N.Y. Comp. Codes R. & Regs. Tit. 3 § 6.5 - Investments in community development entities or projects
(a) The Banking Board hereby finds that the
promulgation of this section is consistent with the policy of the State of New
York as declared in section 10 of the New York State Banking Law and thereby
protects the public interest, including the interest of depositors, creditors,
shareholders, stockholders and consumers and is necessary to achieve or
maintain parity between banks and trust companies and national banks with
respect to rights, powers, privileges, benefits, activities, loans, investments
or transactions.
(b) The Banking
Board hereby finds that title 12, United States Code,[FN*] sections 93a, 481
and 1818, 1994 edition, and title 12, Code of Federal Regulations,* part 24,
permits national banks to make investments designed primarily to promote the
public welfare, including the welfare of low-and moderate-income areas or
individuals, such as by providing housing, services or jobs.
(c) A bank or trust company may make equity
investments in community development entities or projects provided that any
such entity or project primarily serves a public purpose. An entity or project
will be deemed to serve a public purpose if it primarily benefits low- and
moderate-income individuals, low-and moderate-income areas, or other areas
targeted for redevelopment by the local, State, tribal or Federal government
(including Federal enterprise communities and Federal empowerment zones) by
providing or supporting one or more of the following activities:
(1) affordable housing, community services,
or permanent jobs for low- and moderate- income individuals;
(2) equity or debt financing for small
businesses;
(3) area revitalization
or stabilization; or
(4) other
activities, services, or facilities that primarily promote the public
welfare.
(d) In
addition, the bank or trust company should demonstrate that is not reasonably
practicable to obtain other private market financing for the proposed
investment, the extent to which the investment benefits communities otherwise
served by the bank and non-bank community support for or participation in the
investment. Community support or participation may be demonstrated in a variety
of ways, including but not limited to:
(1) in
the case of an investment in a CD entity with a board of directors,
representation on the board of directors by non-bank community representatives
with expertise relevant to the proposed investment;
(2) establishment of an advisory board for
the bank's community development activities that includes non-bank community
representatives with expertise relevant to the proposed investment;
(3) formation of a formal business
relationship with a community-based organization in connection with the
proposed investment;
(4)
contractual agreements with community partners to provide services in
connection with the proposed investment;
(5) joint ventures with local small
businesses in the proposed investment; and
(6) financing for the proposed investment
from the public sector or community development organizations.
(e) A bank or trust company's
aggregate outstanding investments under this Part may not exceed five percent
of its capital and surplus, unless the bank or trust company is at least
adequately capitalized and the Banking Department determines, by written
approval of the bank or trust company's proposed investment(s), that a higher
amount will pose no significant risk. In no case may a bank or trust company's
aggregate outstanding investments under this Part exceed 10 percent of its
capital and surplus. A bank or trust company may not make an investment under
this Part that would expose the bank or trust company to unlimited
liability.
(f) A bank or trust
company shall be eligible to use a self-certification process if it:
(1) is well capitalized within the meaning of
applicable Federal regulations;
(2)
has a composite rating of 1 or 2 under the Uniform Financial Institutions
Rating System and is not the subject of any regulatory orders or agreements;
and
(3) has a Community
Reinvestment Act rating of at least "satisfactory."
A bank or trust company that is adequately capitalized and that has a composite rating of 3 with demonstrable improving trends may seek written permission from the superintendent to self- certify investments made under this Part.
(g) An eligible bank or trust company may
self-certify the following investments without prior notice to or approval by
the Superintendent of Banks or the Banking Board:
(1) investments in an entity that finances,
acquires, develops, rehabilitates, manages, sells, or rents housing primarily
for low- and moderate-income individuals;
(2) investments that finance small businesses
(including equity or debt financing and investments in an entity that provides
loan guarantees) that are located in low- or moderate- income areas or that
produce or retain permanent jobs, the majority of which are held by low- and
moderate-income individuals;
(3)
investments that provide credit counseling, job training, community development
research, and similar technical assistance services for non-profit community
development organizations, low- and moderate-income individuals or areas, small
businesses located in low- or moderate-income areas or that produce or retain
permanent jobs, the majority of which are held by low- and moderate-income
individuals;
(4) investments in an
entity that acquires, develops, rehabilitates, manages, sells, or rents
commercial or industrial property that is located in a low-or moderate-income
area and occupied primarily by small businesses, or that is occupied primarily
by small businesses that produce or retain permanent jobs, the majority of
which are held by low- and moderate-income individuals;
(5) investments as a limited partner, or as a
partner in an entity that is itself a limited partner in a project with a
general partner that is, or is primarily owned and operated by, a
26 U.S.C.
501(c)(3) or (4) non-profit
corporation and that qualifies for the Federal low-income housing tax credit.
(This publication, the 1994 edition, published in 1995, may be viewed at the
New York State Banking Department, located at 2 Rector Street, New York, NY
10006 and the Department of State located at 41 State Street, Albany, NY 12231.
The United States Code is published by the Office of Law Revision Counsel of
the House of Representatives. This publication is for sale by the U.S.
Government Printing Office, Superintendent of Documents, Mail Stop SSOP,
Washington, DC 20402-9328);
(6)
investments in low- or moderate-income areas that produce or retain permanent
jobs, the majority of which are held by low- and moderate- income individuals;
and
(7) investments in a banking
organization that has been identified by the superintendent as a banking
organization with a community development focus or in a national bank that has
one or more offices or branches in New York and that has been approved by the
OCC as a national bank with a community development focus.
(h) An otherwise eligible bank or trust
company may not self-certify an investment if:
(1) the investment involves properties
carried on the bank's or trust company's books as "other real estate owned;"
or
(2) more than 25 percent of the
investment funds projects in a State or metropolitan area other than the states
or metropolitan areas in which the bank or trust company maintains its main
office or branches; or
(3) the
Banking Department determines, in published guidance, that the investment is
inappropriate for self-certification.
(i) To self-certify an investment, an
eligible bank or trust company shall submit to the superintendent a notice of
self-certification within 10 days after it makes the investment. The notice
shall include:
(1) the name of the entity or
project in which the bank or trust company has invested and the date on which
the investment was made;
(2) the
type of investment (equity or debt), the eligible investment activity that the
investment supports, and a brief description of the particular
investment;
(3) the amount of the
bank or trust company's total investment in the entity or project and the bank
or trust company's aggregate outstanding investments under this Part, including
commitments and the investment being self-certified;
(4) the percentage of the bank or trust
company's capital and surplus represented by the bank or trust company's
aggregate outstanding investments under this Part, including commitments and
the investment being self-certified;
(5) a statement certifying compliance with
subdivisions (c) and (d) of this section; and
(6) if necessary, a statement certifying that
no more than 25 percent of the investment funds projects in a state or
metropolitan area other than the states or metropolitan areas in which the bank
or trust company maintains its main office or branches.
(j) If a bank or trust company seeking to
make an investment may not self-certify the investment, it shall submit to the
Superintendent a request for prior approval to make the investment, including
the following information:
(1) the name of
the entity or project in which the bank or trust company proposed to invest and
the proposed investment date;
(2)
the type of investment (equity or debt), the eligible investment activity that
the investment supports, and a description of the particular
investment;
(3) the amount of the
bank or trust company's investment in the entity or project, and the bank or
trust company's aggregate outstanding investments under this Part, including
commitments and the investment being proposed;
(4) the percentage of the bank or trust
company's capital and surplus represented by the bank or trust company's
aggregate outstanding investments under this Part, including commitments and
the investment being proposed; and
(5) a statement certifying compliance with
subdivisions (c) and (d) of this section;
(k) In reviewing a proposal, the Banking
Department considers the following factors and other available information:
(1) whether the investment satisfies the
requirements of subdivisions (c) and (d) of this section;
(2) whether the investment is consistent with
the safe and sound operation of the bank or trust company; and
(3) whether the investment is consistent with
the requirements of this Part and the Banking Department's policies.
(l) Unless otherwise notified in
writing by the superintendent, the proposed investment shall be deemed approved
30 calendar days from the date on which the Banking Department receives the
bank or trust company's investment proposal. The Banking Department, by
notifying the bank or trust company, may extend its period for reviewing the
investment proposal. If so notified, the bank or trust company may make the
investment only with the Banking Department's written approval. The Banking
Department may impose one or more conditions in connection with its approval of
an investment under this Part. All approvals are subject to the condition that
a bank or trust company must conduct the approved activity in a manner
consistent with any published guidance issued by the Banking Department
regarding the activity.
[FN*] For information regarding the United States Code (USC or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see Supervisory Policy G 1.
Notes
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No prior version found.