Senate Study Bill 3214
SENATE FILE
BY (PROPOSED COMMITTEE ON
COMMERCE BILL BY
CO=CHAIRPERSON WARNSTADT)
Passed Senate, Date Passed House, 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 5848SK 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. determined by one of the following:
2 2 a. When the current market rate, as determined and made
2 3 available by the treasurer of state each month, is five
2 4 percent per annum or more, the interest rate per annum shall
2 5 be up to three percentage points below the current market
2 6 rate.
2 7 b. When the current market rate, as determined and made
2 8 available by the treasurer of state each month, is less than
2 9 five percent per annum, the interest rate per annum shall be
2 10 up to sixty percent below the current market rate.
2 11 4. "Qualified linked investment" means a linked investment
2 12 in which a certificate of deposit is placed by the treasurer
2 13 of state with an eligible lending institution under the
2 14 traditional livestock producers linked investment loan program
2 15 established under section 12.43A.
2 16 Sec. 3. Section 12.34, Code 2005, is amended to read as
2 17 follows:
2 18 12.34 LINKED INVESTMENTS == LIMITATIONS == RULES ==
2 19 MATURITY AND RENEWAL OF CERTIFICATES.
2 20 1. The treasurer of state may invest up to the lesser of
2 21 one hundred eight million dollars or ten twenty=five percent
2 22 of the balance of the state pooled money fund in certificates
2 23 of deposit in eligible lending institutions as provided in
2 24 sections section 12.32 and 12.33, this section, and sections
2 25 12.35 through 12.43B 12.43. The moneys invested pursuant to
2 26 this section shall be used as follows:
2 27 a. The treasurer of state may invest up to sixty=eight
2 28 million dollars to support programs provided in sections 12.32
2 29 and 12.33, this section, and sections 12.35 through 12.43B
2 30 other than the traditional livestock producers linked
2 31 investment loan program as provided in section 12.43A and the
2 32 value=added agricultural linked investment loan program as
2 33 provided in section 12.43B.
2 34 b. The treasurer of state shall invest the remaining
2 35 amount as follows:
3 1 (1) At least twenty million dollars shall be invested in
3 2 order to support the traditional livestock producers linked
3 3 investment loan program as provided in section 12.43A.
3 4 (2) At least twenty million dollars shall be invested in
3 5 order to support the value=added agricultural linked
3 6 investment loan program as provided in section 12.43B.
3 7 2. a. The treasurer of state shall adopt rules pursuant
3 8 to chapter 17A to administer sections section 12.32 and 12.33,
3 9 this section, and sections 12.35 through 12.43B 12.43.
3 10 b. The treasurer of state in cooperation with the board of
3 11 directors of the agricultural development authority as
3 12 established in section 175.3 shall adopt rules for the
3 13 administration of the traditional livestock producers linked
3 14 investment loan program as provided in section 12.43A. The
3 15 treasurer of state in cooperation with the agricultural
3 16 products advisory council established in section 15.203 shall
3 17 adopt rules for the administration of the value=added
3 18 agricultural linked investment loan program as provided in
3 19 section 15.204.
3 20 3. A certificate of deposit, which is placed by that is
3 21 issued to the treasurer of state with by an eligible lending
3 22 institution on or after July 1, 1996 2006, may be renewed at
3 23 the option of the treasurer on an annual basis for a total
3 24 term not to exceed five years. The following shall apply to
3 25 the certificate of deposit:
3 26 a. For a linked investment other than a qualified linked
3 27 investment, the initial certificate of deposit for a given
3 28 borrower shall have a maturity of one year. The certificate
3 29 of deposit may be renewed on an annual basis for a total term
3 30 not to exceed five years.
3 31 b. For a qualified linked investment, the initial
3 32 certificate of deposit for a given borrower shall have a
3 33 maturity of one year. The certificate of deposit may be
3 34 renewed on an annual basis for a total term not to exceed
3 35 three years.
4 1 Sec. 4. Section 12.35, subsection 1, Code 2005, is amended
4 2 to read as follows:
4 3 1. An eligible lending institution that desires to receive
4 4 a linked investment shall enter into an agreement with the
4 5 treasurer of state, which shall include requirements necessary
4 6 for the eligible lending institution to comply with sections
4 7 12.32 through 12.34, this section, and sections 12.36 through
4 8 12.43B 12.43.
4 9 Sec. 5. Section 12.36, subsection 2, Code 2005, is amended
4 10 to read as follows:
4 11 2. Upon acceptance of the linked investment loan package
4 12 or any portion of the package, the treasurer of state shall
4 13 place certificates of deposit funds with the eligible lending
4 14 institution at a rate not more than three percent below the
4 15 current market rate and the eligible lending institution shall
4 16 issue to the treasurer of state one or more certificates of
4 17 deposit with interest at a rate determined pursuant to section
4 18 12.32, subsection 3. The treasurer of state shall not place a
4 19 certificate of deposit funds with an eligible lending
4 20 institution pursuant to sections 12.32 through, 12.34, 12.35,
4 21 this section, and sections 12.37 through 12.43B 12.43, unless
4 22 the certificate of deposit earns a rate of interest of at
4 23 least two one percent. Interest earned on the certificate of
4 24 deposit and principal not renewed shall be remitted to the
4 25 treasurer of state at the time the certificate of deposit
4 26 matures. Certificates of deposit placed issued pursuant to
4 27 sections 12.32 through, 23.34, 12.35, this section, and
4 28 sections 12.37 through 12.43B 12.43 are not subject to a
4 29 penalty for early withdrawal.
4 30 Sec. 6. Section 12.38, Code 2005, is amended to read as
4 31 follows:
4 32 12.38 REPORTS.
4 33 By February 1 of each year, the treasurer of state shall
4 34 report on the linked investments for tomorrow programs for the
4 35 preceding calendar year to the governor, the department of
5 1 economic development, the speaker of the house of
5 2 representatives, and the president of the senate. The speaker
5 3 of the house shall transmit copies of this report to the house
5 4 co=chair of the joint economic development appropriations
5 5 subcommittee and the chairs of the standing committees in the
5 6 house which customarily consider legislation regarding
5 7 agriculture, and commerce, and economic growth, and the
5 8 president of the senate shall transmit copies of this report
5 9 to the senate co=chair of the joint economic development
5 10 appropriations subcommittee and the chairs of the standing
5 11 committees in the senate which customarily consider
5 12 legislation regarding agriculture, and commerce, and economic
5 13 growth. The report shall set forth the linked investments
5 14 made by the treasurer of state under the program during the
5 15 year, the total amount deposited, the number of deposits, and
5 16 an estimate of foregone interest, and shall include
5 17 information regarding the nature, terms, and amounts of the
5 18 loans upon which the linked investments were based and the a
5 19 listing of eligible borrowers to which the loans were made.
5 20 Sec. 7. Section 12.43, Code 2005, is amended to read as
5 21 follows:
5 22 12.43 FOCUSED SMALL BUSINESS LINKED INVESTMENTS PROGRAM
5 23 CREATED == DEFINITIONS.
5 24 The treasurer of state shall adopt rules to implement a
5 25 focused small business linked investments program to increase
5 26 the availability of lower cost funds to inject needed capital
5 27 into small businesses owned and operated by women or
5 28 minorities in this state by residents of this state, which is
5 29 the public policy of the state. The rules shall be in
5 30 accordance with the following:
5 31 1. As used in this section:,
5 32 a. "Disability" is defined as provided in section 15.102,
5 33 subsection 5.
5 34 b. "Focused small business" means a one of the following:
5 35 a. A new small business which is fifty=one percent or more
6 1 owned, operated, and actively managed by one or more women,
6 2 minority persons, or persons with a disability, provided the
6 3 business that meets all the requirements of subsection 5.
6 4 c. "Major life activity" is defined as provided in section
6 5 15.102, subsection 5.
6 6 d. "Minority person" is defined as provided in section
6 7 15.102, subsection 5.
6 8 b. An existing small business that meets all of the
6 9 requirements of subsection 5 where local competition does not
6 10 exist in the principal area of business activity of the
6 11 existing small business, and the loss of the existing small
6 12 business would result in a hardship on the community.
6 13 2. Loan applications for a focused new small business
6 14 shall be for the purchase of land, improvements, fixtures,
6 15 machinery, inventory, supplies, equipment, information
6 16 technology, or licenses, or patent, trademark, or copyright
6 17 fees and expenses. Loan applications for the transfer of an
6 18 existing small business shall be to assist in the transfer of
6 19 ownership of retail, wholesale, manufacturing, service, or
6 20 agricultural business that may close in the absence of
6 21 sufficient financial assistance.
6 22 3. During the lifetime of this loan program, the maximum
6 23 amount of assistance that an eligible borrower or business may
6 24 borrow or receive through this loan program shall be one two
6 25 hundred thousand dollars. An eligible borrower or business
6 26 under this program shall be limited to one loan from one
6 27 financial institution.
6 28 4. A preference shall be given to those persons who are
6 29 less able than other persons to secure funds for a focused
6 30 small business without participation in the focused small
6 31 business linked investment program.
6 32 5. In order to qualify under this program, all owners of
6 33 the business or borrowers must not have a combined net worth
6 34 exceeding five seven hundred fifty thousand dollars as defined
6 35 in rules adopted by the treasurer of state pursuant to chapter
7 1 17A and the focused small business must meet all of the
7 2 following criteria:
7 3 a. Be a for=profit business.
7 4 b. Have annual gross sales of two million dollars or less
7 5 at the time the application is submitted under section 12.35.
7 6 c. Not be operated out of the home of any person, unless
7 7 the person is eligible for a deduction on federal income taxes
7 8 pursuant to 26 U.S.C. } 280A.
7 9 d. Not involve real estate investments, rental of real
7 10 estate, leasing of real estate, or real estate speculation.
7 11 e. Liquor, beer, and wine sales must not exceed twenty
7 12 percent of annual sales for establishments holding a class "C"
7 13 liquor license issued pursuant to section 123.30.
7 14 f. If an application involves the transfer of an existing
7 15 small business, the transfer must be by purchase, lease=
7 16 purchase, or contract of sale. The purchase must be for all
7 17 or a portion of the business which is essential to its
7 18 continued viability, including land where the business is
7 19 located, fixtures attached to the land, machinery, inventory,
7 20 supplies, equipment, information technology, or licenses,
7 21 patents, trademarks, copyrights, or other intellectual
7 22 property relied upon by the business, and inventory for sale
7 23 by the business.
7 24 g. A borrower and the seller of an existing small business
7 25 shall not be within the third degree of consanguinity or
7 26 affinity.
7 27 6. Loan proceeds shall not be used to refinance existing
7 28 debt, including credit card debt. However, proceeds may be
7 29 used to refinance a short=term bridge loan made in
7 30 anticipation of the treasurer of state's approval of the
7 31 linked investment loan package.
7 32 7. Eligible lending institutions shall verify the borrower
7 33 is eligible to participate under the provisions of this
7 34 section pursuant to rules adopted by the treasurer of state
7 35 pursuant to chapter 17A.
8 1 Sec. 8. Sections 12.33, 12.40, 12.41, 12.43A, 12.43B, and
8 2 15.204, Code 2005, are repealed.
8 3 EXPLANATION
8 4 This bill relates to the linked investments for tomorrow
8 5 Act.
8 6 The bill eliminates the rural small business transfer
8 7 linked investment loan program, the horticultural and
8 8 nontraditional crops linked investment loan program, the
8 9 traditional livestock producer's linked investment loan
8 10 program, and the value=added agricultural linked investment
8 11 loan program. The bill makes conforming amendments.
8 12 The bill changes the method for determining the interest of
8 13 a certificate of deposit issued under the small business
8 14 linked investments program to the treasurer of state by an
8 15 eligible lending institution. The bill provides two
8 16 possibilities. One possibility is when the current market
8 17 rate, as determined and made available by the treasurer of
8 18 state each month, is 5 percent per annum or more, the interest
8 19 rate per annum shall be up to 3 percentage points below the
8 20 current market rate. The second possibility is when the
8 21 current market rate, as determined and made available by the
8 22 treasurer of state each month, is less than 5 percent per
8 23 annum, the interest rate per annum shall be up to 60 percent
8 24 below the current market rate. The bill makes conforming
8 25 amendments.
8 26 The bill changes the amount of moneys the treasurer of
8 27 state may invest under the linked investments program.
8 28 Currently, the treasurer of state may invest up to the lesser
8 29 of $108 million or 10 percent of the balance of the state
8 30 pooled money fund. The bill increases the allowable
8 31 percentage from 10 percent to 25 percent.
8 32 The bill provides that a certificate of deposit issued by
8 33 an eligible lending institution to the treasurer of state
8 34 under the program may be renewed at the option of the
8 35 treasurer on an annual basis for a total term not to exceed
9 1 five years.
9 2 The bill changes the name of the focused small business
9 3 linked investments program to the small business linked
9 4 investments program. The bill changes the eligibility
9 5 criteria under the program. Currently, the program is
9 6 available to new small businesses meeting certain criteria
9 7 which is 51 percent or more owned, operated, and actively
9 8 managed by one or more women, minority persons, or persons
9 9 with a disability. The bill eliminates the requirement
9 10 regarding ownership, operation, and active management of the
9 11 business. The bill provides that a new or existing small
9 12 business is eligible if all owners of the business or
9 13 borrowers do not have a combined net worth exceeding $750,000
9 14 and if the business is a for=profit business, has annual gross
9 15 sales of $2 million or less, is not operated out of the home
9 16 of any person unless certain criteria are met, does not
9 17 involve real estate investments, rental of real estate,
9 18 leasing of real estate, or real estate speculation, and
9 19 liquor, beer, and wine sales do not exceed 20 percent of
9 20 annual sales for certain liquor license holders. The bill
9 21 provides that, if an application involves the transfer of an
9 22 existing small business, the transfer must be by purchase,
9 23 lease=purchase, or contract of sale. The bill provides that a
9 24 borrower and the seller of an existing small business shall
9 25 not be within the third degree of consanguinity or affinity.
9 26 The bill provides an additional requirement for existing small
9 27 businesses that local competition does not exist in the
9 28 principal area of business activity of the existing small
9 29 businesses.
9 30 LSB 5848SK 81
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