Notice of Request for Consideration for Community Development Corporation Designation

SUMMARY: This notice invites applications from eligible organizations

for designation as Community Development Corporations (CDCs) whose

areas of operation meet the size definition of an urban or rural

Empowerment Zone. Such designation entitles a CDC to accept

contributions from taxpayers, who in turn may receive a five percent

tax credit per year for up to 10 years for their qualified cash

contribution. The notice contains information on applying for

designation. There will be no rule or application form issued by HUD.

Responses to this Notice will be considered as formal application for

designation.

DATES: Request due date: On or before 5 p.m. Eastern Time on May 16,

1994.

Comment due date for information collection requirements: April 1,

1994.

ADDRESSES: Requests must be submitted to the Processing and Control

Unit, Room 7255, Office of Community Planning and Development,

Department of Housing and Urban Development, 451 Seventh Street SW.,

Washington, DC 20410-0550.

Comments on the information collection requirements are to be

submitted to Joseph L. Lackey, Jr., OMB Desk Officer, Office of

Management and Budget, New Executive Office Building, Washington, DC

20503. Comments should refer to the document by name.

FOR FURTHER INFORMATION CONTACT: Roy Priest, Director, Office of

Economic Development, Room 7136, Department of Housing and Urban

Development, 451 Seventh Street SW., Washington, DC, 20410-0550; (202)

708-2290, or, TDD for hearing and speech-impaired, (202) 708-2565.

(These numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The information collection requirements contained in this notice

have been submitted to the Office of Management and Budget (OMB) for

review under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520).

The Department has requested that OMB complete its review within 10

days from the date of this publication. No person may be subjected to a

penalty for failure to comply with these information collection

requirements until they have been approved and assigned an OMB control

number. The OMB control number, when assigned, will be announced by

separate notice in the Federal Register.

The burden for collecting the required information is estimated to

include the time for reviewing the instructions, searching existing

data sources, gathering and maintaining the data needed, and completing

and reviewing the collection of information. The following provisions

of the notice have been determined by the Department to contain

collection of information requirements:

----------------------------------------------------------------------------------------------------------------

Number

Number responses Total Hours per

Reference in notice respondents per annual response Total hours

respondent responses

----------------------------------------------------------------------------------------------------------------

Application.................................... 250 1 1 20 5,000

Reports........................................ 20 1 20 5 100

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Total annual burden...................... ........... ........... ........... ........... 5,100

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I. Background

Section 13311 of Title XIII, Chapter I, Subchapter C, Part II of

the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66, approved

August 10, 1993) (the Act), entitled ``Credit for Contributions to

Certain Community Development Corporations,'' authorizes the Secretary

of HUD to select 20 CDCs whose areas of operation meet the size

requirements defined in section 1393 of the Internal Revenue Code of

1986 (IRS Code) for urban or rural Empowerment Zones. (Interim rules

for both the rural Empowerment Zone and urban Empowerment Zone programs

were published on January 18, 1994 (59 FR 2686 and 59 FR 2700,

respectively).)

Upon selection, the statutory provision allows the selected CDCs to

accept contributions from taxpayers who in turn may receive a five

percent tax credit for their qualified cash contributions each year for

a 10-year period. The statute provides that the selections must be made

before July 1, 1994 and that at least eight of the CDCs selected must

have operational areas that meet the size definition for rural

Empowerment Zones (as defined by section 1392 of the IRS Code).

Eligibility for selection is discussed in section III of this Notice.

Because of the technical nature of the tax credit provisions, CDCs

and other interested parties should consult with the Internal Revenue

Service or other persons with expertise in tax matters for more

information on the tax credits.

II. Definitions

CDC means a Community Development Corporation.

HUD means the United States Department of Housing and Urban

Development.

Low-income means the income of individuals who are members of

families whose incomes do not exceed 80 percent of the median income

for their respective areas as defined by HUD.

Operational area means the geographic area in which the CDC

proposes to carry out and promote activities under the Act.

Population Census Tract means a census tract, or, if census tracts

are not defined for the area, a block numbering area.

Poverty means the number of persons listed as being at or below the

poverty level in the 1990 Decennial Census;

Qualified low-income assistance means assistance which is:

(1) Designed to provide employment of, and business opportunities

for, low-income individuals who are residents of the operational area

of the CDC; and

(2) Approved by the Secretary of HUD for use by a selected CDC

within its operational area.

Secretary means the Secretary of HUD.

Urban area means any area that lies inside a Metropolitan Area

(MA), as designated by the Office of Management and Budget, or an area

that is outside of an MA where the local government either has a

population of 20,000 or documents the urban character of the area.

III. Eligible CDCs

An eligible CDC is one that meets the following criteria:

(1) It is a tax-exempt corporation as described in section

501(c)(3) of the IRS Code and is exempt from taxes under section 501(a)

of the IRS Code;

(2) Its principal purposes include promoting employment and

business opportunities for low-income individuals who are residents of

its operational area;

(3) Its operational area must meet the size requirements set forth

in section 1392 of the IRS Code:

(i) It does not exceed 20 square miles if an urban area or 1,000

square miles if a rural area;

(ii) It has a boundary which is continuous, or, except in the case

of a rural area located in more than one State, consists of not more

than three noncontiguous parcels;

(iii) In the case of an urban area, it is located entirely within

no more than two contiguous States; and in the case of a rural area, it

is located entirely within no more than three contiguous States; and

(iv) It does not include any portion of a central business district

(as such term is used for purposes of the most recent Census of Retail

Trade) unless the poverty rate for each population census tract in such

district is not less than 35 percent (30 percent in the case of an

Enterprise Community).

(4) Its operational area is experiencing unemployment at a rate (as

determined by the appropriate, most recently available data published

by the U.S. Bureau of Labor Statistics) that is not less than the

national unemployment rate; and

(5) The median family income of residents of such area does not

exceed 80 percent of the median gross income of residents in the

jurisdiction of the local government which includes such area.

Note that a CDC and its respective operational area are not

statutorily required to be located in or associated with any

Empowerment Zone or Enterprise Community application or designation.

However, the Secretary will consider whether a CDC applicant under this

Notice is nominated along with the submission of a draft of the

strategic plan for a nominated Empowerment Zone/Enterprise Community.

IV. Request for Consideration

In order to make a designation, HUD must conclude that a CDC meets

the statutory provisions for eligible applicants. In addition to other

appropriate documentation, HUD will accept the following documentation

as evidence that a CDC meets the eligibility requirements for

selection:

(1) Section 501(c)(3) status--A copy of IRS form 1023, Application

for Recognition of exemption under section 501(c)(3). That contains the

CDC's IRS approval number;

(2) Purpose--A copy of the CDC's executed Articles of

Incorporation, or equivalent, describing the organization's purpose

and, if applicable, any other companion document describing the

organization's purpose demonstrating that its principal purposes

include promoting employment and business opportunities for low-income

individuals who are residents of its area of operation;

(3) Area of operation--A map showing the CDC's area of operation.

The map should show census tract boundaries. Alternatively, a CDC may

submit a map with its area of operation and a listing of the census

tracts covered by its area of operation. Note that the CDC's

operational area cannot exceed the size requirements for an Empowerment

Zone as described in Section III of this Notice;

(4) Unemployment rate--A statement of the most recent unemployment

rate for the CDC's operational area (note that if the CDC's operational

area is less than a county or metropolitan area, then the unemployment

rate must be provided for the area that is the closest to the CDC's

operational area; if greater than a county or metropolitan area, a

proportional average of the rates for the jurisdictions served must be

provided); and

(5) Median family income of the CDC's operational area--The CDC

must provide the median family income of the residents of its

operational area. Median family income should be based upon information

in the 1990 Decennial Census.

V. Additional Documentation for Consideration

A CDC should provide the following documentation as evidence of its

commitment and capability to carry out the intent of the statute and

the Secretary's criteria for selection as outlined in section VIII of

this Notice:

(1) Utilization of qualified CDC contribution--The CDC must

describe how, if it is selected by the Secretary and authorized to

receive ``qualified CDC contributions'' under the Act, its program(s)

is designed to use such contributions to provide employment of, and

business opportunities for, low-income individuals who are residents of

the CDC's operational area. Such description would include, but not be

limited to, the following:

(i) The CDC's current programs that have provided employment and

business opportunities for low-income residents of its operational area

for the last three years, including number of jobs created or

businesses assisted for low-income residents of its operational area;

the types of jobs and businesses, and their application to community

needs; and a discussion of the programs' design and implementation,

including successes and failures;

(ii) A discussion of how the CDC's proposed program(s) builds upon

its existing programs or serves a need that is not being met by its

current programs;

(iii) How the CDC will create linkages between human development,

economic development, and housing development in its operational area;

(iv) A description of how the CDC's staff will be available to

carry out the program(s) and its capacity to do so, including the

submission of its most recent operating statement and annual report;

(v) The nature of the expected, qualified contributions to the CDC

(e.g., outright grants, loans, long-term equity investments such as

general or limited partnerships, etc.).

(vi) A description of the CDC's past and current capacity for

administering tax-preferred donations and investments.

If a CDC has been actively operating for less than three years, it

should describe its programs and provide its financial statements for

each year since its inception.

(2) Collaborative partnerships within the community--The CDC should

describe the collaborative partnerships that it carries out within its

community among residents (particularly low-income residents),

neighborhood organizations, community and local businesses, financial

institutions, and local and State governments. The description should

discuss all phases of involvement of the above groups, including

participation of low-income residents on its Board of Directors;

participation of businesses and financial institutions in its financing

and their technical assistance in carrying out the CDC's program(s);

and participation of the CDC in limited partnerships, if any, with

other not-for-profit and for-profit entities.

(3) Participation in developing and carrying out a strategic plan--

If the unit(s) of general local government in which the CDC's

operational area is located is applying for designation as a Federal

Empowerment Zone or Enterprise Community, the CDC should describe the

extent to which it is participating in the design of a comprehensive,

strategic plan to serve the Zone or Community. The CDC should also

describe the extent to which its proposed program(s) will further the

implementation of such a strategic plan. In the event the local

government is not applying for such designation, the CDC should

describe the extent to which it is carrying out or developing its own

strategic plan in partnership with other organizations, institutions,

businesses and groups within the CDC's operational area.

(4) Desired designation--The CDC must state whether it desires an

urban or rural designation. Designees can receive only one designation.

(5) Agreement to provide progress reports--The CDC must state that

it agrees to provide annual reports on the status and progress of its

operations and projected program(s). HUD may revoke a CDC's designation

at any time if reports are not provided upon request, or if a CDC's

program(s) does not demonstrate satisfactory progress in meeting

commitments set forth in its application.

VI. Selection of CDCs

Requests will be accepted and reviewed in accordance with this

Notice, and will be selected at the sole discretion of the Secretary.

Requests must be submitted to the address set out at the beginning of

this Notice under ADDRESSES.

Requests must be received at the above address by 5 p.m. Eastern

Time on May 16, 1994. Responsibility to make a timely submission is the

sole responsibility of the CDC.

VII. Threshold Review

A request for designation will not receive consideration for

designation if the CDC fails to demonstrate by its submission that:

(1) It is a section 501(c)(3) corporation exempt from tax under

section 501(a) of the Internal Revenue Code;

(2) The principal purposes of the organization include promoting

employment of and business opportunities for low-income individuals of

its operational area;

(3) Its operational area meets the size requirements set out in

Section III of this Notice;

(4) The unemployment rate (as determined by the appropriate

available data) is not less than the national unemployment rate;

(5) The median family income of residents of its operational area

does not exceed 80 percent of the median income of residents of the

jurisdiction of the local government that includes such area; and

(6) An agreement has been legally executed by the chief executive

officer of the CDC stating that if selected by the Secretary in

fulfillment of the Act that the CDC will provide a report on its

progress in carrying out the commitments in its application no later

than December 31 of each calendar year for the 10 years following the

date of its designation, and will cooperate in any review of its

operations that HUD may deem necessary.

VIII. Final Selection

On behalf of the Secretary, HUD's Office of Community Planning and

Development will administer the processing of all applications and

selection of the CDCs to be designated.

All requests that meet the threshold review will be considered for

final selection based on documentation received in response to Section

V of this Notice and on criteria that demonstrate CDCs' capacity,

capabilities and commitment to maximize the use of qualified

contributions for the purposes set forth in the Act.

In accordance with the following criteria, applicants are

encouraged to submit any additional materials that may be pertinent to

demonstrating relevance to these criteria:

(1) The extent to which its programs have provided employment and

business opportunities for low-income residents of its operational area

(Note: Priority shall be given to corporations with a

demonstrated record of performance in administering community

development programs which target at least 75 percent of the jobs

emanating from their investment funds to low income or unemployed

individuals;

(2) How proposed program(s), as a result of a successful

designation, will provide employment and business opportunities for

low-income residents of its operational area;

(3) Linkages that the CDC will establish on its own initiative, or

through comprehensive planning with other organizations and agencies in

furthering human, economic, and housing development;

(4) The strength and breadth of the collaborative partnerships in

which it participates in its community, including its residents

(particularly low-income residents), community organizations, community

and local businesses, financial institutions, and local and State

governments, in the design and implementation of a program that

provides employment and business opportunities for low-income residents

of its operational area;

(5) The extent to which the CDC, if it has been involved in housing

development, can demonstrate that its programs have contributed to the

provision of housing for low- and moderate-income persons of the

locality or operational area; and if it has not been involved in

housing development, then the extent to which its programs have

contributed to such provision.

(6) If the unit(s) of general local government comprising the whole

or a part of the CDC's operational area is applying for Federal

designation as an Empowerment Zone or Enterprise Community, the extent

of the CDC's involvement in development and implementation of a

strategic plan for the Zone or Community;

(7) The extent to which the CDC's staff will be available to carry

out its proposed program(s) and its capacity to do so;

(8) The extent to which its past programs have and/or its proposed

program(s) will contribute to the elimination or prevention of

discriminatory housing practices and have and/or will promote

investment in communities in which low income and/or racial/ethnic

minorities are the predominant residents;

(9) The degree to which the design of the CDC's program(s) and

resultant products are creative and innovative;

(10) The extent of all public and private funding sources that will

be leveraged by the contributions that are projected to receive tax

credits and the estimated amounts of those commitments.

Consideration will also be given to the location of the CDCs'

defined operational areas to achieve geographic and other forms of

diversity, where possible.

IX. Other Matters

National Environmental Policy Act. A Finding of No Significant

Impact with respect to the environment required by the National

Environmental Policy Act (42 U.S.C. 4321-4374) is unnecessary, since

the Department has determined that the selection process under this

notice is categorically excluded from the Department's regulations

implementing the National Environment Policy Act at 24 CFR 50.20.

Executive Order 12606. The General Counsel, as the Designated

Official under Executive Order No. 12606, The Family, has determined

that this notice will not have a significant impact on family

formation, maintenance, or well-being. The notice sets out the process

by which the Secretary will select CDCs to which contributions by

taxpayers will qualify for tax credits.

Executive Order 12611. The General Counsel, as the Designated

Official under section 6(a) of Executive Order No. 12611, Federalism,

has determined that this notice will not involve the preemption of

State law by Federal statute or regulation and will not have Federalism

implications. The selection process envisioned by the notice qualifies

contributions to those CDCs selected for tax credits under the Internal

Revenue Code. This process will not affect the distribution of power

and responsibility among the various levels of government.

Dated: March 2, 1994.

Andrew Cuomo,

Assistant Secretary for Community Planning and Development.

[FR Doc. 94-6593 Filed 3-21-94; 8:45 am]

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