HCS/SCS/SB 270 - This act modifies provisions relating to the linked deposit program and other duties of the State Treasurer.
Any written contract between the State Treasurer and a depositary of state funds may be for a period of up to five years (Section 30.250). Currently, the State Treasurer must give consideration to the comparative yield to be derived in determining where to invest state moneys. This act repeals that requirement and instead requires the treasurer to give consideration to the benefits to the economy and welfare of the state when state money is invested in banking institutions of this state, as well as the aggregate return in earnings and taxes on deposits and investments. (Section 30.260).
The State Treasurer is required to use only certain securities as collateral for moneys deposited by the treasurer into financial institutions, unless the treasurer determines that any of such securities may place state public funds at risk. The list of approved securities is modified to add mortgage securities, including qualified individual loans secured by deeds of trust on residential, commercial or farm real estate. Such mortgage securities must meet certain requirements to ensure that the financial institution is compliant with current standards of the Federal Home Loan Bank of Des Moines, Iowa. The act sets forth collateral requirements for different types of mortgage securities. Each financial institution pledging such mortgage securities must report monthly to the State Treasurer to ensure that the securities meet collateral requirements. The list of approved securities is also modified to include any investment in which the State Treasurer may invest. These two new additions to the list are not authorized for political subdivisions (Section 30.270).
The State Treasurer is authorized to enter into agreements with private entities to provide services relating to the State Treasurer's statutory and constitutional duties (Section 30.286).
The act modifies numerous provisions regarding the linked deposit program, which allows financial institutions to make lower interest rate loans to certain types of agri-businesses, job enhancement businesses, educational institutions, real estate development and other entities in order to stimulate economic development. The act modifies certain definitions, including: "eligible agribusiness" by deleting the requirement that the business must employ ten or more persons; "eligible beginning farmer" by increasing the limit on the size and value of a farm in order to qualify under the definition; and "linked deposit" by removing language setting the interest rate floor for such loans at two percent (Section 30.750).
Currently, the State Treasurer may invest in linked deposits as long as the aggregate amount does not exceed $360 million. The act raises that aggregate amount to $720 million. The act doubles the cap on the amount of money which can currently be invested in linked deposits for different types of qualified businesses and other entities. Further, the act repeals language which limited the state Treasurer's ability to commingle allocations among the types of linked deposits (Sections 30.753 and 30.830). Currently, linked deposits made to certain eligible agribusinesses cannot exceed $100,000. The act caps such linked deposits at a dollar limit determined by the state treasurer. Beginning August 28, 2005, lending institutions shall give consideration to eligible borrowers who have not previously received linked deposits, but nothing prohibits a lending institution from making a linked deposit to an eligible borrower who has previously received a linked deposit (Section 30.756).
The State Treasurer is authorized to place linked deposits with a lending institution at certain below-market rates, provided that the linked deposit rate is not below one percent. If the market rate is 5% or above, then the state treasurer shall reduce the market rate by up to 3% to obtain the linked deposit rate. If the market rate is less than 5%, then the state treasurer shall reduce the market rate by up to 60% to obtain the linked deposit rate. All linked deposit rates are determined and calculated by the State Treasurer. The State Treasurer must make a good faith effort to ensure that linked deposit loans are awarded to female or minority owned entities. The agreement between the State Treasurer and the lending institution receiving linked deposits shall specify that the original deposit plus renewals shall not exceed five years. Each year, the lending institution must repay the state treasurer any linked deposit principal received from the borrower in the previous year. Certain lines of credit are excluded from the repayment provisions of this act (Section 30.758).
The interest rate that may be charged by a lending institution receiving linked deposits shall be set at a rate reduced by the State Treasurer making the linked deposit to the lending institution. The act deletes a requirement that the State Treasurer annually report on the linked deposit program to the General Assembly, since current law requires a similar report by the linked deposit review committee (Section 30.760). The act extends the expiration of the linked deposit program from 2007 to 2015 (Section 30.767). The State Treasurer is authorized to renew linked deposits for certain agribusinesses for additional, up to five-year, terms, instead of the current one-year terms (Section 30.840).
The act creates a new category of borrower that may participate in the linked deposit program relating to the creation of facilities producing goods derived from agricultural commodities or producing an energy source derived from a renewable domestically grown organic compound, such as ethanol. The Missouri Agricultural and Small Business Development Authority is required to determine eligible facility borrowers, based on the borrower's ability to repay the loan, the economic conditions of the area in which the agricultural property is located, and the prospect for success of the project. An eligible facility borrower cannot receive a linked deposit loan for more than $70 million (Section 30.860).
The act creates the "State Treasurer's General Operations Fund". Moneys in the fund shall be used to pay for personal service, equipment and other expenses of the State Treasurer in carrying out official duties. The State Treasurer shall deduct the costs incurred by the State Treasurer in administering official duties of the treasurer from the interest earned on the state's investments and deposit such deducted moneys in the Fund. The total costs of the State Treasurer for personal service, equipment and other expenses cannot exceed ten basis points of the total average daily fund balance of funds in the state treasury (Section 1).
The act repeals a section that required any bank account with more than $10,000 to be obtained through an open and competitive process (Section 30.247).
This act contains an emergency clause.