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Federal Register / Vol. 86, No. 41 / Thursday, March 4, 2021 / Notices Affiliate must meet the other certification criteria in accordance with the existing regulations governing CDFI
certification.
i. The revised regulation also states that, solely for the purpose of participating in the CDFI Bond Guarantee Program, the Affiliates provision of Financial Products and Financial Services, Development Services, and/or other similar financing transactions need not be arms-length in nature if such transaction is by and between the Affiliate and Controlling CDFI, pursuant to an operating agreement that a includes management and ownership provisions, b is effective prior to the submission of a CDFI Certification Application, and c is in form and substance that is acceptable to the CDFI Fund.
ii. An Affiliate whose CDFI
certification is based on the financing activity or track record of a Controlling CDFI is not eligible to receive financial or technical assistance awards or tax credit allocations under any other CDFI
Fund program until such time that the Affiliate meets the financing entity requirement based on its own activity or track record.
iii. If an Affiliate elects to satisfy the financing entity requirement based on the financing activity or track record of a Controlling CDFI, and if the CDFI
Fund approves such Affiliate as an Eligible CDFI for the sole purpose of participation in the CDFI Bond Guarantee Program, said Affiliates CDFI
certification will terminate if: A It does not enter into Bond Loan documents with its Qualified Issuer within one 1
year of the date that it signs the term sheet which is an exhibit to the Agreement to Guarantee; B it ceases to be an Affiliate of the Controlling CDFI;
or C it ceases to adhere to CDFI
certification requirements.
iv. An Affiliate electing to satisfy the financing entity requirement based on the financing activity or track record of a Controlling CDFI need not have completed any financing activities prior to the date the CDFI Certification Application is submitted or approved.
However, the Affiliate and the Controlling CDFI must have entered into the operating agreement described in biB above, prior to such date, in form and substance that is acceptable to the CDFI Fund.
c. Target Market requirement 12 CFR
1805.201b3: To be a Certified CDFI, an entity must serve at least one eligible Target Market either an Investment Area or a Targeted Population by directing at least 60% of all of its Financial Product activities to one or more eligible Target Market.

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i. Solely for the purpose of participation as an Eligible CDFI in the FY 2021 application round of the CDFI
Bond Guarantee Program, an Affiliate of a Controlling CDFI may be deemed to meet the Target Market requirement by virtue of serving either:
A An Investment Area through borrowers or investees that serve the Investment Area or provide significant benefits to its residents pursuant to 12
CFR 1805.201b3iiF. For purposes of this NOGA, the term borrower or investee includes a borrower of a loan originated by the Controlling CDFI that has been transferred to the Affiliate as lender which loan must meet Secondary Loan Requirements, pursuant to an operating agreement with the Affiliate that includes ownership/
investment and management provisions, which agreement must be in effect prior to the submission of a CDFI Certification Application and in form and substance that is acceptable to the CDFI Fund.
Loans originated by the Controlling CDFI do not need to be transferred prior to application submission; however, such loans must be transferred before certification of the Affiliate is effective.
If an Affiliate has more than one Controlling CDFI, it may meet this Investment Area requirement through one or more of such Controlling CDFIs Investment Areas; or B a Targeted Population indirectly or through borrowers or investees that directly serve or provide significant benefits to such members pursuant to 12 CFR 1805.201b3iiiB if a loan originated by the Controlling CDFI has been transferred to the Affiliate as lender which loan must meet Secondary Loan Requirements and the Controlling CDFIs financing entity activities serve the Affiliates Targeted Population pursuant to an operating agreement that includes ownership/
investment and management provisions by and between the Affiliate and the Controlling CDFI, which agreement must be in effect prior to the submission of a CDFI Certification Application and in form and substance that is acceptable to the CDFI Fund. Loans originated by the Controlling CDFI do not need to be transferred prior to application submission; however, such loans must be transferred before certification of the Affiliate is effective. If an Affiliate has more than one Controlling CDFI, it may meet this Targeted Population requirement through one or more of such Controlling CDFIs Targeted Populations.
An Affiliate that meets the Target Market requirement through paragraphs iiA or B above, is not eligible to receive financial or technical assistance
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awards or tax credit allocations under any other CDFI Fund program until such time that the Affiliate meets the Target Market requirements based on its own activity or track record.
ii. If an Affiliate elects to satisfy the target market requirement based on paragraphs ciiA or B above, the Affiliate and the Controlling CDFI must have entered into the operating agreement as described above, prior to the date that the CDFI Certification Application is submitted, in form and substance that is acceptable to the CDFI
Fund.
d. Development Services requirement 12 CFR 1805.201b4: To be a Certified CDFI, an entity must provide Development Services in conjunction with its Financial Products. Solely for the purpose of participation as an Eligible CDFI in the FY 2021 application round of the CDFI Bond Guarantee Program, an Affiliate of a Controlling CDFI may be deemed to meet this requirement if: i Its Development Services are provided by the Controlling CDFI pursuant to an operating agreement that includes management and ownership provisions with the Controlling CDFI that is effective prior to the submission of a CDFI Certification Application and in form and substance that is acceptable to the CDFI Fund and ii the Controlling CDFI must have provided Development Services in conjunction with the transactions that the Affiliate is likely to purchase, prior to the date of submission of the CDFI
Certification Application.
e. Accountability requirement 12 CFR
1805.201b5: To be a Certified CDFI, an entity must maintain accountability to residents of its Investment Area or Targeted Population through representation on its governing board and/or advisory boards, or through focus groups, community meetings, and/or customer surveys. Solely for the purpose of participation as an Eligible CDFI in the FY 2021 application round of the CDFI Bond Guarantee Program, an Affiliate of a Controlling CDFI may be deemed to meet this requirement only if it has a governing board and/or advisory board that has the same composition as the Controlling CDFI and such governing board or advisory board has convened and/or conducted Affiliate business prior to the date of submission of the CDFI Certification Application. If an Affiliate has multiple Controlling CDFIs, the governing board and/or advisory board may have a mixture of representatives from each Controlling CDFI so long as there is at least one representative from each Controlling CDFI.

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