Release of Federal Regulator Q&A on CRA
July 15, 2016Today, the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation released a notice on the Interagency Questions and Answers Regarding Community Investment. This notice announces a new Q&A document and annunciates the changes from earlier drafts.
The pertinent section for the Historic Tax Credit reads as follows and can be found beginning at Page 16 of the document:
Several commenters representing the Historic Tax Credit (HTC) industry suggested changes to the proposed Q&A that would expand and clarify the circumstances under which CRA consideration would be available for loans and investments related to projects involving HTCs. These commenters suggested the Agencies amend Q&A § __.12(g)(3) – 1 to create a presumption that activities related to HTC projects qualify for CRA consideration as promoting economic development by financing small businesses and small farms. Because not all HTC projects would meet the requirements to qualify for CRA consideration under 12 CFR __.12(g)(3), the Agencies believe it would be inappropriate to grant such a presumption. Nonetheless, in instances in which loans to, or investments in, projects that receive HTCs do meet the regulatory definition of community development, including the geographic restrictions, the Agencies concur that CRA consideration should be provided. For example, a loan to, or investment in, an HTC project that does, in fact, relate to a facility that will house small businesses that support permanent job creation, retention, or improvement for low- or moderate-income individuals, in low- or moderate-income areas, or in areas targeted for redevelopment by Federal, state, local, or tribal governments may receive CRA consideration as promoting economic development. Further, a loan to or investment in an HTC project that will provide affordable housing or community services for low- or moderate-income individuals would meet the definition of community development as affordable housing or a community service targeted to low- or moderate-income individuals, respectively. Similarly, loans to or investments in HTC projects may also meet the definition of community development when the project revitalizes or stabilizes a low- or moderate-income geography, designated disaster area, or a designated distressed or underserved nonmetropolitan middle-income geography. Greater weight will be given to those HTC-related activities that are most responsive to community credit needs, including the needs of low- or moderate-income individuals or geographies. See Q&As § __.12(g) – 1, § __.12(g)(2) – 1, § __.12(g)(4) – 2, § __.12(g)(4)(i) – 1, and § __.12(g)(4)(ii) – 2 through – 4.
The release is below and the full notice can be found here (http://www.occ.gov/news-issuances/news-releases/2016/nr-ia-2016-82a.pdf).
Also, for additional insight on when bank regulators consider HTC investments eligible for CRA credit, see the Novogradac Journal Article by John Leith-Tetrault.
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Category: Government Reports / Tax Credit News
Release of Federal Regulator Q&A on CRA
July 15, 2016Today, the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation released a notice on the Interagency Questions and Answers Regarding Community Investment. This notice announces a new Q&A document and annunciates the changes from earlier drafts.
The pertinent section for the Historic Tax Credit reads as follows and can be found beginning at Page 16 of the document:
Several commenters representing the Historic Tax Credit (HTC) industry suggested changes to the proposed Q&A that would expand and clarify the circumstances under which CRA consideration would be available for loans and investments related to projects involving HTCs. These commenters suggested the Agencies amend Q&A § __.12(g)(3) – 1 to create a presumption that activities related to HTC projects qualify for CRA consideration as promoting economic development by financing small businesses and small farms. Because not all HTC projects would meet the requirements to qualify for CRA consideration under 12 CFR __.12(g)(3), the Agencies believe it would be inappropriate to grant such a presumption. Nonetheless, in instances in which loans to, or investments in, projects that receive HTCs do meet the regulatory definition of community development, including the geographic restrictions, the Agencies concur that CRA consideration should be provided. For example, a loan to, or investment in, an HTC project that does, in fact, relate to a facility that will house small businesses that support permanent job creation, retention, or improvement for low- or moderate-income individuals, in low- or moderate-income areas, or in areas targeted for redevelopment by Federal, state, local, or tribal governments may receive CRA consideration as promoting economic development. Further, a loan to or investment in an HTC project that will provide affordable housing or community services for low- or moderate-income individuals would meet the definition of community development as affordable housing or a community service targeted to low- or moderate-income individuals, respectively. Similarly, loans to or investments in HTC projects may also meet the definition of community development when the project revitalizes or stabilizes a low- or moderate-income geography, designated disaster area, or a designated distressed or underserved nonmetropolitan middle-income geography. Greater weight will be given to those HTC-related activities that are most responsive to community credit needs, including the needs of low- or moderate-income individuals or geographies. See Q&As § __.12(g) – 1, § __.12(g)(2) – 1, § __.12(g)(4) – 2, § __.12(g)(4)(i) – 1, and § __.12(g)(4)(ii) – 2 through – 4.
The release is below and the full notice can be found here (http://www.occ.gov/news-issuances/news-releases/2016/nr-ia-2016-82a.pdf).
Also, for additional insight on when bank regulators consider HTC investments eligible for CRA credit, see the Novogradac Journal Article by John Leith-Tetrault.
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Category: Government Reports / Tax Credit News