2012 -- H 7637

=======

LC00893

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

RELATING TO AUTHORIZING THE ECONOMIC DEVELOPMENT CORPORATION TO

CREATE THE JOB GUARANTY PROGRAM

     Introduced By: Representatives Jackson, O`Neill, Gallison, Lally, and Keable

     Date Introduced: February 16, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Section 1 of Chapter 26 of the 2010 Public Laws entitled "An Act Relating

1-2

to Economic Development" is hereby amended to read as follows:

1-3

     SECTION 1. WHEREAS, The Rhode Island Economic Development Corporation was

1-4

created by the general assembly pursuant to chapter 64 of title 42 of the general laws in order to,

1-5

among other things, promote the retention and expansion of businesses and the creation of jobs in

1-6

Rhode Island; and

1-7

     WHEREAS, One of the methods utilized by the Rhode Island Economic Development

1-8

Corporation to help promote and expand businesses in Rhode Island is the use of its quasi-public

1-9

corporation powers to issue bonds and debt and guarantees of debt; and

1-10

     WHEREAS, Rhode Island continues to suffer from continuing high unemployment and

1-11

other ill effects from the most recent national recession; and

1-12

     WHEREAS, One of Rhode Island's economic development's strategies of continuing to

1-13

optimize its knowledge economy assets, such, as the sciences, technology, digital media,

1-14

innovative manufacturing and other technologies, requires adequate access to capital; and

1-15

     WHEREAS, Rhode Island companies in growth phases are limited in their ability to

1-16

obtain reasonable credit without access to credit enhancement; and

1-17

     WHEREAS, The Rhode Island Economic Development Corporation desires to create a

1-18

loan guarantee and bond program pursuant to which it will be able to guarantee loan repayments

1-19

either directly or through the issuance of its bonds in order to induce lending to companies

2-1

growing their employment in Rhode Island;

2-2

     WHEREAS, The Rhode Island Economic Development Corporation seeks to have

2-3

authority pursuant to chapter 18 of title 35 of the general laws to guarantee debts or otherwise

2-4

issue its bonds for this purpose not to exceed one hundred twenty five million dollars

2-5

($125,000,000) one hundred thirty-five million dollars ($135,000,000) in the aggregate of unpaid

2-6

principal, thereby limiting the contingent long-term cost of such program to the state; and

2-7

     WHEREAS, The Rhode Island Economic Development Corporation requests the

2-8

approval of the general assembly prior to undertaking such program; now, therefore be it

2-9

     RESOLVED, That the Rhode Island Economic Development Corporation (the

2-10

"corporation") is hereby empowered and authorized pursuant to chapter 18, title 35 of the general

2-11

laws, and notwithstanding any provisions of chapter 64, title 42 of the general laws to the

2-12

contrary, to create the corporation's Job Creation Guaranty Program (the "program"). Under the

2-13

program, the corporation may from time to time issue its bonds, guaranty debt service thereon or

2-14

on bonds issued by the Rhode Island industrial facilities corporation, or guaranty the debt service

2-15

of another provided that the principal amount of bonds or other obligations guaranteed pursuant

2-16

to the program shall not at any time exceed one hundred twenty five million dollars

2-17

($125,000,000). one hundred thirty-five million dollars ($135,000,000); provided, that at least ten

2-18

million dollars ($10,000,000) shall be reserved exclusively for small employers. As used herein

2-19

the term "small employer" means any person, firm or corporation, partnership, association,

2-20

political subdivision or self-employed individual that is actively engaged in business, including

2-21

but not limited to, a business or corporation organized under the Rhode Island Non-Profit

2-22

Corporation Act, chapter 6 of title 7, or a similar act of another state that, on at least fifty percent

2-23

(50%) of it working days during the preceding calendar quarter, employed no more than fifty (50)

2-24

eligible employees, with a normal work week of thirty (30) or more hours, the majority of whom

2-25

were employed within this state, and in which a bona fide employer-employee relationship exists.

2-26

In determining the number of eligible employees, companies that are affiliated companies, or that

2-27

are eligible to file a combined tax return for purposes of taxation by this state, shall be considered

2-28

one employer. The term "small employer" also includes a self-employed individual. The

2-29

guaranty of any bond or other obligation may extend to repayment of the principal thereof,

2-30

sinking payments therefore, interest thereon, and payment of any redemption price or premium in

2-31

connection with the redemption thereof prior to maturity;

2-32

     RESOLVED, That guaranties or bonds issued by the corporation shall be approved by its

2-33

board of directors, or a committee of the board as so designated by the board, and shall be

2-34

executed by its executive director or any authorized officer of the corporation as authorized in a

3-1

resolution approved by the board of directors of the corporation from time to time in a form the

3-2

corporation may prescribe. The board of directors of the corporation in authorizing any such

3-3

guaranty or bond obligations shall consider and be guided by the following objectives:

3-4

     (a) Priority will be given to projects that promptly create permanent, full-time jobs with

3-5

annual wages in excess of two hundred fifty percent (250%) of the then current minimum wage

3-6

earned annually with industry comparable benefits. A full-time job shall mean one in which the

3-7

employee works a minimum of thirty (30) hours per week within this state.

3-8

     (b) Any guaranty or bond obligations hereby authorized should leverage capital

3-9

formation to facilitate business development with new and existing companies that will create or

3-10

retain jobs in this state. The documentation reflecting guaranty and bond obligations authorized

3-11

hereby shall contain adequate legal provisions for assuring performance by the borrower of

3-12

creating and retaining new jobs within this state.

3-13

     (c) Priority shall be given to guarantees that align with the State’s economic development

3-14

strategy to expand high-wage jobs in knowledge industry growth clusters or with respect to assets

3-15

related thereto.

3-16

     (d) Guarantees or loan obligations from the program’s borrower will be collateralized by

3-17

any and all available assets of the borrower and guarantors, where applicable, including

3-18

subordinate collateral positions, cross collateralization with other lenders and collateralized

3-19

guarantees as appropriate.

3-20

     (e) Insurances, including hazard and key person life, may be required where appropriate.

3-21

     (f) The corporation may utilize such data and retain experts as necessary to assess and

3-22

validate associated guaranty risk, and the corporation may charge borrower reasonable fees for

3-23

the corporation’s guaranty and reimbursement of expenses;

3-24

     RESOLVED, that in order assure any payments due on guarantees or bond obligations

3-25

issued by the corporation in connection with the program pursuant to this authorization are made,

3-26

to assure the continued operation and solvency of the corporation for the carrying out of its

3-27

corporate purposes, and except as otherwise set forth in these authorizing resolutions in

3-28

accordance with the provisions of chapter 64, title 42 of the general laws: (i) The corporation

3-29

shall create a reserve fund from which shall be charged any and all expenses of the corporation

3-30

with respect to guarantee or bond obligations of the corporation pursuant to these resolutions

3-31

resulting from a program borrower’s default; and (ii) The corporation shall credit to the reserve

3-32

fund no less than fifty percent (50%) of all program receipts of the corporation including guaranty

3-33

fees, premiums and any other receipts or recoveries from collections received pursuant to the

3-34

corporation’s rights to recover payments as a guarantor; and (iii) To the extent the corporation’s

4-1

obligations as a guarantor or pursuant to its program bond obligations are not satisfied by

4-2

amounts in its guaranty reserve fund, the executive director of the corporation shall annually, on

4-3

or before December 1st, make and deliver to the governor a certificate stating the minimum

4-4

amount, if any, required for the corporation to make payments due on such guarantees. During

4-5

each January session of the general assembly, the governor shall submit to the general assembly,

4-6

as part of the governor’s budget, the total of such sums, if any, required to pay any and all

4-7

obligations of the corporation under such guarantees or bond obligations pursuant to the terms of

4-8

this authorization. All sums appropriated by the general assembly for that purpose, and paid to the

4-9

corporation, if any, shall be utilized by the corporation to make payments due on such guarantees

4-10

or bond obligations. Any recoveries by the corporation of guarantee payments are to be returned

4-11

to the guarantee reserve fund and utilized to reduce any obligation of the state pursuant to any

4-12

guarantees entered into by the corporation;

4-13

     RESOLVED, on or before January 1 of each year, the corporation shall issue a report on

4-14

all guarantees issued by the corporation pursuant to this authorization. The report shall include at

4-15

a minimum: a list of each guarantee issued; a description of the borrower on behalf of which the

4-16

guarantee was issued; the lender or lenders that made the loan, and the amount of such loan, to

4-17

such borrower; the amount of principal and interest on each such loan outstanding as of the date

4-18

of such report; a summary of the collateral securing the repayment of such loan for which the

4-19

guarantee was issued; and a summary of the economic impacts made by such borrower as a result

4-20

of the guaranteed loan, including but not limited to the number, type and wages of jobs created by

4-21

such borrower, any impacts on the industry in which the borrower operates and an estimate of

4-22

income taxes for the state State of Rhode Island generated by the employees of such borrower and

4-23

the borrower itself

4-24

     SECTION 2. Section 1 of Chapter 29 of the 2010 Public Laws entitled "An Act Relating

4-25

to Authorizing the Economic Development Corporation to Create the Job Creation Guaranty

4-26

Program" is hereby amended to read as follows:

4-27

     SECTION 1. WHEREAS, The Rhode Island Economic Development Corporation was

4-28

created by the general assembly pursuant to chapter 64 of title 42 of the general laws in order to,

4-29

among other things, promote the retention and expansion of businesses and the creation of jobs in

4-30

Rhode Island; and

4-31

     WHEREAS, One of the methods utilized by the Rhode Island Economic Development

4-32

Corporation to help promote and expand businesses in Rhode Island is the use of its quasi-public

4-33

corporation powers to issue bonds and debt and guarantees of debt; and

5-34

     WHEREAS, Rhode Island continues to suffer from continuing high unemployment and

5-35

other ill effects from the most recent national recession; and

5-36

     WHEREAS, One of Rhode Island's economic development's strategies of continuing to

5-37

optimize its knowledge economy assets such, as the sciences, technology, digital media,

5-38

innovative manufacturing and other technologies, requires adequate access to capital; and

5-39

     WHEREAS, Rhode Island companies in growth phases are limited in their ability to

5-40

obtain reasonable credit without access to credit enhancement; and

5-41

     WHEREAS, The Rhode Island Economic Development Corporation desires to create a

5-42

loan guarantee and bond program pursuant to which it will be able to guarantee loan repayments

5-43

either directly or through the issuance of its bonds in order to induce lending to companies

5-44

growing their employment in Rhode Island;

5-45

     WHEREAS, The Rhode Island Economic Development Corporation seeks to have

5-46

authority pursuant to chapter 18 of title 35 of the general laws to guarantee debts or otherwise

5-47

issue its bonds for this purpose not to exceed one hundred twenty five million dollars

5-48

($125,000,000) one hundred thirty-five million dollars ($135,000,000) in the aggregate of unpaid

5-49

principal, thereby limiting the contingent long-term cost of such program to the state; and

5-50

     WHEREAS, The Rhode Island Economic Development Corporation requests the

5-51

approval of the general assembly prior to undertaking such program; now, therefore be it

5-52

     RESOLVED, That the Rhode Island Economic Development Corporation (the

5-53

"corporation") is hereby empowered and authorized pursuant to chapter 18, title 35 of the general

5-54

laws, and notwithstanding any provisions of chapter 64, title 42 of the general laws to the

5-55

contrary, to create the corporation's Job Creation Guaranty Program (the "program"). Under the

5-56

program, the corporation may from time to time issue its bonds, guaranty debt service thereon or

5-57

on bonds issued by the Rhode Island industrial facilities corporation, or guaranty the debt service

5-58

of another provided that the principal amount of bonds or other obligations guaranteed pursuant

5-59

to the program shall not at any time exceed one hundred twenty five million dollars

5-60

($125,000,000). one hundred thirty-five million dollars ($135,000,000); provided, that at least ten

5-61

million dollars ($10,000,000) shall be reserved exclusively for small employers. As used herein

5-62

the term "small employer" means any person, firm or corporation, partnership, association,

5-63

political subdivision or self-employed individual that is actively engaged in business, including

5-64

but not limited to, a business or corporation organized under the Rhode Island Non-Profit

5-65

Corporation Act, chapter 6 of title 7, or a similar act of another state that, on at least fifty percent

5-66

(50%) of it working days during the preceding calendar quarter, employed no more than fifty (50)

5-67

eligible employees, with a normal work week of thirty (30) or more hours, the majority of whom

5-68

were employed within this state, and in which a bona fide employer-employee relationship exists.

6-1

In determining the number of eligible employees, companies that are affiliated companies, or that

6-2

are eligible to file a combined tax return for purposes of taxation by this state, shall be considered

6-3

one employer. The term "small employer" also includes a self-employed individual. The

6-4

guaranty of any bond or other obligation may extend to repayment of the principal thereof,

6-5

sinking payments therefore, interest thereon, and payment of any redemption price or premium in

6-6

connection with the redemption thereof prior to maturity;

6-7

     RESOLVED, That guaranties or bonds issued by the corporation shall be approved by its

6-8

board of directors, or a committee of the board as so designated by the board, and shall be

6-9

executed by its executive director or any authorized officer of the corporation as authorized in a

6-10

resolution approved by the board of directors of the corporation from time to time in a form the

6-11

corporation may prescribe. The board of directors of the corporation in authorizing any such

6-12

guaranty or bond obligations shall consider and be guided by the following objectives:

6-13

     (a) Priority will be given to projects that promptly create permanent, full-time jobs with

6-14

annual wages in excess of two hundred fifty percent (250%) of the then current minimum wage

6-15

earned annually with industry comparable benefits. A full-time job shall mean one in which the

6-16

employee works a minimum of thirty (30) hours per week within this state.

6-17

     (b) Any guaranty or bond obligations hereby authorized should leverage capital

6-18

formation to facilitate business development with new and existing companies that will create or

6-19

retain jobs in this state. The documentation reflecting guaranty and bond obligations authorized

6-20

hereby shall contain adequate legal provisions for assuring performance by the borrower of

6-21

creating and retaining new jobs within this state.

6-22

     (c) Priority shall be given to guarantees that align with the State’s economic development

6-23

strategy to expand high-wage jobs in knowledge industry growth clusters or with respect to assets

6-24

related thereto.

6-25

     (d) Guarantees or loan obligations from the program’s borrower will be collateralized by

6-26

any and all available assets of the borrower and guarantors, where applicable, including

6-27

subordinate collateral positions, cross collateralization with other lenders and collateralized

6-28

guarantees as appropriate.

6-29

     (e) Insurances, including hazard and key person life, may be required where appropriate.

6-30

     (f) The corporation may utilize such data and retain experts as necessary to assess and

6-31

validate associated guaranty risk, and the corporation may charge borrower reasonable fees for

6-32

the corporation’s guaranty and reimbursement of expenses;

6-33

     RESOLVED, that in order assure any payments due on guarantees or bond obligations

6-34

issued by the corporation in connection with the program pursuant to this authorization are made,

7-1

to assure the continued operation and solvency of the corporation for the carrying out of its

7-2

corporate purposes, and except as otherwise set forth in these authorizing resolutions in

7-3

accordance with the provisions of chapter 64, title 42 of the general laws: (i) The corporation

7-4

shall create a reserve fund from which shall be charged any and all expenses of the corporation

7-5

with respect to guarantee or bond obligations of the corporation pursuant to these resolutions

7-6

resulting from a program borrower’s default; and (ii) The corporation shall credit to the reserve

7-7

fund no less than fifty percent (50%) of all program receipts of the corporation including guaranty

7-8

fees, premiums and any other receipts or recoveries from collections received pursuant to the

7-9

corporation’s rights to recover payments as a guarantor; and (iii) To the extent the corporation’s

7-10

obligations as a guarantor or pursuant to its program bond obligations are not satisfied by

7-11

amounts in its guaranty reserve fund, the executive director of the corporation shall annually, on

7-12

or before December 1st, make and deliver to the governor a certificate stating the minimum

7-13

amount, if any, required for the corporation to make payments due on such guarantees. During

7-14

each January session of the general assembly, the governor shall submit to the general assembly,

7-15

as part of the governor’s budget, the total of such sums, if any, required to pay any and all

7-16

obligations of the corporation under such guarantees or bond obligations pursuant to the terms of

7-17

this authorization. All sums appropriated by the general assembly for that purpose, and paid to the

7-18

corporation, if any, shall be utilized by the corporation to make payments due on such guarantees

7-19

or bond obligations. Any recoveries by the corporation of guarantee payments are to be returned

7-20

to the guarantee reserve fund and utilized to reduce any obligation of the state pursuant to any

7-21

guarantees entered into by the corporation;

7-22

     RESOLVED, on or before January 1 of each year, the corporation shall issue a report on

7-23

all guarantees issued by the corporation pursuant to this authorization. The report shall include at

7-24

a minimum: a list of each guarantee issued; a description of the borrower on behalf of which the

7-25

guarantee was issued; the lender or lenders that made the loan, and the amount of such loan, to

7-26

such borrower; the amount of principal and interest on each such loan outstanding as of the date

7-27

of such report; a summary of the collateral securing the repayment of such loan for which the

7-28

guarantee was issued; and a summary of the economic impacts made by such borrower as a result

7-29

of the guaranteed loan, including but not limited to the number, type and wages of jobs created by

7-30

such borrower, any impacts on the industry in which the borrower operates and an estimate of

7-31

income taxes for the state of Rhode Island generated by the employees of such borrower and the

7-32

borrower itself.

8-33

     SECTION 3. This act shall take effect upon passage.

=======

LC00893

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO AUTHORIZING THE ECONOMIC DEVELOPMENT CORPORATION TO

CREATE THE JOB GUARANTY PROGRAM

***

9-1

     This act would amend Chapters 26 and 29 of the 2010 Public Laws in regard to economic

9-2

development. The act would also increase the amount of money for which the Job Creation

9-3

Guaranty Program of the Rhode Island Economic Development Corporation may issue bonds or

9-4

guaranty debt service thereon, from $125,000,000 to $135,000,000. This act would further

9-5

provide that at least $10,000,000 would be reserved for small employers.

9-6

     This act would take effect upon passage.

=======

LC00893

=======