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Federal Register / Vol. 86, No. 41 / Thursday, March 4, 2021 / Notices
1. Award funds received under any other CDFI Fund Program cannot be used by any participant, including Qualified Issuers, Eligible CDFIs, and Secondary Borrowers, to pay principal, interest, fees, administrative costs, or issuance costs including Bond Issuance Fees related to the CDFI Bond Guarantee Program, or to fund the RiskShare Pool for a Bond Issue.
2. Bond Proceeds may not be used to refinance any projects financed and/or supported with proceeds from the Capital Magnet Fund CMF.
3. Bond Proceeds may not be used to refinance a leveraged loan during the seven-year NMTC compliance period.
However, Bond Proceeds may be used to refinance a QLICI after the seven-year NMTC compliance period has ended, so long as all other programmatic requirements are met.
4. The terms Qualified Equity Investment, Community Development Entity, and QLICI are defined in the NMTC Programs authorizing statute, 26
U.S.C. 45D.
J. Relationship and interplay with other Federal programs and Federal funding. Eligible CDFIs may not use Bond Loans to refinance existing Federal debt or to service debt from other Federal credit programs.
1. The CDFI Bond Guarantee Program underwriting process will include a comprehensive review of the Eligible CDFIs concentration of sources of funds available for debt service, including the concentration of sources from other Federal programs and level of reliance on said sources, to determine the Eligible CDFIs ability to service the additional debt.
2. In the event that the Eligible CDFI
proposes to use other Federal funds to service Bond Loan debt or as a Credit Enhancement for Secondary Loans, the CDFI Fund may require, in its sole discretion, that the Eligible CDFI
provide written assurance from such other Federal program in a form that is acceptable to the CDFI Fund and that the CDFI Fund may rely upon, that said use is permissible.
K. Contemporaneous application submission. Qualified Issuer Applications may be submitted contemporaneously with Guarantee Applications; however, the CDFI Fund will review an entitys Qualified Issuer Application and make its Qualified Issuer determination prior to approving a Guarantee Application. As noted above in D 1, review priority will be given to any Qualified Issuer Application that is accompanied by a Guarantee Application.
L. Other restrictions on use of funds.
Bond Proceeds may not be used to
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finance or refinance any trade or business consisting of the operation of any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off-premises. Bond Proceeds may not be used to finance or refinance tax-exempt obligations or to finance or refinance projects that are also financed by tax-exempt obligations if: a Such financing or refinancing results in the direct or indirect subordination of the Bond Loan or Bond Issue to the tax-exempt obligations, or b such financing or refinancing results in a corresponding guarantee of the taxexempt obligation. Qualified Issuers and Eligible CDFIs must ensure that any financing made in conjunction with taxexempt obligations complies with CDFI
Bond Guarantee Program Regulations.
II. General Application Information The following requirements apply to all Qualified Issuer Applications and Guarantee Applications submitted under this NOGA, as well as any Qualified Issuer Applications and Guarantee Applications submitted under the FY 2020 NOGA that were neither withdrawn nor declined in FY
2020.
A. CDFI Certification Requirements.
1. In general. By statute and regulation, the Qualified Issuer applicant must be either a Certified CDFI an entity that has been certified by the CDFI Fund as meeting the CDFI
certification requirements set forth in 12
CFR 1805.201 or an entity designated by a Certified CDFI to issue Bonds on its behalf. An Eligible CDFI must be a Certified CDFI as of the Bond Issue Date and must maintain its CDFI certification throughout the term of the corresponding Bond.
2. CDFI Certification requirements.
Pursuant to the regulations that govern CDFI certification 12 CFR 1805.201, an entity may be certified if it is a legal entity meaning, that it has properly filed articles of incorporation or other organizing documents with the State or other appropriate body in the jurisdiction in which it was legally established, as of the date the CDFI
Certification Application is submitted and meets the following requirements:
a. Primary Mission requirement 12
CFR 1805.201b1: To be a Certified CDFI, an entity must have a primary mission of promoting community development, which mission must be consistent with its Target Market. In general, the entity will be found to meet the primary mission requirement if its
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incorporating documents or boardapproved narrative statement i.e., mission statement or resolution clearly indicate that it has a mission of purposefully addressing the social and/
or economic needs of Low-Income individuals, individuals who lack adequate access to capital and/or financial services, distressed communities, and other underserved markets. An Affiliate of a Controlling CDFI, seeking to be certified as a CDFI
and therefore, approved to be an Eligible CDFI to participate in the CDFI
Bond Guarantee Program, must demonstrate that it meets the primary mission requirement on its own merit, pursuant to the regulations and the CDFI Certification Application and related guidance materials posted on the CDFI Funds website.
b. Financing Entity requirement 12
CFR 1805.201b2: To be a Certified CDFI, an entity must demonstrate that its predominant business activity is the provision of Financial Products and Financial Services, Development Services, and/or other similar financing.
On April 10, 2015, the CDFI Fund published a revision of 12 CFR
1805.201b2, the section of the CDFI
certification regulation that governs the financing entity requirement. The regulatory change creates a means for the CDFI Fund, in its discretion, to deem an Affiliate meaning, in this case, an entity that is Controlled by a CDFI;
see 12 CFR 1805.104b to have met the financing entity requirement based on the financing activity or track record of the Controlling CDFI Control is defined in 12 CFR 1805.104q, solely for the purpose of participating in the CDFI
Bond Guarantee Program as an Eligible CDFI. This change is key to the creation of an AFS for the Bond Guarantee Program see Section IIB2 of this NOGA for more information on the AFS. In order for the Affiliate to rely on the Controlling CDFIs financing track record, A the Controlling CDFI must be a Certified CDFI; B there must be an operating agreement that includes management and ownership provisions in effect between the two entities prior to the submission of a CDFI Certification Application and in form and substance that is acceptable to the CDFI Fund;
and C the Affiliate must submit a complete CDFI Certification Application to the CDFI Fund no later than 11:59
p.m. ET on April 2, 2021 in order it to be considered for CDFI certification and participation in the FY 2021 application round of the CDFI Bond Guarantee Program. This regulatory revision affects only the Affiliates ability to meet the financing entity requirement for purposes of CDFI certification: Said
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