H.R. 3677 (112th): National Cooperative Development Act

112th Congress, 2011–2013. Text as of Dec 15, 2011 (Introduced).

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I

112th CONGRESS

1st Session

H. R. 3677

IN THE HOUSE OF REPRESENTATIVES

December 15, 2011

(for himself, Mr. Brady of Pennsylvania, Ms. Lee of California, and Mr. Tierney) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To authorize the Secretary of Housing and Urban Development to establish a national program to create jobs and increase economic development in underserved areas by promoting cooperative development.

1.

Short title

This Act may be cited as the National Cooperative Development Act.

2.

Findings and purpose

(a)

Findings

The Congress finds that Federal policy can promote cooperative development in underserved areas, which demonstrably has the following benefits for communities located in such areas:

(1)

Advancement of local economic stability.

(2)

An increase of local circulation of capital, thereby increasing economic multipliers and the impact of community investment to spur locally oriented economic growth.

(3)

Developing, attracting, and anchoring new productive capital in low-income communities.

(4)

Expansion of investment opportunities and asset creation for low- and moderate-income Americans.

(b)

Purpose

The purpose of this Act is to establish a Federal program that will create jobs and increase economic development in underserved areas by promoting cooperative development in such areas.

3.

Definitions

In this Act:

(1)

Secretary

The term Secretary means the Secretary of Housing and Urban Development, or his or her designee.

(2)

National cooperative development program

The term National Cooperative Development Program means the program established under section 4(a).

(3)

National cooperative development center

The term national cooperative development center means a nonprofit organization, college, or university, or a group of such organizations colleges, or universities, selected by the Secretary pursuant to section 4(b)(1) to award national center funds to local cooperative development centers and cooperative organizations, and carry out other duties and responsibilities in accordance with this Act.

(4)

Local cooperative development center

The term local cooperative development center means a nonprofit organization, college, or university, or a group of such organizations, colleges, or universities, with expertise in establishing and developing cooperative organizations.

(5)

Cooperative organization

The term cooperative organization means an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

(6)

Cooperative development

The term cooperative development means technical assistance provided for the purpose of—

(A)

providing financial forecasting, feasibility analysis, business planning, and other preparatory activity to ensure that a cooperative organization, or organizations that are in the process of establishing such an organization, are grounded in sound business practices;

(B)

assisting with establishing incorporation documents, bylaws, and policies that ensure that cooperative organizations—

(i)

adhere to legal obligations of a local or State government or the Federal Government; and

(ii)

are governed by transparent and agreed-upon rules;

(C)

educating, with respect to how cooperative organizations function—

(i)

board members, management, and employees of cooperative organizations;

(ii)

local communities affected by such organizations and the general public; and

(iii)

professionals involved in cooperative development;

(D)

providing organizational planning for cooperative organizations, including board meetings and board development, and strategic planning;

(E)

hosting networking activities and conferences involving cooperative organizations, entities that work with such organizations, and professional organizations that engage in cooperative development;

(F)

providing professional development of professionals involved in cooperative development by offering training focused on cooperative development; and

(G)

providing administrative and operational set-up of cooperative organizations.

(7)

Eligible project

The term eligible project means a project that—

(A)

meets the eligibility criteria established by the national cooperative development center pursuant to section 5(a)(1)(E); and

(B)

serves an underserved area.

(8)

National center funds

The term national center funds means grant funds awarded to the national cooperative development center by the Secretary under the National Cooperative Development Program.

(9)

Underserved area

(A)

In general

The term underserved area means an area located within—

(i)

a census tract that is defined as low- or moderate-income by the Bureau of the Census of the Department of Commerce;

(ii)

a population census tract that is treated as a low-income community under section 45D(e) of the Internal Revenue Code of 1986; or

(iii)

subject to subparagraph (B), an area that—

(I)

is adjacent to an area that meets the requirements of either clause (i) or (ii); and

(II)

is given special approval by the national cooperative development center to be classified as an underserved area.

(B)

Limitation

The national cooperative development center shall limit the number of projects funded under the National Cooperative Development Program that are located in an area described in subparagraph (A)(iii).

(10)

Women- and minority-owned business

The term women- and minority-owned business shall have the meaning given such term in regulations prescribed by the Secretary.

4.

Establishment of national cooperative development program and selection of the national center

(a)

Establishment of program

The Secretary shall establish a program to be known as the National Cooperative Development Program to carry out the purpose described in section 2(b).

(b)

Selection of National Cooperative Development Center

(1)

In general

Not later than 1 year after the date of the enactment of this Act, the Secretary shall select, through a competitive process, and enter into a grant agreement with a national cooperative development center that shall carry out its duties and responsibilities in accordance with this Act.

(2)

Considerations

In selecting the national cooperative development center under paragraph (1), the Secretary shall take into consideration the following:

(A)

The extent that the national cooperative development center has demonstrated expertise in cooperative development.

(B)

The experience that such national center has in providing—

(i)

technical and financial assistance to cooperative organizations in underserved areas; and

(ii)

educational resources to such organizations.

(c)

Submittal of strategic plan to Secretary by the National Center

(1)

In general

Not later than 90 days after the Secretary has selected the national cooperative development center under subsection (b)(1), such national center shall submit to the Secretary a strategic plan that outlines how the national center intends on utilizing national center funds, and such plan shall specifically include—

(A)

a proposed budget, including the proposed administrative costs;

(B)

a detailed description of how the national center will use national center funds to promote, or engage in, cooperative development; and

(C)

other pertinent information that the Secretary may require.

(2)

Review of plan

The Secretary shall review the strategic plan submitted under paragraph (1) and ensure that the administrative costs will not exceed the limitation provided under section 5(a)(2)(B)(i).

(3)

Approval required

Not later than 60 days after the submittal of the strategic plan under paragraph (1), the Secretary shall approve or reject such plan. In the case that the Secretary—

(A)

approves such plan, the Secretary shall disperse national center funds within 1 year after such approval; or

(B)

rejects such plan, not later than 60 days after such rejection, such national center shall resubmit a revised plan.

(d)

Establishing performance targets

(1)

HUD

The Secretary shall establish performance targets for the national cooperative development center, which shall include, at a minimum, the following requirements:

(A)

Focus on women- and minority-owned cooperative organizations

A significant percentage of projects funded with national center funds shall involve cooperative organizations that are women- or minority-owned.

(B)

Focus on underserved areas

A substantial portion of the projects funded by local cooperative development centers with national center funds shall serve communities located in an underserved area.

(C)

Effectiveness of assistance

Assistance provided by the national cooperative development center to local cooperative development centers shall be evaluated based on—

(i)

the level of responsiveness of the national cooperative development center to requests for assistance;

(ii)

the ability of the national cooperative development center to craft programs that help local cooperative development centers establish new cooperative organizations; and

(iii)

measurable economic results in local communities that local cooperative development centers serve.

(2)

Local cooperative development centers

Each local cooperative development center awarded national center funds shall establish, in coordination with the national cooperative development center, performance targets that must be met at the end of each year in which the entity receives grant funds. Such targets shall be approved by the national cooperative development center.

5.

National cooperative development center

(a)

Duties of the national cooperative development center

(1)

In general

The national cooperative development center shall—

(A)

submit to the Secretary a strategic plan in accordance with section (4)(c)(1);

(B)

develop technical assistance, educational, and other materials to assist local cooperative development centers that are receiving national center funds develop cooperative organizations;

(C)

monitor and evaluate the performance of such local centers;

(D)

provide guidance, information on best practices, and technical assistance to communities seeking to establish cooperative organizations;

(E)

establish the eligibility criteria for projects to be carried out using national center funds; and

(F)

develop program and reporting guidelines, as approved by the Secretary.

(2)

Use of national center funds

(A)

In general

The national cooperative development center may use national center funds to undertake activities that promote cooperative development, including—

(i)

distributing national center funds to local cooperative development centers, either selected under clause (i) of subparagraph (C) or established under subsection (b), in accordance with such subparagraph;

(ii)

partnering with a financial institution to—

(I)

establish a revolving loan program, subject to the limitation under subparagraph (B)(ii)(II), that will provide loans to cooperative organizations; and

(II)

develop other loan programs and financial products that can be accessed by local cooperative development centers to support the development and retention of cooperative organizations;

(iii)

providing technical assistance in areas where local cooperative development centers do not provide such assistance, especially assistance for cooperative organizations at the national level;

(iv)

funding reasonable administrative costs approved by the Secretary in accordance with section 4(c)(3);

(v)

providing funding for ongoing professional training of providers of technical assistance and supporting existing professional development training for organizations engaged in cooperative development;

(vi)

establishing and developing local cooperative development centers pursuant to subsection (b); and

(vii)

carrying out any other activities that promote cooperative development, as determined by the Secretary.

(B)

Allocation of national center funds

The national cooperative development center shall allocate national center funds in the following manner:

(i)

Shall reserve not more than 10 percent for administrative purposes.

(ii)

Of the national center funds not allocated for administrative costs under clause (i)—

(I)

55 percent shall be awarded to local cooperative development centers; and

(II)

45 percent shall be allocated to establish the revolving loan program referred to clause (ii)(I) of subparagraph (A) and undertake any other activity described under such subparagraph.

(C)

Distribution of national center funds to local cooperative development centers

(i)

In general

The national cooperative development center shall select, through a competitive process, and enter into a grant agreement, for a period of no more than 3 years, with local cooperative development centers to promote, or engage in, cooperative development in accordance with this Act.

(ii)

Criteria for selection

The national cooperative development center shall, in consultation with the Secretary, establish the criteria for selecting the local cooperative development centers under clause (i), taking into account the considerations under clause (iii).

(iii)

Considerations

In selecting local cooperative development centers under clause (ii), the national cooperative development center shall take into consideration the following:

(I)

The technical capacity to carry out eligible projects.

(II)

The ability to deliver technical assistance in underserved areas.

(III)

The capacity and commitment to offering cooperative development in underserved areas.

(IV)

The ability to come up with the expected matching funding of not less than 15 percent of national funds received by the local cooperative development center.

(V)

The presence of eligible projects.

(VI)

The track record in developing successful cooperative organizations.

(VII)

The degree of community engagement and support.

(VIII)

The ability to have a positive economic impact on an area through job creation or retention, affordable housing creation, or wealth creation.

(IX)

Such other qualities as the national cooperative development center may determine.

(D)

Multi-year funding permitted

The national cooperative development center may award national center funds to a local cooperative development center for more than 1 fiscal year.

(E)

Violation of grant agreement

If the national cooperative development center determines that an entity awarded grant funds under National Cooperative Development Program has not met the performance targets established pursuant to section 4(d), is not making reasonable progress toward meeting such measures, or is otherwise in violation of the grant agreement, the national center may—

(i)

withhold financial assistance until the performance measures are met; or

(ii)

terminate the grant agreement established under section 5(a)(2)(C)(i).

(b)

Establishment of new local cooperative development centers

(1)

In general

The national cooperative development center may establish up to 3 local cooperative development centers in each fiscal year.

(2)

Selection criteria

The national cooperative development center shall establish the criteria for the selection of organizations that form the local cooperative development centers established under subparagraph (1).

(3)

Location

In addition to the criteria established pursuant to subparagraph (2), a local cooperative development center established under subparagraph (1) shall be located in a region of the United States or economic sector where no other local cooperative development centers are located.

(4)

Limitations on funding

A local cooperative development center established under subparagraph (1) may be awarded national center funds for no more than 3 years. After the expiration of such 3-year period, in order to be eligible for a grant under the National Cooperative Development Program, such local center would be required to compete for such funds in accordance with subsection (a)(2)(C).

6.

Local cooperative development centers

(a)

Use of funds by local cooperative development centers

A local cooperative development center selected under section 5(a)(2)(C)(i) may use national center funds to undertake activities that promote cooperative development.

(b)

Availability of funds

(1)

In general

A local cooperative development center awarded national center funds shall—

(A)

obligate any such funds not later than 3 years after the date on which the such funds were awarded to such local center; and

(B)

expend any such funds not later than 4 years after such date.

(2)

Unobligated amounts

If national center funds awarded to a local cooperative development center are not obligated by the period described in paragraph (1)(A), the national cooperative development center may rescind and award such funds to another local cooperative development center in accordance with this Act.

(3)

Report

Not later than 1 year after receiving national center funds, and annually thereafter, a local cooperative development center selected under section 5(a)(2)(C)(i) or established under section 5(b) shall submit to the national cooperative development center a report that includes—

(A)

the total amount of grant funds that have been expended;

(B)

a description of the activities undertaken by such local center;

(C)

an evaluation of each project funded with national center funds;

(D)

an assessment of the economic impact of the projects funded with national center funds; and

(E)

other information as the Secretary or the national cooperative development center may require.

7.

Report to Congress

Not later than 3 years after the date of the enactment of this Act, and annually thereafter, the Secretary, in collaboration with the national cooperative development center, shall submit to Congress a report includes—

(1)

information on the number of cooperatives created;

(2)

best practices from the local cooperative development centers that are awarded national center funds and the economic benefits to the local community in which such center serves resulting from such use of funds;

(3)

an evaluation of performance targets established pursuant to section 4(d);

(4)

case studies featuring select cooperative organizations that benefitted from the National Cooperative Development Program; and

(5)

any additional information, including statistics, that would help promote future cooperative development.

8.

Regulations

Not later than 180 days after the date of the enactment of this Act, the Secretary shall issue regulations necessary to carry out its provisions.

9.

Authorization of appropriations

There are authorized to be appropriated to the Secretary for the award of grants under the National Cooperative Development Program, to remain available until expended—

(1)

$25,000,000 for fiscal year 2012;

(2)

$25,000,000 for fiscal year 2013;

(3)

$25,000,000 for fiscal year 2014;

(4)

$25,000,000 for fiscal year 2015; and

(5)

$25,000,000 for fiscal year 2016.