|
APA Opposes CRA 'Streamlining' Below are APA's comments filed with the Office of Thrift Supervision objecting to proposed weakening of Community Redevelopment Act standards. The proposal would ease various CRA evaluation criteria. CRA is critical to housing and redevelopment in distressed communities. January 24, 2005 Regulation Comments To Whom It May Concern: The American Planning Association (APA) opposes the changes to regulatory oversight of the Community Reinvestment Act (CRA) by the Office of Thrift Supervision as promulgated in the Federal Register, Vol. 69, No. 226, 68257 – 68265. The proposed regulations threaten to significantly reduce community development financing and thrift services in the underserved low-income communities CRA was designed to assist. APA represents more than 37,000 planners, planning commissioners, local officials, academics, and engaged citizens nationwide. APA is committed to helping its members advance the revitalization of the nation’s communities through good planning and development practices. APA believes that CRA has been a critical resource in developing decent affordable housing for low- and moderate-income renters and homeowners across the country. CRA is equally vital as a catalyst for investment and development in these neighborhoods. Under CRA, banks and thrifts have an affirmative and continual obligation to serve low- and moderate-income communities. However, these regulatory changes would allow many of these institutions to avoid or significantly reduce this statutory obligation. As proposed by OTS, the new regulations would change the definition of “community development” to include services targeting rural areas and areas affected by natural disasters. Ostensibly, this change is intended to ensure an equitable distribution of investment toward rural areas. However, as drafted, the regulations offer an unacceptable loophole allowing large thrifts to suffer no CRA penalty if they offer community development financing to affluent communities that just happen to be in rural or disaster stricken areas. Any change in CRA oversight and monitoring must maintain the statute’s original intent of securing investment in low- and moderate-income areas. APA also urges OTS to reject proposed changes to the CRA exam process. As proposed, large thrifts subject to OTS oversight could opt to be evaluated under CRA solely or mostly based on its lending practices. Currently, thrifts are evaluated not only for lending but also for investment and services. The changes to the evaluation and exam process raise the troubling possibility that thrifts could sharply limit their investments in targeted neighborhoods and cut back on financial services to citizens in these areas and yet still pass muster under OTS’ weakened standard. The investment test is of particular importance since much of these funds are used to finance affordable rental housing through the Low Income Housing Tax Credit. LIHTC is the most widely used and effective tool to finance increasingly scarce affordable housing. The proposed rule, then, threatens not only the integrity of CRA but also the practical application of the LIHTC. Additional flexibility can be incorporated into the ratings matrix, but the scheme outlined in the proposed regulations provides insufficient guarantees that thrifts are adequately meeting CRA obligations. Some floor rating minimums for investments and services should be maintained in any rule granting new exam flexibility. Finally, we are troubled by the prospect of unilateral regulatory changes in CRA by one of the four responsible agencies. The previously coordinated and uniform oversight by OTS, the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Comptroller of the Currency has encouraged the involvement of local governments and community development organizations in the CRA process. The prospect of a patchwork of regulations affecting different financial institutions may have a chilling affect on public participation. Since its adoption in 1977, CRA has directly aided in the redevelopment of distressed, low-income communities, which have been historically underserved by financial services institutions. Furthermore, CRA has directed investment and leveraged financing amounting to more than $1 trillion according to estimates by the Local Initiatives Support Corporation. This dramatic infusion of capital has been accomplished without direct federal appropriations. For planners working to increase quality of life for citizens, expand housing opportunities, and increase development in existing neighborhoods, CRA has been among the most important federal tools and incentives. We urge your careful reconsideration of these issues and ask that you reject the proposed regulations. Thank you for your consideration. Sincerely,
W. Paul Farmer, AICP |
| |
Printer-Friendly Format
