Could we get credit as Loans to school districts which are locatd in middle or upper income area/tracts for Community Developement lending?

Go to the state of Michigan's education agency and obtain the "economically disadvantaged" percentage for the district. If it is greater than 50% you might have a chance.

It doesn't matter whether the district offices are located in a middle or high income census tract. Was that your question? Or are you saying there are nothing but middle and upper income census tracts in the ISD? That would be unusual, especially in an economically blighted state like Michigan.

Why is Michigan econimcally blighted?....just curious. My friend just moved up there.

hey Swiggy!

My old stompin' grounds up near Flint, Saginaw, and Bay City are devastated with the demise of the big 3 auto makers. Ford was the only one to make it without government money, but it didn't have plants in my towns. Those were all GM towns. There were more people living in those towns 50 years ago then there are now. Detroit as well, they are ghost towns and financially devastated.

I didn't mean to offend Michiganders, but that state just isn't what it used to be....

Tourism may be the only future Michigan has, that and controlling a big chunk of fresh water.

Ah ha!! I have been to Flint because that is where my friend used to live. She moved back down here to be near her aging Mom but couldn't find a job in her field so had to move back up there. She told me which town but I can't remember. I do remember her telling me how run down Flint had come to be.

I am new to CRA, and trying to find my footing. I am currently trying to identify CD loan and wanted to know if the "economically disadvantaged" percentage for the district enough or would it be good to have the school districts free & reduced lunch percentage as well? Does it matter if it is in a distressed or underserved county?

The term "economically disadvantaged" is the phrase school administrators use for student families that qualify for the National Free and Reduced Lunch Program.

Do not rely on the term "Title One". It is not the equivalent of having a majority of students eligible for free and reduced lunch.

Another trap to avoid is the situation where 80% of the median family income falls below the income eligibility amount for either free or reduced lunch. In this case you cannot use free and reduced lunch percentage or the economically disadvantaged percentage as a proxy for low-and-moderate-income. Since you are from Texas, there are certain MSAs where this is the case, Abilene for example.

I'm stupid, but I've read and re-read your post and I don't understand what you're saying.

No you are not Swiggy, I am clear as mud in that last paragraph...

Under the National School Lunch Program (NSLP), to be eligible for reduced price meals, family income cannot be greater than $42,643 for the 2012-2013 calendar year. For the free meal program, family income can be no greater than $29,965 annually for the 2012-2013 school year. The Area Median Income (AMI) for Abilene, Texas, as estimated by HUD for 2012, is $52,900. Low- to moderate- income (LMI) is defined as median family income that is less than 80% of the AMI, which is $42,320. The income limits for participation in the NSLP must fall below 80% of AMI in order to use the free and reduced lunch dollar amount as a proxy for LMI.

So in Abilene, 80% of the AMI is lower than the reduced lunch amount - therefore, my examiners tell me I can't use free and reduced lunch as a proxy for the definition of LMI.

Does that make more sense? This doesn't happen often, but when it does it is a deal killer for getting CRA credit when we are working in public schools.

OK....now I understand. We have no branches in Abilene, fortunately, but I guess I need to pay attention to that for where we DO have branches.

Great information...Thanks!

Another question I have is on farm loans over $500,000. If a farm loan greater than $500,000 is made to a borrower in a distressed and/or underserved county the loan can be count as a community development loan…right?

A distressed or underserved middle-income geography is designated such due to poverty, unemployment, and/or population loss. From my experience, examiners typically will look to see if the loan creates permanent jobs or helps to retain businesses and residents. Again, permanent jobs are the key. Had a loan to a municupality to fund a sewer infrastructure project that would bring water to a rural community. Since the jobs created were temporary (construction of sewer line), the examiner did not allow us CDL credit. My thought process was that expanding the community's sewer system would help retain businesses and residents, but the examiner did not see it that way. That was my examiner, others may have had a different experience.

FROM THE Q AND Aa

§ll.12(g)(4)(iii)—3: What activities are considered to ‘‘revitalize or stabilize’’ a distressed nonmetropolitan middleincome geography, and how are those activities evaluated?

A3. An activity revitalizes or stabilizes a distressed nonmetropolitan middle-income geography if it helps to attract new, or retain existing, businesses or residents. An activity will be presumed to revitalize or stabilize the area if the activity is consistent with a bona fide government revitalization or stabilization plan. The Agencies Generally will consider all activities that revitalize or stabilize a distressed nonmetropolitan middle-income geography, but will give greater weight to those activities that are most responsive to community needs, including needs of low- or moderateincome individuals or neighborhoods.

Qualifying activities may include, for example, providing financing to attract a major new employer that will create long-term job opportunities, including for low- and moderate-income individuals, and activities that provide financing or other assistance for essential infrastructure or facilities necessary to attract or retain businesses or residents.

I would think you should have received credit for "essential infrastructure".

I'm trying to write an audit on CRA and trying to understand Community Development Loans.

Is a loan to an individual for their residence in a Low-to-moderate income tract (LMI) considered a Community Development Loan for an ISB or is it only when they serve more than one person/household?

A loan to an individual for their home is not a community development loan. However, if you make mortgages to low to moderate income borrowers in your AA (not just to people in low to moderate tracts who could very well be a higher income class) and can show that you do lend for consumer and business purposes in low to moderate tracts, that will help with the geographic distribution portion of your CRA exam and help the rating.

HMDA reportable loans (or just home mortgages if you are not a HMDA reporter) weigh heavily in CRA.