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Guide to Community Development Precedent Letters

Last updated: 11/13/13

2013
2013-1 (PDF)Investment in Fund Using New Markets Tax Credits to Finance High Speed Fiber Optic and Microwave Connections in LMI Areas - A national bank may make an equity investment in a Fund that finances high-speed, fiber optic and microwave connections to remote, low- and moderate-income communities. 01/25/2013
2012
2012-1 (PDF)Investment in Fund Using New Markets Tax Credits to Finance the Construction of a Community-Scale, Wind Energy Facility - A national bank may make an equity investment in a Fund that finances the development and maintenance of a community-scale, wind-energy facility that is located in a LMI area. 09/14/2012
2011
2011-3 (PDF)Investment in Fund Using New Markets Tax Credits to Finance the Construction of a Windmill Part Production Facility - A national bank may make an equity investment in a Fund that finances the construction of a wind turbine, component part production facility, which is located in a LMI area, and the purchase of related machinery and equipment. 06/17/2011
1131 (PDF)OCC Issues Interpretive Letter Concluding that a National Bank May Dispose of DPC Real Estate by Transferring the Property to the Bank's Community Development Corporation Subsidiary - The OCC issued an interpretive letter ("Letter 1131") in which it concluded that a national bank could meet its obligation to dispose of a parcel of DPC real property (“DPC Property”) by transferring the DPC Property to a limited partnership wholly-owned by the Bank's Community Development Corporation subsidiary. The DPC Property was a Low-Income Housing Tax Credit development project that the Bank acquired by deed in lieu of foreclosure. Although the Bank held the DPC Property pursuant to its authority to hold DPC assets, the OCC states that the DPC Property is also a permissible public welfare investment because it primarily benefits low- and moderate-income individuals. Letter 1131 concludes that the Bank can accomplish the required "disposition" by transferring the DPC Property to the CDC Subsidiary because the CDC Subsidiary's business is to make public welfare investments such as investments in the DPC Property. Accordingly, the Bank can, by using the CDC Subsidiary, extend the Bank's holding and development period for the DPC Property beyond the five-year period allowed under the Bank's DPC Authority. 4/15/2011.
2011-2 (PDF)Investment in Fund Using New Markets Tax Credits to Finance Wind Turbines for LMI Area - A national bank may make an equity investment in the Harbor Wind Investment Fund, Limited Liability Company. The purpose of the Fund, which primarily benefits low- and moderate-income areas, is to finance the construction and operation of wind turbines. 12/15/2011
2011-1 (PDF)Investment in Fund to Provide Financial Products and Services for LMI Consumers - The purpose of the Fund, which primarily benefits low- and moderate-income individuals, is to provide financing to companies that deliver financial products and services targeted to the underbanked and low- to moderate-income persons, as shown by lower prices and credit, savings and investment. 04/05/2011
2009
2009-6 (PDF)Investment in Fund to Install Photovoltaic System in Low income Housing Tax Credit Project - A national bank may make an investment in a Community and Economic Development Entity that will install photovoltaic systems in low-income housing tax credit projects. These systems will qualify for renewable energy tax credits. 12/16/2009
2009-5 (PDF)Investment in Fund for Construction of Rent-to-Own Affordable Rental Housing - A national bank may make an investment in a Community and Economic Development Entity, which will use New Markets Tax Credits, for the construction of a rent-to-own affordable housing complex in a low- and moderate-income area. 06/17/2009
2009-4 (PDF)Investment in Fund to Renovate and Lease a Residential Drug and Alcohol Treatment Center - A national bank may make an investment in a Community and Economic Development Entity, which utilizes New Markets Tax Credits, for the renovation and lease of a residential drug and alcohol treatment center in a low- and moderate-income area. 06/17/2009
2009-3 (PDF)Investment in Fund to Construct Industrial Facility on Indian Reservation - A national bank may make an investment in a Community and Economic Development Entity that constructs an industrial facility that will produce jobs on an Indian Reservation in a low- and moderate-income area. 03/09/2009
2009-2 (PDF)Investment in Fund for Construction of Agricultural Facilities - A national bank may make an investment in a Community and Economic Development Entity that funds construction of agricultural product receiving bins, which will increase the tax base and produce jobs in a low- and moderate-income area. 01/06/2009
2009-1 (PDF)Investment in fund for solar energy producing facilities - A national bank may make an equity investment to acquire a membership interest in a fund (the Company) established as a limited liability company that will master lease a solar energy project financed by the Company. The managing member of the Company is a renewable energy utility company that designed, installed, insured, and maintained customized solar systems for industrial, commercial, and municipal enterprises. The investment primarily benefits low- and moderate-income areas. 02/17/2009
2008
2008-1 (PDF)Investment in fund for solar energy producing facilities - A national bank may invest in limited liability entities each of which will develop, acquire, install and maintain solar energy-producing facilities and provide electricity for specified properties. 07/31/2008
2007
2007-2 (PDF)Investment in the construction and sale of single family properties - A national bank through its subsidiary community development corporation may invest, using a combination of debt and equity, in the construction of single family homes located in low- or moderate-income communities, which are then sold to low and moderate income individuals. 10/11/2007
2007-1 (PDF)Investment in the renovation and resale of single family properties - A national bank through its wholly owned subsidiary community development corporation may invest, using a combination of debt and equity, in the acquisition and renovation of single family homes located in low- or moderate-income communities, which are then resold. 08/17/2007
2006
2006-1 (PDF)Fund Comprised of SBA Guaranteed Loans: A national bank may make an investment in a fund which invests in the federally guaranteed portion of Small Business Administration 7(a) loans.
1076 (PDF)Separation between Investment Limits and Legal Lending Limits
The letter clarifies that the investment authority contained in 12 U.S.C. § 24 (Eleventh) is separate and distinct from the lending limits provided in 12 U.S.C. § 84. Therefore, a national bank may make a direct or indirect investment under the investment authority contained in 12 U.S.C. § 24 (Eleventh) that promotes the public welfare by benefiting low- and moderate-income communities or families, subject to certain limits. Furthermore, a national bank may make loans or extensions of credit to one borrower up to the full amount permitted by 12 U.S.C. § 84 and implementing regulations in 12 C.F.R. Part 32, and also hold eligible securities of the same obligor up to the full amount permitted under 12 U.S.C. 24 (Seventh) and 12 C.F.R. Part 1.
2005
2005-3 (PDF)Investment in the purchase, construction, and operation of an ethanol plant
A national bank may make an investment in a community and economic development entity that will purchase, construct, and operate an ethanol plant because it is located in an LMI geography and will provide jobs to unskilled individuals. 07/20/2005
2005-2 (PDF)Investment in financing source for charter school facilities
A national bank may make an investment in a financing source for charter school facilities when the funds will be made available to charter schools in the mid-Atlantic region that enroll students from predominantly low-income households or are located in predominantly low-income neighborhoods. 04/13/2005
2005-1 (PDF)Investment in nonprofit making small loans to low-income parents transitioning from welfare to work
A national bank can make an investment in a private multi-service agency serving low-income parents transitioning from welfare to work. The agency provides small loans, for those workers who cannot get loans elsewhere, for the purposes of helping family members pay for unexpected expenses that can interfere with their ability to keep a job or stay in school. 04/07/2005
2004
2004-3 (PDF)2nd Trust Deed Permanent Loans
A national bank may invest, as a limited partner, in a community development entity formed under the federal New Markets Tax Credit program which acquires real estate loan made to qualified, active, low-income community businesses. The specific investment fund invests in 2nd trust deed permanent loans on retail, office, commercial, and industrial projects. 11/22/2004
2004-2 (PDF)Transitional Housing for Homeless
A national bank may invest, through its subsidiary community development corporation, in the acquisition and rehabilitation of a single-family dwelling to provide transitional housing for the homeless. The CDC will own and manage the property and residents of the facility will receive case management support from an established nonprofit social services provider. 04/26/2004
2004-1 (PDF)New Markets Tax Credit Investment Fund
A national bank invested in a leveraged new markets tax credit multi-investor limited partnership (Fund). The sponsor of the Fund is a Community Development Entity certified by the U.S. Treasury Department's Community Development Financial Institutions Fund. The Fund will make loans to or investments in qualified, active, low-income community businesses that, in turn, will qualify the Fund to receive new markets tax credits that have previously been allocated to the sponsor.08/30/2004
2003
2003-4 (PDF)Preferred stock in a foundation
A national bank may purchase preferred stock in a foundation that operates crime prevention programs in the nation's nursing homes. The foundation uses the bank's funds to purchase government and agency securities. Interest earned on these securities is used to fund crime prevention activities in nursing homes located in low- and moderate-income areas or occupied by low- and moderate-income residents. 11/17/2003
2003-3 (PDF)Preferred shares in a trust that acquires and owns tax-exempt participating and nonparticipating first mortgage bonds and other tax-exempt instruments
A national bank may purchase preferred shares in a trust that acquires and owns tax-exempt participating and nonparticipating first mortgage bonds and other tax-exempt instruments that are issued by various state or local government, agencies, or authorities. The proceeds from the bonds are used for financing affordable housing development and rehabilitation, and most of those properties also benefit from the use of federal low-income housing tax credits. 09/30/2003
2003-2 (PDF)Investment in a foundation
A national bank may make an investment in a foundation that will use the funds to help capitalize a loan pool, which makes loans that support affordable housing, community services, or permanent jobs for low- and moderate-income individuals, financing for small businesses; area revitalization or stabilization; or other activities, services or facilities that primarily promote the public welfare. 04/06/2003
2003-1 (PDF)Federal employment tax credits
A national bank may purchase an equity interest in a limited liability company (LLC) whose primary purpose is to invest in an operating company that employs individuals, which employment is expected to qualify the operating for federal employment tax credits, including the Work Opportunity Credit, the Welfare to Work Credit, and the Renewal Community Employment Credit. 09/26/2003
2002
2002-8 (PDF)Investment in partnership with Native American Nations
A national bank's community development corporation (CDC) subsidiary may provide financial support and financial services to assist economic development efforts of Native American Nationals directed toward low- and moderate-income communities. Specific proposed activities of the CDC include: (1) providing financial literacy services; (2) buying, selling, and leasing real estate, for example, in partnership with local housing authorities; ad (3) providing, servicing, and maintain ATMs and ATM and debit cards. 12/20/2002
2002-7 (PDF)Opinion of merchant banking regulation application of CDC investments
Merchant banking capital regulation does not apply to investments made in community development corporations (CDC) and community development projects. The merchant banking capital regulation, which established minimum capital requirements for certain equity investments in non-financial companies, does not apply to investments made in a CDC to promote the public welfare under 12 USC 24 (Eleventh). 11/27/2002
2002-6 (PDF)Investment financing for low- and moderate-income first-time homebuyers
A national bank's community development corporation (CDC) subsidiary may conduct various community and economic development activities that primarily benefit low- and moderate-income individuals, low- and moderate-income areas, or other areas targeted for redevelopment by local, state, federal, or tribal governments. Approved activities include providing financing at reduced rates to low- and moderate-income families that received subsidies under state and federal government programs for the purchase of their first homes. 09/23/2002
2002-5 (PDF)Investment financing to small business owner
A national bank's community development corporation (CDC) subsidiary may conduct various community and economic development activities that primarily benefit low- and moderate-income individuals, low- and moderate-income areas, or other areas targeted for redevelopment by local, state, federal, or tribal governments. Approved activities include providing working capital for a convenience and hardware store in a low- and moderate-income community. 07/18/2002
2002-4 (PDF)Investment financing to a medical student
A national bank's community development corporation (CDC) subsidiary may conduct various community and economic development activities that primarily benefit low- and moderate-income individuals, low- and moderate-income areas, or other areas targeted for redevelopment by local, state, federal, or tribal governments. Approved activities include providing financing the education of a medical student who had committed to work after graduation for a facility that provides medical services to low-income families. 05/03/2002
2002-3 (PDF)Investment financing for a state chartered school
A national bank's community development corporation (CDC) subsidiary may conduct various community and economic development activities that primarily benefit low- and moderate-income individuals, low- and moderate-income areas, or other areas targeted for redevelopment by local, state, federal, or tribal governments. Approved activities include providing financing to a corporation that owns and operates a charter school, funded by the state, that educates "at-risk" students, who are primarily low- and moderate-income and have exhibited behavioral or drug problems in other schools. 05/03/2002
2002-2 (PDF)Investment financing to renovate and lease a commercial building to Texas Workforce Commission
A national bank's community development corporation (CDC) subsidiary may conduct various community and economic development activities that primarily benefit low- and moderate-income individuals, low- and moderate-income areas, or other areas targeted for redevelopment by local, state, federal, or tribal governments. Approved activities include investing in an entity that renovated a commercial building leased to a state government agency that provides training to unemployed low- and moderate-income individuals and assists them in finding employment. 04/16/2002
2002-1 (PDF)Investment in shares of CDC subsidiary of affiliated national bank
A national bank may purchase shares in an existing community development corporation (CDC) subsidiary that previously had been formed and capitalized by another affiliated national bank. As a result of the new investments, the CDC subsidiary expanded its products and services to the states that the new shareholders served. 02/06/2002
2001
2001-4 (PDF)Agricultural Cooperative
Under Part 24, a national bank may purchase common stock in an agricultural cooperative, where the bank's liability was limited to the amount of its equity investment. The cooperative was initiated by a local economic development authority and local farmers and businesses as a way to promote the economic development of the area, and received financial support from both the economic development authority and the federal government. 09/04/2001
2001-3 (PDF)CD investments up to 10% Investment Limit
In connection with a request for prior approval of an affordable housing investment, the OCC approved a national bank's request to self-certify future affordable housing investments that would exceed 5 percent of its capital and surplus, up to a maximum of 10 percent of capital and surplus. The requirements of 12 CFR 24 relating to self-certification and all other requirements of the regulation will apply to the additional investments. 08/01/2001
2001-2 (PDF)Environmental Redevelopment Fund
National bank may purchase member shares in a limited liability company (LLC) that primarily benefits low- and moderate-income areas. The LLC provides financing to private and public sector borrowers for environmental analysis and remediation of properties with environmental contamination issues for reuse to attract new and growing businesses, create jobs, provide affordable housing, and support other community development efforts. 07/18/2001
2001-1 (PDF)Closed-End Mutual Fund
National bank may purchase an equity interest in a closed-end mutual fund that finances affordable housing primarily for low- and moderate-income individuals. The fund is structured as a Business Development Company under the Investment Company Act of 1940. The fund purchases securities backed by loans to homebuyers with incomes below 80 percent of median income as well as loans to sponsors of multifamily housing units that use federal low-income housing tax credits or financing provided by U.S. Department of Housing and Urban Development (HUD). 04/20/2001
2000
2000-3 (PDF)Historic tax credit investment
National bank may invest in Historic Tax Credit investment in the Central Vermont Arts Center Limited Partnership. The Partnership will finance the renovation of a vacant historic property located in an economic revitalization area in Barre City, Vermont. The general partner and project sponsor is a nonprofit corporation that will also lease space for artists and operate an art gallery and teaching facility. The facility will support the establishment of small businesses by providing artists and artisans with studio space and an opportunity to market their work. The proposal was consistent with 12 CFR 24 because the project was intended to serve as the cornerstone for renewed small business investment and area revitalization, and the property was located in an area that the local government had targeted for revitalization. 10/18/2000
2000-2 (PDF)Fund to acquire limited partnership interests in Native American affordable housing
National bank may make and investment in a fund created to acquire limited partnership interest in affordable rental properties that are located on, or near Native American reservation in Arizona, Wisconsin, Minnesota, Montana, North Dakota, south Dakota, and Wyoming. The fund's projects qualify for federal low-income housing tax credits and historic rehabilitation tax credits and primarily target low- and moderate-income persons and families. Each project is sponsored by an Indian Tribe, an affiliated Tribal housing Association, Indian Housing Authority, Indian Tribally Designated Housing Entity, Indian Nonprofit Housing Corporation, or similar tribal entity. 04/10/2000
2000-1 (PDF)Consolidation of Public Welfare Investments into CDC
National bank may consolidate public welfare investment activities in an existing community development corporation (CDC). The CDC would manage its portfolio so that the majority of its investments qualify as public welfare investments under 12 CFR 24. Thus, the CDC would be primarily engaged in making public welfare investments, and the bank's investments in the CDC would be designed primarily to promote the public welfare as required by 12 USC 24 (Eleventh). 02/14/2000
1999
1999-3 (PDF)Affordable housing lease-purchase transaction with a local school district
This letter approves a national bank's direct equity investment under 12 CFR 24 to engage in an affordable housing lease-purchase transaction with a local school district. This transaction involves a bank purchasing real property that would be leased to the local school district for a term of up to 10 years, with the school district taking ownership of the property at the end of the lease. During the 10-year lease period, the school district would sublet the properties to teachers earning less than 80 percent of the area median income. 09/01/1999
1999-2 (PDF)Financing a regional medical office facility that will meet essential health needs for the community
Letter approves a bank's investment in a community development corporation (CDC) financing a regional medical office facility that will meet essential health needs for the community. After the loan from the CDC is repaid, the medical office building and its equipment will be given to the regional authority developing and operating this facility. 05/11/1999
1999-1 (PDF)Investment in a real estate investment trust
Letter approves an investment in a real estate investment trust (REIT) created to foster affordable housing and community development. The REIT will provide capital investments to projects that are designed to support community development including affordable housing for low-or moderate-income individuals; community services targeted to low- or moderate-income individuals; activities that promote economic development by financing small businesses, and activities that revitalize or stabilize low- or moderate-income geographies. This REIT was formed in conjunction with a national nonprofit, community development intermediary that will be responsible for managing and maintaining the properties in the trust's portfolio. 02/25/1999