20140131 - PRA Supporting Statement - Proposed Information Collections - BG Program

Community Development Financial Institutions Fund, Department of the Treasury

Supporting Statement
Community Development Financial Institutions Program
Community Development Financial Institutions Bond Guarantee Program
OMB Approval Number 1559-0044
A. Justification
1. Circumstances necessitating collection of information
The purpose of the Community Development Financial Institutions (CDFI) Bond Guarantee
Program (BG Program) is to support CDFI lending by providing Guarantees for Bonds issued by
Qualified Issuers as part of a Bond Issue for Eligible Community or Economic Development
Purposes. The BG Program provides CDFIs with a new source of long-term capital and furthers
the mission of the CDFI Fund to increase economic opportunity and promote community
development investments for underserved populations and distressed communities in the United
States. The CDFI Fund achieves its mission by promoting access to capital and local economic
growth by investing in, supporting, and training CDFIs.
Through the BG Program, applicants apply to be approved as a Qualified Issuer (QI), using the
Qualified Issuer Application (QI Application). Qualified Issuers may submit Guarantee
Applications to be approved for a Guarantee under the BG Program. Applicants are required to
provide financial and program related information and, subject to approval, will enter into
agreements that require the collection of reports that will be used for credit underwriting,
compliance monitoring and program evaluation purposes. The application information is required in
order for program management to evaluate an applicant’s capacity to effectively execute its
obligations under the Bond Documents.
2. Method of collection and use of data
The QI Application and Guarantee Application are to be submitted via the myCDFIFund platform at
www.cdfifund.gov. All application materials will be used by the BG Program staff to review
applicants for their organizational expertise, experience and capacity to adhere to the requirements
of the BG Program.
3. Use of Information Technology
The QI Application and Guarantee Application are to be submitted via the myCDFIFund platform at
www.cdfifund.gov.
4. Efforts to identify duplication
All of the information requested is required in order to evaluate an applicant’s capacity to carry out
the financial and administrative responsibilities of a QI. It is anticipated that most applicants will
also be awardees or participants in other CDFI Fund programs. As a result there will be some
overlap in the submitted information between both programs, but the separate nature of the
reporting systems does not allow for a single point of data entry at this time.

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Community Development Financial Institutions Fund, Department of the Treasury

5. Impact on small entities
This collection of information is not expected to have a significant impact on small entities. The
minimum amount of funding under the BG Program requires that applicants have sufficient
organizational capacity and experience to manage the requirements of underwriting, administration,
reporting and due diligence in order to be approved for a Guarantee.
Therefore it is expected that applicants will have the capacity to complete an application package
without significant disruption to their on-going operations. Thus, this collection of information will not
impose a significant impact on small entities that wish to submit an application.
6. Consequences of less frequent collection and obstacles to burden reduction
The CDFI Fund will not be able to properly evaluate an applicant’s ability to execute the BG
Program’s requirements without this collection of data.
7. Circumstances requiring special information collection
There are no special circumstances. The collection of information is conducted in a manner
consistent with the guidelines in 5 CFR 1320.6.
8. Consultation with Persons Outside the Agency
Pursuant to the notice and request for comments published in the Federal Register on October 28,
2013, at 78 FR 64292, the CDFI Fund received detailed comments from the organizations and/or
individuals reflected in the following table. All comments have been reviewed by the CDFI Fund
and have been taken into consideration. A summary of the public comments, as well as the CDFI
Fund’s responses, follow below.
No
.
1

Organization Name

3
4

Opportunity Finance Network (with joint
recommendations of the following sign-on
organizations: Calvert Foundation; Clearinghouse
CDFI; Community Development Trust; Community
Reinvestment Fund; Hope Enterprise Corporation; IFF;
Low Income Investment Fund; NCB Capital Impact;
The Reinvestment Fund)
Financial Innovations Roundtable, Carsey Institute,
University of New Hampshire
Boston Community Capital
Community Reinvestment Fund, USA

5

Low Income Investment Fund

6
7

Hope Credit Union; Hope Enterprise Corporation
Los Angeles LDC, Inc.

8

Enterprise Community Loan Fund, Inc.

2

2

Organization
Representative
Jennifer Vasiloff, EVP

Date Submitted

Michael Swack, Director

December 23, 2013

Elyse D. Cherry, CEO
Frank Altman, President
and CEO
Nancy O. Andrews,
President and CEO
William J. Bynum, CEO
Michael Banner,
President and CEO
Lori Chatman, President

December 26, 2013
December 27, 2013

December 20, 2013

December 27, 2013
December 27, 2013
December 27, 2013
December 23d, 2013

Community Development Financial Institutions Fund, Department of the Treasury

A. Respondents indicated that the revised drafts of the Qualified Issuer Application and
Guarantee Application are clearer and more streamlined compared to those used in the
FY2013 round. Some respondents requested clarifications or edits to certain perceived
inconsistencies in the application documents.
The CDFI Fund welcomes the positive feedback from respondents. The CDFI Fund has
updated the application documents to clarify or correct minor errors.
B. Respondents requested that additional information or instructions be provided to clarify the
application process. In particular, respondents requested clarity as to whether Newly
Formed Affiliates (NFAs) are eligible to receive Bond Loans. Respondents also requested
guidance on how the CDFI Fund evaluates the capabilities of Qualified Issuers in instances
where Servicer functions are delegated to their Eligible CDFI. Finally, respondents
generally indicated that the public outreach sessions provided by the CDFI Fund during
FY2013 were valuable to properly and efficiently submitting required application materials.
At this time, the CDFI Fund cannot accept Newly Formed Affiliates as eligible to receive
Bond Loans unless they meet the requirements of the Interim Rule at 12 CFR 1808,
particularly the requirement that an Eligible CDFI be a certified CDFI. The CDFI Fund will
provide additional guidance on the criteria used to evaluate Qualified Issuer and Guarantee
applications in the forthcoming Notice of Guarantee Availability (NOGA). Additionally, the
CDFI Fund will expand upon the public outreach sessions provided in FY2013 and attempt
to provide both a greater quantity and quality of details regarding the CDFI Bond
Guarantee Program structure and application procedures to reduce public burden.
C. Respondents requested that the CDFI Fund obtain additional data on the mission-orientation
of Qualified Issuers to ensure strategic alignment with the CDFI Bond Guarantee Program.
Respondents also indicated that alternative data should be collected in the form of a draft
business term sheet rather than a draft legal term sheet. Finally, respondents requested
additional guidance on what types of Credit Enhancements the CDFI Fund will evaluate.
The CDFI Fund will continue to collect information regarding a Qualified Issuer’s mission orientation and strategic alignment with the CDFI Bond Guarantee Program. The
forthcoming NOGA will provide additional guidance on the criteria used to evaluate
Qualified Issuers with regard to their mission orientation. The CDFI Fund believes that a
draft Term Sheet is the best method for reducing overall public burden in the application
process. A draft Term Sheet requires additional time and effort for initial application
submission, but will reduce overall public burden by ensuring that the CDFI Fund clearly
understands the exact terms of the proposed Guarantee Application and reduce
miscommunication. Finally, the CDFI Fund will provide additional guidance in the NOGA
regarding the evaluation criteria for credit enhancements.
D. Respondents generally indicated that the applications asked appropriate questions to
determine an applicant’s financial health and viability. Respondents suggested that smaller
CDFIs may not fit the same credit profile as the larger financial institutions which received
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Community Development Financial Institutions Fund, Department of the Treasury

Guarantees in FY2013. Respondents also requested clear benchmarks and minimum
standards for financial strength.
The CDFI Fund welcomes the feedback provided and will provide additional guidance in the
forthcoming NOGA to clarify the evaluation criteria for Eligible CDFIs proposing to receive
Bond Loans. However, the CDFI Fund cannot provide exact benchmarks or minimum
standards that would allow applicants to “reverse engineer” the credit evaluation criteria
and potentially circumvent the review process.
E. Respondents indicated that the current assets classes are sufficient to cover the vast
majority of lending activities in which CDFIs currently engage. A respondent suggested
that subordinate and mezzanine debt also be included as acceptable loan structures for
certain asset classes.
OMB Circular A-129 prohibits the Federal government’s debt from being subordinated to the
interest of other lenders. The CDFI Fund will not accept the suggestion to add subordinate
or mezzanine debt.
F. Respondents suggested that there may be some duplication in the amount of burden required
to follow the Secondary Loan Requirement (SLR)s and submit the collection instruments.
The CDFI Fund has amended the “Secondary Loan Requirement- Certification” document to
add a standardized Itemization of Collateral. The document will re duce public burden and
streamline the amount of information that must be collected. By submitting the attached
Itemization of Collateral once with each package of multiple SLR Certifications, the amount
of time and effort spent perfecting liens in Secondary Loans and Other Pledged Loans will
be reduced. Additionally, minor updates have been made to the Secondary Loan
Requirements to reduce the public burden required of an Eligible CDFI such as by allowing
Secondary Borrowers to submit unaudited rather tha n audited financial statements.
G. Finally, the CDFI Fund received public comments which were not responsive to the Federal
Register Notice or which were only tangentially related to reducing public burden.
The CDFI Fund has reviewed the public comments in their totality and made updates to the
NOGA and application materials in an attempt to reduce public burden and improve the
application submission and review process.
9. Provision of payment to respondents
No payments or gifts will be made to respondents.
10. Assurance of confidentiality
The CDFI Fund is subject to all Federal regulations with respect to confidentiality of information
supplied in QI and Guarantee Applications.
11. Justification of sensitive questions.
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Community Development Financial Institutions Fund, Department of the Treasury

No personally identifiable information (PII) is collected.
12. Estimate of the hour burden of information collection.
Information Collection

Qualified Issuer
Application
Guarantee
Application
Secondary Loan
Requirement
TOTALS

No.
Respondents

No. Responses
Per
Respondent

20

1

50

Annual
Responses

Hours Per
Response

Estimated
Burden Hours

20

240

4,800

1

50

50

2,500

20

1

20

50

1,000

90

1

90

92.222

8,300

13. Estimate of total annual cost burden to respondents
The information requested should be readily available to applicants that are not dependent upon third
party assistance. There are no additional capital, start-up or ongoing operational, or maintenance
costs associated with this information collection. No purchases of equipment or services are
necessary to complete the QI Application or Guarantee Application.
14. Estimate of annualized cost to the Government
The costs to the Government are the program staff and consultant time required to develop the
documents. Follow on costs consist of following up with applicants, reviewing and qualifying the
applicants for approval and reporting the results. Staff and consultant development costs are
estimated at $15,000. Follow on activities will be conducted by internal staff.
15. Any program changes or adjustments
An adjustment is being made to reflect a more accurate accounting of burden associated with this
information collection.
16. Plans for information tabulation and publication
Confidential and proprietary information collected through the QI and Guarantee Applications will
not be published.
17. Reasons for not displaying expiration date of OMB approval
Display of the OMB expiration date may cause confusion in reporting by the applicants of the
appropriate due date(s). The non-display of the OMB expiration date is requested.

18. Explanation of exceptions to certification statement
Not applicable.

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Community Development Financial Institutions Fund, Department of the Treasury

B. Collections of Information Employing Statistical Methods
This section is not applicable.

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