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Regulatory Advocacy

Working Together to Reduce Regulatory Burdens
Regulation Summary
Agency National Credit Union Administration
Rule Name Federal Credit Union Occupancy, Planning, and Disposal of Acquired and Abandoned Premises; Incidental Powers
Comment Due Date 06/27/16

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The NCUA Board issued a proposed rule that would amend the agency’s regulations governing a federal credit union’s (FCU) requirements for occupancy, planning, and disposal of acquired and abandoned premises.  The proposal eliminates a requirement in the current occupancy rule that an FCU must plan for, and eventually achieve, full occupancy of acquired premises.  Instead, it allows for a credit union to achieve partial occupancy with an at least fifty present use of premises by an FCU and partial occupancy can be maintained with not plan for full occupancy.  This is a change that CUNA has long advocated for because it gives credit unions much needed to flexibility on the use of their property. 

The proposal would amend the definition of ‘‘partially occupy’’ to mean occupation and use, on a full-time basis, of at least fifty percent of the premises by the FCU, or by a combination of the FCU and a credit union service organization (CUSO) in which the FCU has a controlling interest in accordance with Generally Accepted Accounting Principles (GAAP).  The current definition requires that partial occupancy be “sufficient to show that the federal credit union will fully occupy the premises within a reasonable time.”  The change in the definition eliminates full occupancy requirements by eliminating the requirement for a usage plan to achieve full occupancy.  An FCU would still be subject to the regulatory timeframes in the current regulation, which are generally six years to achieve partial occupancy.  Without a waiver a credit union would be required to occupy and use 50 percent of a premise in six years.   NCUA would leave in place waivers for partial occupancy requirements. 

The proposal also amends the excess capacity provision in NCUA’s incidental powers rule to clarify that an FCU may lease or sell excess capacity in its facilities, but it need not anticipate that such excess capacity will be fully occupied by the FCU in the future.  This change allows credit unions to lease or rent space without consideration of future credit union occupancy as long as fifty percent threshold is met. 

This flexibility is not extended to the sale or lease of excess capacity in equipment or services, including employee-sharing and data processing for third parties, continues to be limited to circumstances where an FCU reasonably anticipates that such excess capacity will be taken up by the future expansion of services to members.  Thus, non-premise related use of property, capacity or services would still be subject to the same regulation. 

CUNA has long sought these changes as they provide regulatory relief for credit unions’ from requirements  limiting use of real property used for credit union operations.  The proposal would allow credit unions to enter into long term leases for unused space in property owned as long as a credit union meets the partial occupancy requirements with more than fifty percent use of a premise.