Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 1 of chapter 40F of the General Laws, as appearing in the 1984 Official Edition, is hereby amended by striking out the definition of "Capital participation investments" and inserting in place thereof the following definition:-

"Capital participation instruments", purchase of stock, both common and preferred, convertible securities, warrants, subscriptions, options to acquire, capital loans, and working capital or inventory loans, royalties, and any other lawful derivations of the foregoing.

SECTION 1A. Said section 1 of said chapter 40F is hereby further amended by striking out the definition of "Costs of a project" and inserting in place thereof the following definition:-

"Costs of a project", any and all costs associated with the design, planning, and implementation of a project undertaken in a target area which can reasonably be recovered in the financing of the project. Such costs may include but are not limited to the costs of planning, design, and other administrative costs, options to buy land, feasibility or other studies, seed money, construction, working capital, and other costs determined by the directors of the corporation to be necessary to the purposes of this chapter; provided, however, that administrative costs shall not exceed ten per cent of the total costs of any project.

SECTION 2. Section 3 of said chapter 40F, as so appearing, is hereby amended by striking out paragraph (i) and inserting in place thereof the following paragraph:-

(i) Borrow money by the issuance of debt obligations whether tax exempt or taxable and secure such obligations by the pledge of its revenues or of the revenues, mortgages, and notes of others, provided that the corporation shall not issue debt obligations the principal amount of which, when added to the principal amount of the debt obligations theretofore issued by the corporation, excluding debt obligations previously refunded or being or to be refunded thereby, shall exceed thirty million dollars.

SECTION 3. The second paragraph of section 4 of said chapter 40F, as so appearing, is hereby amended by striking out the second sentence.

SECTION 4. Said section 4 of said chapter 40F, as so appearing, is hereby further amended by striking out the third paragraph.

SECTION 5. Said chapter 40F is hereby further amended by inserting after section 4 the following section:-

Section 4A. The state treasurer acting on behalf of the commonwealth shall enter into an agreement with the corporation providing that the commonwealth shall purchase shares of the corporation in the amount of two million dollars per fiscal year of the commonwealth for a period of two such years; in return for said investment the commonwealth shall receive two hundred thousand shares, designated Class A shares, of stock in the corporation per year upon each purchase for a total of eight hundred thousand shares by the end of the fourth year. The state treasurer acting on behalf of the commonwealth shall enter into an agreement with the corporation providing that the commonwealth shall purchase shares of the corporation in the amount of five hundred thousand dollars per fiscal year of the commonwealth for a period of two such years; in return for said investment the commonwealth shall receive one hundred thousand shares, designated Class B shares, of stock in the corporation per year upon each such purchase for a total of four hundred thousand Class B shares by the end of the fourth year. These shares, together with the shares purchased by the state treasurer pursuant to section four, shall constitute the entire issues of stock of the corporation.

Such stock purchase agreements shall provide for purchase of stock at such time during each such year and upon such terms and under such conditions as the corporation may stipulate. The corporation may pledge such agreements and the rights of the corporation to receive amounts thereunder as security for the payment of debt obligations issued by the corporation. Each such agreement shall constitute a general obligation of the commonwealth for which the faith and credit of the commonwealth shall be pledged for the benefit of the corporation and of the holders of any debt obligations of the corporation which may be secured by a pledge of such agreement or of amounts to be received by the corporation under such agreement.

Amounts received by the corporation under the stock purchase agreement relating to Class A shares of stock may be used (i) to purchase capital participation instruments from community development corporations in return for an investment in specific projects as described in section four, (ii) as security for the payment of debt obligations issued by the corporation to finance the purchase of capital participation instruments as aforesaid, (iii) to pay the normal business expenses of the corporation, or (iv) for any combination of the foregoing.

Amounts received by the corporation under the stock purchase agreement relating to Class B shares of stock may be used (i) to purchase capital participation instruments from community development corporations in return for an investment in a specific project related to the full or partial guaranty of performance bonds for minority-owned or women-owned contractors under the conditions described in section four, (ii) as security for the payment of debt obligations issued by the corporation to finance the purchase of capital participation instruments as aforesaid, (iii) to pay the normal business expenses of the corporation, or (iv) for any combination of the foregoing.

SECTION 6. Said chapter forty F is hereby repealed.

SECTION 7. On or before June thirtieth, nineteen hundred and ninety-four, the board of directors of the Massachusetts Community Development Finance Corporation, at the request of the state treasurer, shall assist the state treasurer in implementing a plan for the sale of the shares of common stock, including Class A shares and Class B shares, which are held by the commonwealth pursuant to chapter forty F of the General Laws.

SECTION 7A. The state auditor shall annually conduct a field audit of the Massachusetts Development Finance Corporation.

SECTION 7B. The Massachusetts Finance Development Corporation shall notify the senator and representative representing the district in which a community development corporation is located whenever such community development corporation applies for funds from the said Massachusetts Development Finance Corporation.

SECTION 8. Section six of this act shall take effect on July first, nineteen hundred and ninety-four.