Appendix A: CRA Method
1.0 Economic development
(The Size and Purpose Tests both must be met):
1.1 Test One: Size
According to the Department of Treasury an institution’s loan, investment, or service meets the ‘‘size’’ test if it finances:“either directly or through an intermediary, entities that either meet the size eligibility standards of the Small Business Administration’s Development Company (SBDC)or Small Business Investment Company (SBIC) programs, or have gross annual revenues of $1 million or less.”
Small Business Guidance
The OCC has provided guidance on the size test. A project meets the size test if its revenues at time of loan closing are less than the revenue threshold for a small business. There venues for a small business, as shown in the table below are determined by using the relevant NAICs codes for a particular project.
| NAICS Codes |
NAICS Industry Description |
Size Standards in millions of dollars |
|---|---|---|
| Sector 53- Real Estate and Rental and Leasing | ||
| Subsector 531- Real Estate | ||
| 531120 | Lessors of Non-residential Buildings (except Mini- warehouses) |
$27.5M |
Source: U.S. Small Business Administration – Table of Small Business
Standards Matched to North American Industry Classification System Codes
1.2 Test Two: Purpose
The Purpose Test requires that the loan or investment promote economic development in the surrounding area The Purpose Test is met through the improvement of conditions for LMI individuals, Individuals of any income in LMI census tracts and individuals of any income targeted for redevelopment by local government plans and
strategies.
2.0 Revitalize and Stabilize
(The Revitalize and Stabilize and Certain Geographies Tests both must be met):
2.1 Test One: Revitalize and Stabilize
According to the Department of Treasury, activities that revitalize or stabilize an LMI geography are: “activities that help to attract new, or retain existing, businesses or residents.Examiners will presume that an activity revitalizes or stabilizes an LMI geography if the activity has been approved by the governing board of an Enterprise Community or Empowerment Zone and is consistent with the board’s strategic plan. They will make the same presumption if the activity has received similar official designation as consistent with a federal, state, local, or tribal government plan for the revitalization or stabilization of the LMI geography.”28These activities include
- Activities that help attract and retain businesses and residents.
- Activities consistent with federal, state, local, or tribal government plans for revitalization
- Activities that facilitate environmental clean‐up or redevelopment of an industrial site in an effort to revitalize the surrounding area.
- Activities that create, retain, or improve jobs for LMIindividuals5.Federal EC or EZ Strategic Plan aligned activities that are approved by governing boards
2.2 Test Two: Certain Geographies
The Certain Geographies’ test has four sub tests, but only one of four must be met to fill the requirement. Based on our analysis, this project meets two of four sub tests. ‘Certain Geographies’ is met due to the redevelopment of a blighted and contaminated industrial property that benefits its census tract having 60% poverty as well as the five of nine surrounding census tracts (within one mile) that are LMI
- LMI census tracts
- Middle ‐ and upper‐income census tracts if the activity revitalizes an adjacent LMI tract
- Designated disaster areas
- Distressed or underserved, non-metropolitan middle-income geographies