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CDFI Fund Publishes Revisions to Capital Magnet Fund Interim Rule

Lydia Wedlock

Comments due to the CDFI Fund by August 26, 2024

The U.S. Department of the Treasury is issuing a revised Interim Rule for the Capital Magnet Fund (CMF), administered by the Community Development Financial Institutions Fund (CDFI Fund). Changes incorporated by the revised Interim Rule include, among other things:

  1. Revisions to CMF program requirements and defined terms to improve and streamline the administration of the CMF program;

  2. Revisions to project level requirements to better align CMF with other Federal housing programs and reduce burden on Recipients; and

  3. Other programmatic updates to address current business practices in the affordable housing industry.

This revised Interim Rule also reflects requirements set forth in the final rule, Uniform Administrative Requirements (UAR), Cost Principles and Audit Requirements for Federal Awards, adopted by the Department of the Treasury on December 19, 2014. The revised Interim Rule with request for public comment can be accessed in the Related Materials section below.

The CMF was established through the Housing and Economic Recovery Act of 2008 (HERA), Public Law 110–289, section 1131, to carry out a competitive grant program administered by the CDFI Fund. The mission of the CDFI Fund is to increase economic opportunity and promote community development investments for underserved populations and in distressed communities in the United States. Its long-term vision is an America in which all people have access to affordable credit, capital, and financial services.

Through the CMF, the CDFI Fund is authorized to make financial assistance grants to Certified Community Development Financial Institutions (CDFIs) and Nonprofit Organizations with a principal purpose of the development or management of affordable housing. CMF Awards must be used to attract private financing for and increase investment in: (i) the Development, Preservation, Rehabilitation, and Purchase of Affordable Housing for primarily Extremely Low-Income, Very Low-Income, and Low-Income Families; and (ii) Economic Development Activities which, in conjunction with Affordable Housing Activities, will stabilize or revitalize a Low-Income Area or Underserved Rural Area.

Between fiscal years 2010 and 2023, the CDFI Fund administered eight CMF Application rounds, obligating nearly $1.4 billion in total awards. Since the last update to the Rule in 2016, there have been changes in business practices in the affordable housing industry and regulatory requirements in other relevant Federal affordable housing assistance programs. Accordingly, the CDFI Fund is promulgating this revised Interim Rule in order to better align with the best practices of the affordable housing industry.

This revised Interim Rule also addresses and incorporates written comments the CDFI Fund received in response to the Notice and Request for Information (RFI) that was published in the Federal Register on July 7, 2023. The CDFI Fund issued the RFI to obtain input about how to enhance and improve the impact of the CMF program to create and preserve affordable housing across the country, minimize administrative burden on program applicants and award recipients, and safeguard public funds.

Comments provided in response to these Interim Rule changes will inform the CDFI Fund’s development of program policies and administrative practices that will better support the activities of CMF Recipients as they spur investment in affordable housing and related economic development efforts that serve Low-Income Families and communities.

Comments on the revised interim rule must be submitted by Monday, August 26, 2024 via the Federal eRulemaking Portal, www.regulations.gov. For questions, contact Andrew Schlack, Program Manager, Capital Magnet Fund, CDFI Fund, by email at cmf@cdfi.treas.gov, and include “CMF Interim Rule Change” in the subject line of the email.

Additional guidance regarding how current CMF Award Recipients will be impacted by this Interim Rule is forthcoming.

In addition to its Request for Comments of the revised Interim Rules, the CDFI Fund will also be publishing a related Request for Comments on the CMF Performance Reporting Requirements (PRRs). The PRRs, which ensure CMF recipients are successfully pursuing their performance commitments, are changing to align with the updates in the revised interim rule and to eliminate certain data points that are no longer needed.

Related Materials