Senate Bill 5787 - Linked Deposit Program

Summary

Senate Bill 5787, State of Washington 67th Legislature, 2022 Regular Session, by Senators Nguyen, Dhingra, Frockt, Keiser, Kuderer, Liias, Lovick, Nobles, and Pedersen, by request of State Treasurer, read first time 01/11/22 and referred to the Committee on Business, Financial Services & Trade. The act relates to the linked deposit program, amending RCW 43.86A.030, 43.86A.040 and 43.86A.050 and reenacting and amending RCW 43.86A.060. Sec. 1 changes the references to a time certificate of deposit program to a surplus funds investment program and sets an apportionment formula. The final section authorizes the office of minority and women's business enterprises to adopt rules, including limits on the total principal loan amount that a business or owner receives.

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Full text

     Z-0514.1

                               SENATE BILL 5787


     State of Washington       67th Legislature        2022 Regular Session

     By Senators Nguyen, Dhingra, Frockt, Keiser, Kuderer, Liias, Lovick,
     Nobles, and Pedersen; by request of State Treasurer

     Read first time 01/11/22.      Referred   to   Committee   on   Business,
     Financial Services & Trade.




 1       AN ACT Relating to the linked deposit program; amending RCW
 2   43.86A.030, 43.86A.040, and 43.86A.050; and reenacting and amending
 3   RCW 43.86A.060.


 4   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 5       Sec. 1.   RCW 43.86A.030 and 2010 c 139 s 1 are each amended to
 6   read as follows:
 7       (1)(a) The state treasurer shall make funds available for a
 8   ((time certificate of deposit)) surplus funds investment program
 9   according to the following formula: The state treasurer shall
10   apportion to all participating depositaries an amount equal to five
11   percent of the three year average mean of general state revenues as
12   certified in accordance with Article VIII, section 1(b) of the state
13   Constitution, or fifty percent of the total surplus treasury
14   investment availability, whichever is less. Within thirty days after
15   certification, an amount equal to those funds determined to be
16   available according to this formula for the ((time certificate of
17   deposit)) surplus funds investment program shall be available for
18   deposit in qualified public depositaries. These funds shall be
19   allocated among the participating depositaries on a basis to be
20   determined by the state treasurer.


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 1       (b) The funds made available by the treasurer for a ((time
 2   certificate of deposit)) surplus funds investment program under (a)
 3   of this subsection (1) may be provided from either treasury surplus
 4   funds or funds held pursuant to chapter 43.250 RCW.
 5       (2) Of all state funds available under this section, the state
 6   treasurer may use up to one hundred seventy-five million dollars per
 7   year for the purposes of RCW 43.86A.060(2)(c) (i) and (iii) and up to
 8   fifteen   million  dollars   per  year   for  the   purposes  of  RCW
 9   43.86A.060(2)(c)(ii). The amounts made available to these public
10   depositaries shall be equal to the amounts of outstanding loans made
11   under RCW 43.86A.060.
12       (3) The formula so devised shall be a matter of public record
13   giving consideration to, but not limited to, deposits, assets, loans,
14   capital structure, investments, or some combination of these factors.
15   However, if in the judgment of the state treasurer the amount of
16   allocation for ((certificates of deposit)) the surplus funds
17   investment program as determined by this section will impair the cash
18   flow needs of the state treasury, the state treasurer may adjust the
19   amount of the allocation accordingly.
20       (4) Deposits and interest accrued thereon made through the
21   surplus funds investment program must be protected against loss
22   pursuant to RCW 39.58.020.


23       Sec. 2.   RCW 43.86A.040 and 1973 c 123 s 4 are each amended to
24   read as follows:
25       Except as provided in RCW 43.86A.020 and 43.86A.030, nothing in
26   this chapter shall be construed as a limitation upon the powers of
27   the state treasurer to determine the amount of surplus treasury funds
28   which may be invested ((in time certificates of deposit)).

29       Sec. 3.   RCW 43.86A.050 and 1973 c 123 s 5 are each amended to
30   read as follows:
31       The state treasurer shall devise the necessary formulae and
32   methodology   to   implement   the  provisions   of   this   chapter.
33   Periodically, but at least once every six months, the state treasurer
34   shall review all rules and shall adopt, amend or repeal them as may
35   be necessary. These rules and a list of ((time certificate of
36   deposit)) surplus funds investment allocations shall be published in
37   the treasurer's monthly financial report as required under the
38   provisions of RCW 43.08.150.
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 1       Sec. 4. RCW 43.86A.060 and 2009 c 385 s 3 and 2009 c 384 s 1 are
 2   each reenacted and amended to read as follows:
 3       (1) The state treasurer shall establish a linked deposit program
 4   for investment of ((deposits)) surplus treasury funds in qualified
 5   public depositaries. As a condition of participating in the program,
 6   qualified public depositaries must make qualifying loans as provided
 7   in this section. The state treasurer may purchase ((a certificate of
 8   deposit)) an investment instrument that is equal to the amount of the
 9   qualifying loan made by the qualified public depositary or may
10   purchase ((a certificate of deposit)) an investment instrument that
11   is equal to the aggregate amount of two or more qualifying loans made
12   by one or more qualified public depositaries.
13       (2) Qualifying loans made under this section are those:
14       (a) Having terms that do not exceed ten years;
15       (b) Where an individual loan does not exceed one million dollars;
16       (c)(i) That are made to a minority or women's business enterprise
17   that has received state certification under chapter 39.19 RCW;
18       (ii) That are made to a veteran-owned business that has received
19   state certification under RCW 43.60A.190; or
20       (iii) That are made to a community development financial
21   institution that is: (A) Certified by the United States department of
22   the treasury pursuant to 12 U.S.C. Sec. 4701 et seq.; and (B) using
23   that loan to make qualifying loans under (c)(i) of this subsection;
24       (d) Where the interest rate on the loan to the minority or
25   women's business enterprise or veteran-owned business does not exceed
26   an interest rate that is two hundred basis points below the interest
27   rate the qualified public depositary would charge for a loan for a
28   similar purpose and a similar term, except that, if the preference
29   given by the state treasurer to the qualified public depositary under
30   subsection (3) of this section is less than two hundred basis points,
31   the qualified public depositary may reduce the preference given on
32   the loan by an amount that corresponds to the reduction in preference
33   below two hundred basis points given to the qualified public
34   depositary; and
35       (e) Where the points or fees charged at loan closing do not
36   exceed one percent of the loan amount.
37       (3) In setting interest rates of ((time certificate of deposits))
38   surplus funds invested for the linked deposit program, the state
39   treasurer shall offer rates so that a two hundred basis point
40   preference will be given to the qualified public depositary, except
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 1   that the treasurer may lower the amount of the preference to ensure
 2   that the effective interest rate on the deposit is not less than zero
 3   percent.
 4       (4) Upon notification by the state treasurer that a minority or
 5   women's business enterprise is no longer certified under chapter
 6   39.19 RCW or that a veteran-owned business is no longer certified
 7   under RCW 43.60A.190, the qualified public depositary shall reduce
 8   the amount of qualifying loans by the outstanding balance of the loan
 9   made under this section to the minority or women's business
10   enterprise or the veteran-owned business, as applicable.
11       (5) The office of minority and women's business enterprises has
12   the authority to adopt rules to:
13       (a) Ensure that when making a qualified loan under the linked
14   deposit program, businesses that have never received a loan under the
15   linked deposit program are given first priority;
16       (b) Limit the total principal loan amount that any one business
17   receives in qualified loans under the linked deposit program over the
18   lifetime of the businesses;
19       (c) Limit the total principal loan amount that an owner of one or
20   more businesses receives in qualified loans under the linked deposit
21   program during the owner's lifetime;
22       (d) Limit the total amount of any one qualified loan made under
23   the linked deposit program; and
24       (e) Ensure that loans made by community development financial
25   institutions are qualifying loans under subsection (2)(c)(i) of this
26   section.

                                  --- END ---




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