House File 2661 - Introduced
HOUSE FILE
BY COMMITTEE ON ECONOMIC
GROWTH
(SUCCESSOR TO HSB 641)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the linked investments for tomorrow Act.
2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
3 TLSB 5848HV 81
4 tm/gg/14
PAG LIN
1 1 Section 1. Section 12.31, Code 2005, is amended to read as
1 2 follows:
1 3 12.31 SHORT TITLE.
1 4 This section and sections 12.32 through 12.43B 12.43 shall
1 5 be known as the "Linked Investments for Tomorrow Act".
1 6 Sec. 2. Section 12.32, Code 2005, is amended to read as
1 7 follows:
1 8 12.32 DEFINITIONS.
1 9 As used in section 12.31, this section, and sections 12.33
1 10 12.34 through 12.43B 12.43, unless the context otherwise
1 11 requires:
1 12 1. "Eligible borrower" means any person who is in the
1 13 business or is entering the business of producing, processing,
1 14 or marketing horticultural crops or nontraditional crops in
1 15 this state or any person in this state who is qualified to
1 16 participate in one of the programs in this section and
1 17 sections 12.33 12.34 through 12.43B 12.43. "Eligible
1 18 borrower" does not include a person who has been determined to
1 19 be delinquent in making child support payments or any other
1 20 payments due the state.
1 21 2. "Eligible lending institution" means a financial
1 22 institution that is empowered to make commercial loans and is
1 23 eligible pursuant to chapter 12C to be a depository of state
1 24 funds.
1 25 3. "Linked investment" means a certificate of deposit
1 26 placed issued pursuant to this section and sections 12.33
1 27 12.34 through 12.43B by 12.43 to the treasurer of state with
1 28 by an eligible lending institution, at an interest rate not
1 29 more than three percent below current market rate on the
1 30 condition that the institution agrees to lend the value of the
1 31 deposit, according to the investment agreement provided in
1 32 section 12.35, to an eligible borrower at a rate not to exceed
1 33 four percent above the rate paid on the certificate of
1 34 deposit. The treasurer of state shall determine and make
1 35 available the current market rate which shall be used each
2 1 month.
2 2 4. "Qualified linked investment" means a linked investment
2 3 in which a certificate of deposit is placed by the treasurer
2 4 of state with an eligible lending institution under the
2 5 traditional livestock producers linked investment loan program
2 6 established under section 12.43A.
2 7 Sec. 3. Section 12.34, Code 2005, is amended to read as
2 8 follows:
2 9 12.34 LINKED INVESTMENTS == LIMITATIONS == RULES ==
2 10 MATURITY AND RENEWAL OF CERTIFICATES.
2 11 1. The treasurer of state may invest up to the lesser of
2 12 one hundred eight million dollars or ten twenty=five percent
2 13 of the balance of the state pooled money fund in certificates
2 14 of deposit in eligible lending institutions as provided in
2 15 sections section 12.32 and 12.33, this section, and sections
2 16 12.35 through 12.43B 12.43. The moneys invested pursuant to
2 17 this section shall be used as follows:
2 18 a. The treasurer of state may invest up to sixty=eight
2 19 million dollars to support programs provided in sections 12.32
2 20 and 12.33, this section, and sections 12.35 through 12.43B
2 21 other than the traditional livestock producers linked
2 22 investment loan program as provided in section 12.43A and the
2 23 value=added agricultural linked investment loan program as
2 24 provided in section 12.43B.
2 25 b. The treasurer of state shall invest the remaining
2 26 amount as follows:
2 27 (1) At least twenty million dollars shall be invested in
2 28 order to support the traditional livestock producers linked
2 29 investment loan program as provided in section 12.43A.
2 30 (2) At least twenty million dollars shall be invested in
2 31 order to support the value=added agricultural linked
2 32 investment loan program as provided in section 12.43B. One=
2 33 half of the moneys invested pursuant to this section shall be
2 34 made available under the program implemented pursuant to
2 35 section 12.43 to increase the availability of lower cost
3 1 moneys for purposes of injecting needed capital into small
3 2 businesses owned and operated by women and minorities. A
3 3 "minority person" means the same as defined in section 15.102,
3 4 subsection 5. The treasurer shall invest the remaining one=
3 5 half of the moneys invested pursuant to this section to
3 6 support any other eligible applicant as provided in section
3 7 12.43.
3 8 2. a. The treasurer of state shall adopt rules pursuant
3 9 to chapter 17A to administer sections section 12.32 and 12.33,
3 10 this section, and sections 12.35 through 12.43B 12.43.
3 11 b. The treasurer of state in cooperation with the board of
3 12 directors of the agricultural development authority as
3 13 established in section 175.3 shall adopt rules for the
3 14 administration of the traditional livestock producers linked
3 15 investment loan program as provided in section 12.43A. The
3 16 treasurer of state in cooperation with the agricultural
3 17 products advisory council established in section 15.203 shall
3 18 adopt rules for the administration of the value=added
3 19 agricultural linked investment loan program as provided in
3 20 section 15.204.
3 21 3. A certificate of deposit, which is placed by that is
3 22 issued to the treasurer of state with by an eligible lending
3 23 institution on or after July 1, 1996 2006, may be renewed at
3 24 the option of the treasurer on an annual basis for a total
3 25 term not to exceed five years. The following shall apply to
3 26 the certificate of deposit:
3 27 a. For a linked investment other than a qualified linked
3 28 investment, the initial certificate of deposit for a given
3 29 borrower shall have a maturity of one year. The certificate
3 30 of deposit may be renewed on an annual basis for a total term
3 31 not to exceed five years.
3 32 b. For a qualified linked investment, the initial
3 33 certificate of deposit for a given borrower shall have a
3 34 maturity of one year. The certificate of deposit may be
3 35 renewed on an annual basis for a total term not to exceed
4 1 three years. All participants with certificates of deposit
4 2 issued prior to July 1, 2006, are subject, for renewal
4 3 certificates of deposit, to the requirements and terms
4 4 applicable to the certificates of deposit issued prior to July
4 5 1, 2006.
4 6 Sec. 4. Section 12.35, subsection 1, Code 2005, is amended
4 7 to read as follows:
4 8 1. An eligible lending institution that desires to receive
4 9 a linked investment shall enter into an agreement with the
4 10 treasurer of state, which shall include requirements necessary
4 11 for the eligible lending institution to comply with sections
4 12 12.32 through 12.34, this section, and sections 12.36 through
4 13 12.43B 12.43.
4 14 Sec. 5. Section 12.36, subsection 2, Code 2005, is amended
4 15 to read as follows:
4 16 2. Upon acceptance of the linked investment loan package
4 17 or any portion of the package, the treasurer of state shall
4 18 place certificates of deposit funds with the eligible lending
4 19 institution at a rate not more than three percent below the
4 20 current market rate and the eligible lending institution shall
4 21 issue to the treasurer of state one or more certificates of
4 22 deposit with interest at a rate determined pursuant to section
4 23 12.32, subsection 3. The treasurer of state shall not place a
4 24 certificate of deposit funds with an eligible lending
4 25 institution pursuant to sections 12.32 through, 12.34, 12.35,
4 26 this section, and sections 12.37 through 12.43B 12.43, unless
4 27 the certificate of deposit earns a rate of interest of at
4 28 least two one percent. Interest earned on the certificate of
4 29 deposit and principal not renewed shall be remitted to the
4 30 treasurer of state at the time the certificate of deposit
4 31 matures. Interest from the linked investments for tomorrow
4 32 program shall be considered earnings of the general fund of
4 33 the state. Certificates of deposit placed issued pursuant to
4 34 sections 12.32 through, 12.34, 12.35, this section, and
4 35 sections 12.37 through 12.43B 12.43 are not subject to a
5 1 penalty for early withdrawal.
5 2 Sec. 6. Section 12.38, Code 2005, is amended to read as
5 3 follows:
5 4 12.38 REPORTS.
5 5 By February 1 of each year, the treasurer of state shall
5 6 report on the linked investments for tomorrow programs for the
5 7 preceding calendar year to the governor, the department of
5 8 economic development, the speaker of the house of
5 9 representatives, and the president of the senate. The speaker
5 10 of the house shall transmit copies of this report to the house
5 11 co=chair of the joint economic development appropriations
5 12 subcommittee and the chairs of the standing committees in the
5 13 house which customarily consider legislation regarding
5 14 agriculture, and commerce, and economic growth, and the
5 15 president of the senate shall transmit copies of this report
5 16 to the senate co=chair of the joint economic development
5 17 appropriations subcommittee and the chairs of the standing
5 18 committees in the senate which customarily consider
5 19 legislation regarding agriculture, and commerce, and economic
5 20 growth. The report shall set forth the linked investments
5 21 made by the treasurer of state under the program during the
5 22 year, the total amount deposited, the number of deposits, and
5 23 an estimate of foregone interest, and shall include
5 24 information regarding the nature, terms, and amounts of the
5 25 loans upon which the linked investments were based and the a
5 26 listing of eligible borrowers to which the loans were made.
5 27 Sec. 7. Section 12.43, Code 2005, is amended to read as
5 28 follows:
5 29 12.43 FOCUSED SMALL BUSINESS LINKED INVESTMENTS PROGRAM
5 30 CREATED == DEFINITIONS.
5 31 The treasurer of state shall adopt rules to implement a
5 32 focused small business linked investments program to increase
5 33 the availability of lower cost funds to inject needed capital
5 34 into small businesses owned and operated by women or
5 35 minorities in this state by residents of this state, which is
6 1 the public policy of the state. The rules shall be in
6 2 accordance with the following:
6 3 1. As used in this section:,
6 4 a. "Disability" is defined as provided in section 15.102,
6 5 subsection 5.
6 6 b. "Focused small "small business" means a one of the
6 7 following:
6 8 a. A new or existing small business which is fifty=one
6 9 percent or more owned, operated, and actively managed by one
6 10 or more women, minority persons, or persons with a disability,
6 11 provided the business that meets all the requirements of
6 12 subsection 5.
6 13 c. "Major life activity" is defined as provided in section
6 14 15.102, subsection 5.
6 15 d. "Minority person" is defined as provided in section
6 16 15.102, subsection 5.
6 17 b. For applications to transfer an existing small business
6 18 to a new owner, the small business must also meet the
6 19 requirements of subsection 5 when local competition does not
6 20 exist in the principal area of business activity of the
6 21 existing small business, and the loss of the existing small
6 22 business would result in a hardship on the community.
6 23 2. Loan applications for a focused new or existing small
6 24 business shall be for the purchase of land, improvements,
6 25 fixtures, machinery, inventory, supplies, equipment,
6 26 information technology, or licenses, or patent, trademark, or
6 27 copyright fees and expenses. Loan applications for the
6 28 transfer of an existing small business shall be to assist in
6 29 the transfer of ownership of retail, wholesale, manufacturing,
6 30 service, or agricultural business that may close in the
6 31 absence of sufficient financial assistance.
6 32 3. During the lifetime of this loan program, the maximum
6 33 amount of assistance that an eligible borrower or business may
6 34 borrow or receive through this loan program shall be one two
6 35 hundred thousand dollars. An eligible borrower or business
7 1 under this program shall be limited to one loan from one
7 2 financial institution.
7 3 4. A preference shall be given to those persons who are
7 4 less able than other persons to secure funds for a focused
7 5 small business without participation in the focused small
7 6 business linked investment program.
7 7 5. In order to qualify under this program, all owners of
7 8 the business or borrowers must not have a combined net worth
7 9 exceeding five seven hundred fifty thousand dollars as defined
7 10 in rules adopted by the treasurer of state pursuant to chapter
7 11 17A and the focused small business must meet all of the
7 12 following criteria:
7 13 a. Be a for=profit business.
7 14 b. Have If an application involves an existing business or
7 15 the transfer of an existing business to a new owner, the
7 16 business must have annual gross sales of two million dollars
7 17 or less at the time the application is submitted under section
7 18 12.35.
7 19 c. Not be operated out of the home of any person, unless
7 20 the person is eligible for a deduction on federal income taxes
7 21 pursuant to 26 U.S.C. } 280A.
7 22 d. Not involve real estate investments, rental of real
7 23 estate, leasing of real estate, or real estate speculation.
7 24 e. Liquor, beer, and wine sales must not exceed twenty
7 25 percent of annual sales for establishments holding a class "C"
7 26 liquor license issued pursuant to section 123.30.
7 27 f. If an application involves the transfer of an existing
7 28 small business, the transfer must be by purchase, lease=
7 29 purchase, or contract of sale. The purchase must be for all
7 30 or a portion of the business which is essential to its
7 31 continued viability, including land where the business is
7 32 located, fixtures attached to the land, machinery, inventory,
7 33 supplies, equipment, information technology, or licenses,
7 34 patents, trademarks, copyrights, or other intellectual
7 35 property relied upon by the business, and inventory for sale
8 1 by the business.
8 2 g. A borrower and the seller of an existing small business
8 3 shall not be within the third degree of consanguinity or
8 4 affinity.
8 5 6. Loan proceeds shall not be used to refinance existing
8 6 debt, including credit card debt. However, proceeds may be
8 7 used to refinance a short=term bridge loan made in
8 8 anticipation of the treasurer of state's approval of the
8 9 linked investment loan package.
8 10 7. Eligible lending institutions shall verify the borrower
8 11 is eligible to participate under the provisions of this
8 12 section pursuant to rules adopted by the treasurer of state
8 13 pursuant to chapter 17A.
8 14 Sec. 8. Sections 12.33, 12.40, 12.41, 12.43A, 12.43B, and
8 15 15.204, Code 2005, are repealed.
8 16 EXPLANATION
8 17 This bill relates to the linked investments for tomorrow
8 18 Act.
8 19 The bill eliminates the rural small business transfer
8 20 linked investment loan program, the horticultural and
8 21 nontraditional crops linked investment loan program, the
8 22 traditional livestock producer's linked investment loan
8 23 program, and the value=added agricultural linked investment
8 24 loan program. The bill makes conforming amendments.
8 25 The bill changes the amount of moneys the treasurer of
8 26 state may invest under the linked investments program.
8 27 Currently, the treasurer of state may invest up to the lesser
8 28 of $108 million or 10 percent of the balance of the state
8 29 pooled money fund. The bill increases the allowable
8 30 percentage from 10 percent to 25 percent.
8 31 The bill provides that one=half of the moneys invested
8 32 under the program shall be made available to increase the
8 33 availability of lower cost moneys for purposes of injecting
8 34 needed capital into small businesses owned and operated by
8 35 women and minorities. The bill provides that the remaining
9 1 one=half of the moneys invested under the program shall be
9 2 used to support any other eligible applicant under the
9 3 program.
9 4 The bill provides that a certificate of deposit issued by
9 5 an eligible lending institution to the treasurer of state
9 6 under the program may be renewed at the option of the
9 7 treasurer on an annual basis for a total term not to exceed
9 8 five years. The bill provides that all participants with
9 9 certificates of deposit issued prior to July 1, 2006, are
9 10 subject, for renewal certificates of deposit, to the
9 11 requirements and terms applicable to the certificates of
9 12 deposit issued prior to July 1, 2006. The bill provides that
9 13 interest from the linked investments for tomorrow program
9 14 shall be considered earnings of the general fund of the state.
9 15 The bill changes the name of the focused small business
9 16 linked investments program to the small business linked
9 17 investments program. The bill changes the eligibility
9 18 criteria under the program. Currently, the program is
9 19 available to new small businesses meeting certain criteria
9 20 which is 51 percent or more owned, operated, and actively
9 21 managed by one or more women, minority persons, or persons
9 22 with a disability. The bill eliminates the requirement
9 23 regarding ownership, operation, and active management of the
9 24 business. The bill provides that a new or existing small
9 25 business is eligible if all owners of the business or
9 26 borrowers do not have a combined net worth exceeding $750,000
9 27 and if the business is a for=profit business, has annual gross
9 28 sales of $2 million or less if the application involves an
9 29 existing business or the transfer of an existing business, is
9 30 not operated out of the home of any person unless certain
9 31 criteria are met, does not involve real estate investments,
9 32 rental of real estate, leasing of real estate, or real estate
9 33 speculation, and liquor, beer, and wine sales do not exceed 20
9 34 percent of annual sales for certain liquor license holders.
9 35 The bill provides that, if an application involves the
10 1 transfer of an existing small business, the transfer must be
10 2 by purchase, lease=purchase, or contract of sale. The bill
10 3 provides that a borrower and the seller of an existing small
10 4 business shall not be within the third degree of consanguinity
10 5 or affinity. The bill provides an additional requirement for
10 6 existing small businesses that local competition does not
10 7 exist in the principal area of business activity of the
10 8 existing small businesses.
10 9 LSB 5848HV 81
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