12 U.S.C. § 4705 — Community partnerships

Page 1735 TITLE 12—BANKS AND BANKING § 4705 ‘‘(b) REPORTING.—The Inspector General of the De- partment of the Treasury shall submit to the Com- mittee on Financial Services of the House of Rep- resentatives and the Committee on Banking, Housing, and Urban Affairs of the Senate and the Secretary of the Treasury not less frequently than 2 times per year a report relating to the oversight provided by the Office of the Inspector General, including any recommenda- tions for improvements to the programs described in subsection (a).’’ § 4704. Applications for assistance (a) Form and procedures An application for assistance under this sub- chapter shall be submitted in such form and in accordance with such procedures as the Fund shall establish. (b) Minimum requirements Except as provided in sections 4705 and 4712 of this title, the Fund shall require an applica- tion— (1) to establish that the applicant is, or will be, a community development financial insti- tution; (2) to include a comprehensive strategic plan for the organization that contains— (A) a business plan of not less than 5 years in duration that demonstrates that the ap- plicant will be properly managed and will have the capacity to operate as a commu- nity development financial institution that will not be dependent upon assistance from the Fund for continued viability; (B) an analysis of the needs of the invest- ment area or targeted population and a strategy for how the applicant will attempt to meet those needs; (C) a plan to coordinate use of assistance from the Fund with existing Federal, State, local, and tribal government assistance pro- grams, and private sector financial services; (D) an explanation of how the proposed ac- tivities of the applicant are consistent with existing economic, community, and housing development plans adopted by or applicable to an investment area or targeted popu- lation; and (E) a description of how the applicant will coordinate with community organizations and financial institutions which will provide equity investments, loans, secondary mar- kets, or other services to investment areas or targeted populations; (3) to include a detailed description of the applicant’s plans and likely sources of funds to match the amount of assistance requested from the Fund; (4) in the case of an applicant that has pre- viously received assistance under this sub- chapter, to demonstrate that the applicant— (A) has substantially met its performance goals and otherwise carried out its respon- sibilities under this subchapter and the as- sistance agreement; and (B) will expand its operations into a new investment area or serve a new targeted pop- ulation, offer more products or services, or increase the volume of its business; (5) in the case of an applicant with a prior history of serving investment areas or tar- geted populations, to demonstrate that the ap- plicant— (A) has a record of success in serving in- vestment areas or targeted populations; and (B) will expand its operations into a new investment area or to serve a new targeted population, offer more products or services, or increase the volume of its current busi- ness; and (6) to include such other information as the Fund deems appropriate. (c) Preapplication outreach program The Fund shall provide an outreach program to identify and provide information to potential applicants and may provide technical assistance to potential applicants, but shall not assist in the preparation of any application. (Pub. L. 103–325, title I, § 105, Sept. 23, 1994, 108 Stat. 2170.) § 4705. Community partnerships (a) Application An application for assistance may be filed jointly by a community development financial institution and a community partner to carry out a community partnership. (b) Application requirements The Fund shall require a community partner- ship application— (1) to meet the minimum requirements es- tablished for community development finan- cial institutions under section 4704(b) of this title, except that the criteria specified in para- graphs (1) and (2)(A) of section 4704(b) of this title shall not apply to the community part- ner; (2) to describe how each coapplicant will par- ticipate in carrying out the community part- nership and how the partnership will enhance activities serving the investment area or tar- geted population; and (3) to demonstrate that the community part- nership activities are consistent with the stra- tegic plan submitted by the community devel- opment financial institution coapplicant. (c) Selection criteria The Fund shall consider a community partner- ship application based on— (1) the community development financial in- stitution coapplicant— (A) meeting the minimum selection cri- teria described in section 4704 of this title; and (B) satisfying the selection criteria of sec- tion 4706 of this title; (2) the extent to which the community part- ner coapplicant will participate in carrying out the partnership; (3) the extent to which the community part- nership will enhance the likelihood of success of the community development financial insti- tution coapplicant’s strategic plan; and (4) the extent to which service to the invest- ment area or targeted population will be bet- ter performed by a partnership as opposed to the individual community development finan- cial institution coapplicant. Page 1736 TITLE 12—BANKS AND BANKING § 4706 (d) Limitation on distribution of assistance Assistance provided upon approval of an appli- cation under this section shall be distributed only to the community development financial institution coapplicant, and shall not be used to fund any activities carried out directly by the community partner or an affiliate or subsidiary thereof. (e) Other requirements and limitations All other requirements and limitations im- posed by this subchapter on a community devel- opment financial institution assisted under this subchapter shall apply (in the manner that the Fund determines to be appropriate) to assist- ance provided to carry out community partner- ships. The Fund may establish additional guide- lines and restrictions on the use of Federal funds to carry out community partnerships. (Pub. L. 103–325, title I, § 106, Sept. 23, 1994, 108 Stat. 2171.) § 4706. Selection of institutions (a) Selection criteria Except as provided in section 4712 of this title, the Fund shall, in its sole discretion, select com- munity development financial institution appli- cants meeting the requirements of section 4704 of this title for assistance based on— (1) the likelihood of success of the applicant in meeting the goals of its comprehensive strategic plan; (2) the experience and background of the management team; (3) the extent of need for equity invest- ments, loans, and development services within the investment areas or targeted populations; (4) the extent of economic distress within the investment areas or the extent of need within the targeted populations, as those fac- tors are measured by objective criteria; (5) the extent to which the applicant will concentrate its activities on serving its in- vestment areas or targeted populations; (6) the amount of firm commitments to meet or exceed the matching requirements and the likely success of the plan for raising the bal- ance of the match; (7) the extent to which the matching funds are derived from private sources; (8) the extent to which the proposed activi- ties will expand economic opportunities with- in the investment areas or the targeted popu- lations; (9) whether the applicant is, or will become, an insured community development financial institution; (10) the extent of support from the invest- ment areas or targeted populations; (11) the extent to which the applicant is, or will be, community-owned or community-gov- erned; (12) the extent to which the applicant will increase its resources through coordination with other institutions or participation in a secondary market; (13) in the case of an applicant with a prior history of serving investment areas or tar- geted populations, the extent of success in serving them; and (14) other factors deemed to be appropriate by the Fund. (b) Geographic diversity In selecting applicants for assistance, the Fund shall seek to fund a geographically diverse group of applicants, which shall include appli- cants from metropolitan, nonmetropolitan, and rural areas. (Pub. L. 103–325, title I, § 107, Sept. 23, 1994, 108 Stat. 2172.) § 4707. Assistance provided by Fund (a) Forms of assistance (1) In general The Fund may provide— (A) financial assistance through equity in- vestments, deposits, credit union shares, loans, and grants; and (B) technical assistance— (i) directly; (ii) through grants; or (iii) by contracting with organizations that possess expertise in community devel- opment finance, without regard to whether the organizations receive or are eligible to receive assistance under this subchapter. (2) Equity investments (A) Limitation on equity investments The Fund shall not own more than 50 per- cent of the equity of a community develop- ment financial institution and may not con- trol the operations of such institution. The Fund may hold only transferable, nonvoting equity investments in the institution. Such equity investments may provide for convert- ibility to voting stock upon transfer by the Fund. (B) Fund deemed not to control Notwithstanding any other provision of law, the Fund shall not be deemed to control a community development financial institu- tion by reason of any assistance provided under this subchapter for the purpose of any other applicable law to the extent that the Fund complies with subparagraph (A). Noth- ing in this subparagraph shall affect the ap- plication of any Federal tax law. (3) Deposits Deposits made pursuant to this section in an insured community development financial in- stitution shall not be subject to any require- ment for collateral or security. (4) Limitations on obligations Direct loan obligations may be incurred by the Fund only to the extent that appropria- tions of budget authority to cover their cost, as defined in section 661a(5) of title 2, are made in advance. (b) Uses of financial assistance (1) In general Financial assistance made available under this subchapter may be used by assisted com- munity development financial institutions to serve investment areas or targeted popu- lations by developing or supporting—