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Financial Services Law Insights and Observations

NYDFS says climate-based activities may qualify for state CRA credit

State Issues NYDFS CRA State Regulators

State Issues

On February 9, NYDFS issued new guidance stating that financing activities that support the climate resiliency of low- and moderate-income (LMI) and underserved communities may receive credit under the New York Community Reinvestment Act (the “New York CRA”). The industry letter notes that LMI and underserved communities are “disproportionally affect[ed]” by climate change because they “tend to be more susceptible to flooding and heat waves” and have “fewer resources to recover from natural disasters.” NYDFS reminds institutions that one way banking institutions subject to the New York CRA are evaluated is the extent to which their activity revitalizes or stabilizes both LMI geographies and underserved geographies, and that financing climate resiliency actions “may help mitigate climate change risks and at the same time revitalize or stabilize those geographic areas.” Accordingly, NYDFS outlines a non-exhaustive list of specific examples that may qualify for credit under the New York CRA, including (i) “renewable energy, energy-efficiency and water conservation equipment or projects for affordable housing…”; (ii) “microgrid or battery storage projects in LMI areas with high flood and/or wind risk…”; and (iii) “installation of air conditioning in multifamily buildings offering affordable housing….” Moreover, NYDFS states that banking institutions may also receive credit for climate resiliency promoting investments or loans to Community Development Financial institutions, among others.

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