NY State Senate Bill 2017-S7703

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Feb 09, 2018	referred to corporations, authorities and commissions

2017-S7703 (ACTIVE) - Details

Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: New York State Urban Development Corporation Act
Laws Affected:: Add §16-dd, UDC Act

2017-S7703 (ACTIVE) - Summary

Relates to creating the community development revolving loan program to provide low interest loans or loan guarantees to a targeted market, where it is underserved and otherwise difficult to obtain regular bank financing.

2017-S7703 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S7703

SPONSOR: HAMILTON
 
TITLE OF BILL:  An act to amend the New York state urban development
corporation act, in relation to creating the community development
revolving loan program

 
PURPOSE:

To create a community development revolving loan fund program under
control of Empire State Development to fund loans made by Community
Development Financial Institutions in low income communities for small
businesses, including MWBEs, affordable housing and community facili-
ties.

 
SUMMARY OF SPECIFIC PROVISIONS:

 
SECTION 1:

This adds a new section 16-dd which creates a Community Development

financial loan program including the definition of Community Development
Financial Institutions (CDFI), which defines services area, and target
populations to be served by the loan program.

The community development revolving loan program is created to provide
low interest loans or guarantees to underserved low income markets.
Such loans or loan guarantees shall be made by a CDFI for the purposes
of small businesses, including Minority and Women-Owned Business Enter-
prises (MWBEs), microbusinesses, small farm businesses, residential
mortgages, commercial mortgages, housing rehabilitation, home improve-
ment, not-for-profit community based organizations.

The Urban Development Corporation (UDC) may either administer the
program or enter into an agreement with third party entity to administer
the program.

The UDC shall be allowed to receive funds from the corporation itself,
financial institutions, insurance companies, business corporations and
settlements of civil actions by the department of financial services.

Participating Community Development Financial Institutions shall submit
annual reports which detail the uses, the funds, and the number of jobs
created and the economic development generated.

UDC is authorized conduct audits to ensure compliance with the program

A five member advisory committee is established to examine the loan
practices, promotion, implementation and administration of the fund.

 
SECTION 2:

This act shall take effect April 1, 2018; provided however, if this act
shall become a law after such date it shall take effect immediately and
shall be deemed to have been in full force and effect on and after April
1, 2018. Effective immediately, the addition, amendment and/or repeal of
any rule or regulation necessary for the implementation of this act on
its effective date are authorized and directed to be made and completed
on or before such effective date.

 
JUSTIFICATION:

A community development fund exclusively dedicated to funding loans by
Community Development Financial Institutions (CDFIs) supports lending in
underserved and low income communities. There is no shortage of loan
demand in low income communities. This loan fund would assist CDFIs in
bridging the gap in financial services which exists in many low income
communities.

CDFIs are specialized financial institutions designated by the U.S.
Department of Treasury to serve low income communities in rural and
urban areas. CDFIs located across the state since 2005 have made more
than $2.4 billion in loans in low income communities financing more than
48,000 small businesses, affordable housing developments and community
facilities.

This proposed loan fund is unique because it provides for a
public/private capitalization of the loan fund. The loan fund may accept
funding from banks and other entities to support this mission driven
fund.

The loan fund provides a pool of capital to fund loans in low income
areas which would reach borrowers that often require non-traditional
loan terms, higher reserve requirements and some coaching to effectively
function in the marketplace. The pool of capital provided would provide
scale and commoditization for these loans which would be critical in
achieving more effective market penetration.

 
PRIOR LEGISLATIVE HISTORY:

No prior legislative history.

 
FISCAL IMPLICATIONS:

The program would require an appropriation to fund its implementation
but those funds would be reinvested upon repayment by the lenders to be
recycled to other borrowers.

 
EFFECTIVE DATE:
This act shall take effect April 1, 2018; provided however, if this act
shall become a law after such date it shall take effect immediately and
shall be deemed to have been in full force and effect on and after April
1, 2018. Effective immediately, the addition, amendment and/or repeal of
any rule or regulation necessary for the implementation of this act on
its effective date are authorized and directed to be made and completed
on or before such effective date.

2017-S7703 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7703
 
                             I N  S E N A T E
 
                             February 9, 2018
                                ___________
 
 Introduced  by Sen. HAMILTON -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN ACT to amend the New York state urban development corporation act, in
   relation to creating the community development revolving loan program
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 1 of chapter 174 of the laws of 1968,  constituting
 the  New  York  state  urban  development corporation act, is amended by
 adding a new section 16-dd to read as follows:
   § 16-DD.   COMMUNITY DEVELOPMENT  REVOLVING  LOAN  PROGRAM.  1.  DEFI-
 NITIONS.  AS  USED  IN  THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE
 FOLLOWING MEANINGS:
   (A) "COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION" MEANS  AN  ORGANIZA-
 TION  WHOSE  PRINCIPAL  OFFICE  IS LOCATED IN THIS STATE, WHICH HAS BEEN
 CERTIFIED AS A COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION BY THE FEDER-
 AL COMMUNITY DEVELOPMENT FINANCIAL  INSTITUTIONS  FUND,  AS  ESTABLISHED
 PURSUANT TO 12 U.S.C. § 4701, ET SEQ.
   (B) "INVESTMENT AREA" MEANS A GEOGRAPHIC AREA WHICH:
   (I) IS ECONOMICALLY DISTRESSED AS DEFINED IN SECTION SIXTEEN-D OF THIS
 ACT; AND
   (II)  HAS  SIGNIFICANT UNMET NEEDS FOR LOANS OR IS LOCATED IN A FEDER-
 ALLY DESIGNATED EMPOWERMENT ZONE OR ENTERPRISE COMMUNITY AS  ESTABLISHED
 PURSUANT  TO TITLE XIII OF THE FEDERAL OMNIBUS BUDGET RECONCILIATION ACT
 OF 1993 (PUBLIC LAW 103-66).
   (C) "LOW INCOME" MEANS HAVING AN INCOME, ADJUSTED FOR FAMILY SIZE,  OF
 NOT MORE THAN:
   (I)  FOR METROPOLITAN AREAS, EIGHTY PERCENT OF THE AREA MEDIAN INCOME;
 OR
   (II) FOR NON-METROPOLITAN AREAS, THE GREATER OF EIGHTY PERCENT OF  THE
 AREA MEDIAN INCOME OF THE STATEWIDE NON-METROPOLITAN AREA MEDIAN INCOME.
   (D)  "TARGETED  POPULATION" MEANS INDIVIDUALS OR AN IDENTIFIABLE GROUP
 OF INDIVIDUALS INCLUDING, BUT NOT LIMITED TO, MINORITY  AND  WOMEN-OWNED
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD14306-02-8

 S. 7703                             2
 
 BUSINESS  ENTERPRISES  WHO  ARE  LOW  INCOME  OR OTHERWISE LACK ADEQUATE
 ACCESS TO LOANS.
   (E)  "TARGET  MARKET" MEANS A DEFINED SERVICE AREA WHICH SERVES ONE OR
 MORE INVESTMENT AREAS OR TARGETED POPULATION.
   2. THE COMMUNITY DEVELOPMENT REVOLVING LOAN PROGRAM IS HEREBY  CREATED
 TO  PROVIDE  LOW INTEREST LOANS OR LOAN GUARANTEES TO A TARGETED MARKET,
 WHERE IT IS UNDERSERVED AND OTHERWISE DIFFICULT TO OBTAIN  REGULAR  BANK
 FINANCING.  SUCH  LOANS  OR LOAN GUARANTEES SHALL BE MADE BY A COMMUNITY
 DEVELOPMENT FINANCIAL INSTITUTION AND SHALL BE MADE  IN  TARGET  MARKETS
 FOR  PURPOSES  OF  SMALL  BUSINESSES,  MICROBUSINESSES, SMALL FARM BUSI-
 NESSES, RESIDENTIAL MORTGAGES, COMMERCIAL MORTGAGES,  HOUSING  REHABILI-
 TATION,  HOME  IMPROVEMENT, NOT-FOR-PROFIT COMMUNITY BASED ORGANIZATIONS
 AND FOR SUCH OTHER PURPOSES AS PERMITTED BY THE CORPORATION.
   3. A COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION DESIRING  TO  PARTIC-
 IPATE  IN  THE  PROGRAM  SHALL  EXECUTE AN AGREEMENT IN SUCH FORM AS THE
 CORPORATION MAY PRESCRIBE AND SHALL CONTAIN SUCH TERMS AND PROVISIONS AS
 THE CORPORATION OR ITS AGENT MAY DEEM AS NECESSARY AND APPROPRIATE.
   4. THE CORPORATION IS HEREBY  AUTHORIZED  TO  ADMINISTER  THE  PROGRAM
 CREATED  IN  SUBDIVISION TWO OF THIS SECTION OR ALTERNATIVELY, TO DO THE
 FOLLOWING:
   (A) ENTER INTO A CONTRACT WITH A THIRD PARTY TO ACT AS  THE  AGENT  OF
 THE  CORPORATION  WITH  RESPECT  TO  THE ADMINISTRATION OF SUCH PROGRAM,
 PURSUANT TO A COMPETITIVE PROCESS;
   (B) CONDUCT AN ANNUAL REVIEW AND ASSESSMENT OF THE PERFORMANCE OF  THE
 THIRD  PARTY  IN  ITS CAPACITY AS AGENT FOR THE CORPORATION TO DETERMINE
 WHETHER THE CONTRACT REFERENCED IN PARAGRAPH  (A)  OF  THIS  SUBDIVISION
 SHOULD BE RENEWED FOR AN ADDITIONAL TWO YEAR PERIOD. THE REVIEW SHALL BE
 BASED  ON WHETHER THE THIRD PARTY AGENT HAS SATISFACTORILY MET THE TERMS
 AND CONDITIONS OF THE CONTRACT;
   (C) PROMULGATE RULES AND REGULATIONS WITH RESPECT TO  THE  IMPLEMENTA-
 TION  OF THE COMMUNITY DEVELOPMENT REVOLVING LOAN PROGRAM ESTABLISHED BY
 THIS SECTION AND ANY OTHER RULES AND REGULATIONS  NECESSARY  TO  FULFILL
 THE  PURPOSES  OF THIS SECTION, IN ACCORDANCE WITH THE STATE ADMINISTRA-
 TIVE PROCEDURE ACT.
   (D) ANY CONTRACT ENTERED INTO PURSUANT TO PARAGRAPH (A) OF THIS SUBDI-
 VISION SHALL:
   (I) BE FOR A PERIOD OF TWO YEARS AND SHALL BE  RENEWED  FOR  AN  ADDI-
 TIONAL  TWO YEAR PERIOD SUBJECT TO REQUIREMENTS OF PARAGRAPH (B) OF THIS
 SUBDIVISION; AND
   (II) PROVIDE FOR COMPENSATION FOR EXPENSES INCURRED BY THE THIRD PARTY
 AGENT IN CONNECTION WITH ITS  SERVICES  AS  AGENT  AND  FOR  SUCH  OTHER
 SERVICES  AS  THE  CORPORATION  MAY  DEEM APPROPRIATE INCLUDING, BUT NOT
 LIMITED TO THE USE OF THE PREMISES, PERSONNEL AND PERSONAL  PROPERTY  OF
 THE THIRD PARTY AGENT.
   5.  THE  CORPORATION  IS AUTHORIZED TO ESTABLISH A REVOLVING LOAN FUND
 ACCOUNT INTO WHICH FUNDS MAY BE RECEIVED FROM ANY SOURCE, INCLUDING  BUT
 NOT  LIMITED  TO,  THE  CORPORATION,  FINANCIAL  INSTITUTIONS, INSURANCE
 COMPANIES, BUSINESS CORPORATIONS AND FROM SETTLEMENTS OF  CIVIL  ACTIONS
 BY  THE  DEPARTMENT  OF  FINANCIAL SERVICES, AND FROM WHICH FUNDS MAY BE
 EXPENDED FOR THE AFOREMENTIONED PURPOSES.
   6. WITH RESPECT TO LOANS PURSUANT TO THIS PROGRAM, A COMMUNITY  DEVEL-
 OPMENT FINANCIAL INSTITUTION MAY CHARGE APPLICATION, COMMITMENT AND LOAN
 GUARANTEE  FEES  SUBJECT  TO  A  SCHEDULE OF FEES APPROVED BY THE CORPO-
 RATION.

 S. 7703                             3
 
   7. A COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION PARTICIPATING IN  THE
 PROGRAM  SHALL SUBMIT TO THE CORPORATION, AN ANNUAL REPORT DETAILING THE
 FOLLOWING:
   (A) THE NUMBER OF PROGRAM LOANS MADE;
   (B) THE AMOUNT OF PROGRAM FUNDING USED FOR LOANS;
   (C) THE USE OF LOAN PROCEEDS BY THE BORROWER;
   (D) THE NUMBER OF JOBS CREATED OR RETAINED;
   (E) A DESCRIPTION OF THE ECONOMIC DEVELOPMENT GENERATED;
   (F) THE STATUS OF OUTSTANDING PROGRAM LOANS; AND
   (G)  SUCH  OTHER  INFORMATION  AS  THE  CORPORATION OR ITS AGENT SHALL
 REQUIRE.
   8. THE CORPORATION MAY DIRECTLY  OR  THROUGH  A  THIRD  PARTY  CONDUCT
 AUDITS  OF  A  COMMUNITY  DEVELOPMENT FINANCIAL INSTITUTION'S COMPLIANCE
 WITH THE PROVISIONS OF THIS SECTION AND ANY REGULATIONS PROMULGATED.  IN
 THE  EVENT  OF  SUBSTANTIVE NONCOMPLIANCE, THE CORPORATION MAY TERMINATE
 THE PARTICIPATION OF SUCH COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION IN
 THE PROGRAM.
   9. THE CORPORATION SHALL CREATE AN ADVISORY COMMITTEE, CONSISTING OF A
 MAXIMUM OF FIVE MEMBERS. SUCH COMMITTEE  SHALL  ADVISE  THE  CORPORATION
 WITH RESPECT TO LOAN PRACTICES, PROCESSES AND PROCEDURES; INTERNAL CRED-
 IT  POLICIES AND APPROPRIATE RISK ASSESSMENT STANDARDS FOR LOANS MADE BY
 COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS. SUCH COMMITTEE SHALL ADDI-
 TIONALLY ADVISE THE CORPORATION IN  THE  PROMOTION,  IMPLEMENTATION  AND
 ADMINISTRATION  OF SUCH FUND, INCLUDING ALSO PROVIDING ASSISTANCE TO THE
 CORPORATION IN SECURING PRIVATE FUNDS FOR THE REVOLVING LOAN FUND.   THE
 MEMBERS  OF SUCH COMMITTEE SHALL HAVE EXPERIENCE WITH COMMUNITY DEVELOP-
 MENT FINANCIAL INSTITUTIONS, AND SHALL, TO THE EXTENT PRACTICAL, REFLECT
 DIVERSITY IN GEOGRAPHIC LOCATION AND COMMUNITIES SERVED.
   § 2. This act shall take effect April 1, 2018;  provided  however,  if
 this  act  shall become a law after such date it shall take effect imme-
 diately and shall be deemed to have been in full force and effect on and
 after April 1, 2018.  Effective  immediately,  the  addition,  amendment
 and/or repeal of any rule or regulation necessary for the implementation
 of this act on its effective date are authorized and directed to be made
 and completed on or before such effective date.

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Senate Bill S7703

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Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

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2017-S7703 (ACTIVE) - Details

2017-S7703 (ACTIVE) - Summary

2017-S7703 (ACTIVE) - Sponsor Memo

2017-S7703 (ACTIVE) - Bill Text download pdf

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Sponsored By

Jesse Hamilton

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Actions

2017-S7703 (ACTIVE) - Details

2017-S7703 (ACTIVE) - Summary

2017-S7703 (ACTIVE) - Sponsor Memo

2017-S7703 (ACTIVE) - Bill Text download pdf

Comments