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    Part 24 Community Development Investments

    National banks may make investments primarily designed to promote the public welfare under the community development investment authority in 12 USC 24 (Eleventh) and its implementing regulation, 12 CFR 24 (Part 24). This authority allows banks to make investments that primarily benefit low- and moderate-income individuals, low- and moderate-income areas, or areas targeted for redevelopment by local, state, tribal, or federal government. Examples of these investments include supporting affordable housing and other real estate development, providing equity for start-up and small business expansion, revitalizing or stabilizing a government-designated area. The materials on this web page have been developed to assist national banks in making Part 24 investments and are organized under the following categories:

    If you need additional assistance, please call the Community Development Division at (202) 874-4930 or contact your District Community Affairs Officer.

    OCC’s Part 24 Resources

    Community Developments Investments, On-line magazine- OCC’s new on-line electronic magazine (e-zine) version of its award winning Community Development newsletter. Each issue of this quarterly e-zine will focus on an investment topic of interest to bankers and examiners, and provide feature articles and resources on that topic. The e-zine shares the perspective of bankers and community development practitioners on topics that illustrate the creative side of community development investing and offer common qualities that can be applied to other investments. It also includes investment opportunities in the OCC Districts, easy access to resources on community development investment topics, and the OCC’s public welfare investment authority (12 CFR 24).

    • Summer 2004 : This issue looks at how New Markets Tax Credits (NMTCs) can help fill financial gaps for projects located in economically distressed communities. The e-zine article describes bank strategies for using NMTCs to reach markets through projects that might otherwise be denied financing or only find financing at too high a cost for deal success.

    Community and Economic Development Entities, Community Development Projects, and Other Public Welfare Investments
    The OCC has amended 12 CFR part 24, which describes its rules governing public welfare investments by national banks. The amended rule was published in the Federal Register on August 15, 2003 and is effective on September 15, 2003 (see Bulletin 2003-39 ). These changes are intended to encourage new and expanded investments by national banks supporting community and economic development efforts and include:

    • Updating the definition section of the regulation to reflect the additional types of public welfare investment structures that have become more common in recent years and that are permissible under the governing statute.
    • Adding a new option to the public welfare standard by permitting an investment that would receive consideration under CRA as a "qualified investment."
    • Clarifying how a national bank calculates the value of its public welfare investments for purposes of complying with the rule's investment limits.
    • Expanding the list of examples of qualifying public welfare investments that satisfy the rule's requirements.

    CD-1 - National Bank Community Development (Part 24) Investments -- The OCC recently revised its form CD-1 - National Bank Community Development (Part 24) Investments to be consistent with the final changes to 12 CFR Part 24, which were effective on September 15, 2003. The new form continues to use a check-list format that provides step-by-step guidance to national banks that submit information to the OCC about their Part 24 investments. A bank must submit the completed CD-1 form to provide either an after-the-fact notice or to request prior OCC approval of a community development investment under Part 24. The bank should send the completed CD-1 form to the Director, Community Development Division, Mail Stop 7-3, Office of the Comptroller of the Currency, Washington, DC 20219. The revised Part 24 regulation, the availability of the CD-1 form, and the effective date are described in Bulletin 2003-39. A Word version of the CD-1 form is also available which allows the user to either print or download the form. The CD-1 form is Section 508 compliant. Please see instructions for downloading and navigating the CD-1 form.

    Investments Requiring Prior OCC Approval Under Part 24 . OCC publishes this list of investments which have been determined to be inappropriate for banks’ self-certification.

    Part 24 Community Development Investment Precedent Letters . The OCC posts its precedent setting community development investment letters in the Electronic Interpretations and Actions section of OCC’s Web site. These investments were made consistent with the 12 CFR 24 authority and reflect precedent setting actions that are consistent with the public welfare and other requirements of the regulation. These letters are posted periodically, starting with the Electronic Interpretations and Actions for April 2004.

    Common Part 24 Questions are listed here to provide guidance on national bank investments using 12 CFR 24 authority or other appropriate national bank authority.

    Quick Reference Guide to Part 24 Investments describes the guidelines for community development investments covered by 12 CFR 24. It gives an easy-to-follow list of requirements and examples of how banks make investments.

    Regulation W Special Analysis: Impact on Community Development Corporations  (CDC) provides guidance for 12 CFR 24 investment proposals that: (1) present issues under sections 23A and 23B of the Federal Reserve Act, and (2) involve a holding company's transfer of an interest in its CDC to one or more subsidiary banks.

    Directory of 2002 National Bank Community Development Investments discusses recent trends in national bank community development investments and provides brief summaries of Part 24 investments made by national banks and their community development partners in 2002. It also provides a summary listing of national and regional funds in which banks invested in 2002 and geographic listings of investments with contact information. The 2001, 2000, 1999, 1998, 1997 editions of the directory are available on-line. Please contact the Community Development Division if you would like to obtain the 1994, 1995 or 1996 editions.

    First Quarter 2004: At-A-Glance Chart of National Bank Community Development Investments , illustrates national bank investments, made through the 12 CFR 24 authority. The OCC responded to these investments during the time period indicated.

    Compendium of National Bank Part 24 Investments in National and Regional Funds is an alphabetic listing of nationwide and regional funds in which national banks have made investments using the Part 24 community development investment authority.

    Part 24 Community Developments Topics

    OCC’s Community Developments newsletter highlights examples of Part 24 investments and other community development best practices. The following articles have been excerpted from recent editions of Community Developments.

    Bank Subsidiary Community Development Corporations

    Investment in the Future: Bank of America’s Community Development Corporation and the Power of Investments discusses how bank-owned CDCs can partner with neighborhood-based organizations to develop affordable housing and revitalize communities.

    CDFIs and Community Development Banks

    Community Development Financial Institutions and CD Banks – Natural Partners for Traditional Lenders . Comptroller of the Currency John D. Hawke, Jr. discusses the role and structure of CDFIs and CD banks and outlines financial and other incentives for bank investments and partnerships with these nontraditional institutions.

    Bank of America’s Strategic Approach to Investing in CDFIs reviews how banks can effectively leverage CDFIs to reach into corners of markets that banks typically don’t have the personnel and resources to serve.

    Multibank Small Business Mezzanine Funds describes how these funds can use bank investments to provide financing to provide “gap” financing to small and emerging businesses.

    Using Bank Enterprise Awards to Leverage Bank Investments outlines how the CDFI Fund’s Bank Enterprise Awards Program can provide financial support to banks increasing their investments in CDFI Fund certified community development financial institutions.

    Growing Opportunities in Bank-CDFI Partnerships provides bankers a framework for evaluating an investment in a CDFI.

    CD Venture Capital

    Ocean National Bank Community Development Invests in Venture Capital Fund reviews a community bank’s investment in a regional fund providing venture capital for small firms providing jobs for low- income people .

    Commercial Real Estate Community Development

    First Citizens’ Investments Create New Jobs in Charles City, Iowa discusses a community bank’s investment in “spec” industrial buildings designed to attract new employers to a state-designated Enterprise Zone.

    Multifamily Affordable Housing

    The Low-Income Housing Tax Credit Program: Community Bank Reaps More than Monetary Returns discusses a community bank’s Part 24 investments in this regional low-income housing tax credit fund .

    Tax Credits 101 provides a simple overview of the mechanics of low-income housing tax credits.

    Tax Credits Help Ease Severe Indian Country Housing Problem reviews how low-income housing tax credits are being used in Indian country.

    The Community Development Trust: Investing in Affordable Multifamily Housing describes the types of loans this Real Estate Investment Trust (REIT) makes in support of community development activities using national bank Part 24 investments and other private capital.

    New Markets Tax Credits

    Bank Enterprise Awards and New Markets Tax Credits: Two Tools to Increase the Flow of Private Capital to Targeted Markets .  CDFI Fund Director Tony Brown discusses investment opportunities for banks under the New Markets Tax Credit program.

    Part 24 Community Development Investments (Generally)

    The Community Reinvestment Act and Part 24 answers the commonly asked question of whether a Part 24 investment will receive positive consideration in a national bank’s CRA examination.

    Focus on Community Development Investments . Comptroller of the Currency John D. Hawke, Jr. discusses successful Part 24 investment partnerships between banks and community-based organizations.

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