12 U.S.C. § 4569 — Capital Magnet Fund

(a) Establishment. The Treasury must establish a trust fund called the Capital Magnet Fund. It is a special account within the Community Development Financial Institutions Fund.

(b) Deposits. The Fund consists of (1) amounts transferred under 12 U.S.C. § 4567 and (2) amounts appropriated, transferred, or credited to it under any other law.

(c) Expenditures. Fund amounts are available to the Secretary of the Treasury for a competitive grant program that attracts private capital and increases investment in (1) developing, preserving, rehabilitating, or purchasing affordable housing primarily for extremely low-, very low-, and low-income^* families; and (2) economic-development activities or community-service facilities, such as day-care, workforce-development, and health-care facilities, that together with affordable-housing activities use a coordinated strategy to stabilize or revitalize a low-income or underserved rural area.

(d) Federal assistance. For Federal civil-rights laws, all assistance using Fund amounts is Federal financial assistance.

(e) Eligible grantees. Subject to Treasury requirements about experience and success in attracting private financing and carrying out proposed activities, grants may go only to (1) a Treasury-certified community development financial institution or (2) a nonprofit whose principal purposes include developing or managing affordable housing.

(f) Eligible uses. Grants may be used for subsection (c)'s purposes, including (1) loan-loss reserves, (2) capitalizing a revolving loan fund, (3) capitalizing an affordable-housing fund, (4) capitalizing a fund supporting subsection (c)(2) activities, and (5) risk-sharing loans.

(g) Applications. (1) The Secretary must establish by regulation a competitive process allowing eligible grantees to apply at the time and in the manner the Secretary sets. (2) Each application must describe in detail (A) the kinds of affordable-housing, economic, and community-revitalization projects that support or sustain residents of a grant-funded affordable-housing project, including planned eligible uses; (B) other funding types, sources, and amounts; and (C) the expected time frame for using the grant.

(h) Grant limitation. (1) One eligible grantee, together with subsidiaries and affiliates, may not receive more than 15 percent of the Fund's aggregate grant-available money in a year. (2)(A) The Secretary must seek geographic diversity in economically distressed areas, including metropolitan and underserved rural areas in every State^*. (B) This includes areas meeting objective distress criteria set by the Secretary, which may include low-income or poverty levels; unemployment or underemployment; blight and disinvestment; projects for extremely low-, very low-, and low-income families inside or outside a designated distress area; and other criteria the Secretary designates. (3) Each grant must reasonably be expected to produce eligible housing, economic, or community-development projects supporting or sustaining a grant-funded affordable-housing project whose total costs are at least 10 times the grant. (4) Grant amounts must be committed within two years after allocation. The Secretary must recapture into the Capital Magnet Fund amounts not used or committed for use and allocate those amounts in the first year after recapture. (5) Treasury regulations must prohibit grants for (A) political activities, (B) advocacy, (C) lobbying directly or through others, (D) counseling services, (E) travel, and (F) preparing or giving tax-return advice. Political activity includes influencing selection, nomination, election, or appointment of candidates to Federal, State, or local office as codified in 26 U.S.C. § 501. (6) A grantee may not use assistance or amounts under this section to pay someone to influence or try to influence a State or local agency^*, elected official, officer, or employee about making, awarding, extending, continuing, renewing, amending, or modifying a State or local government contract, grant, loan, or cooperative agreement as defined in 31 U.S.C. § 1352. (7) In measuring enterprise^* housing goals and its duty to serve underserved markets under 12 U.S.C. § 4565, the Director^* of the Federal Housing Finance Agency may not count Fund amounts used for eligible subsection (f) activities. The Director must give credit^* for enterprise purchases of mortgages for housing receiving Fund money, but only when the purchases are financed from sources other than that grant money. (8)(A) The Secretary must require each grantee to maintain a system ensuring recipients use Fund assistance consistently with this section, its regulations, and the assistance's conditions. The Secretary must set minimum agreement terms, including periodic financial and project reports, record retention, and audits for the grant's duration, plus other needed administration and compliance requirements. (B) After reasonable notice and a hearing, if the Secretary finds substantial noncompliance, the Secretary must, until satisfied the problem is fixed, (i) reduce assistance by the amount misused, (ii) require repayment of misused amounts, (iii) limit assistance to unaffected activities or recipients, or (iv) terminate assistance.

(i) Periodic reports. (1) The Secretary must periodically report to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services about activities funded under this section. (2) The Secretary must make those reports public.

(j) Regulations. (1) The Secretary must issue regulations to carry out this section. (2) They must include (A) authority to audit, arrange audits, or otherwise verify enterprise activities; (B) at least annual audits of each enterprise allocation; (C) independent certified-public-accountant review of each grantee financial statement under Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants; and (D) an application and selection process providing for fair distribution among urban, suburban, and rural areas and selection based on specific criteria, including priority for (I) ability to generate additional investment, (II) affordable-housing need, considering different regions' distinct needs, and (III) ability to obligate money and carry out activities promptly.