[Federal Register Volume 63, Number 206 (Monday, October 26, 1998)]
[Notices]
[Pages 57224-57226]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28515]


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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.) (the ``Act'') authorizes the 
Community Development Financial Institutions Fund (``the Fund'') to 
select and provide assistance to eligible applicants under the 
Community Development Financial Institutions (``CDFI'') Program. The 
interim rule (12 CFR part 1805), which was published in the Federal 
Register on April 4, 1997 (62 FR 16444), provides guidance on the 
contents of application materials and program requirements. This NOFA 
is in connection with the third competitive round of the 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. Subject to the 
availability of funds, the Fund currently anticipates making awards of 
up to $7.5 million in appropriated funds pursuant to this NOFA. The 
Fund reserves the right to fund, in whole or in part, any, all, or none 
of the applications submitted in response to this NOFA. Also being 
published elsewhere in this issue of the Federal Register is a separate 
NOFA in connection with the Core Component of the CDFI Program, with 
respect to which the Fund intends to make available up to $50 million 
in appropriated funds.

DATES: Applications may be submitted at any time after October 26, 
1998. The deadline for receipt of an application is 6:00 p.m. EST on 
January 19, 1999. Applications received in the offices of the Fund 
after that date and time will be rejected and returned to the sender. 
Applications sent to the Fund electronically or by facsimile will not 
be accepted.
    The Fund anticipates making available up to $7.5 million in 
appropriated funds under this NOFA. The anticipated maximum aggregate 
award per applicant under this NOFA is $1.5 million. However, the Fund, 
in its sole discretion, reserves the right to award amounts in excess 
of $1.5 million for an applicant(s) if it deems it appropriate.

ADDRESSES: Applications shall be sent to: Awards Manager, Community 
Development Financial Institutions Fund, U.S. Department of the 
Treasury, 601 13th Street NW., Suite 200 South, Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT: If you have any questions about the 
program requirements for this program, contact the CDFI Program 
Manager. Should you wish to request an application package or have any 
questions regarding application procedures, contact the CDFI Awards 
Manager. They may be reached by phone at (202) 622-8662, by facsimile 
on (202) 622-7754 or by mail at CDFI Fund, 601 13th Street, NW., Suite 
200 South, Washington, DC 20005. Allow at least one to two weeks for 
the receipt of the application package. Applications and other 
information regarding the Fund and its programs may be downloaded from 
the Fund's website at http://www.treas.gov/cdfi.

SUPPLEMENTARY INFORMATION:

I. Background

    Credit and investment capital are essential ingredients for 
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 NOFA is in 
connection with the Intermediary Component of the CDFI Program.
    Elsewhere in this issue of the Federal Register, the Fund is 
publishing a NOFA for financial and technical assistance to CDFIs 
pursuant to the direct funding approach of the Core Component of the 
CDFI Program. The Fund anticipates that it will devote the great bulk 
of the financial assistance available for the CDFI Program to the Core 
Component. In the separate NOFA for the Core Component, the Fund is 
making available up to $50 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 NOFA in 
connection with the Intermediary Component of the CDFI Program is one 
part of a broader effort to develop and make available such new tools. 
Under the Intermediary Component NOFA, the Fund has an anticipated 
maximum award for $1.5 million per applicant. However, the Fund, in its 
sole discretion, reserves the right to award amounts in excess of the 
anticipated maximum award amount if the Fund deems it appropriate.

[[Page 57225]]

    The Fund recognizes that there are in existence certain 
intermediary CDFIs, and that 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 enhance 
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 NOFA invites 
applications from CDFIs, and organizations seeking to become CDFIs, 
that are or plan to become a specialized CDFI intermediary, focusing on 
providing loans to, or investments in, other CDFIs and/or to support 
the formation of CDFIs. This NOFA 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 that have criteria for financing, in arms-length 
transactions, other CDFIs and/or to support the formation of CDFIs.
    This NOFA implements the third round of the Intermediary Component. 
Many CDFIs will be facing the decision of whether they should devote 
the substantial time and effort necessary to prepare an application, 
due by January 21, 1999, in response to the Core Component NOFA 
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 a CDFI intermediary.

II. Eligibility

    An applicant for assistance pursuant to this NOFA must meet the 
eligibility requirements found in Sec. 1805.200. At the time an entity 
submits an application, the entity must be duly organized and validly 
existing under the laws of the jurisdiction in which it is incorporated 
or otherwise established. In addition, under Sec. 1805.200(a)(3), this 
NOFA 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; or
    (2) If (a) the applicant is not a CDFI; or
    (b) If the applicant's financings do not primarily focus on 
financing and/or supporting the formation of CDFIs at the time of 
application, the application shall include a realistic plan for the 
applicant to meet both criteria (a) and (b) 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 and demonstrates that its 
financings primarily focus on other CDFIs and/or the formation of 
CDFIs.

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 under this NOFA.
    Since an intermediary that is selected under this NOFA must be a 
CDFI when funded, its predominant business activity must, per 
Sec. 1805.701(b)(4), 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 demonstrates to the satisfaction of the Fund 
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.
    If an applicant is currently certified as a CDFI, it may, at its 
option, submit a copy of the letter of certification and the 
certification of material changes form, a copy of which is contained in 
the application package, in lieu of the information requested in Part 
III.B., 1 through 8, 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) and this NOFA.
    Since the target markets served by an applicant under this NOFA 
will depend on the target markets served by CDFIs funded by the 
applicant, the applicant need not fill out Part III.B.3, C. Map of 
Investment Area(s), 4. Studies or Analyses of Unmet Needs, or 9. Target 
Market Designation, or 10. Investment Area Designation Worksheet. 
Instead, the applicant should describe its target markets, which 
description may include target markets that are regional or national in 
scope. The application should include an 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 an all-inclusive 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 responding to this NOFA must obtain matching funds from 
sources other than the Federal Government on the basis of not less than 
one dollar for each dollar of assistance provided by the Fund. Such 
matching funds shall be at least comparable in form and value to the 
assistance provided by the Fund. Non-Federal funds obtained or legally 
committed on or after January 1, 1997 may be considered when 
determining matching funds availability. Applicants selected to receive 
assistance under this NOFA must have firm commitments for the matching 
funds required under Sec. 1805.600 by no later than August 31, 1999. 
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

[[Page 57226]]

assistance if the Fund deems it appropriate.

VI. Evaluation Factors

    Applications will be evaluated on a competitive basis in accordance 
with the criteria described in 12 CFR 1805.802(b) and this NOFA. Also, 
applications will be reviewed for eligibility and completeness purposes 
under 12 CFR 1805.802(a) and this NOFA. The Fund reserves the right to 
conduct eligibility and completeness reviews under Sec. 1805.802(a) and 
this NOFA concurrently with its substantive review under 
Sec. 1805.802(b) and this NOFA.
    In conducting its substantive review, the Fund will initially 
evaluate applications using a 300 maximum point scale as follows:
    (a) Financial Strength and Organizational Capacity (12 CFR 
1805.802(b)(1)), 150 points maximum;
    (1) The applicant's track record, financial strength and current 
operations (including its general financial operations and lending/
investment operations), 25 points for established groups, 5 points for 
start-ups;
    (2) The capacity, skills, and experience of the management team and 
other key personnel (overall organizational structure, lending/
investing activities, community development experience), 75 points for 
established groups, 95 points for start-ups;
    (3) The quality of the comprehensive business plan (identification 
of community needs, market analysis, strategies for addressing needs 
and demand, implementation strategy including any community 
partnerships, and identifying risks and assumptions), 50 points;
    (b) External Resources 12 CFR 1805.802(b)(2), 50 points maximum; 
and
    (c) Community Impact and Community Partnerships (if applicable) 12 
CFR 1805.802(b)(3) and (4), 100 points maximum.
    As shown above, the Fund will utilize two different 150 point 
scales for the Financial Strength and Organizational Capacity criteria 
depending on whether an applicant is deemed by the Fund to be a start-
up organization or an established organization. The Fund defines a 
start-up organization as an entity that has been in operation for less 
than two years. The Fund will find an organization to be a start-up if 
it began incurring operating expenses after October 26, 1996, based on 
a review of submitted income and expense statements and/or other 
statements submitted by an applicant as part of its application. In 
evaluating applications of start-up organizations against the Financial 
Strength and Organizational Capacity criteria, the Fund will place 
greater emphasis on the experience, strength and background of an 
applicant's management team and key personnel than on the breadth and 
depth of its financial resources and trends in operating performance.
    Once the initial evaluation is completed, the Fund will determine 
which applications will receive further consideration for funding based 
on the application scores (standardized if deemed appropriate), the 
recommendations of the individuals performing the initial reviews and 
the amount of funds available. Those applicants selected for further 
review or a second stage evaluation may receive an on-site interview 
conducted by Fund staff in accordance with 12 CFR 1805.800 for purposes 
of obtaining clarifying or confirming information. A final review panel 
will consider the results of the initial and second stage evaluations 
and the geographic and institutional diversity of the target markets of 
those applicants being considered for funding under 12 CFR 
1805.802(b)(5). The final review panel will make recommendations to the 
Fund's selecting official.
    While previous awardees are eligible to apply under this NOFA, such 
applicants should be aware that success in a previous round should not 
be considered indicative of the likelihood of success under this NOFA. 
At the same time, organizations will not be penalized for having 
received awards in a previous round or rounds, except to the extent 
provided by 12 CFR 1805.502(a) which prohibits the Fund, except in 
certain circumstances, from providing more than $5 million in 
assistance to any organization and its subsidiaries and affiliates 
during any three-year period.
    The anticipated maximum award per applicant under this NOFA is $1.5 
million. However, the Fund, in its sole discretion, reserves the right 
to make individual award amounts in excess of $1.5 million if it deems 
it appropriate.

VII. Workshops

    The Fund expects to host workshops in November and December of this 
year to disseminate information to organizations interested in applying 
for assistance under this NOFA. If you wish to be on a mailing list to 
receive information about such workshops, please fax your request to 
the Fund.

    Authority: 12 U.S.C. 4703, 4703 note, 4704, 4706, 4707, and 
4717; 12 CFR part 1805.700.

    Dated: October 20, 1998.
Maurice A. Jones,
Deputy Director for Policy and Programs, Community Development 
Financial Institutions Fund.
[FR Doc. 98-28515 Filed 10-23-98; 8:45 am]
BILLING CODE 4810-70-P