[Federal Register Volume 85, Number 89 (Thursday, May 7, 2020)]
[Notices]
[Pages 27275-27278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09747]


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DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund


Notice of Information Collection and Request for Public Comment

ACTION: Notice and request for public comment.

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SUMMARY: The Department of the Treasury, as part of its continuing 
effort to reduce paperwork and respondent burden, invites the general 
public and other Federal agencies to take this opportunity to comment 
on proposed and/or continuing information collections, as required by 
the Paperwork Reduction Act of 1995. Currently, the Community 
Development Financial Institutions Fund (CDFI

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Fund), Department of the Treasury, is soliciting comments concerning 
the Community Development Financial Institutions Program--Certification 
Application, which Applicants will submit through the CDFI Fund's 
Awards Management Information System (AMIS).

DATES: Written comments must be received on or before August 5, 2020 to 
be assured of consideration.

ADDRESSES: Submit your comments via email to Tanya McInnis, Program 
Manager for the Office of Certification, Compliance Monitoring and 
Evaluation, CDFI Fund, at [email protected].

FOR FURTHER INFORMATION CONTACT: Tanya McInnis, Program Manager for the 
Office of Certification, Compliance Monitoring and Evaluation, 
Community Development Financial Institutions Fund, U.S. Department of 
the Treasury, 1500 Pennsylvania Ave. NW, Washington DC 20220 or by 
phone at (202) 653-0300. Other information regarding the CDFI Fund and 
its programs may be obtained through the CDFI Fund's website at http://www.cdfifund.gov.

SUPPLEMENTARY INFORMATION: 
    Title: Community Development Financial Institutions Program--
Certification Application.
    OMB Number: 1559-0028.
    Type of Review: Regular Review.
    Abstract: A certified Community Development Financial Institution 
(CDFI) is a specialized financial institution that works in markets 
that are underserved by traditional financial institutions. CDFIs 
provide a range of financial products and services in economically 
distressed target markets, such as mortgage financing for low-income 
and first-time homebuyers and not-for-profit developers, flexible 
underwriting and risk capital for needed community facilities, and 
technical assistance, commercial loans and investments to small start-
up or expanding businesses in low-income areas. CDFIs include regulated 
institutions such as community development banks and credit unions, and 
non-regulated institutions such as loan and venture capital funds. CDFI 
certification is a designation conferred by the CDFI Fund and is a 
requirement for accessing Financial Assistance awards from the CDFI 
Fund through the CDFI Program and Native American CDFI Assistance 
Program, and bond guarantees through the CDFI Bond Guarantee Program, 
as well as certain benefits under the Bank Enterprise Award Program, to 
support an organization's established community development financing 
programs. A financial institution seeking to become a Certified CDFI 
and qualify to access assistance from the CDFI Fund must complete the 
CDFI Certification Application.
    The CDFI Fund is authorized by the Riegle Community Development 
Banking and Financial Institutions Act of 1994 (Pub. L. 103-325, 12 
U.S.C. 4701 et seq.) (the Act). The regulations governing CDFI 
certification are found at 12 CFR. 1805.201 (the Regulations). 
Capitalized terms found in this notice are defined in the regulations 
that govern the CDFI Program, at 12 CFR 1805.104.
    Since 1997, the universe of Certified CDFIs has grown from 196 to 
nearly 1,100 organizations, with nearly $159 billion in total assets 
and headquarters in all fifty states, the District of Columbia, Guam, 
and Puerto Rico. The significance of CDFI Certification also has 
increased over the years, as CDFI status has come to serve as a 
qualifier for other Federal government and private sector programs and 
benefits.
    As part of a review to ensure the CDFI Certification policies and 
procedures continue to meet the statutory and regulatory requirements, 
are responsive to the evolving nature of the CDFI industry, and protect 
government resources, the CDFI Fund published a Request for Information 
(RFI) in January 2017 seeking comments from the public regarding 
current CDFI Certification policies and procedures. The public 
responded to the RFI with 28 letters and over 200 pages of comments.
    The revised application reflects changes to CDFI Certification 
policy that resulted from this review. In developing the revised 
policies and application, the CDFI Fund maintained five policy 
objectives:
    1. Continue to foster a diversity of CDFI types, activities, and 
geographies;
    2. Support the growth and reach of CDFIs, especially as it relates 
to their ability to innovate and take advantage of new technologies;
    3. Protect the CDFI brand;
    4. Minimize burden on CDFIs while improving data quality and 
collection methods; and
    5. Promote efficiency for CDFI Fund staff in rendering CDFI 
Certification determinations.
    The revised Certification policies and application attempt both to 
provide the flexibility necessary for CDFIs to grow and to serve the 
hardest to reach distressed communities, and to maintain the integrity 
of what it means to be a certified CDFI from a mission perspective. In 
addition, where existing policy was considered appropriate, changes 
were made to the application and guidance to provide greater 
transparency and clarity around the criteria that entities must meet to 
obtain and maintain CDFI Certification. (Currently certified CDFIs, 
following a sufficient grace period, will be expected to demonstrate 
compliance with the revised policies in order to maintain their 
certification.)
    In addition to revisions to reflect changes in policy, the 
application form incorporates new tools to ease the burden on 
Applicants. In place of the existing paper application, Applicants will 
be able to complete the revised application in the CDFI Fund's Award 
Management Information System (AMIS). This will streamline the process 
by pulling data provided by Applicants elsewhere in AMIS to auto-
complete portions of the application. The use of AMIS furthermore will 
reduce the overall number of questions an Applicant is required to 
answer by presenting only those relevant to the Applicant, as 
determined by entity type and/or responses to other questions in the 
application.
    The revised application also will pull data provided by the 
Applicant through a new data collection tool, the Certification 
Transaction Level Report (CTLR). The CTLR provides a method to evaluate 
the extent to which an entity serves distressed areas and underserved 
populations. Data provided through the CTLR will be used to 
automatically complete portions of the CDFI Certification Application 
and determine the share of an entity's Financial Products and/or 
Financial Services that are deployed to the entity's proposed Target 
Market(s). For additional information on the CTLR, see OMB 1559-0046.
    With the CTLR, the existing ``Target Market CY'' and ``Target 
Market FYE'' sections of the application will be eliminated. Data 
collected through the CTLR also will facilitate revised policies that 
allow for the elimination of the Target Market mapping requirement for 
most Applicants. Although the revised application includes a number of 
new questions, the CDFI Fund anticipates that the overall effect of the 
changes to the application will be a net reduction in burden to 
Applicants.
    Affected Public: Businesses or other for-profit institutions, non-
profit entities, and State, local, and Tribal entities participating in 
CDFI Fund programs.
    Estimated Number of Respondents: 150.
    Estimated Annual Time per Respondent: 35 hours.

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    Estimated Total Annual Burden Hours: 5,250 hours.
    Request for Comments: Comments submitted in response to this notice 
will be summarized and/or included in the request for OMB approval. All 
comments will become a matter of public record at http://www.cdfifund.gov. The CDFI Fund is seeking input on the content of the 
revised CDFI Certification Application. The application and related 
guidance may be obtained on the CDFI Fund's website at https://www.cdfifund.gov/programs-training/certification/cdfi/Pages/default.aspx. Comments are invited on all aspects of the information 
collection, but commentators may wish to focus particular attention on: 
(a) The cost for CDFIs to operate and maintain the services/systems 
required to provide the required information; (b) ways to enhance the 
quality, utility, and clarity of the information to be collected, 
including which data might be useful to publish to provide the public a 
concise organizational profile of each certified CDFI's Financial 
Products, Financial Services, Asset Size, and Target Markets; (c) 
whether the collection of information is necessary for the proper 
evaluation of the effectiveness and impact of the CDFI Fund's programs, 
including whether the information has practical utility; (d) the 
accuracy of the CDFI Fund's estimate of the burden of the collection of 
information, and; (e) ways to minimize the burden of the collection of 
information including through the use of technology.
    In addition, the CDFI Fund requests comments in response to the 
following questions:
    1. Is the information that will be collected by the revised 
application necessary and appropriate for the CDFI Fund to consider for 
the purpose of CDFI certification?
    2. Are certain questions or tables redundant or unnecessary?
    3. Should any questions or tables be added to ensure collection of 
relevant information?
    4. Are there questions where the intent or the purpose of the 
question is not clear? If so, which questions, and what needs to be 
clarified in order to provide a comprehensive response?
    5. Are there questions that would require additional guidance to 
respond adequately? If so, which questions, and what type of 
instructions would be helpful in order to be able to provide a 
response?
    6. What is a reasonable grace period for currently certified CDFIs 
to come into compliance with the new certification criteria?
    7. Currently applicants are allowed to submit CDFI Certification 
Applications at any time throughout the year. The CDFI Fund is 
considering transitioning to a quarterly submission schedule, which 
would allow applicants to submit CDFI Certification Applications only 
within a specific time period every three months. Should the CDFI Fund 
transition to a quarterly CDFI Certification Application cycle?
    Primary Mission--Financial Products and Services: The Act states 
that a CDFI must have ``a primary mission of promoting community 
development.'' Further, the Regulations state that, ``In determining 
whether an Applicant has such a primary mission, the CDFI Fund will 
consider whether the activities of the Applicant are purposefully 
directed toward improving the social and/or economic conditions of 
underserved people and/or residents of economically distressed 
communities.''
    To strengthen the primary mission test and examine the extent to 
which an entity's Financial Products and Financial Services align with 
that mission, the CDFI Certification Application will evaluate an 
entity's Financial Products and Financial Services, with a focus on the 
strategies, policies, and practices related to the products and 
services offered by that entity.
    Given the CDFI Fund's limited resources to review an entity's 
products or services individually, the application asks entities a 
series of questions and/or attestations about their activities. The aim 
of these questions is to determine, to the extent possible, whether an 
entity--and the Financial Products and Financial Services it offers--
adheres to a set of mission related principles. These include:
     Community Development Intent: Be purposefully directed 
toward improving the social and/or economic conditions of underserved 
people and/or residents of economically distressed communities.
     Responsible Financing Practices: Engage in providing 
products and services in a way that does not harm consumers. Financial 
Products should be affordable and based upon a borrower's ability to 
repay and CDFIs should practice transparency, fair collections, and 
compliance with federal, state, and local laws and regulations.
    The CDFI Fund is considering whether certain practices that do not 
align with these principles should be considered disqualifying for the 
purposes of CDFI Certification.
    Questions Related to Primary Mission--Financial Products and 
Services:
    8. Are the questions in the revised application appropriate to 
determine an entity's community development intent?
    9. Are there other practices related to the provision of Financial 
Products and/or Financial Services that should be considered indicators 
of an entity's community development intent?
    10. Should any of the questions in the application related to 
responsible financing practices be used as a basis to automatically 
disqualify an Applicant from eligibility for CDFI Certification, or are 
there alternative criteria that should be met or used in such a manner?
    11. If there are practices that should be considered either 
disqualifying or a prerequisite for CDFI Certification, should there be 
exceptions for any entities that engage or fail to engage, 
respectively, in such practices and, if so, under what circumstances?
    12. Are there any other practices related to the responsible 
provision of Financial Products, especially those related to mortgage 
or other real estate lending, and to equity investments, for which 
either the presence or absence of which should be considered for 
purposes of CDFI Certification?
    13. For purposes of CDFI Certification, should an entity be 
required to indicate that it offers or engages in at least one or more 
of the types of Financial Services and practices identified in the 
questions on ``Responsible Financing Practices--Financial Services?''
    14. Are there any practices related to the provision of Financial 
Services for which either the presence or absence of which should be 
considered disqualifying for purposes of CDFI Certification?
    Primary Mission--Affiliates: Subsidiaries of Insured Depository 
Institutions (IDIs), Depository Institution Holding Companies (DIHCs), 
and Affiliates or Subsidiaries of DIHCs currently are required by 
statute to meet the certification test collectively. To avoid disparate 
treatment among financial service providers, the CDFI Fund is proposing 
to apply the primary mission test, regardless of entity type, to all 
parent entities and to any Subsidiary or Affiliate that engages in 
financing activities.
    Questions Related to Primary Mission--Affiliates:
    15. Are there circumstances that the CDFI Fund should consider as 
an exception to this rule?
    Target Market--Mapping: Under the new certification policy, 
entities serving an Investment Area consisting solely of

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individual qualified census tracts (i.e., those that the CDFI Fund has 
determined meet one or more of the statutory economic distress 
criteria) as their Target Market will be able to count all activity in 
qualified census tracts toward their Target Market requirements. 
Similarly, entities that serve certain Targeted Populations will be 
able to count all qualifying activity toward their Target Market 
requirements, regardless of location. Currently, for purposes of 
certification, entities are required to identify the specific 
geographic area(s) within which they propose to serve an Investment 
Area(s) and/or Targeted Population(s) as their Target Market. 
Furthermore, only transactions within that specified geographic area(s) 
for which an entity seeks or has received CDFI Certification are 
eligible to count toward the percentage level of Financial Product 
activity to the eligible Target Market(s) required for certification.
    With the revised policies, the CDFI Fund will remove the geographic 
boundaries on most Target Market designations and will measure all of 
an entity's eligible activity to its designated Target Market type(s) 
(i.e., Investment Areas and/or Targeted Populations) toward the 
applicable percentage threshold. This change, in effect, will allow any 
CDFI to serve its designated Target Market type(s) at whatever level it 
is capable, including nationally and/or through the use of financial 
technology, without having to seek additional approval.
    Mapping an entity's geographic Target Market area still will be 
required under certain circumstances. The Regulations permit CDFIs to 
serve an Investment Area consisting of ``a geographic unit that is a 
county (or equivalent area), minor civil division that is a unit of 
local government, incorporated place, census tract, or Indian 
Reservation.'' Furthermore, an entity may designate a Customized 
Investment Area that consists of a group of contiguous geographic units 
that together meet certain identified distress criteria.
    For entities that propose Customized Investment Area Target Markets 
comprised of contiguous geographic units that include non-qualifying 
census tracts, only the activity within the designated Customized 
Investment Area will count toward their Target Market requirements. 
Similarly, CDFIs that have a Target Market consisting of a non-
predesignated Other Targeted Population (OTP) that has been approved 
only at a local level will be able to count activity to that OTP only 
within an approved geographic area.
    Questions Related to Target Market--Mapping:
    16. Are there other circumstances under which the CDFI Fund should 
continue to require entities to map their Target Markets and, by 
implication, limit eligible Target Market activity to such geographic 
areas?
    Target Market--Financial Services: In addition to Financial 
Products, the Regulations allow Financial Services as a means of 
demonstrating that an entity serves a Target Market. The CDFI Fund 
proposes to operationalize the measurement of Financial Services toward 
the Target Market test by providing credit for the number of depository 
accounts offered to an entity's Target Market. Under this policy, 
entities will be able to meet the test if at least 60% of the entity's 
depository accounts and at least 50% of its Financial Products are 
provided to the Target Market.
    Questions Related to Target Market--Financial Services:
    17. Are there other Financial Services that the CDFI Fund should 
consider measuring toward the Target Market test? If so, how should 
they be incorporated into a single measure, with depository accounts, 
of an entity's Financial Services activity?
    18. Are the proposed thresholds for Financial Product and Financial 
Services activity appropriate when both are used to meet the Target 
Market test?
    Accountability: The revised board membership standards emphasize a 
preference for accountability through governing boards (as the source 
of decision-making authority), while providing greater flexibility on 
the geography of board members and their total numbers for entities 
with multiple Target Markets.
    Questions Related to Accountability:
    19. Are any of the revised accountability requirements unduly 
burdensome? Please be specific to type of CDFI (e.g., regulated, non-
profit, private sector) if the requirements create disparate impact.
    20. Are there alternative ways an entity can demonstrate decision-
making accountability to its Target Market(s) that the CDFI Fund should 
consider?
    21. Should the methods to demonstrate accountability differ based 
on type of CDFI (e.g., regulated, non-profit, private sector)?

    Authority: 12 U.S.C. 4703, 4703 note, 4704, 4706, 4707, 4717; 12 
CFR part 1805.

Jodie L. Harris,
Director, Community Development Financial Institutions Fund.
[FR Doc. 2020-09747 Filed 5-6-20; 8:45 am]
 BILLING CODE 4810-70-P