General Assembly: 76 (1996 Regular GA) - Chapter 1058 - Linked investments


Published: 1996-04-04

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151 lAWS OF THE SEVEN1Y-SIXTH GA, 1996 SESSION

CHAPTER 1058 UNKED INVESTMENTS

H.F.2397

AN ACf relating to linked investments and establishing an effective date.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 12.32, Code 1995, is amended to read as follows: 12.32 DEFINITIONS. As used in this division, unless the context otherwise requires:

CH. 1058

1. "Eligible borrower" means any person who is in the business or is entering the busi- ness of producing, processing, or marketing horticultural crops or nontraditional crops in this state or any person in this state who is qualified to participate in one of the programs in this division.

2. "Eligible lending institution" means a financial institution that is empowered to make commercial loans, and is eligible pursuant to chapter 12C to be a depository of state funds, aRa agrees te f3ameif3ate in the linlrea in-vestmeRts feF temeFFew f3Fegram.

3. "Linked investment" means a certificate of deposit placed pursuant to this division by the treasurer of state with an eligible lending institution, at an interest rate not more than three percent below current market rates on the condition that the institution agrees to lend the value of the deposit, according to the investment agreement provided in section ~ 12.35, to an eligible borrower at a rate not to exceed four percent above the rate paid on the certificate of deposit.

Sec. 2. Section 12.34, subsection 2, Code 1995, is amended to read as follows: 2. The treasurer shall adopt rules pursuant to chapter 17A to imf3lemeat administer this

division ineludiRg, but Ret limitea te, rules iaeRtifyi:Rg hemewtuml eF9f3s aRa ReRtFadi tieRaI eFef3s feF 'Nhieh the IiRlrea in-vestmeats may be leaRea.

Sec. 3. Section 12.34, Code 1995, is amended by adding the following new subsection: NEW SUBSECTION. 3. Certificates of deposit placed by the treasurer on or after July

1, 1996, pursuant to this division may be renewed at the option of the treasurer. The initial certificate of deposit for a given borrower shall have a maturity of one year and may be renewed for eight additional one-year periods.

Sec. 4. Section 12.35, Code 1995, is amended to read as follows: 12.35 APPUCATION . .L An eligible lending institution that desires to receive a linked investment shall enter

into an agreement with the treasurer of state. which shall include requirements necessary for the eligible lending institution to comply with this division.

-h 2. An eligible lending institution that desires to receive a linked investment shall accept and review applications for loans from eligible borrowers. The leRdiBg institutieR shall af3f3ly all usualleRdiBg stanaards te aeteFlDine the eredit wert.'liness ef eaeh eligiBle BeFFeweF. LeaR af3f3lieatieRs shall Be feF the f3UFehase eF lease ef lana, maehinery, eEtUiIJ meat, seea, feFtiliz!eF, direet mariretiRg faeilities, eF Rew eF expanding f3Feeessing faeilities feF hemeultUFal eF9f3s eF ReRtFaditieRal eFef3s. The mtuBmum s~e ef a leaR is twe hURdrea theusaRa aellars f3eF BeFFeweF feF a f3FeauetieR leaR aRa five hundrea tReusaRa aellars feF f3Feeessing eF maFlieting faeilities.

a: 3. The eligible fiRaReial lending institution shall forward to the state treasurer of state a linked investment loan package in the form and manner as prescribed by the trea- surer of state. The package shall include information required by the treasurer of state, including but not limited to the amount of the loan requested and the purpose of the loan. The institution shall certify that the applicant is an eligible borrower aRa shall eertify the f3Feseat BeFFe'lr.dlg rate af3f3lieable te the sf3eeifie eligible BeFFeweF.

CH. 1058 lAWS OF THE SEVENTY-SIXTH GA., 1996 SESSION

Sec. 5. Section 12.36, Code 1995, is amended to read as follows: 12.36 ACTIONS BY TREASURER AGREEMENT.

152

1. The treasurer of state shall accept or reject a linked investment loan package or any portion of the package based on the type or terms of the loan involved. the availability of state funds. or the compliance of the eligible borrower or eligible lending institution.

2. Upon acceptance of the linked investment loan package or any portion of the pack- age, the treasurer of state shall place certificates of deposit with the eligible lending insti- tution at a rate not more than three percent below the current market rate. Mer JHIy 1, 1992, the The treasurer of state shall not place a certificate of deposit with an eligible lending institution pursuant to this division, unless the certificate of deposit earns a rate of interest of at least two percent. WheR Reeessar-y, the treaS1:lFer may plaee eertifieates et depesit pner te aeeeptaRee et a liRked iR-vestmeRt leaR paekage. Interest earned on the certificate of deposit and principal not renewed shall be remitted to the treasurer of state at the time the certificate of deposit matures. Certificates of deposit placed pursuant to this division are not subject to a penalty for early withdrawal.

6: The eligihle leRdiR-g iBstitutieR shall eRter iRte aR iBvestmeRt agreemeRt 'nith the treasurer et state, ",,'-hieh shall iRelude reE):uiremeRts Reeessar-y te eany eut this dPiisieR. The reE):UiFemeRts shall refleet the market eeRditieRs prevailiRg iR the eligihle leRdiRg iRstitutieR's leRdiBg area. The agreemeRt may iRelude a speeifieatieR et the pened et time iR 'l"meh the leRding institHtieR is te leRd funds upeR the plaeemeRt ef a liRked iR-vest meRt, aRd shall iRelude pre¥isieRs fer the eertifieates et depesit te he plaeed fer eRe year maturities that may he reRewed fer eight additieRal eRe year peneds. IRterest shall he paid at the times determmed hy the treaS1:lFer et state.

Sec. 6. Section 12.38, Code 1995, is amended to read as follows: 12.38 REPORTS. By February 1 of each year, the treasurer of state shall report on the linked investments

for tomorrow program, the F1:lFal small husiness traRsfer liBkeEl investmeRt leaR pregram, the targeted small husiness linked investmeRts pregram, aBd the mam street liRkeEl invest meRts leaR pregram programs for the preceding calendar year to the governor, the depart- ment of economic development, the speaker of the house of representatives, and the presi- dent of the senate. The speaker of the house shall transmit copies of this report to the house co-chair of the joint economic development appropriations subcommittee and the chairs of the standing committees in the house which customarily consider legislation regarding agriculture and commerce, and the president of the senate shall transmit copies of this report to the senate co-chair of the joint economic development appropriations subcommittee and the chairs of the standing committees in the senate which customarily consider legislation regarding agriculture and commerce. The report shall set forth the linked investments made by the treasurer of state under the program during the year, the total amount deposited, the number of deposits, and an estimate of foregone interest, and shall include information regarding the nature, terms, and amounts of the loans upon which the linked investments were based and the eligible borrowers to which the loans were made.

Sec. 7. Section 12.40, Code 1995, is amended to read as follows: 12.40 RURAL SMALL BUSINESS TRANSFER LINKED INVESTMENT LOAN

PROGRAM. 1. As used in this section, "rural small business" means an existing rural small busi-

ness, for which local competition does not exist in the principal realm of business activity of that business, and the loss of which will work a hardship on the rural community. A rural small business may include a grocery store, drug store, gasoline station, convenience store, hardware business, or farm supply store. A rural small business does not include a new business.

2. The treasurer of state shall adopt rules consistent with this division to implement a rural small business transfer linked investment loan program to further the fellewiRg pUFpeses:

153 lAWS OF THE SEVEN1Y-SIXTH GA., 1996 SESSION CH. 1058

~ To promote the business prosperity aRe eeoRomie welfare of Iowa through promot iRg the prosperity aRe eeoRomie 'Nelfare of rural Iowa.

&. -Te maintain and expand existing employment opportunities and the provision of retail goods on a local level in small rural communities by assisting in the transfer of ownership of retail-oriented businesses where, in the absence of sufficient financial assis- tance, the businesses may close.

3. UpOR the plaeemeRt of linlree investffieRt mOReys with aR eligible leReiRg iDstim tiOR, the iRStimtiOR is reE:J:uiree to leRe mORey to a persoR pUFSuaRt to rules aeoptee by the treasurer of state for the traRsfer of a rural small busiDess. The In order to qualify as an eligible borrower, the rural small business must be located in a city with a population of five thousand or less. A city located in a county with a population in excess of three hun- dred thousand, if the city is contiguous to another city in the county and that other city is contiguous to the largest city in that county, shall be eORsieeree as hav:.ng a populatioR iR exeess of five thousaRe ineligible to qualify as a borrower.

4. The In order to qualify as an eligible borrower, the transfer of the rural small busi- ness must be by purchase, lease-purchase, or contract of sale. The purchase must be for a portion of the business which is essential to its continued viability, including real estate where the business is located, fixtures attached to the real estate, equipment relied upon by the business, and inventory for sale by the business. ~ The eligible leReiRg iDStimtiOR shall apply all usual leRdiBg StaReareS to eetermine

the ereeitworthiness of eaeh eligible bOFFo'Ner. The leRdiRg iRStitUtiOR shall forware to the treasurer of state all iBformatioR or aay eertifieatioR relating to the 10aR reE:J:UiFee aRe iR a maRfier preseribee by this ei>,qSiOR aRe rules whieh shall be aeoptee by the treasurer of state.

e. 5. A In order to qualify as an eligible borrower, a borrower and the seller of the rural small business shall not be within the third degree of consanguinity or affinity.

6. Loan proceeds shall not be used to refinance existing debt. including credit card debt. However, proceeds may be used to refinance a short-term bridge loan made in an- ticipation of the treasurer's approval of the linked investment loan package.

7. The maximum loan amount that a borrower may receive under this program shall Rot be more thaR be fifty thousand dollars.

& Not more thaR ORe thinl of the amowH of the pereeRtage authomee in seetioR 12.34 may be usee for p~oses of supportiBg this program aRe the maiD street liBl{ee Hwest meBt 10aR program \iBeer seetioR 12.51.

Sec. 8. NEW SECTION. 12.41 HORTICULTURAL AND NONTRADITIONAL CROPS LINKED INVESTMENT LOAN PROGRAM.

The treasurer of state shall adopt rules to implement a horticultural and nontraditional crops linked investment loan program to provide statewide availability of lower cost funds for lending that will stimulate existing or encourage new businesses in the areas of pro- ducing, processing, or marketing horticultural or nontraditional crops, The rules shall be in accordance with the following:

1. In order to qualify as an eligible borrower, the loan application shall be for the pur- chase or lease of land, machinery, equipment, or the purchase of other inputs used in the business of producing, processing, or marketing horticultural or nontraditional crops as defined by the treasurer.

2. Loan proceeds shall not be used to refinance existing debt, including credit card debt. However, proceeds may be used to refinance a short-term bridge loan made in an- ticipation of the treasurer's approval of the linked investment loan package.

3. The maximum loan amount that an eligible borrower may receive under this pro- gram is two hundred thousand dollars for a production loan and five hundred thousand dollars for processing or marketing facilities.

Sec. 9. The treasurer of state shall not place any new certificates of deposit for linked investments for the targeted small business linked investments program under section

CH. 1058 lAWS OF THE SEVENTY-SIXTH GA, 1996 SESSION 154

12.43 between the effective date of this Act and June 30, 1997, unless the person for whom the linked investment is to be made has been certified by the department of inspections and appeals under section lOA302 and has submitted to the treasurer of state a targeted small business borrower application by the effective date of this Act. Certificates of de- posit placed prior to, or following the submission of a borrower application by a certified targeted small business by the effective date of this Act may be renewed in accordance with section 12.34.

Sec. 10. Certificates of deposit placed prior to the effective date of this Act or certifi- cates of deposit placed on or after the effective date of this Act for persons who were certified under section 12.52 and who have submitted to the treasurer of state a main- street borrower application by the effective date of this Act, under the main street linked investments program may be renewed in accordance with section 12.34.

Sec. 11. Sections 12.51 and 12.52, Code 1995, are repealed.

Sec. 12. EFFECTIVE DATE. This Act, being deemed of immediate importance, takes effect upon enactment.

Approved April 4, 1996

CHAPTER 1059 WORKERS' COMPENSATION - UMITED LIABIUTY COMPANY MEMBERS

H.F.308

AN ACT relating to the election of workers' compensation coverage by a limited liability company member.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 85.1, subsection 3, paragraph b, subparagraph (3), Code 1995, is amended to read as follows:

(3) Officers of a family farm corporation or members of a limited liability company, spouses of the officers or members, the parents, brothers, sisters, children and stepchil- dren of either the officers or members, or the spouses of the officers or members, and the spouses of the brothers, sisters, children, and stepchildren of either the officers or mem- bers, or the spouses of the officers or members who are employed by the corporation or limited liability company, the primary purpose of which, although not necessarily the stated purpose, is farming or ownership of agricultural land, and who are actually engaged in agricultural pursuits or operations immediately connected with the agricultural pursuits either on or off the premises of the corporation or limited liability company.

Sec. 2. Section 85.1A, Code 1995, is amended to read as follows: 85.1A PROPRIETORS, UMITED LIABIUTY COMPANY MEMBERS, AND PARTNERS. A proprietor, limited liability company member, or partner who is actively engaged in

the proprietor's, limited liability company member's, or partner's business on a substan- tially full-time basis, may elect to be covered by the workers' compensation law of this state by purchasing valid workers' compensation insurance specifically including the pro- prietor, limited liability company member, or partner. The election constitutes an assump- tion by the employer of workers' compensation liability for the proprietor, limited liability company member, or partner for the time period in which the insurance contract is in force. The proprietor, limited liability company member, or partner shall accept compen- sation in the manner provided by the workers' compensation law and the employer is