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 1988 Official Edition, is hereby 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 for the purposes of this chapter; provided, however, that no more than ten percent of the amount invested by the Massachusetts Community Development Finance Corporation towards the project shall be used for administrative costs of the project.

SECTION 2. The definition of "Small business" of said section 1 of said chapter 40F, as so appearing, is hereby amended by striking out, in line 51, the words "seven million five hundred thousand" and inserting in place thereof the following words:- twelve million.

SECTION 2A. Said definition of "Small business" of said section 1 of said chapter 40F, as so appearing, is hereby further amended by striking out, in line 56, the words "fifteen million" and inserting in place thereof the following words:- twenty-four million.

SECTION 3. Section 4 of said chapter 40F, as so appearing, is hereby amended by striking out paragraph (13) and inserting in place thereof the following paragraph:-

(13) The CDFC has not invested or loaned more than twenty percent of all of the lendable or investable resources made available to it under this chapter in any one CDC, including this investment.

SECTION 4. The last paragraph of section 4A of said chapter 40F, as so appearing, is hereby amended by striking out clause (i) and inserting in place thereof the following clause:- (i) to provide financial assistance, loan instruments and guaranties for performance bonds to minority-owned or women-owned contractors notwithstanding the conditions described in section four, except that the CDFC must find (a) that the project plans conform to all applicable environmental, zoning, building, planning or sanitation laws, (b) that there is a reasonable expectation that the project will be successful, and (c) that its participation is necessary to the successful completion of the proposed project because funding for the project is unavailable in the traditional capital markets, or that credit has been offered on terms that would preclude the success of the project,.

SECTION 5. Said chapter 40F is hereby further amended by striking out section 5, as so appearing, and inserting in place thereof the following section:-

Section 5. The CDFC is hereby specifically authorized to establish or to invest in the capital stock of one or more corporations organized for the purposes of furthering the objectives of this chapter as set forth in section one of chapter eight hundred and sixty-six of the acts of nineteen hundred and seventy-five. Without limitation, any such corporation may:

(1) serve as a financial intermediary between entities undertaking projects and small businesses and public or private sources of capital including, without limitation, direct lenders, guarantors or grant makers. Any corporation so organized may accomplish its purposes by means of (i) investing in the equity capital of, (ii) making direct loans to, or (iii) issuing loan guarantees to entities undertaking projects or to small businesses; and

(2) provide financial and managerial consulting services to entities undertaking projects, small businesses and minority-owned or women-owned contractors.

The CDFC may have a controlling or a minority interest in any such corporation, as the board of directors of the CDFC shall determine in its discretion; provided, however, that at least one member of the board of directors of the CDFC shall sit on the board of directors of any such corporation.

None of the funds received derived from the common stock investment provided for in section four shall be used to support the establishment or operation of any corporations organized by the CDFC pursuant to this section or to finance the purchase of shares of capital stock authorized by this section. Notwithstanding the provisions of section four A, funds received from the common stock investment provided for in section four A and from any other investments authorized by this chapter may be used for the establishment and operation of any corporation so organized or to finance the purchase of shares of capital stock authorized by this section. Notwithstanding the foregoing, the amounts received by CDFC pursuant to section four A under the stock purchase agreement relating to Class B shares of stock shall be used for purposes relating to the assistance of minority-owned or women-owned contractors by any corporation established or in which the CDFC invests pursuant to this section.

Any corporation established under the provisions of this section or in which the CDFC has invested pursuant to this section shall, prior to making any investment in the capital stock of, or loans or loan guarantees to entities undertaking projects or to small businesses, make the following findings:

(1) That such action is consistent with the objectives of this chapter as set forth in section one of chapter eight hundred and sixty-six of the acts of nineteen hundred and seventy-five and may reasonably be expected to contribute to the redevelopment and economic well-being of target areas or will increase or maintain threatened primary employment or will assist minority or women-owned businesses.

(2) That in cases where a community development corporation is sponsoring a project, the CDC appears able to manage its proposed project responsibilities.

(3) That the funds provided by the CDFC will be used solely in connection with the costs of the project or the operation of the small business.

(4) That provision is made in the contract for adequate reporting of financial data from the small business or project to such corporation. Such provisions may include a requirement for an annual or other periodic audit of the books of the project or the small business.

(5) That its participation is necessary to the successful completion of the proposed project or to the success of the small business because funding for the project or small business is unavailable in the traditional capital markets, or that credit has been offered on terms that would preclude the success of the project or the small business.

(6) That provision has been made that should the CDFC desire to sell or otherwise dispose of stock received pursuant to such a contract, that the small business or entity undertaking a project, or their nominee, shall within one hundred and twenty days have the right of first refusal upon said sale and the right to meet any subsequent bona fide offer by a third party.

In no case shall the CDFC, or the CDFC in combination with such corporation, own more than forty-nine percent of the voting stock in any small business.

Upon the request of the CDFC, the commissioner of banks is hereby specifically authorized and directed to examine the books of any corporation established or invested in by the CDFC pursuant to the provisions of this section in the event that such examination is a condition of the particular investment, lending, loan guaranty or grant program administered by such corporation.

SECTION 6. Chapter 324 of the acts of 1987 is hereby amended by striking out section 8 and inserting in place thereof the following section:-

Section 8. Section six of this act shall take effect on July first, two thousand.