HOUSE BILL No. 6040 May 9, 2002, Introduced by Reps. Rich Brown, Adamini, Neumann, Anderson, Bovin, Lipsey, Sheltrown, Plakas, Gosselin, Van Woerkom, Bogardus, George, Gieleghem, Lockwood and Lemmons and referred to the Committee on Commerce. A bill to amend 1855 PA 105, entitled "An act to regulate the disposition of the surplus funds in the state treasury; to provide for the deposit of surplus funds in certain financial institutions; to lend surplus funds pursuant to loan agreements secured by certain commercial, agricultural, or industrial real and personal property; to authorize the loan of surplus funds to certain municipalities; to authorize the partic- ipation in certain loan programs; to authorize an appropriation; and to prescribe the duties of certain state agencies," (MCL 21.141 to 21.147) by adding section 2f. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 SEC. 2F. (1) THE STATE TREASURER MAY INVEST SURPLUS FUNDS 2 UNDER THE STATE TREASURER'S CONTROL IN CERTIFICATES OF DEPOSIT OR 3 OTHER INSTRUMENTS OF A FINANCIAL INSTITUTION QUALIFIED UNDER THIS 4 ACT TO RECEIVE DEPOSITS OR INVESTMENTS OF SURPLUS FUNDS FOR THE 5 PURPOSE OF FACILITATING TOURISM LOANS. THE STATE TREASURER SHALL 6 ENDEAVOR TO MAKE INVESTMENTS UNDER THIS SUBSECTION IN FINANCIAL 7 INSTITUTIONS SO THAT TOURISM LOANS WILL BE CONVENIENTLY AVAILABLE 07016'02 JLB 2 1 IN ALL GEOGRAPHIC REGIONS IN THIS STATE. THE STATE TREASURER MAY 2 ENTER INTO AN INVESTMENT AGREEMENT WITH A FINANCIAL INSTITUTION 3 TO PROVIDE FOR THE INVESTMENT UNDER THIS SUBSECTION. THE INVEST- 4 MENT AGREEMENT SHALL CONTAIN ALL OF THE FOLLOWING: 5 (A) THE TERM OF THE INVESTMENT, WHICH SHALL BE NOT MORE THAN 6 10 YEARS. 7 (B) A REQUIREMENT THAT THE INTEREST ACCRUING ON THE INVEST- 8 MENT SHALL NOT BE MORE THAN THE INTEREST EARNED BY THE FINANCIAL 9 INSTITUTION ON TOURISM LOANS MADE AFTER THE DATE OF THE 10 INVESTMENT. 11 (C) A REQUIREMENT THAT THE FINANCIAL INSTITUTION SHALL PRO- 12 VIDE GOOD AND AMPLE SECURITY AS THE STATE TREASURER REQUIRES AND 13 SHALL IDENTIFY THE TOURISM LOANS AND THE TERMS AND CONDITIONS OF 14 THOSE LOANS THAT ARE MADE AFTER THE DATE OF THE INVESTMENT THAT 15 ARE ATTRIBUTABLE TO THAT INVESTMENT, TOGETHER WITH OTHER INFORMA- 16 TION REQUIRED UNDER THIS ACT. 17 (D) A REQUIREMENT THAT A TOURISM LOAN MADE BY THE FINANCIAL 18 INSTITUTION THAT IS ATTRIBUTABLE TO THE INVESTMENT SHALL BE 19 ISSUED AT A RATE OR RATES OF INTEREST THAT ARE ESTABLISHED IN THE 20 INVESTMENT AGREEMENT. 21 (E) A REQUIREMENT THAT A TOURISM LOAN MADE BY THE FINANCIAL 22 INSTITUTION THAT IS ATTRIBUTABLE TO THE INVESTMENT SHALL BE MADE 23 NOT LATER THAN 3 YEARS AFTER THE EFFECTIVE DATE OF THE AMENDATORY 24 ACT THAT ADDED THIS SECTION. 25 (F) A REQUIREMENT THAT A TOURISM LOAN MADE BY THE FINANCIAL 26 INSTITUTION THAT IS ATTRIBUTABLE TO THE INVESTMENT SHALL BE 27 ISSUED FOR A LOAN REPAYMENT PERIOD OF NOT MORE THAN 7 YEARS. 07016'02 3 1 (G) A REQUIREMENT THAT A TOURISM LOAN MADE BY THE FINANCIAL 2 INSTITUTION THAT IS ATTRIBUTABLE TO THE INVESTMENT SHALL NOT 3 EXCEED $10,000.00. 4 (H) A REQUIREMENT THAT A TOURISM LOAN MADE BY THE FINANCIAL 5 INSTITUTION THAT IS ATTRIBUTABLE TO THE INVESTMENT SHALL NOT BE 6 RELEASED BY THE FINANCIAL INSTITUTION UNLESS THE LOAN APPLICANT 7 HAS CERTIFIED THAT IT IS AN ELIGIBLE BORROWER. 8 (I) A REQUIREMENT THAT, TO THE EXTENT THE FINANCIAL INSTITU- 9 TION HAS NOT MADE TOURISM LOANS IN AN AMOUNT AT LEAST EQUAL TO 10 THE AMOUNT OF THE INVESTMENT WITHIN 90 DAYS AFTER THE INVESTMENT, 11 THE RATE OF INTEREST PAYABLE ON THAT PORTION OF THE OUTSTANDING 12 INVESTMENT SHALL BE INCREASED TO A RATE OF INTEREST PROVIDED IN 13 THE INVESTMENT AGREEMENT, WITH THE INCREASE IN THE RATE OF INTER- 14 EST APPLIED RETROACTIVELY TO THE DATE ON WHICH THE STATE TREA- 15 SURER MADE THE INVESTMENT. 16 (J) INCENTIVES FOR THE EARLY REPAYMENT OF THE INVESTMENT AND 17 FOR THE ACCELERATION OF PAYMENTS IN THE EVENT OF A STATE CASH 18 SHORTFALL AS PRESCRIBED BY THE INVESTMENT AGREEMENT, IF REQUIRED 19 BY THE STATE TREASURER. 20 (K) OTHER TERMS AS PRESCRIBED BY THE STATE TREASURER. 21 (2) AN INVESTMENT MADE UNDER THIS SECTION IS FOUND AND 22 DECLARED TO BE FOR A VALID PUBLIC PURPOSE. 23 (3) THE ATTORNEY GENERAL SHALL APPROVE DOCUMENTATION FOR AN 24 INVESTMENT UNDER THIS SECTION AS TO LEGAL FORM. 25 (4) THE AGGREGATE AMOUNT OF INVESTMENTS MADE UNDER THIS SEC- 26 TION SHALL NOT EXCEED $3,000,000.00. 07016'02 4 1 (5) UPON THE DETERMINATION BY THE DIRECTOR OF THE DEPARTMENT 2 OF MANAGEMENT AND BUDGET THAT THE NEED TO FACILITATE TOURISM 3 LOANS HAS SIGNIFICANTLY DIMINISHED BASED ON CHANGES IN THE ECON- 4 OMY OF THIS STATE, THE STATE TREASURER MAY TAKE ACTIONS NECESSARY 5 TO ENSURE THAT NO NEW TOURISM LOANS THAT ARE ATTRIBUTABLE TO AN 6 INVESTMENT UNDER THIS SECTION ARE MADE. A DETERMINATION UNDER 7 THIS SUBSECTION SHALL NOT AFFECT EXISTING TOURISM LOANS THAT ARE 8 ATTRIBUTABLE TO AN INVESTMENT UNDER THIS SECTION. 9 (6) EARNINGS FROM AN INVESTMENT MADE UNDER THIS SECTION THAT 10 ARE IN EXCESS OF THE AVERAGE RATE OF INTEREST EARNED DURING THE 11 SAME PERIOD ON OTHER SURPLUS FUNDS, OTHER THAN SURPLUS FUNDS 12 INVESTED UNDER SECTION 1, SHALL BE CREDITED TO THE GENERAL FUND 13 OF THIS STATE. IF INTEREST FROM AN INVESTMENT MADE UNDER THIS 14 SECTION IS BELOW THE AVERAGE RATE OF INTEREST EARNED DURING THE 15 SAME PERIOD ON OTHER SURPLUS FUNDS, OTHER THAN SURPLUS FUNDS 16 INVESTED UNDER SECTION 1, THE GENERAL FUND SHALL BE REDUCED BY 17 THE AMOUNT OF THE DEFICIENCY ON AN AMORTIZED BASIS OVER THE 18 REMAINING TERM OF THE INVESTMENT. A LOSS OF PRINCIPAL FROM AN 19 INVESTMENT MADE UNDER THIS SECTION SHALL REDUCE THE EARNINGS OF 20 THE GENERAL FUND BY THE AMOUNT OF THAT LOSS ON AN AMORTIZED BASIS 21 OVER THE REMAINING TERM OF THE INVESTMENT. 22 (7) THE STATE TREASURER MAY TAKE ANY NECESSARY ACTION TO 23 ENSURE THE SUCCESSFUL OPERATION OF THIS SECTION, INCLUDING MAKING 24 INVESTMENTS WITH FINANCIAL INSTITUTIONS TO COVER THE ADMINISTRA- 25 TIVE AND RISK-RELATED COSTS ASSOCIATED WITH A TOURISM LOAN. 26 (8) ANNUALLY, EACH FINANCIAL INSTITUTION IN WHICH THE STATE 27 TREASURER HAS MADE AN INVESTMENT UNDER THIS SECTION SHALL FILE AN 07016'02 5 1 AFFIDAVIT, SIGNED BY A SENIOR EXECUTIVE OFFICER OF THE FINANCIAL 2 INSTITUTION, STATING THAT THE FINANCIAL INSTITUTION IS IN COMPLI- 3 ANCE WITH THE TERMS OF THE INVESTMENT AGREEMENT. 4 (9) THE STATE TREASURER SHALL ANNUALLY PREPARE AND SUBMIT A 5 REPORT TO THE LEGISLATURE REGARDING THE DISPOSITION OF MONEY 6 INVESTED FOR PURPOSES OF FACILITATING TOURISM LOANS UNDER THIS 7 SECTION. THE REPORT SHALL INCLUDE ALL OF THE FOLLOWING 8 INFORMATION: 9 (A) THE TOTAL NUMBER OF ELIGIBLE BORROWERS WHO HAVE RECEIVED 10 A TOURISM LOAN. 11 (B) BY COUNTY, THE TOTAL NUMBER AND AMOUNTS OF THE TOURISM 12 LOANS THAT WERE ISSUED. 13 (C) THE NAME OF EACH FINANCIAL INSTITUTION PARTICIPATING IN 14 THE TOURISM LOAN PROGRAM AND THE AMOUNT INVESTED IN EACH FINAN- 15 CIAL INSTITUTION FOR PURPOSES OF THE LOAN PROGRAM. 16 (10) AS USED IN THIS SECTION: 17 (A) "ELIGIBLE BORROWER" MEANS A PERSON WHO THE STATE TREA- 18 SURER DETERMINES IS ENGAGED IN A BUSINESS DESCRIBED UNDER CODE 19 SECTIONS 72111, 72112, 721191, 721199, AND 721211 OF SUBSECTOR 20 721--ACCOMMODATION OF THE NORTH AMERICAN INDUSTRY CLASSIFICATION 21 SYSTEM, UNITED STATES 1997, PUBLISHED BY THE OFFICE OF MANAGEMENT 22 AND BUDGET IN 13 C.F.R. 121.201, EMPLOYS NOT MORE THAN 20 23 FULL-TIME EMPLOYEES, AND HAS CURRENT GROSS ANNUAL SALES OF LESS 24 THAN $1,000,000.00. 25 (B) "ELIGIBLE COST" MEANS THE COSTS INCURRED BY AN ELIGIBLE 26 BORROWER IN MAINTAINING AND OPERATING A BUSINESS SERVICING THE 27 TOURISM INDUSTRY. 07016'02 6 1 (C) "SURPLUS FUNDS" MEANS, AT ANY GIVEN DATE, THE EXCESS OF 2 CASH AND OTHER RECOGNIZED ASSETS THAT ARE EXPECTED TO BE RESOLVED 3 INTO CASH OR ITS EQUIVALENT IN THE NATURAL COURSE OF EVENTS AND 4 WITH A REASONABLE CERTAINTY, OVER THE LIABILITIES AND NECESSARY 5 RESERVES AT THE SAME DATE. 6 (D) "TOURISM LOAN" MEANS A LOAN TO AN ELIGIBLE BORROWER TO 7 FINANCE AN ELIGIBLE COST. 07016'02 Final page. JLB