Requires the preparation of a comprehensive economic development plan for the use of eminent domain when the primary purpose is economic development

BILL NUMBER:S5910

Title of bill

An act to amend the public authorities law, the not-for-profit corporation law, the general municipal law and the eminent domain procedure law, in relation to eminent domain reform

Purpose

This bill would prohibit public authorities or public benefit corporations from depositing their moneys in a banking institution with a federal or state Community Reinvestment Act rating of less than satisfactory.

Summary of provisions

Section 1 of the bill amends the public authorities law by adding a new section 2891 which specifies that, notwithstanding any other provision of this chapter, no public authority or public benefit corporation chartered by the State of New York shall deposit its moneys in a banking institution to which the Community Reinvestment Act of 1977, United States P.L. 95-128, applies unless such institution has received a record of performance no lower than satisfactory.

Section 2 of the bill sets forth the effective date.

Justification

In 1977, Congress passed the Community Reinvestment Act (CRA), a law that sought to eliminate discriminatory behavior by banks. The CRA requires banks to meet the financial needs of their communities by investing in low- to moderate-income neighborhoods. One of the CRA's most powerful tools to spur banks to return capital to the neighborhoods from which they extracted it is the CRA's focus upon neighborhood lending target compliance, as well as enforcement against banks that fail to meet federal lending guidelines. The overall goal is to encourage banks to lend in distressed communities, thereby promoting local economic development, small business and consumer lending, and homeownership.

A report by the Association for Neighborhood and Housing Development (ANHD) concerning New York City's 17 largest banks reveals that while deposits grew by more than $452 billion in 2007 and 2008, these institutions reduced community lending 20.2 percent or $560 million dollars. Furthermore, the report concludes that these banks also reduced their multi-family loans in low-income areas by nearly 25 percent, or $1.3 billion dollars. While this report may be no more than a window into a problem whose parameters are different outside of New York City, the dramatic declines in lending portrayed during a period of consumer cred- it crisis are distressing and endanger the prosperity and recover of New York's communities.

In New York, billions of dollars are held on deposit by public authorities and public benefit corporations, and the deposit or withholding of such funds can act as a powerful incentive for CRA compliance. This bill would further enhance CRA compliance by directing the public authorities continued or created in New York not to deposit funds in those banks that have not received a CRA rating of satisfactory or better.

Legislative history

2014: A02058 (Kavanagh)- Corporations, Authorities and Commissions 2013: A02058 (Kavanagh)- Ways and Means 2012: A05947 (Kavanagh)- Ways and Means 2011: A05947 (Kavanagh)- Corporations, Authorities and Commissions 2010: A11713 (Kavanagh)- Corporations, Authorities and Commissions

Fiscal impact on the state

None.

Effective date

This act shall take effect on the one hundred twentieth day after it shall have become a law.