Pub. 6 2016 Issue 2

debt issued by public housing authori- ties. But comfort with the structure does not necessarily exempt institutions from documenting that each housing bond issuance benefited low-to-moder- ate income individuals. New, innovative structures, including Tax Exempt Municipal Securities (TEMS), provide increased transparency and can more easily be applied to and documented for an institution’s CRA investment test than traditional public housing debt. TEMS finance the acquisition or origination of underlying mortgages that conform to Internal Revenue Code Section 143 requirements, including the stipulation that, generally, all owner- financing provided under the issue 9 “… is provided for mortgagors whose fam- ily income is 115 percent or less of the applicable median family income.” Moreover, because each TEMS issue is backed by a single 30 year Ginnie Mae, Fannie Mae, or Freddie Mac MBS, rather than a pool of loans or securities, underlying loan level details are available to investors. PURPOSE Providing affordable housing to low-to-moderate income individuals is perhaps the most obvious example of a community development purpose and is mentioned specifically in CRA regula- tions. Moreover, all state public housing authorities are purposefully designed to meet the housing needs of residents that are not met in the private market. For example, Utah Housing Corp was chartered to 10 “…help provide affordable housing for low and moderate income persons.” While not meant to be comprehensive, we hope this article highlights munici- pal bonds as a lesser known, but viable, CRA investment alternative. Indeed, mu- nicipal debt outside of the four categories mentioned above might qualify if the debt revitalizes or stabilizes infrastruc- ture or service projects 11 . Please reach out to the Stifel Financial Institution Strate- gies team or your Stifel representative to discuss further. w REFERENCES 1 Interagency Questions and Answers Regarding Community Reinvestment, FDIC CRACompliance Manual, May 2014. 2 Supplemental Interagency Questions and Answers Regard - ing Community Reinvestment, FDIC CRACompliance Manual, May 2015. 3 Public Disclosure- Community Reinvestment Act Perfor - mance Evaluation, Office of the Comptroller of the Currency, June 2012. 4 Interagency Questions and Answers Regarding Community Reinvestment, FDIC CRACompliance Manual, May 2015. 5 Student Poverty FRPM Data, California Department of Education, 2015. 6 Digest of Education Statistics, National Center for Educa - tion Statistics, 2015. 7 American Recovery and Reinvestment Act of 2009 8 Interagency Questions and Answers Regarding Community Reinvestment, FDIC CRACompliance Manual, May 2015. 9 26 U.S.C. § 143(f)(1) 10 About UHC, Utah Housing Corp 11 Interagency Correspondence, OCC Community and Consumer Law Division, Michael S. Bylsma November, 20, 1997. RELIABILITY providing our banking clients with the best business solutions Buchalter Nemer a full service business law firm www.buchalter.com 24 www.azbankers.org CRA w Continued from page 23