LIHTC - Equity Fund

In the past, the bank directly purchased LIHTCs. We received investment credit for: (1) the amount purchased during the current exam cycle, and (2) the book value of LIHTCs purchased in prior exam cycles.

The bank is now considering investing in an equity fund that purchases LIHTCs so that we can diversify risk. I want to ensure we'll receive the same amount of CD investment credit going thru the fund as we did for directly purchasing the LIHTCs.

Are my following conclusions correct?

1. Bank will receive CD investment credit if the fund invests in LIHTCs in the assessment area. If there aren't any viable LIHTCs in the AA, and the fund invests in LIHTCs in the broader regional or state wide area, the bank will receive CD investment credit.

2. The bank will receive investment credit for: (1) the amount purchased during the current exam cycle, and (2) the book value of the LIHTC purchased in prior exam cycles.

Thanks.

You have it correctly. The investment in the LIHTCs would receive the same consideration as your direct purchase of the credits. AR.

Thank you for confirming. This could be a big initiative for us, so I wanted to ensure I understood correctly.

You may not receive equivalent qualitative credit. Q&A .12(h)-6 says in part: The institution’s assessment area(s) need not receive an immediate or direct benefit from the institution’s specific participation in the broader organization or activity, provided that the purpose, mandate, or function of the organization or activity includes serving geographies or individuals located within the institution’s assessment area(s).
and .12(h) - 7 says With larger regional areas, benefit to the institution’s assessment area(s) may be diffused and, thus, less responsive to assessment area needs.