing.--An APIC may issue debentures that the 
        Secretary may guarantee under the terms of this Act.
            (2) Leverage limits.--In general, as a matter of sound 
        financial management practices--
                    (A) the total amount of debentures that an APIC 
                issues under this Act that an APIC may have outstanding 
                at any one time shall not exceed an amount equal to 200 
                percent of the equity capital of the APIC, as 
                determined by the Secretary: Provided, That the 
                Secretary may by regulation increase the foregoing 
                percentage to up to 300 percent for all APICs, or any 
                reasonable class of APICs; and
                    (B) an APIC must not have more than $300,000,000 in 
                face value of debentures issued under this Act 
                outstanding at any one time.
            (3) Repayment.--
                    (A) An APIC must have repaid, or have otherwise 
                been relieved of indebtedness, with respect to any 
                interest or principal amounts of borrowings under this 
                subsection no less than 2 years before the APIC may 
                dissolve or otherwise complete the wind-up of its 
                business.
                    (B) An APIC may repay any interest or principal 
                amounts of borrowings under this subsection at any 
                time: Provided, That the repayment of such amounts 
                shall not relieve an APIC of any duty otherwise 
                applicable to the APIC under this Act, unless the 
                Secretary orders such relief.
                    (C) Until an APIC has repaid all interest and 
                principal amounts on APIC borrowings under this 
                subsection, an APIC may use the proceeds of investments 
                in accordance with regulations issued by the Secretary 
                only to--
                            (i) pay for proper costs and expenses the 
                        APIC incurs in connection with such 
                        investments;
                            (ii) pay for the reasonable administrative 
                        expenses of the APIC;
                            (iii) purchase Treasury securities;
                            (iv) repay interest and principal amounts 
                        on APIC borrowings under this subsection;
                            (v) make interest, dividend, or other 
                        distributions to or on behalf of an investor; 
                        or
                            (vi) undertake such other purposes as the 
                        Secretary may approve.
                    (D) After an APIC has repaid all interest and 
                principal amounts on APIC borrowings under this 
                subsection, and subject to continuing compliance with 
                subsection (a), the APIC may use the proceeds from 
                investments to make interest, dividend, or other 
                distributions to or on behalf of investors in the 
                nature of returns on capital, or the withdrawal of 
                equity capital, without regard to subparagraph (C) but 
                in conformity with the APIC's investment strategy and 
                statement of public purpose goals.
    (d) Reuse of Debenture Proceeds.--An APIC may use the proceeds of 
sale of Treasury securities purchased under subsection (c)(3)(C)(iii) 
to make qualified low-income community investments, subject to the 
Secretary's approval. In making the request for the Secretary's 
approval, the APIC shall follow the procedures applicable to an APIC's 
request for HUD guarantee action, as the Secretary may modify such 
procedures for implementation of this subsection. Such procedures shall 
nevertheless include the description and certifications that an APIC 
must include in all requests for guarantee action, and the 
environmental certification applicable to initial expenditures for a 
project or activity.
    (e) Antipirating.--Notwithstanding any other provision of law, an 
APIC may not use any equity capital required to be contributed under 
this Act, or the proceeds from the sale of any debenture under this 
Act, to make an investment, as determined by the Secretary, to assist 
directly in the relocation of any industrial or commercial plant, 
facility, or operation, from 1 area to another area, if the relocation 
is likely to result in a significant loss of employment in the labor 
market area from which the relocation occurs.
    (f) Bankruptcy Restriction--Exclusion of APIC From Definition of 
Debtor.--Section 109(b)(2) of title 11 of the United States Code is 
amended by inserting before ``credit union'' the following: ``America's 
Private Investment Companies licensed by the Department of Housing and 
Urban Development under the America's Private Investment Companies 
Act,''.

SEC. 7. CREDIT ENHANCEMENT BY THE FEDERAL GOVERNMENT.

    (a) Issuance and Guarantee of Debentures.--Consistent with the 
Federal Credit Reform Act of 1990, the Secretary is authorized to make 
commitments to guarantee and guarantee the timely payment of all 
principal and interest as scheduled on, debentures issued by APICs. 
Such commitments or guarantees may be made by the Secretary on such 
terms and conditions, including but not limited to amounts, 
expirations, number, priorities of repayment, security, collateral, 
amortization, payment of interest (including the timing thereof), and 
fees and charges, as the Secretary determines to be appropriate, in 
documents that the Secretary approves for any commitment or guarantee, 
or pursuant to regulations issued by the Secretary. Debentures 
guaranteed by the Secretary under this subsection shall be senior to 
any debt obligation, equity contribution or earnings, or the 
distribution of dividends, interest, or other amounts of an APIC, 
notwithstanding any Federal or other law. Debentures may be issued for 
a term of not to exceed 21 years and shall bear interest during all or 
any part of that time period at a rate or rates approved by the 
Secretary. The debentures shall also contain such other terms as the 
Secretary may fix.
    (b) Issuance of Trust Certificates.--The Secretary, or an agent or 
entity selected by the Secretary, is authorized to issue trust 
certificates representing ownership of all or a fractional part of 
guaranteed debentures issued by APICs and held in trust.
    (c) Guarantee of Trust Certificates.--
            (1) In general.--The Secretary is authorized, upon such 
        terms and conditions as the Secretary determines to be 
        appropriate, to guarantee the timely payment of the principal 
        of and interest on trust certificates issued by the Secretary, 
        or an agent or other entity, for purposes of this section. Such 
        guarantee shall be limited to the extent of principal and 
        interest on the guaranteed debentures which compose the trust.
            (2) Substitution option.--The Secretary shall have the 
        option to replace in the corpus of the trust any prepaid or 
        defaulted debenture with a debenture, another full faith and 
        credit instrument, or any obligations of the United States, 
        that may reasonably substitute for such prepaid or defaulted 
        debenture.
            (3) Proportionate reduction option.--In the event that the 
        Secretary elects not to exercise the option under paragraph 
        (2), and a debenture in such trust is prepaid, or in the event 
        of default of a debenture, the guarantee of timely payment of 
        principal and interest on the trust certificate shall be 
        reduced in proportion to the amount of principal and interest 
        that such prepaid debenture represents in the trust. Interest 
        on prepaid or defaulted debentures shall accure and be 
        guaranteed by the Secretary only through the date of payment of 
        the guarantee. During the term of a trust certificate, it may 
        be called for redemption due to prepayment or default of all 
        debentures that are in the corpus of the trust.
    (d) Full Faith and Credit Backing of Guarantees.--The full faith 
and credit of the United States is pledged to the timely payment of all 
amounts which may be required to be paid under any guarantee by the 
Secretary pursuant to this section.
    (e) Subrogation and Liens.--
            (1) In the event the Secretary pays a claim under a 
        guarantee issued under this section, the Secretary shall be 
        subrogated fully to the rights satisfied by such payment.
            (2) No State or local law, and no Federal law, shall 
        preclude or limit the exercise by the Secretary of its 
        ownership rights in the debentures in the corpus of a trust 
        under this section.
    (f) Registration.--
            (1) The Secretary shall provide for a central registration 
        of all trust certificates issued pursuant to this section.
            (2) The Secretary may contract with an agent or agents to 
        carry out on behalf of the Secretary the pooling and the 
        central registrations functions of this section notwithstanding 
        any other provisions of law, including maintenance on behalf of 
        and under the direction of the Secretary, such commercial bank 
        accounts or investments in obligations of the United States as 
        may be necessary to facilitate trusts backed by debentures 
        guaranteed under this Act and the issuance of trust 
certificates to facilitate formation of the corpus of the trusts. The 
Secretary may require such agent or agents to provide a fidelity bond 
or insurance in such amounts as the Secretary determines to be 
necessary to protect the interests of the Government.
            (3) Book-entry or other electronic forms of registration 
        for trust certificates under this Act are authorized.
    (g) Timing of Issuance of Guarantees of Debentures and Trust 
Certificates.--The Secretary may, from time to time in the Secretary's 
discretion, exercise the authority to issue guarantees of debentures 
under this Act or trust certificates under this Act.

SEC. 8. APIC REQUESTS FOR GUARANTEE ACTIONS.

    (a) All APIC Requests for HUD Guarantee Action.--An APIC may 
request that the Secretary guarantee a debenture that the APIC intends 
to issue, in accordance with the Secretary's regulations. All such 
requests shall include a description of the manner in which the APIC 
intends to use the proceeds from such debenture. All such requests 
shall also include certification by the APIC that the APIC is in 
substantial compliance with--
            (1) this Act and other applicable laws;
            (2) all terms and conditions of its license, and of any 
        penalty or condition that may have arisen from examination or 
        monitoring by the Secretary or otherwise, including the 
        satisfaction of any financial audit exception that may have 
        been outstanding;
            (3) all requirements relating to the allocation and use of 
        New Markets Tax Credits; and
            (4) any other requirements that the Secretary may specify 
        under regulations.
    (b) Requests for Guarantee of Debentures That Would Include Funding 
for Initial Expenditure for a Project or Activity.--In addition to the 
description and certification that an APIC is required to supply in all 
requests for guarantee action under subsection (a), in the case of an 
APIC's request for a guarantee that includes a debenture, the proceeds 
of which the APIC expects to be used as its initial expenditure for a 
project or activity in which the APIC intends to invest, and the 
expenditure for which would require an environmental assessment under 
the National Environmental Policy Act of 1969 and other related laws 
that further the purposes of such Act, such request for guarantee 
action must include evidence satisfactory to the Secretary of the 
certification of the completion of environmental review of the project 
or activity required of the cognizant State or local government under 
subsection (c). If the environmental review responsibility for the 
project or activity has not been assumed by a State or local government 
under subsection (c), then the Secretary is responsible for carrying 
out the applicable responsibilities under the National Environmental 
Policy Act of 1969 and other provisions of law that further the 
purposes of such Act that relate to the project or activity, and the 
Secretary must execute such responsibilities before acting on the 
APIC's request for the guarantee that is covered by this subsection.
    (c) Responsibility for Environmental Reviews.--
            (1) Execution of responsibility by the secretary.--This 
        subsection shall apply to guarantees by the Secretary of 
        debentures under this Act, the proceeds of which would be used 
        in connection with qualified low-income community investments 
        of APICs under this Act.
            (2) Assumption of responsibility by cognizant unit of 
        general government.--
                    (A) Guarantee of debentures.--In order to assure 
                that the policies of the National Environmental Policy 
                Act of 1969 and other provisions of law that further 
                the purposes of such Act (as specified in regulations 
                issued by the Secretary) are most effectively 
                implemented in connection with the expenditure of funds 
                under this Act, and to assure to the public 
                undiminished protection of the environment, the 
                Secretary may, under such regulations, in lieu of the 
                environmental protection procedures otherwise 
                applicable, provide for the guarantee of debentures, 
                any part of the proceeds of which are to fund 
                particular qualified low-income community investments 
                of APICs under this Act, if a State or unit of general 
                local government, as designated by the Secretary in 
                accordance with regulations issued by the 
Secretary, assumes all of the responsibilities for environmental 
review, decisionmaking, and action pursuant to the National 
Environmental Policy Act of 1969 and such other provisions of law that 
further such Act as the regulations of the Secretary specify, that 
would otherwise apply to the Secretary were the Secretary to undertake 
the funding of such investments as a Federal action.
                    (B) Implementation.--The Secretary shall issue 
                regulations to carry out this subsection only after 
                consultation with the Council on Environmental Quality. 
                Such regulations shall--
                            (i) specify any other provisions of law 
                        which further the purposes of the National 
                        Environmental Policy Act of 1969 and to which 
                        the assumption of responsibility as provided in 
                        this subsection applies;
                            (ii) provide eligibility criteria and 
                        procedures for the designation of a State or 
                        unit of general local government to assume all 
                        of the responsibilities in this subsection;
                            (iii) specify the purposes for which funds 
                        may be committed without regard to the 
                        procedure established under paragraph (3);
                            (iv) provide for monitoring of the 
                        performance of environmental reviews under this 
                        subsection;
                            (v) in the discretion of the Secretary, 
                        provide for the provision or facilitation of 
                        training for such performance; and
                            (vi) subject to the discretion of the 
                        Secretary, provide for suspension or 
                        termination by the Secretary of the assumption 
                        under subparagraph (A).
                    (C) Responsibilities of states and units of general 
                local government.--The Secretary's duty under 
                subparagraph (B) shall not be construed to limit any 
                responsibility assumed by a State or unit of general 
                local government with respect to any particular request 
                for guarantee under subparagraph (A), or the use of 
                funds for a qualified investment.
            (3) Procedure.--The Secretary shall approve the request for 
        guarantee of a debenture, any part of the proceeds of which is 
        to fund particular qualified low-income community investments 
        of APICs under this Act, that is subject to the procedures 
        authorized by this subsection only if, not less than 15 days 
        prior to such approval and prior to any commitment of funds to 
        such investment (except for such purposes specified in the 
        regulations issued under paragraph (2)(B)), the APIC submits to 
        the Secretary a request for guarantee of a debenture that is 
        accompanied by evidence of a certification of the State or unit 
        of general local government which meets the requirements of 
        paragraph (4). The approval by the Secretary of any such 
        certification shall be deemed to satisfy the Secretary's 
        responsibilities pursuant to paragraph (1) under the National 
        Environmental Policy Act of 1969 and such other provisions of 
        law as the regulations of the Secretary specify insofar as 
        those responsibilities relate to the guarantees of debentures, 
        any parts of the proceeds of which are to fund such 
        investments, which are covered by such certification.
            (4) Certification.--A certification under the procedures 
        authorized by this subsection shall--
                    (A) be in a form acceptable to the Secretary;
                    (B) be executed by the chief executive officer or 
                other officer of the State or unit of general local 
                government who qualifies under regulations of the 
                Secretary;
                    (C) specify that the State or unit of general local 
                government under this subsection has fully carried out 
                its responsibilities as described under paragraph (2); 
                and
                    (D) specify that the certifying officer--
                            (i) consents to assume the status of a 
                        responsible Federal official under the National 
                        Environmental Policy Act of 1969 and each 
                        provision of law specified in regulations 
                        issued by the Secretary insofar as the 
                        provisions of such Act or other such provision 
                        of law apply pursuant to paragraph (2); and
                            (ii) is authorized and consents on behalf 
                        of the State or unit of general local 
                        government and himself or herself to accept the 
                        jurisdiction of the Federal courts for the 
                        purpose of enforcement of the responsibilities 
                        of such an official.

SEC. 9. EXAMINATION AND MONITORING OF APIC'S.

    (a) In General.--The Secretary shall, under regulations, through 
audits, performance agreements, license conditions, or otherwise, 
examine and monitor the operations and activities of APICs for 
compliance with sound financial management practices, and for 
satisfaction of the program and procedural goals of this Act and other 
related Acts. The Secretary may undertake any responsibility under this 
section in cooperation with an APIC liaison committee, or any agency 
that is a member of such a committee, or other agency.
    (b) Monitoring, Updating, and Program Review.--
            (1) Reporting and updating.--The Secretary may establish 
        such annual or more frequent reporting requirements for APICs, 
        and such requirements for independent audits, and the updating 
        of the statement of public purpose goals, investment strategy 
        (including the benchmarks in such strategy), and other 
        documents that may have been used in the license application 
        process under this Act, as the Secretary determines necessary 
        to assist the Secretary in monitoring the compliance and 
        performance of APICs.
            (2) Examinations.--The Secretary shall, no less often than 
        once every 2 years, examine the operations and portfolio of 
        each APIC licensed under this Act for compliance with sound 
        financial management practices, and for compliance with this 
        Act.
            (3) Examination standards.--
                    (A) Sound financial management practices.--The 
                Secretary shall examine each APIC to ensure, as a 
                matter of sound financial management practices, 
                substantial compliance with this and other applicable 
                laws, including Federal executive orders, Department of 
                Treasury and Office of Management and Budget guidance, 
                circulars, and application and licensing requirements 
                on a continuing basis. The Secretary may set any 
                additional sound financial management practices 
                standards by regulation, including standards that 
                address solvency and financial exposure.
                    (B) Performance and other examinations.--The 
                Secretary shall monitor each APIC's progress in meeting 
                the goals in the APIC's statement of public purpose 
                goals, executing the APIC's investment strategy, and 
                other matters.

SEC. 10. INCENTIVES AND PENALTIES.

    (a) Incentives.--From amounts of budget authority appropriated 
after the initial appropriation for the cost of annual loan guarantee 
commitments under this Act, the Secretary may increase the credit 
subsidy allocated to an APIC, in the Secretary's discretion, as an 
award for high performance of the APIC in carrying out its investment 
strategy and statement of public purpose goals.
    (b) Penalties.--
            (1) In general.--The Secretary may penalize any APIC, or 
        any manager of an APIC, in the event such APIC or a manager of 
        the APIC commits an act of fraud, mismanagement, or 
        noncompliance with this Act or regulations thereunder or a 
        condition of the APIC's license under this Act. The Secretary 
        in regulations shall identify, by generic description of a role 
        or responsibilities, any manager of an APIC that is subject to 
        this subsection.
            (2) Penalties requiring notice and hearing.--With respect 
        to an act of commission or omission under paragraph (1) for 
        which the Secretary may penalize an APIC or a manager, the 
        Secretary may, following notice in writing to the APIC or the 
        manager, and opportunity for administrative hearing--
                    (A) assess a civil money penalty against an APIC, 
                or a manager of an APIC, the amount of which may exceed 
                $10,000;
                    (B) require an APIC to divest any interest in an 
                investment, on such terms and conditions as the 
                Secretary imposes; or
                    (C) revoke the APIC's license.
            (3) Penalties requiring notice and an opportunity to 
        respond.--With respect to any act of commission or omission 
        under paragraph (1) for which the Secretary may penalize 
an APIC or a manager, following notice in writing and an opportunity 
for the APIC or manager to respond, impose any reasonable penalty. Such 
a penalty may, in addition to any others, be--
                    (A) a civil money penalty of $10,000 or less;
                    (B) the suspension of an APIC's license, or the 
                conditioning of the use of an APIC's license, for up to 
                90 days, including the deferral for the period of the 
                suspension of a commitment to guarantee any new 
                debenture of the APIC; or
                    (C) any other penalty that the Secretary determines 
                to be less burdensome to the APIC than a penalty that 
                requires notice and an administrative hearing under 
                this Act.
    (c) Procedures.--
            (1) No award under this section shall be made until notice 
        thereof is published in the Federal Register.
            (2) No civil money penalty, or other penalty under 
        subsection (b), except suspension or conditioning of an APIC's 
        license under subsection (b)(3)(B), shall be due and payable, 
        or otherwise take effect, or be subject to enforcement by an 
        order of a court, until notice thereof is published in the 
        Federal Register.
            (3)(A) The Secretary may suspend or condition an APIC's 
        license for up to 45 days without prior notice in the Federal 
        Register, but such suspension or conditioning shall take effect 
        only after the Secretary has issued a written notice (including 
        a writing in electronic form) of such action to the APIC. Such 
        written notice shall be effective without regard to whether the 
        APIC has been accorded the opportunity to respond. Such 
        suspension or conditioning shall be subject to enforcement by 
        an order of a court when the Secretary has issued such written 
        notice.
            (B) After such suspension or conditioning takes effect, the 
        Secretary shall promptly cause a notice of suspension or 
        conditioning of such license for up to 90 days to be published 
        in the Federal Register. The APIC shall be entitled to respond 
        to such notice. In counting the time period of the suspension 
        or conditioning, the first day shall be the day that written 
        notice under this paragraph is issued.
            (C) During the time period of such suspension or 
        conditioning, the Secretary may proceed under subsection 
        (b)(2), and in accordance with the procedures applicable to 
        such subsection, to revoke the APIC's license. Only if the 
        Secretary so proceeds, notwithstanding any other provision of 
        this section, the Secretary may extend the suspension or 
        conditioning of the APIC's license by publishing a notice of 
        such action in the Federal Register--
                    (i) for the first such extension, before the up to 
                90 days under subparagraph (B) expires; and
                    (ii) for any subsequent extensions of up to 90 
                days, before the preceding period of up to 90 days 
                expires.
            (D) The suspension or conditioning of an APIC's license by 
        the Secretary under this paragraph shall remain in effect in 
        accordance with its terms until final adjudication in any 
        litigation undertaken to challenge such suspension or 
        conditioning, or revocation, of an APIC's license.
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