ALEXANDRIA, Va. — The NCUA Board approved a new proposedrule–sort of–during its March 14 monthly meeting.

The proposed rule regarding federal credit union ownership offixed assets doesn't make any substantive changes. Rather, itmerely clarifies the regulation so credit unions better understandhow to comply.

So-called “plain language” has replaced regulatory text,according to the proposal. Also, an introductory section has beenadded, existing definitions were reorganized and new ones added.Finally, the proposed rule clarifies the waiver process. StaffAttorney Pamela Wu told the board the proposed rule redefines termsthat credit unions had told the NCUA were unclear and madecompliance difficult. 

Specifically, the rule redefines terms in a provision thatrequires a credit union to partially occupy unimproved property,with both the “unimproved property” and  “partiallyoccupy” definitions receiving additionalclarification. 

Unimproved property is further defined as raw land, orspecifically, land without development, significant buildings,structures or site preparation. It also includes land that hasnever had improvements or was improved at one time but has sincefunctionally reverted to an unimproved state.

Additionally, the rule will consider land to be unimproved evenif it is functional and intrinsically valuable but serves nopurpose for the credit union's planned use. The proposal used as anexample property that has water and sewer lines for a residentialdevelopment, but the credit union plans to build a parking garagethere.

The proposed rule also intends to clarify the NCUA'sexpectations for waiver requests, as well as its obligations inreviewing those requests. In the proposal, the NCUA issued aninformal comment request for ideas to improve the wavier process,admitting the current rule is somewhat inconsistent, uneven andburdensome in some circumstances.

“The board emphasizes that NCUA is committed to making theagency's waiver process more consistent and user friendly andwelcomes public comment on ways of doing so,” the proposed rulesaid.

Language treatments proposed would clarify exactly when aparticular requirement or limitation is subject to waiver by theNCUA and would describe the agency's obligations in each provisionthat is subject to a waiver.

Comments on the proposed rule, specifically, ways to enhance itsreadability and usefulness, are due 60 days after the rule ispublished in the Federal Register.

The NCUA Board also approved a community charter conversionrequest from the $313 million Cinfed FCU of Cincinnati. The credit union has penetrated 74%of its potential current membership and has seen its primary selectemployee group, the federal government, downsize in recent years,Chairman Debbie Matz said. She said the conversion “makes sense forthe long haul” of the credit union, and was complimentary ofCinfed's request, noting that it included a significant increase inthe marketing budget.

As of Dec. 31, 2012, Cinfed served nearly 30,000 members, allgained from SEGs. The conversion will expand the credit union'sfield of membership to include a four-county area in the Cincinnatimetropolitan area.

Matz asked Consumer Access Analyst Elliot Weiss why Cinfedrequested to serve only four of the 14 counties that make up theCincinnati metropolitan area. He said the four counties form awell-defined local community, which is designated as a core-basedstatistical area with a population of 2.5 million or less.Additionally, the four counties provide public transportationaccess to Cinfed locations.