HOUSE BILL No. 6672

 

November 29, 2006, Introduced by Rep. Kolb 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

participation 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 2g.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2g. (1) The state treasurer may invest surplus funds

 

under the state treasurer's control in certificates of deposit or

 

other instruments of a financial institution qualified under this

 

act to receive deposits or investments of surplus funds for the

 

purpose of facilitating qualified banking development loans. The

 

state treasurer shall endeavor to make investments under this

 


subsection in financial institutions such that qualified banking

 

development loans will be conveniently available in all geographic

 

regions in this state. The state treasurer may enter into an

 

investment agreement with a financial institution to provide for

 

the investment under this subsection. The investment agreement

 

shall contain all of the following:

 

     (a) The term of the investment, which shall be not more than

 

15 years.

 

     (b) A requirement that the interest accruing on the investment

 

shall not be more than the interest earned by the financial

 

institution on qualified banking development loans made after the

 

date of the investment.

 

     (c) A requirement that the financial institution shall provide

 

good and ample security as the state treasurer requires and shall

 

identify the qualified banking development loans and the terms and

 

conditions of those loans that are made after the date of the

 

investment that are attributable to that investment together with

 

other information required by this act.

 

     (d) A requirement that a qualified banking development loan

 

made by the financial institution that is attributable to the

 

investment shall be issued at a rate or rates of interest that are

 

established in the investment agreement.

 

     (e) A requirement that a qualified banking development loan

 

made by the financial institution that is attributable to the

 

investment shall be made not later than 5 years after the effective

 

date of this section.

 

     (f) A requirement that a qualified banking development loan

 


made by the financial institution that is attributable to the

 

investment shall be issued for a loan repayment period of not more

 

than 15 years.

 

     (g) Incentives for the early repayment of the investment and

 

for the acceleration of payments in the event of a state cash

 

shortfall as prescribed by the investment agreement, if required by

 

the state treasurer.

 

     (h) Other terms as prescribed by the state treasurer.

 

     (2) An investment made under this section is found and

 

declared to be for a valid public purpose.

 

     (3) The attorney general shall approve documentation for an

 

investment under this section as to legal form.

 

     (4) Earnings from an investment made under this section that

 

are in excess of the average rate of interest earned during the

 

same period on other surplus funds, other than surplus funds

 

invested under section 1, shall be credited to the general fund of

 

this state. If interest from an investment made under this section

 

is below the average rate of interest earned during the same period

 

on other surplus funds, other than surplus funds invested under

 

section 1, the general fund shall be reduced by the amount of the

 

deficiency on an amortized basis over the remaining term of the

 

investment. A loss of principal from an investment made under this

 

section shall reduce the earnings of the general fund by the amount

 

of that loss on an amortized basis over the remaining term of the

 

investment.

 

     (5) The state treasurer may take any necessary action to

 

ensure the successful operation of this section, including making

 


investments with financial institutions to cover the administrative

 

and risk-related costs associated with a qualified banking

 

development loan.

 

     (6) Annually, each financial institution in which the state

 

treasurer has made an investment under this section shall file an

 

affidavit, signed by a senior executive officer of the financial

 

institution, stating that the financial institution is in

 

compliance with the terms of the investment agreement.

 

     (7) The state treasurer shall annually prepare and submit a

 

report to the legislature regarding the disposition of money

 

invested for purposes of facilitating qualified banking development

 

loans under this section. The report shall include all of the

 

following information:

 

     (a) The total number of financial institutions located or

 

operating in a banking development district who have received a

 

qualified banking development loan.

 

     (b) By county, the total number and amounts of the qualified

 

banking development loans that were issued.

 

     (c) The name of each financial institution participating in

 

the qualified banking development loan program and the amount

 

invested in each financial institution for purposes of the loan

 

program.

 

     (8) As used in this section:

 

     (a) "Banking development district" means a banking development

 

district created under the banking development district authority

 

act.

 

     (b) "Qualified banking development loan" means a loan from a

 


financial institution operating within a banking development

 

district to an individual who resides in or a business operating in

 

a banking development district that is used for job creation,

 

housing, or economic development inside the banking development

 

district.

 

     (c) "Surplus funds" means, at any given date, the excess of

 

cash and other recognized assets that are expected to be resolved

 

into cash or its equivalent in the natural course of events and

 

with a reasonable certainty, over the liabilities and necessary

 

reserves at the same date and any other available funds.