[Federal Register Volume 62, Number 65 (Friday, April 4, 1997)]
[Notices]
[Pages 16461-16464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8784]
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DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund
Notice of Funds Availability (NOFA) Inviting Applications for the
Community Development Financial Institutions (CDFI) Program--
Intermediary Component
AGENCY: Community Development Financial Institutions Fund, Department
of the Treasury.
ACTION: Notice of Funds Availability (NOFA) inviting applications.
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SUMMARY: The Community Development Banking and Financial Institutions
Act of 1994 (12 U.S.C. 4701 et seq.) (hereafter referred to as the
``Act'') provides authority for the Community Development Financial
Institutions Fund (hereafter referred to as ``the Fund'') to select and
provide assistance to eligible applicants under the Community
Development Financial Institutions (``CDFI'') Program. The revised
interim rule (12 CFR part 1805), published elsewhere in this issue of
the Federal Register, provides guidance on the contents of necessary
application materials and program requirements. This Notice is in
connection with two
[[Page 16462]]
competitive rounds of a new intermediary component of the CDFI Program.
This intermediary component will provide financial assistance to CDFIs
that provide financing primarily to other CDFIs and/or to support the
formation of CDFIs. The Fund currently anticipates making awards of
between $5.0 million and $7.5 million in appropriated funds pursuant to
this Notice. Also being published elsewhere in this issue of the
Federal Register is a separate Notice in connection with the core
component of the CDFI Program, with respect to which the Fund intends
to make available up to $32.5 million in appropriated funds.
DATES/TWO ROUNDS: Applications may be submitted at any time after April
4, 1997. Applications will be evaluated competitively for the
intermediary component in two separate rounds. For the first round, the
deadline for receipt of an application is 6 p.m. Eastern Standard Time
on Friday, May 16, 1997. For the second round, the deadline for receipt
of an application is 6 p.m. Eastern Standard Time on Friday, June 20,
1997. Applications received after the deadline for the first round but
before the deadline for the second round will be considered as part of
the second round. Applications received after the deadline for the
second round will not be accepted and will be returned to the sender.
An applicant may apply in each round. Applications sent to the Fund by
facsimile will not be accepted.
The Fund anticipates making available at least $5 million in
appropriated funds pursuant to this Notice. If less than $2.5 million
in appropriated funds is awarded in the first round, the amount of
available funds for the second round will be $5 million less the amount
awarded in the first round. If $2.5 million or more is awarded during
the first round, the amount of available funds for the second round
will be $2.5 million. As of the date of this Notice, for the two rounds
combined, the Fund intends to award no more than $7.5 million in
appropriated funds. The Fund reserves the right to award higher or
lower amounts in each round, and for the two rounds combined, than the
amounts described above, depending on the quality of applications
received in each round.
The anticipated maximum aggregate award per applicant under this
Notice (i.e. for both rounds combined) is $1.25 million. However, the
Fund, in its sole discretion, reserves the right to award amounts in
excess of $1.25 million for an applicant(s) if it deems it appropriate.
ADDRESSES: Applications must be sent to: The Community Development
Financial Institutions Fund, U.S. Department of the Treasury, 1500
Pennsylvania Avenue, NW., Washington, DC 20220.
FOR FURTHER INFORMATION CONTACT: The Community Development Financial
Institutions Fund, U.S. Department of the Treasury, 1500 Pennsylvania
Avenue, NW., Washington, DC 20220, (202) 622-8662. (This is not a toll
free number.) If you have any questions about the regulations, this
Notice or the application packet, you may call or write to the Fund at
the above telephone number or address, or you may send questions by
facsimile to (202) 622-7754. To request an application packet, please
send by facsimile a written request which includes the name of the
requester, organization, mailing address, telephone number and
facsimile number. Requests for an application packet should be sent by
facsimile to (202) 622-2599, which is the facsimile number being used
to receive requests for an application packet.
SUPPLEMENTARY INFORMATION:
I. Background
Credit and investment capital are essential ingredients in creating
and retaining jobs, developing affordable housing, starting or
expanding businesses, revitalizing neighborhoods, and empowering
people. As a key urban and rural policy initiative, the CDFI Program is
facilitating the creation of a national network of financial
institutions that are specifically dedicated to community development.
This strategy will build strong institutions that make loans and
investments and provide services to economically distressed investment
areas and disadvantaged targeted populations. This Notice is in
connection with a new intermediary component of the CDFI Program.
Elsewhere in this issue of the Federal Register, the Fund is
publishing a new Notice of Funds Availability for financial and
technical assistance to CDFIs pursuant to the direct funding approach
used in the first round. That separate Notice is in connection with the
core component of the CDFI Program, and the Fund anticipates that for
the foreseeable future, the Fund will devote the great bulk of the
financial assistance available for the CDFI Program to this core
component. In the separate Notice for the core component, the Fund is
making available up to $32.5 million in appropriated funds.
The Fund also recognizes that to address the diverse needs and take
full advantage of the enormous potential of the growing CDFI industry,
it is important that the Fund be on the cutting edge of innovation by
expanding the tools it utilizes to assist CDFIs. This Notice in
connection with an intermediary component of the CDFI Program is one
part of a broader effort to develop and make available such new tools.
The Fund recognizes that there are in existence certain
intermediary CDFIs, and others may be created over time, that focus
their financing activities primarily on financing other CDFIs. Such
institutions may have knowledge and capacity to develop and implement a
specialized niche or niches in their financing of CDFIs and/or CDFIs in
formation. The Fund believes that providing financial assistance to
such intermediaries can be an effective way to expand its support of
the CDFI industry. To illustrate the concept of an intermediary CDFI
with a few examples, an intermediary may have a specialized niche or
niches focusing on financing a specific type or types of CDFIs,
providing small amounts of capital per CDFI, financing CDFIs with
specialized risk levels, or financing institutions seeking to become
CDFIs. By providing financial assistance to specialized intermediaries,
the Fund believes it can leverage the expertise of such intermediaries
and strengthen the Fund's capacity to support the development and
enhancement of the CDFI industry. This Notice invites applications from
CDFIs, and organizations seeking to become CDFIs, that are or plan to
become such a specialized intermediary, focusing on providing loans to
or investments in other CDFIs and/or to support the formation of CDFIs.
This Notice is not intended and should not be construed to allow an
applicant to file a joint application on behalf of a group of other
CDFIs, but rather to provide financial assistance to intermediaries who
have criteria for financing, in arms length transactions, other CDFIs
and/or to support the formation of CDFIs.
This Notice implements the intermediary component by using two
competitive rounds. This should expedite the ability of intermediary
CDFIs to provide financing to other CDFIs, and should assist the
ability of the intermediary component of the CDFI Program to work
effectively with the core component in a mutually supportive manner.
Many CDFIs will be facing the decision of whether they should devote
the substantial time and effort necessary to prepare an application,
due by June 20, 1997, in response to the core component Notice
[[Page 16463]]
published elsewhere in this issue of the Federal Register. Given what
is expected to be the highly competitive nature of the core component
round, many CDFIs may decide not to apply for the core component, but
instead to concentrate on seeking assistance from an intermediary.
The Fund believes, however, that there may be some intermediary
organizations that wish to apply for assistance in response to this
intermediary component Notice, that will need more time to submit a
quality application than is provided by the May 16, 1997, deadline for
the first round. Such organizations may apply in the second round by
the June 20, 1997, deadline.
II. Eligibility
An applicant for assistance pursuant to this Notice must meet the
eligibility requirements set forth in Sec. 1805.200. In addition,
pursuant to Sec. 1805.200(a)(3), this Notice is limited to applicants
that satisfy the following requirements: (1) The applicant's financings
(loans and/or development investments) must primarily focus on
financing other CDFIs and/or supporting the formation of CDFIs; and (2)
if the applicant is not a CDFI at the time of application, the
application shall include a realistic plan for the applicant to become
a CDFI within one year of the date on which the Fund approves the
applicant for financial assistance (which period may be extended at the
sole discretion of the Fund). In no event will the Fund disburse
assistance to the applicant until the applicant can be certified as a
CDFI.
III. Types of Assistance
An applicant may submit an application for financial assistance in
the form of an equity investment, loan, or grant (or a combination of
these financial assistance instruments). Applicants for financial
assistance shall indicate the dollar amount, form, terms, and
conditions of assistance requested. The Fund will not accept
applications for technical assistance pursuant to this Notice.
Since an intermediary that is selected pursuant to this Notice must
be a CDFI when funded, its predominant business activity must be the
provision of loans and/or development investments. Thus, even if an
intermediary applicant receives a grant from the Fund, the Fund will
normally expect that the intermediary will use such grant to enhance
its ability to make loans and/or development investments in CDFIs or to
support the formation of CDFIs. However, the Fund will consider
requests by an intermediary applicant to utilize Fund assistance to
enhance the ability of the intermediary to make grants to CDFIs or to
support the formation of CDFIs, as long as the intermediary applicant
makes a persuasive case that using Fund assistance in this manner will
further the purposes of the Act, and as long as the intermediary's
predominant business activity will remain the provision of loans and/or
development investments.
IV. Application Packet
Except as described hereafter, an applicant shall submit the
materials described in Sec. 1805.701 and the application packet. To
facilitate coherence and avoid duplication, an applicant may present
its application in an order and format that it believes to be the most
appropriate, provided that the requested information is included and
that an index is provided to assist the Fund in locating the items
requested by Sec. 1805.701.
If an applicant is currently certified as a CDFI, it may, at its
option, submit a copy of the letter of certification in lieu of the
information requested in Part III, A through H, of the application
packet. However, an applicant should include in its application
information that it believes is relevant to the substantive review of
the application specified in Sec. 1805.802(b).
Since the target markets served by an applicant pursuant to this
Notice will depend on the target markets served by CDFIs funded by the
applicant, the applicant need not fill out Part III, C. Map of
Investment Area(s), D. Studies or Analyses of Unmet Needs, or L. Target
Market Designation, or the Investment Area Designation Worksheet.
Instead the applicant should describe its target markets, which
description may be general in nature and may include target markets
that are regional or national in scope. The application should include
a general description and analysis of target markets served by CDFIs
and/or CDFIs in formation which the applicant currently finances, and
what changes in such target markets, if any, may be expected if the
applicant receives financial assistance from the Fund. If applicable,
the applicant should provide a list of CDFIs or CDFIs in formation that
it has financed, and the amount and form of financing, over at least
the last three years.
V. Matching Funds
Applicants pursuant to this Notice may use for matching funds
monies obtained or legally committed on or after January 1, 1996.
Applicants selected to receive assistance under this Notice must have
firm commitments for the matching funds required pursuant to
Sec. 1805.600 by no later than August 31, 1997. The Fund may recapture
and reprogram funds if an applicant fails to raise the required match
by such date. The Fund reserves the right to extend such matching funds
deadline for specific applicants selected for assistance if the Fund
deems it appropriate.
VI. Selection Factors
Applications will be selected on a competitive basis in accordance
with criteria described in 12 CFR 1805.800 to 1805.802. The Fund has
sole discretion in the selection of applications for assistance.
Special emphasis is expected to be placed on:
(1) The applicant's track record, financial strength, and current
operations;
(2) The capacity, skills, and experience of the management team;
(3) The quality of the applicant's comprehensive business plan;
(4) The likelihood that the applicant will be able to raise the
required matching funds; and
(5) The extent and nature of the potential community development
impact that would be catalyzed by the Fund's assistance, relative to
the amount of such assistance to be provided.
The applicant's track record, financial strength, and current
operations are important to the extent they may be suggestive about the
prospects for success in the future. In the case of a young or start-up
institution with no or a limited track record, extra emphasis will be
placed on the capacity, skills, and experience of the applicant's
management team and the quality of its comprehensive business plan.
For the purposes of evaluating applications submitted pursuant to
this Notice, the Fund will evaluate the extent to which provision of
financial assistance by the Fund to an applicant is likely to add
substantial benefits to the CDFI industry, above and beyond what the
Fund can expect to accomplish with its core component. Thus an
applicant having a specialized niche or niches is important. At the
same time, the Fund is seeking to assist intermediaries whose potential
customer base has broad applicability. For example, the Fund does not
seek to provide financial assistance to an intermediary that has a
narrow list of preselected CDFIs it wishes to finance. The Fund seeks
to finance intermediaries that have a more open-ended potential
applicant pool and
[[Page 16464]]
which will be making an independent evaluation of each application,
based on criteria specified in the intermediary applicant's
comprehensive business plan. Moreover, the Fund may give a preference
to applicants that serve or expect to serve CDFIs or CDFIs in formation
in a multi-state area or on a national basis, as opposed to a single
state.
VII. Other Matters
(a) Paperwork Reduction Act. The reader should refer to the revised
interim rule (12 CFR part 1805) published separately in today's Federal
Register for details on the information collection requirements of the
rule and this Notice.
(b) Environmental Impact. Pursuant to Treasury Directive 75-02, the
Department of the Treasury has determined that implementation of the
CDFI Program under the revised interim rule is categorically excluded
from the National Environmental Policy Act of 1969 (42 U.S.C. 4332) and
does not require an environmental review. The determination is
available for public inspection between 9:30 a.m. and 4:30 p.m.
weekdays at the office of the Fund.
Authority: 12 U.S.C. 4703, 4717: Chapter X, Pub. L. 104-19,
Stat. 237; 12 CFR 1805.700.
Kirsten S. Moy,
Director, Community Development Financial Institutions Fund.
[FR Doc. 97-8784 Filed 4-2-97; 1:09 pm]
BILLING CODE 4810-70-P