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Informational Memorandum
Subject:Amendment to Conditions of Approval for RAB and ARC Pilot Investment Programs
Date of Memorandum:09/24/2010
Expiration Date:
Office:Office of Regulatory Policy
Signed By:Jacob, Andrew
FCA Contact Person:Rea, Laurie
Contact Phone:703-883-4232
List of Attachments:

Printer-friendly version => IM-RAB_ARC_Pilot_Programs_09-24-2010.pdf



September 24, 2010


To: Chairman, Board of Directors
Chief Executive Officer
All Farm Credit System Institutions

From: Andrew D. Jacob, CFA, Director
Office of Regulatory Policy

Subject: Amendment to Conditions of Approval for RAB and ARC Pilot Investment Programs


On September 2, 2010, the FCA Board amended the “Definition of Rural Area” condition of approval for the Rural America Bond (RAB) and Agriculture and Rural Community (ARC) bonds or securities pilot investment programs. The definition, as amended, became effective September 2, 2010, and reads as follows:

“Rural area” or “Rural” means an area that is:

(1) Outside a standard metropolitan statistical area (MSA), or

(2) Within a community that has a population of 50,000 or less inhabitants. As used in this definition, “community” means any area outside of a MSA or any territory within an MSA that is not within an urbanized area, all as defined by the United States Census Bureau at the last decennial census, or

(3) Defined as “rural” under the criteria established by either the United States Department of Agriculture (USDA) or other Federal agency pursuant to a congressionally approved program to serve rural areas and the securities are guaranteed, issued, or approved under such congressionally approved program.

The FCA Board adopted the amended condition of approval to better accommodate the definition of rural area for the RAB and ARC pilot programs with the definitions of “rural area” that the USDA currently applies to various programs it administers. Moreover, other Federal agencies have applied these and other definitions of “rural area” to their programs. As a result, Farm Credit System (System) institutions participating in the RAB and ARC pilot programs may now purchase securities in connection with a RAB and ARC project where: 1) the rural area meets the definition of “rural” under the criteria established by either USDA or any other Federal agency pursuant to a congressionally approved program to serve rural areas; (2) the securities are guaranteed, issued, or approved under such congressionally approved program; and (3) the project meets the criteria, objectives and requirements of the RAB and ARC pilot programs. The FCA has determined that amending the definition of “rural area” in the Conditions of Approval for the RAB and ARC programs will better facilitate the ability of System institutions to participate in federally administered rural development programs, which often require significant investments from multiple sources.

Please direct any questions on this change to Laurie Rea, Office of Regulatory Policy, at (703) 883-4232 or by email to real@fca.gov or to Andrew Jacob, Director, Office of Regulatory Policy at (703) 883-4356 or by email to jacoba@fca.gov.