49. The Final Rule on the CRA: How Sunwealth Can Be a Crucial Partner in CRA Compliance
Our 18 kW project at the Church of St. Augustine and St. Martin in Roxbury, MA.
Since its enactment in 1977, the Community Reinvestment Act (CRA) has been vital in encouraging banks to invest in their local communities, with a particular focus on low- and moderate-income (LMI) neighborhoods. The CRA aimed to promote community development by holding banks accountable to specific lending and investment criteria. Decades later, federal banking regulators have instituted a joint final rule that makes extensive amendments to the CRA and its compliance.
The updated regulations expand the geographic evaluation scope, in recognition that many banks now do much of their business online. The rule expands fair lending requirements of banks with at least $2 billion in assets to areas where a bank has originated a substantial number of loans, regardless of the physical presence of a bank’s branch locations. This shift, highlighted by PwC, prompts banks “to identify and possibly enhance their CRA-eligible activities in potential new assessment areas as these broadened geographies could make it more difficult to receive top marks when being graded for CRA compliance.”
Sunwealth's Perspective on Leveraging Renewable Energy for CRA Credits:
The updated final rule also includes revised community development activity categories for banks to earn CRA consideration, along with an expanded geographic evaluation scope, effective from January 1, 2026. The rule will allow banks to “receive consideration for any qualified community development loans, investments or services, regardless of location,” according to Pillsbury Winthrop Shaw Pittman LLP. Additionally, the final rule emphasizes that these activities must benefit or serve LMI individuals, irrespective of whether they are conducted in targeted LMI communities, as highlighted by Ceres, a non-profit sustainability advocacy organization.
Featuring eleven revised community development categories, the regulations deliberately offer “flexibility” in determining activities that qualify for CRA credits, as emphasized by Federal Reserve Vice Chair for Supervision Michael Barr during a webinar with Opportunity Finance Network. Below, an overview of four community development categories illustrates Sunwealth’s seamless alignment with CRA compliance. Our impactful projects present banks with the opportunity to earn CRA credits while contributing to the widespread democratization of solar benefits.
Affordable Housing: Investment in rental housing, owner-occupied housing, and mortgage-backed securities. Sunwealth works with affordable housing developments across the country, with recent projects for The Neighborhood Developers in Revere, MA, the Beacon Interfaith Housing Collaborative in Minneapolis, and the Main South Community Development Corporation in Worcester, MA.
Economic Development: Assistance to small businesses, farms, and government programs, municipalities. This past quarter, we completed a 72-kW project at Four Girls Dairy, a family farm, in Fairfax, Vermont, which will save them $71,600 in lifetime energy savings. The power generated by one of our solar projects at Greentown Labs, one of the largest cleantech incubators in North America, is being sold to the City of Somerville. This arrangement creates lease revenue for Greentown Labs, energy savings for the City, and carbon reduction for all.
Community Supportive Services: Activities improving community well-being – through partnerships with non-profits, schools, churches, and community centers, for example. 40% of our projects are completed in partnership with non-profits and social services organizations, houses of worship, and schools. In September, we completed two projects at Gospel Center Rescue Mission in Stockton, CA, a non-profit offering food, clothing, shelter, counseling, and other services to the homeless, poor, and individuals suffering from addiction.
Place-Based Activities: Targeted initiatives for revitalization, disaster recovery, and more. One of the most notable updates in the 2023 final rule is the inclusion of incentives for supporting climate-related disaster preparedness and weather resiliency in LMI communities. This could include improving the energy efficiency of affordable housing developments, investing in public green space, or developing and installing community solar projects in LMI communities. Sunwealth specializes in financing and developing community-based commercial solar projects with low-income affordable housing developments, small businesses, and non-profits and social services organizations, alike, across 17 states and D.C. Our projects seamlessly align with CRA provisions and position us as a crucial strategic partner.
Sunwealth: Your Partner in Renewable Energy and CRA Compliance
In a changing regulatory landscape, partnering with Sunwealth provides an opportunity to stay ahead of the curve. Investing in solar tax equity with Sunwealth is a chance for banks to receive strong returns while staying CRA compliant and building wealth, sustainability, and resilience in communities across the country.
Reach out to learn more about partnering with Sunwealth.