#2021-2 January 15, 2021

Governor Baker Signs $626 Million Economic Development Bill; Vetoes MBA-Opposed Tenants Right of First Refusal Provision

On Thursday, Governor Charlie Baker signed a $626 million compromise economic development bill that will fund projects throughout the state over the next five years.  The bill also includes provisions long-sought by the Governor to lower the barriers to developing new housing in communities across the Commonwealth -- an area where Massachusetts has lagged behind other states.

The bill, H 5250, includes numerous sections tailored to address the economic challenges posed by the COVID-19 pandemic.  In his signing letter, the Governor noted that the housing changes in the bill “represent the first significant zoning reform in decades.”  The new law authorizes local municipalities to make zoning rule changes by a majority vote of local boards rather than a two-thirds vote.  The change, which faced opposition from municipal governments, had been sought by the Governor and many housing advocates for several years in the Legislature.

Governor Baker also signed 100 of the bill’s outside sections and vetoed 11, including three sections that would have required housing development projects benefiting from a housing development incentive program tax credit to have at least 10 percent affordable units.  Baker rejected the provision on the grounds that it would make projects more difficult to finance.  He also vetoed a rural jobs tax credit, saying the new proposal presented “numerous implementation challenges.” 

The Association was pleased that the Governor also vetoed a provisions that created a local option tenant right of first refusal to purchase certain multi-family properties.  MBA and a broad coalition of lending and real estate organizations opposed the provision in letters last week, noting that it could potentially cloud titles, delay real estate closings and complicate financing.  Baker also vetoed a section which would have created a process for sealing records in eviction cases.  The governor’s vetoes are final since the Legislature that passed the bill expired and a new Legislature has been sworn in.

To view the entire Economic Development law, click here.  To view the Association’s letter to the Governor, click here.

Governor Signs Credit Union Modernization Law with MBA-supported Banking Provisions

As previously reported, after MBA worked with the Legislature to enact the comprehensive Bank Modernization Law in 2014, the credit union industry has sought to expand its powers by filing credit union modernization bills during the last three legislative sessions.  This session, House Financial Services Committee Chairman Jamie Murphy (D- Weymouth) asked MBA and CCUA to work together on several outstanding issues in the hopes of reaching a compromise on a modernization bill.  After a last-minute approval by the legislature last week, the compromise language, now Chapter 338 of the Acts of 2020, is officially law.

Based on our efforts over the last several years, the new law is focused more on technical updates with some substantive changes rather than a complete transformation of the credit union governing laws.  In addition, several MBA-advocated provisions were included at our request as well as amendments sought by the Division of Banks they are provided below.

To review the new CU modernization law, click here.

A brief summary of bank-related matters with reference to the Chapter 338 of the Acts of 2020 is below:

Updates to MA Banking Law and Corrections to the Bank Modernization Act

Mutual Holding Companies

SUMMARY: This amendment corrects an error whereby a bank in mutual form chartered by another state was erroneously omitted from the list of merger partners for a subsidiary bank of a mutual holding company.  The provision was in the original bill but was left out of the final law due to a drafting error. (SECTION 5)

Board Reports

SUMMARY: The consolidated reporting requirement in Chapter 482 has proven disruptive to the past practices of some banks that operated under a different timing sequence for their internal reports to the Board or designated Committee.  This amendment restores that prior reporting sequence as an option and provides banks with a choice of timing sequence for the internal reports.  (SECTION 7)

Bank’s Right of Set Off

SUMMARY: This amendment restores the statutory authority, with any required notice, for a bank to set off against a deposit account for a debt resulting from consumer credit.  The rewrite of this section in Chapter 482 erroneously omitted the reference to the notice provision for consumer credit.  The required federal notice is referenced in statute.  (SECTION 3).

Streamlined holding company transactions

SUMMARY: A significant provision of the 2014 Bank Modernization Act established a streamlined process for certain multi-step transactions involving a holding company and a subsequent bank merger or other transaction to be approved by the Massachusetts Commissioner of Banks.  In such cases, no approval by the Massachusetts Board of Bank Incorporation is required.  This amendment specifies that the streamlined process is available only if the threshold requirements in current law on reciprocity, the three-year age requirement for the bank being acquired, and the deposit cap limit of 30% of deposits are met.  (SECTION 1)

MHC filings with the Secretary of State

SUMMARY: This subsection clarifies that a new bank formed to facilitate a multi-step transaction involving a mutual holding company shall file incorporation documents with the Secretary of State consistent with other statutes for a new bank.  It is also consistent with the filings in section 5 of this Chapter 167H for the reorganization into a mutual holding company resulting in a subsidiary banking institution, as defined.

Extension of Deadline for Incorporating a New Bank

SUMMARY: Under current law, the Board of Bank Incorporation grant the organizers of a de novo bank a Certificate stating that public convenience and advantage will be promoted by the new bank and that competition will not be adversely affected.  The organizers then have one year from the date of that Certificate to complete the formation including the raising of the required capital, securing proper staff and facilities, and obtaining FDIC deposit insurance.  If the organization is not completed within the one year, the Certificate is revoked by operation of law.

The bill grants the BBI the authority to permit a one-time extension subject to its terms, to the statutory time limit to complete the organization of a new bank.  A similar provision for the formation of a new credit union is also included in H 4290.  (SECTIONS 8, 9, and 77)

Provisions Added to Provide Equal Treatment of Banks and Credit Unions

18-65 Law

SUMMARY: At the Association’s suggestion, a section was added to the bill mandating that state-chartered credit unions provide a demand deposit account and a savings account to individuals who are 18 years of age or under or 65 years of age or older.  (SECTION 43)

Fee to establish a branch office

SUMMARY: Under current law, credit unions pay $500 less than banks for an application to establish a branch office.  Sections were added to both banking and credit union law requiring the Office of Administration and Finance (A&F) to set the same fee for both industries for a branch opening.  The provisions give A&F the discretion to adjust the fee based on assets; the number of existing branches or other criteria it deems appropriate.  (SECTION 2 for banks and SECTION 23 for credit unions)

Boston Mayoral Field Taking Shape; House Ways & Means Chair Michlewitz will not Run

On Thursday, Representative Aaron Michlewitz (D-Boston) announced that he will not run for Mayor of Boston this year after reports surfaced that he was considering a run to succeed Mayor Marty Walsh, who is planning to leave for Washington to join President-elect Joe Biden’s cabinet.  However, several other potential candidates are now considering the race.

City Councilors Michelle Wu and Andrea Campbell were already planning to run against Walsh, while Councilor Kim Janey, who will become acting mayor when Walsh steps down, and Councilor Annissa Essaibi George are also now considering campaigns.  Representative Jon Santiago, a South End Democrat and emergency room doctor, Marty Martinez, the City’s Health and Human Services chief, and Boston Police Commissioner William Gross are also reportedly thinking about running.