# Notice of Request for Consideration for Community Development Corporation Designation

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URL: https://www.frixlaw.com/law-library/documents/fr%3A94-6593

## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** March 22, 1994

## Text

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

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]
BILLING CODE 4210-29-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-6593. Public record. Not legal advice.