Federal Deposit
Insurance Corporation

From: Peter Hance [mailto:phance@missoulahousing.org]
Sent: Friday, October 15, 2004 7:28 PM
To: Comments
Cc: cra@nahro.org
Subject: RIN 3064-AC50

As the Executive Director of the Missoula Housing Authority, I write in objection to the proposed rules to change the current CRA language to raise the asset threshold from $250 million to $1 billion and to add language allowing banks to "balance their community lending investing and service activities based on opportunities in the market and the banks own strategic strengths"

As a public housing authority, MHA’s current operating cash is generated through rents from low income persons living in HUD subsidized dwelling units. We are striving to become more independent from federal subsidies by building alternative developments that can cross-subsidize affordable housing projects. The use of these creative, private market driven strategies require private market financing at competitive rates that would allow for repayment from the cash flow generated from rents structured to the lower income levels of our clients. Our experience has been that banks are more willing to price their loans to us at competitive rates due to the CRA requirements.

In smaller, rural areas, competition in banking institutions is limited. The current CRA language has encouraged financial institutions to reach out to rural areas such as Missoula to provide the necessary funds to provide housing and to lessen our dependency on federal subsidies.

The competitive pricing of loans to MHA by banks allows for additional affordable housing development with less outlay of public funds - - rather than needing additional subsidies to move MHA to a more private market driven organization, we can do so through the incentives provided in the existing legislation. We urge you to retain the existing language and to reject the proposed changes in both the threshold amount and the lending investing and service activities.