An office property can fit a federal credit union's location needs without matching its eventual space needs exactly. NCUA's December 21, 2016 final rule relaxed that constraint by removing the requirement to plan for and ultimately achieve full occupancy. Excess facilities capacity could be leased or sold without an expectation that the credit union would later use all of it. [2016-30657][2016-09867]

The competitive rationale appeared in the April 27 proposal. NCUA said compulsory full occupancy could interfere with cost-effective office space, growth and competition. Removing that condition changes the set of property arrangements an institution can consider. It does not show which arrangement would be cheaper, how much rent could be earned or whether a particular real-estate purchase would make financial sense. [2016-30657][2016-09867]

The freedom was bounded by use. At least 50 percent of each premises had to be occupied and used full-time by the federal credit union alone or with a service organization it controlled under generally accepted accounting principles. Partial occupancy was required within a reasonable period, no later than six years after acquisition, subject to an NCUA waiver based on safety and soundness. Speculation was not the stated purpose. [2016-30657][2016-09867]

The rule specified January 20, 2017 as its effective date. Equipment and services remained distinct: leasing or selling their excess capacity still depended on anticipated future expansion of member services. For a market reader, the mechanism is flexibility in facilities choices, not a general relaxation of every business constraint. Proposal and final rule share one regulatory origin and supply no independent evidence of achieved savings or increased competition. [2016-30657][2016-09867]

Source documents

  1. Federal Credit Union Occupancy, Planning, and Disposal of Acquired and Abandoned Premises; Incidental Powershttps://www.govinfo.gov/content/pkg/FR-2016-12-21/html/2016-30657.htm
  2. Federal Credit Union Occupancy, Planning, and Disposal of Acquired and Abandoned Premises; Incidental Powershttps://www.govinfo.gov/content/pkg/FR-2016-04-27/html/2016-09867.htm