Chapter 15

Community Development Investments

Section 1. Authority. Public Law 102-485, enacted by Congress October 23, 1992, authorizes national banks to invest in community development projects designed to promote the welfare of low and moderate income communities and families by providing housing, services or jobs. [12 U.S.C. 24 Eleventh] Public Law 102-485 authorizes state banks which are members of the federal reserve system to make similar investments to the extent permitted by state law. [12 U.S.C. 338a]. The Federal Deposit Insurance Corporation has adopted rules to authorize similar investments for insured state banks. [12 CFR Ch. III, Part 362] The state banking commissioner is authorized by W.S. 13-3-704 to authorize state banks to engage in banking activities in which national banks are authorized to engage. These rules are adopted pursuant to the authority of W.S. 13-3-704.

Section 2. Purpose. It is the purpose of these rules to authorize state banks to promote the public welfare through investments in community development projects for low or moderate income families, while ensuring that such investments do not endanger the safety and soundness of the bank and are consistent with all requirements of law.

Section 3. Definitions. As used in Chapter 15 of these rules:

1. (a) “Area in which a housing project is located” means the smallest geographical subdivision surrounding the site of the housing project for which state income statistics are available. The “area” may be the city or town, county or the state if income statistics for a smaller area adjacent to the project site are not available;
2. (b) “Lower income” means income that is less than or equal to the median income in the area in which the qualified housing project is located;

3. (c) “Qualified housing project” means residential real estate intended to primarily benefit lower income persons throughout the period of the bank’s investment, including:

   1. (i) A project eligible for the low income housing tax credit under section 42 of the Internal Revenue Code [26 U.S.C. 42]; or
   2. (ii) A residential real estate project in which fifty percent (50%) or more of the housing units are occupied or to be occupied by lower income persons.

Section 4. Investment Authorized. A bank chartered under the laws of this state may invest as limited partner in a real estate limited partnership, the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation, or new construction of a qualified housing project.

Section 5. Investment Restrictions.

1. (a) The real estate limited partnership in which a bank invests as a limited partner shall meet the following criteria:

   1. (i) The limited partnership may operate only in the state of Wyoming;
   2. (ii) The limited partnership must be structured to limit the bank’s liability to an amount not exceeding the bank’s capital investment and any specific contingent liabilities, to avoid bank participation in the control of the business of the partnership, and to reflect steps taken by the bank to strictly limit its activities within the partnership, consistent with state law, so that the bank clearly maintains its limited partner status;
   3. (iii) The activities of the limited partnership must be restricted to acquiring, developing, rehabilitating, managing and selling or renting qualified housing projects.
2. (b) A bank may not invest in shares or equities of a corporation in violation of W.S. 13-3-202.

Section 6. Investment Limitation. The investment in a partnership authorized by Section 4, may not exceed two percent (2%) of the bank’s capital and surplus, including undivided profits and reserves, and the bank’s aggregate investment in all such partnerships or projects may not exceed five percent (5%) of its capital and surplus, including undivided profits and reserves. Legally binding commitments shall be included as part of the bank’s investment.

Section 7. Examination. The community development investments of a bank are subject to examination by the state banking commissioner in accordance with W.S. 13-3-702(a), and all reports, agreements and documentation necessary to ensure compliance with state and federal laws and regulations shall be provided upon request as provided by W.S. 13-3-701(d).

Section 8. Remedial Action. A community development project investment which violates any state or federal law or regulation, or which is inconsistent with safe and sound operation of the bank, or which poses a significant risk of impairment of the bank’s capital, is an unsound and unauthorized practice subject to remedial action as provided by W.S. 13-3-104.