Introduced Version SENATE BILL No. 408 _____ DIGEST OF INTRODUCED BILL Citations Affected: IC 28-1-11-14. Synopsis: Community investments by financial institutions. Amends the statute authorizing a bank or trust company to make investments in community based economic development to also authorize investments in: (1) any community and economic development entity, community development project, or other public welfare investment; and (2) tax equity finance transactions; subject to the investments being made in compliance with applicable federal regulations and any regulation, rule, policy, or guidance adopted by the department of financial institutions. Effective: July 1, 2022. Zay January 12, 2022, read first time and referred to Committee on Insurance and Financial Institutions. 2022 IN 408—LS 6818/DI 101 Introduced Second Regular Session of the 122nd General Assembly (2022) PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type. Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution. Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2021 Regular Session of the General Assembly. SENATE BILL No. 408 A BILL FOR AN ACT to amend the Indiana Code concerning financial institutions. Be it enacted by the General Assembly of the State of Indiana: 1 SECTION 1. IC 28-1-11-14, AS AMENDED BY P.L.73-2016, 2 SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE 3 JULY 1, 2022]: Sec. 14. (a) As used in this section, "community based 4 economic development" refers to activities that seek to address 5 economic development through affordable housing development or the 6 rehabilitation of qualified rehabilitated buildings or certified historic 7 structures, or that seeks to address economic causes of poverty within 8 specific geographic areas, revitalizing the economic and social base of 9 low income communities through activities that include: 10 (1) small business and micro-enterprise support; 11 (2) commercial, industrial, and retail revitalization, retention, and 12 expansion; 13 (3) capacity development and technical assistance support for 14 community development corporations; 15 (4) employment and training efforts; 16 (5) human resource development; and 17 (6) social service enterprises. 2022 IN 408—LS 6818/DI 101 2 1 (b) As used in this section, "community development corporation" 2 means a private, nonprofit corporation: 3 (1) whose board of directors is comprised primarily of community 4 representatives and business, civic, and community leaders; and 5 (2) whose principal purpose includes the provision of: 6 (A) housing; 7 (B) community based economic development projects; and 8 (C) social services; 9 that primarily benefit low-income individuals and communities. 10 (c) As used in this section, "capital and surplus" has the meaning set 11 forth in IC 28-1-1-3(10). 12 (d) As used in this section, "community and economic 13 development entity" has the meaning set forth in 12 CFR 24.2(c). 14 (e) As used in this section, "community development project" 15 has the meaning set forth in 12 CFR 24.2(d). 16 (f) As used in this section, "public welfare investment" means 17 any investment permitted by 12 CFR 24.3. 18 (g) As used in this section, "tax equity finance transaction" has 19 the meaning set forth in 12 CFR 7.1025(b)(3). 20 (d) (h) Subject to the limitations of this section, other laws, and any 21 regulation, rule, policy, or guidance adopted by the department 22 concerning investments in community based economic development, 23 any bank or trust company may invest directly or indirectly in equity 24 investments in a corporation, a limited partnership, a limited liability 25 company, or another entity organized as: 26 (1) a community development corporation; 27 (2) an entity formed primarily to support community based 28 economic development; 29 (3) an entity qualifying for the new markets tax credits under 26 30 U.S.C. 45D; 31 (4) an entity approved by the director as being formed for a 32 predominantly civic, community, or public purpose and that: 33 (A) primarily benefits low and moderate income individuals; 34 (B) primarily benefits low and moderate income areas; 35 (C) primarily benefits areas targeted for redevelopment by a 36 government entity; or 37 (D) is a qualified investment under 12 CFR 25.23 for purposes 38 of the Community Reinvestment Act of 1977 (12 U.S.C. 2901 39 et seq.); or 40 (5) an entity making qualified rehabilitation expenditures with 41 respect to a qualified rehabilitated building or certified historic 42 structure, as such terms are defined in section 47 of the Internal 2022 IN 408—LS 6818/DI 101 3 1 Revenue Code of 1986 or a similar state historic tax credit 2 program, as provided for in Section 619(d)(1)(E) of the 3 Dodd-Frank Wall Street Reform and Consumer Protection Act 4 (12 U.S.C. 1851(d)(1)(E)). 5 (i) Subject to any regulation, rule, policy, or guidance adopted 6 by the department, any bank or trust company may invest directly 7 or indirectly in any: 8 (1) community and economic development entity; 9 (2) community development project; or 10 (3) other public welfare investment; 11 as long as the investment is in compliance with 12 CFR 24. 12 (j) Subject to any regulation, rule, policy, or guidance adopted 13 by the department concerning investments in tax equity finance 14 transactions, any bank or trust company may invest directly or 15 indirectly in any tax equity finance transaction as long as: 16 (1) in the case of a national bank or federal savings 17 association, the investment is in compliance with 12 CFR 18 7.1025; or 19 (2) in the case of a bank or trust company, the investment is 20 in compliance with 12 CFR 7.1025(a), 12 CFR 7.1025 (b), and 21 12 CFR 7.1025(c). 22 (e) (k) Except as provided in subsection (f), (l), the aggregate of all 23 equity investments by a bank or trust company under subsection (d) 24 subsections (h), (i), and (j) may not exceed: 25 (1) five percent (5%) of the capital and surplus of the bank or 26 trust company without the prior written approval of the director; 27 and 28 (2) fifteen percent (15%) of the capital and surplus of the bank or 29 trust company under any circumstances. 30 (f) (l) In determining whether to permit the aggregate of all equity 31 investments by a bank or trust company under subsection (d) 32 subsections (h), (i), and (j) to exceed five percent (5%) of the capital 33 and surplus of the bank or trust company under subsection (e)(1), 34 (k)(1), the director shall consider whether: 35 (1) the aggregate of all equity investments under subsection (d) 36 subsections (h), (i), and (j) will pose a significant risk to the 37 affected deposit insurance fund; and 38 (2) the bank or trust company is adequately capitalized. 39 (g) (m) A bank or trust company shall not make any investment 40 under this section if the investment would expose the bank or trust 41 company to unlimited liability. 2022 IN 408—LS 6818/DI 101