HOUSE DOCKET, NO. 426        FILED ON: 1/10/2019

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 935

The Commonwealth of Massachusetts

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PRESENTED BY:

Mike Connolly

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act establishing the Massachusetts infrastructure bank.

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PETITION OF:

HOUSE DOCKET, NO. 426        FILED ON: 1/10/2019

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 935

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE HOUSE, NO. 3543 OF 2017-2018.]

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-First General Court
(2019-2020)

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An Act establishing the Massachusetts infrastructure bank.

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. The General Laws are hereby amended by inserting after chapter 40W the following chapter:-

Chapter 40X. THE MASSACHUSETTS INFRASTRUCTURE BANK

Section 1.  For the purposes of this chapter the following terms shall, unless the context clearly requires otherwise, have the following meanings:-

“The Massachusetts infrastructure bank” or “the bank”, a financial institution able to accept deposits from public and quasi-public entities, make loans and float bond issues and chartered as such by the commonwealth. 

“Infrastructure”, includes capital projects that serve the general public including schools, public services such as police, fire and health, public buildings, water facilities and waste management, farmland preservation, public land management, climate change mitigation and adaptation, local roadways, bike paths, and pedestrian walkways unless clearly indicated otherwise or as defined by the board of directors.

Section 2. (a) There shall be a Massachusetts infrastructure bank, wholly owned by the commonwealth, to increase the currently available sources of infrastructure bond and loan financing to meet the urgent economic development needs of commonwealth cities, towns and state agencies by offering stable, competitive financing and improved transparency, thereby enabling accurate, cost-effective planning by municipalities.

(b) Once the bank is established and profitable, the board of directors may elect to develop financing programs for other significant state and municipal financing needs determined by it to be in the commonwealth’s vital interest and which are not being met cost-effectively, in a timely manner, or without compromising public assets or the tax base. Such needs might include disaster relief, water sourcing and management, or student loans.

(c) The bank will uniquely serve the unmet infrastructure needs of municipalities and towns and the state and may work cooperatively with other state agencies and quasi-public agencies which finance different aspects of infrastructure for developers, non-profits, or special sectors of the economy through grants, bonds based on projected-revenues or future job growth; these include Massworks, MassDevelopment, the Mass Housing Investment Corp., Mass Ventures the Business Development Corp. and the Mass Growth Capital Corp.

Section 3. The bank shall be governed by a 9 member board of directors, appointed by the governor the Senate President, and the Speaker. Members shall serve 4 year staggered terms. The membership shall be made up of representatives of both small and large municipalities and representatives of several regions of the commonwealth. The membership shall be experts in economic development, education, economics, commercial banking, investment banking, labor, the construction industry, municipal planning, and community economic development. The board of directors shall determine their own chair.

Section 4. The board of directors will receive advisory input on the general direction of the bank from an 11 member board of advisors that will meet with the board of directors and the management at least quarterly. The board of advisors shall be appointed by the governor, the state treasurer, the speaker of the house of representatives and the senate president. Board members shall have experience in finance, agriculture, education, environmental policy, capital planning, labor, municipal management, and capital planning. The board of directors shall determine their own chair. The board of advisors shall serve 4 year staggered terms. The board of advisors shall meet at least quarterly with the board and with management. Meetings shall be open to the public and meeting minutes shall be posted publically.

Section 5.  Bond and loan policy, including interest rates, fee structure, underwriting criteria, bond and loan size, and portfolio management shall be developed by the board of directors after input by the public and the board of advisors. The board of directors shall conduct an annual review of its policies processes and criteria. This review shall be undertaken after consultation with the board of advisors.

Section 6. The bank shall undergo an annual, independent audit that shall include an independent valuation of the loan portfolio. The audit report and valuation will be made directly to the board and will be public information. The outside auditor shall   be a different firm every 3 years. The books and records of the bank shall be subject to an annual audit by the auditor of the commonwealth.

Section 7. The senior management team shall consist of a president with banking and municipal finance experience, a senior vice-president with similar experience, and a chief financial officer. This senior management team will be assisted by an administrative staff with sound accounting and computer system capability.  The president shall be appointed by the board of directors, serve at will, and shall be responsible for hiring all other staff. The president shall provide monthly financial reports to the board of directors including a report of all loan or bond requests, a pipeline report, reasons for declinations, and those projects approved for closing and financing. Management will prepare policies and procedures for the engagement of outside consultants, including bond counsel, for approval by the board of directors.

Section 8. Management shall ensure that information and outreach events regarding the bank's programs and bonding capacity are made available in all regions of the commonwealth at least quarterly.

Section 9. The Massachusetts infrastructure bank will accept deposits from public and quasi-public entities, make loans and float bond issues and is chartered as such by the commonwealth. The bank will not compete for retail, mortgage or commercial loans with any other banks or credit unions doing business in Massachusetts, nor will it accept individual or commercial deposits.  Accordingly it will neither advertise to the general public nor will it establish branches or offer any individual retail or commercial products to the general public or maintain ATM’s or other public banking services. Under policies, criteria and procedures established by the board, the bank may participate in loans originated by Massachusetts based banks, if requested by the originating bank. 

Section 10. (a) The commonwealth or its agencies shall capitalize the bank and accept deposits only from state and municipal entities to put taxpayer funds to work for the Massachusetts economy and expand the bank’s lending capacity.

(b) The commonwealth shall provide an initial investment of capital in the range of $50,000,000 as an equity investment from the pension fund or from a direct legislative appropriation. A dividend paid to the pension fund as the equity source may be an agreed percentage of net income, with an appropriate moratorium to allow the bank to reach profitability.

(c) The commonwealth shall deposit an amount of current cash, cash equivalents, or short-term deposits to aggregate from $350,000,000.