[Federal Register Volume 59, Number 55 (Tuesday, March 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6593]


[[Page Unknown]]

[Federal Register: March 22, 1994]


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Part III





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Community Planning and 
Development



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Request for Consideration for Community Development Corporation 
Designation, Grants Availability; Notice
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Community Planning and 
Development
[Docket No. N-94-3730; FR-3635-N-01]
RIN 2506-ZA00

 

Notice of Request for Consideration for Community Development 
Corporation Designation

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice of request for consideration for Community Development 
Corporation (CDC) designation.

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SUMMARY: This notice invites applications from eligible organizations 
for designation as Community Development Corporations (CDCs) whose 
areas of operation meet the size definition of an urban or rural 
Empowerment Zone. Such designation entitles a CDC to accept 
contributions from taxpayers, who in turn may receive a five percent 
tax credit per year for up to 10 years for their qualified cash 
contribution. The notice contains information on applying for 
designation. There will be no rule or application form issued by HUD. 
Responses to this Notice will be considered as formal application for 
designation.

DATES: Request due date: On or before 5 p.m. Eastern Time on May 16, 
1994.
    Comment due date for information collection requirements: April 1, 
1994.

ADDRESSES: Requests must be submitted to the Processing and Control 
Unit, Room 7255, Office of Community Planning and Development, 
Department of Housing and Urban Development, 451 Seventh Street SW., 
Washington, DC 20410-0550.
    Comments on the information collection requirements are to be 
submitted to Joseph L. Lackey, Jr., OMB Desk Officer, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503. Comments should refer to the document by name.

FOR FURTHER INFORMATION CONTACT: Roy Priest, Director, Office of 
Economic Development, Room 7136, Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington, DC, 20410-0550; (202) 
708-2290, or, TDD for hearing and speech-impaired, (202) 708-2565. 
(These numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The information collection requirements contained in this notice 
have been submitted to the Office of Management and Budget (OMB) for 
review under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520). 
The Department has requested that OMB complete its review within 10 
days from the date of this publication. No person may be subjected to a 
penalty for failure to comply with these information collection 
requirements until they have been approved and assigned an OMB control 
number. The OMB control number, when assigned, will be announced by 
separate notice in the Federal Register.
    The burden for collecting the required information is estimated to 
include the time for reviewing the instructions, searching existing 
data sources, gathering and maintaining the data needed, and completing 
and reviewing the collection of information. The following provisions 
of the notice have been determined by the Department to contain 
collection of information requirements: 

----------------------------------------------------------------------------------------------------------------
                                                                 Number                                         
                                                    Number     responses      Total      Hours per              
              Reference in notice                respondents      per         annual      response   Total hours
                                                               respondent   responses                           
----------------------------------------------------------------------------------------------------------------
Application....................................          250            1            1           20        5,000
Reports........................................           20            1           20            5         100 
                                                                                                    ------------
      Total annual burden......................  ...........  ...........  ...........  ...........        5,100
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I. Background

    Section 13311 of Title XIII, Chapter I, Subchapter C, Part II of 
the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66, approved 
August 10, 1993) (the Act), entitled ``Credit for Contributions to 
Certain Community Development Corporations,'' authorizes the Secretary 
of HUD to select 20 CDCs whose areas of operation meet the size 
requirements defined in section 1393 of the Internal Revenue Code of 
1986 (IRS Code) for urban or rural Empowerment Zones. (Interim rules 
for both the rural Empowerment Zone and urban Empowerment Zone programs 
were published on January 18, 1994 (59 FR 2686 and 59 FR 2700, 
respectively).)
    Upon selection, the statutory provision allows the selected CDCs to 
accept contributions from taxpayers who in turn may receive a five 
percent tax credit for their qualified cash contributions each year for 
a 10-year period. The statute provides that the selections must be made 
before July 1, 1994 and that at least eight of the CDCs selected must 
have operational areas that meet the size definition for rural 
Empowerment Zones (as defined by section 1392 of the IRS Code). 
Eligibility for selection is discussed in section III of this Notice.
    Because of the technical nature of the tax credit provisions, CDCs 
and other interested parties should consult with the Internal Revenue 
Service or other persons with expertise in tax matters for more 
information on the tax credits.

II. Definitions

    CDC means a Community Development Corporation.
    HUD means the United States Department of Housing and Urban 
Development.
    Low-income means the income of individuals who are members of 
families whose incomes do not exceed 80 percent of the median income 
for their respective areas as defined by HUD.
    Operational area means the geographic area in which the CDC 
proposes to carry out and promote activities under the Act.
    Population Census Tract means a census tract, or, if census tracts 
are not defined for the area, a block numbering area.
    Poverty means the number of persons listed as being at or below the 
poverty level in the 1990 Decennial Census;
    Qualified low-income assistance means assistance which is:
    (1) Designed to provide employment of, and business opportunities 
for, low-income individuals who are residents of the operational area 
of the CDC; and
    (2) Approved by the Secretary of HUD for use by a selected CDC 
within its operational area.
    Secretary means the Secretary of HUD.
    Urban area means any area that lies inside a Metropolitan Area 
(MA), as designated by the Office of Management and Budget, or an area 
that is outside of an MA where the local government either has a 
population of 20,000 or documents the urban character of the area.

III. Eligible CDCs

    An eligible CDC is one that meets the following criteria:
    (1) It is a tax-exempt corporation as described in section 
501(c)(3) of the IRS Code and is exempt from taxes under section 501(a) 
of the IRS Code;
    (2) Its principal purposes include promoting employment and 
business opportunities for low-income individuals who are residents of 
its operational area;
    (3) Its operational area must meet the size requirements set forth 
in section 1392 of the IRS Code:
    (i) It does not exceed 20 square miles if an urban area or 1,000 
square miles if a rural area;
    (ii) It has a boundary which is continuous, or, except in the case 
of a rural area located in more than one State, consists of not more 
than three noncontiguous parcels;
    (iii) In the case of an urban area, it is located entirely within 
no more than two contiguous States; and in the case of a rural area, it 
is located entirely within no more than three contiguous States; and
    (iv) It does not include any portion of a central business district 
(as such term is used for purposes of the most recent Census of Retail 
Trade) unless the poverty rate for each population census tract in such 
district is not less than 35 percent (30 percent in the case of an 
Enterprise Community).
    (4) Its operational area is experiencing unemployment at a rate (as 
determined by the appropriate, most recently available data published 
by the U.S. Bureau of Labor Statistics) that is not less than the 
national unemployment rate; and
    (5) The median family income of residents of such area does not 
exceed 80 percent of the median gross income of residents in the 
jurisdiction of the local government which includes such area.
    Note that a CDC and its respective operational area are not 
statutorily required to be located in or associated with any 
Empowerment Zone or Enterprise Community application or designation. 
However, the Secretary will consider whether a CDC applicant under this 
Notice is nominated along with the submission of a draft of the 
strategic plan for a nominated Empowerment Zone/Enterprise Community.

IV. Request for Consideration

    In order to make a designation, HUD must conclude that a CDC meets 
the statutory provisions for eligible applicants. In addition to other 
appropriate documentation, HUD will accept the following documentation 
as evidence that a CDC meets the eligibility requirements for 
selection:
    (1) Section 501(c)(3) status--A copy of IRS form 1023, Application 
for Recognition of exemption under section 501(c)(3). That contains the 
CDC's IRS approval number;
    (2) Purpose--A copy of the CDC's executed Articles of 
Incorporation, or equivalent, describing the organization's purpose 
and, if applicable, any other companion document describing the 
organization's purpose demonstrating that its principal purposes 
include promoting employment and business opportunities for low-income 
individuals who are residents of its area of operation;
    (3) Area of operation--A map showing the CDC's area of operation. 
The map should show census tract boundaries. Alternatively, a CDC may 
submit a map with its area of operation and a listing of the census 
tracts covered by its area of operation. Note that the CDC's 
operational area cannot exceed the size requirements for an Empowerment 
Zone as described in Section III of this Notice;
    (4) Unemployment rate--A statement of the most recent unemployment 
rate for the CDC's operational area (note that if the CDC's operational 
area is less than a county or metropolitan area, then the unemployment 
rate must be provided for the area that is the closest to the CDC's 
operational area; if greater than a county or metropolitan area, a 
proportional average of the rates for the jurisdictions served must be 
provided); and
    (5) Median family income of the CDC's operational area--The CDC 
must provide the median family income of the residents of its 
operational area. Median family income should be based upon information 
in the 1990 Decennial Census.

V. Additional Documentation for Consideration

    A CDC should provide the following documentation as evidence of its 
commitment and capability to carry out the intent of the statute and 
the Secretary's criteria for selection as outlined in section VIII of 
this Notice:
    (1) Utilization of qualified CDC contribution--The CDC must 
describe how, if it is selected by the Secretary and authorized to 
receive ``qualified CDC contributions'' under the Act, its program(s) 
is designed to use such contributions to provide employment of, and 
business opportunities for, low-income individuals who are residents of 
the CDC's operational area. Such description would include, but not be 
limited to, the following:
    (i) The CDC's current programs that have provided employment and 
business opportunities for low-income residents of its operational area 
for the last three years, including number of jobs created or 
businesses assisted for low-income residents of its operational area; 
the types of jobs and businesses, and their application to community 
needs; and a discussion of the programs' design and implementation, 
including successes and failures;
    (ii) A discussion of how the CDC's proposed program(s) builds upon 
its existing programs or serves a need that is not being met by its 
current programs;
    (iii) How the CDC will create linkages between human development, 
economic development, and housing development in its operational area;
    (iv) A description of how the CDC's staff will be available to 
carry out the program(s) and its capacity to do so, including the 
submission of its most recent operating statement and annual report;
    (v) The nature of the expected, qualified contributions to the CDC 
(e.g., outright grants, loans, long-term equity investments such as 
general or limited partnerships, etc.).
    (vi) A description of the CDC's past and current capacity for 
administering tax-preferred donations and investments.
    If a CDC has been actively operating for less than three years, it 
should describe its programs and provide its financial statements for 
each year since its inception.
    (2) Collaborative partnerships within the community--The CDC should 
describe the collaborative partnerships that it carries out within its 
community among residents (particularly low-income residents), 
neighborhood organizations, community and local businesses, financial 
institutions, and local and State governments. The description should 
discuss all phases of involvement of the above groups, including 
participation of low-income residents on its Board of Directors; 
participation of businesses and financial institutions in its financing 
and their technical assistance in carrying out the CDC's program(s); 
and participation of the CDC in limited partnerships, if any, with 
other not-for-profit and for-profit entities.
    (3) Participation in developing and carrying out a strategic plan--
If the unit(s) of general local government in which the CDC's 
operational area is located is applying for designation as a Federal 
Empowerment Zone or Enterprise Community, the CDC should describe the 
extent to which it is participating in the design of a comprehensive, 
strategic plan to serve the Zone or Community. The CDC should also 
describe the extent to which its proposed program(s) will further the 
implementation of such a strategic plan. In the event the local 
government is not applying for such designation, the CDC should 
describe the extent to which it is carrying out or developing its own 
strategic plan in partnership with other organizations, institutions, 
businesses and groups within the CDC's operational area.
    (4) Desired designation--The CDC must state whether it desires an 
urban or rural designation. Designees can receive only one designation.
    (5) Agreement to provide progress reports--The CDC must state that 
it agrees to provide annual reports on the status and progress of its 
operations and projected program(s). HUD may revoke a CDC's designation 
at any time if reports are not provided upon request, or if a CDC's 
program(s) does not demonstrate satisfactory progress in meeting 
commitments set forth in its application.

VI. Selection of CDCs

    Requests will be accepted and reviewed in accordance with this 
Notice, and will be selected at the sole discretion of the Secretary. 
Requests must be submitted to the address set out at the beginning of 
this Notice under ADDRESSES.
    Requests must be received at the above address by 5 p.m. Eastern 
Time on May 16, 1994. Responsibility to make a timely submission is the 
sole responsibility of the CDC.

VII. Threshold Review

    A request for designation will not receive consideration for 
designation if the CDC fails to demonstrate by its submission that:
    (1) It is a section 501(c)(3) corporation exempt from tax under 
section 501(a) of the Internal Revenue Code;
    (2) The principal purposes of the organization include promoting 
employment of and business opportunities for low-income individuals of 
its operational area;
    (3) Its operational area meets the size requirements set out in 
Section III of this Notice;
    (4) The unemployment rate (as determined by the appropriate 
available data) is not less than the national unemployment rate;
    (5) The median family income of residents of its operational area 
does not exceed 80 percent of the median income of residents of the 
jurisdiction of the local government that includes such area; and
    (6) An agreement has been legally executed by the chief executive 
officer of the CDC stating that if selected by the Secretary in 
fulfillment of the Act that the CDC will provide a report on its 
progress in carrying out the commitments in its application no later 
than December 31 of each calendar year for the 10 years following the 
date of its designation, and will cooperate in any review of its 
operations that HUD may deem necessary.

VIII. Final Selection

    On behalf of the Secretary, HUD's Office of Community Planning and 
Development will administer the processing of all applications and 
selection of the CDCs to be designated.
    All requests that meet the threshold review will be considered for 
final selection based on documentation received in response to Section 
V of this Notice and on criteria that demonstrate CDCs' capacity, 
capabilities and commitment to maximize the use of qualified 
contributions for the purposes set forth in the Act.
    In accordance with the following criteria, applicants are 
encouraged to submit any additional materials that may be pertinent to 
demonstrating relevance to these criteria:
    (1) The extent to which its programs have provided employment and 
business opportunities for low-income residents of its operational area

    (Note: Priority shall be given to corporations with a 
demonstrated record of performance in administering community 
development programs which target at least 75 percent of the jobs 
emanating from their investment funds to low income or unemployed 
individuals;

    (2) How proposed program(s), as a result of a successful 
designation, will provide employment and business opportunities for 
low-income residents of its operational area;
    (3) Linkages that the CDC will establish on its own initiative, or 
through comprehensive planning with other organizations and agencies in 
furthering human, economic, and housing development;
    (4) The strength and breadth of the collaborative partnerships in 
which it participates in its community, including its residents 
(particularly low-income residents), community organizations, community 
and local businesses, financial institutions, and local and State 
governments, in the design and implementation of a program that 
provides employment and business opportunities for low-income residents 
of its operational area;
    (5) The extent to which the CDC, if it has been involved in housing 
development, can demonstrate that its programs have contributed to the 
provision of housing for low- and moderate-income persons of the 
locality or operational area; and if it has not been involved in 
housing development, then the extent to which its programs have 
contributed to such provision.
    (6) If the unit(s) of general local government comprising the whole 
or a part of the CDC's operational area is applying for Federal 
designation as an Empowerment Zone or Enterprise Community, the extent 
of the CDC's involvement in development and implementation of a 
strategic plan for the Zone or Community;
    (7) The extent to which the CDC's staff will be available to carry 
out its proposed program(s) and its capacity to do so;
    (8) The extent to which its past programs have and/or its proposed 
program(s) will contribute to the elimination or prevention of 
discriminatory housing practices and have and/or will promote 
investment in communities in which low income and/or racial/ethnic 
minorities are the predominant residents;
    (9) The degree to which the design of the CDC's program(s) and 
resultant products are creative and innovative;
    (10) The extent of all public and private funding sources that will 
be leveraged by the contributions that are projected to receive tax 
credits and the estimated amounts of those commitments.
    Consideration will also be given to the location of the CDCs' 
defined operational areas to achieve geographic and other forms of 
diversity, where possible.

IX. Other Matters

    National Environmental Policy Act. A Finding of No Significant 
Impact with respect to the environment required by the National 
Environmental Policy Act (42 U.S.C. 4321-4374) is unnecessary, since 
the Department has determined that the selection process under this 
notice is categorically excluded from the Department's regulations 
implementing the National Environment Policy Act at 24 CFR 50.20.
    Executive Order 12606. The General Counsel, as the Designated 
Official under Executive Order No. 12606, The Family, has determined 
that this notice will not have a significant impact on family 
formation, maintenance, or well-being. The notice sets out the process 
by which the Secretary will select CDCs to which contributions by 
taxpayers will qualify for tax credits.
    Executive Order 12611. The General Counsel, as the Designated 
Official under section 6(a) of Executive Order No. 12611, Federalism, 
has determined that this notice will not involve the preemption of 
State law by Federal statute or regulation and will not have Federalism 
implications. The selection process envisioned by the notice qualifies 
contributions to those CDCs selected for tax credits under the Internal 
Revenue Code. This process will not affect the distribution of power 
and responsibility among the various levels of government.

    Dated: March 2, 1994.
Andrew Cuomo,
Assistant Secretary for Community Planning and Development.
[FR Doc. 94-6593 Filed 3-21-94; 8:45 am]
BILLING CODE 4210-29-P