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.