Monterey Municipal Code Art. 3 Responsible Banking

The purpose of the responsible banking ordinance is to ensure that financial institutions that hold City funds on deposit are responsive to community financial needs, provide services that reflect fair businesses practices, and promote economic growth and community reinvestment within the City of Monterey. Nothing in this article shall limit the authority of the Finance Director/City Treasurer as provided in Section 12-2 or State law. (Ord. 3526 § 3, 2015)

a.“Affordable” means low- or moderate-income individuals as provided in the CRA.

b.“Community development” means: (i) affordable housing for low- or moderate-income individuals; (ii) community services targeted to low- or moderate-income individuals; and (iii) activities that promote economic development by financing small businesses.

c.“CRA” means the Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et seq.) as may be amended.

d.“Depository” means a financial institution that is selected by the City Finance Director/City Treasurer and designated to receive deposits of Monterey’s funds.

e.“Low-income” means individual income that is less than 50% of the area median income, or a median family income that is less than 50% of the area median family income.

f.“Moderate-income” means an individual income that is at least 50% and less than 80% of the area median income, or a median family income that is at least 50% and less than 80% of the area median family income.

g.“Predatory lending practices” are practices that are specifically prohibited by State or Federal law, including such practices as: (i) the frequent making of new loans to refinance existing loans; (ii) the selling of additional products without the borrower’s informed consent; and (iii) the charging of excessive fees. (Ord. 3526 § 3, 2015)

The provisions of this chapter shall apply to depositories that maintain at least $3 million in City deposits on an annual basis. (Ord. 3526 § 3, 2015)

The Finance Director/City Treasurer, in selecting qualified depositories for City moneys, shall:

a.Include local banks in any request for proposals for depository services.

b.Require prospective bidders to provide the City with data on their responsible banking practices.

c.Include in contracts for depository services a statement of work that provides a framework for responsible banking.

d.Establish relevant reporting criteria and time frames to validate the statement of work.

e.Incorporate responsible banking bid criteria requiring any bidder to describe current or proposed programs that address the financial needs for the City’s residents and businesses including: community involvement and reinvestment; meeting community banking needs; supporting small business lending and community development; providing for home ownership and consumer credit; assisting distressed homeowners; residential lending including affordable mortgage programs, new construction and rehabilitation lending and investment; and allowing for products and services that are advantageous for the City and its residents.

f.Include in contracts for depository services that financial institutions shall provide the City with an annual report of their community involvement and reinvestment; meeting community banking needs; supporting small business lending and community development; providing for home ownership and consumer credit; assisting distressed homeowners; residential lending including affordable mortgage programs, new construction and rehabilitation lending and investment; and allowing for products and services that are advantageous for the City and its residents.

g.Require, as part of that year’s annual data disclosure, that financial institutions shall provide a two-year plan for loans and services. Institutions shall describe how they will match or exceed peer Community Reinvestment Act (CRA) performance.

h.Include in contracts for depository services that depositories sign an annual affidavit that they have incorporated the terms and conditions of the responsible banking ordinance.

i.Include in contracts for depository services that the City shall not keep deposits with depositories that have been the subject of a court judgment that they have engaged in predatory lending practices to residents of Monterey County.

j.Include in contracts for depository services that depositories shall provide 120-day notice to the City for branch closures and shall identify branch location and reason for closure.

k.Include in contracts for depository services that if the Finance Director/City Treasurer determines that a depository has failed to meet the requirements for reporting and compliance, such depository shall be prohibited from holding City funds. (Ord. 3526 § 3, 2015)

The City as part of its evaluation of proposals for depository services shall utilize the following criteria as a component of the overall rating/ranking of proposals: community investment, loan modifications, small business loans, affordable home loans, number of locations of branches and services and services provided at branches. (Ord. 3526 § 3, 2015)

The Finance Department shall make an annual compliance report to the City Council and shall maintain on the City’s website the annual report(s) submitted by depositories. (Ord. 3526 § 3, 2015)