1993 SESSION 0992B
SENATE BILL NO. 87
INTRODUCED BY: Sen. W. King of Dist 2; Sen. Hough of Dist 5; Sen. Fraser
of Dist 4; Sen. Delahunty of Dist 22; Rep. B. Packard of
Hills 19; Rep. Crory of Graf 10; Rep. Burling of Sull 1;
Rep. Teschner of Graf 5
REFERRED TO: Economic Development
AN ACT relative to capital access and the business finance authority and capital formation; and relative to ambulatory care clinics.
(1) Clarifies the duties and activities of the business finance authority. Specifically, the bill makes it clear that the authority may make loans and that the state guarantee includes collection expenses and costs related to any loan. The bill also increases the ceiling on state guaranteed loans from $20,000,000 to $40,000,000.
(2) Allows ambulatory care clinics to be participating institutions under the law relative to the New Hampshire higher educational and health facilities authority, and adds ambulatory care clinics to the facilities covered under the laws relative to the higher education building corporation.
(3) Enables the N.H. Higher Education Loan Corporation to act as a secondary market for federally guaranteed student loans.
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EXPLANATION: Matter added appears in bold italics.
Matter removed appears in [brackets].
Matter which is repealed and reenacted or all new appears in regular type.
STATE OF NEW HAMPSHIRE
In the year of Our Lord one thousand
nine hundred and ninety-three
relative to capital access and the business finance authority and
capital formation; and relative to ambulatory care clinics.
Be it Enacted by the Senate and House of Represen-
tatives in General Court convened:
335:1 Statement of Purpose. The general court in 1992, 262, codified as RSA 162-A, continued, expanded and modified the existing structure and powers of the industrial development authority, including renaming the agency the business finance authority, to empower the agency to implement more directly and with state resources economic development and credit enhancement measures. During the implementation of the new law, several modifications and amendments have become necessary to better and more fully implement the provisions of RSA 162-A. The general court finds that such modifications and amendments are integral parts of the original legislation and advance and serve a public purpose. The general court also finds that state public policy can enhance local capital markets to the advantage of commerce and industry. Therefore, the general court adopts this act to increase the supply of capital and credit for the operation and expansion of commerce and industry in New Hampshire.
335:2 Reference Addition. Amend RSA 162-A:3 to read as follows:
162-A:3 Authority Created. There is hereby created the business finance authority, formerly operating and known as the industrial development authority, which shall be a body corporate and politic as an agency of the state having the powers and jurisdiction hereinafter enumerated and such other and additional powers as shall be conferred upon it by the legislature.
335:3 New Section; Administrative Officers. Amend RSA 162-A by inserting after section 5 the following new section:
162-A:5-a Administrative Officers; Compensation. The board shall appoint an executive director, a senior credit officer, a chief financial officer, and other personnel determined by the board to be necessary to carry out the purposes of this chapter. The executive director, the senior credit officer, and the chief financial officer shall serve at the pleasure of the board and shall be qualified by reason of professional competence, education, and experience.
335:4 New Paragraphs; Equity and Debt Securities; Hedging Transactions. Amend RSA 162-A:6 by inserting after paragraph XXIII the following new paragraphs:
XXIV. Acquire, invest in, pledge, or hold debt securities issued with respect to any transaction pursuant to this chapter.
XXV. Enter into contracts to place the investments, loans, or bonds of the authority on such interest rate or cash flow basis as the authority may determine desirable, including without limitation, contracts providing for interest rate exchanges, caps, floors, collars, options, puts, calls
and other hedging transactions.
335:5 Loans Added. Amend RSA 162-A:7, I-IV to read as follows:
I. The authority may expend or loan money upon such terms and conditions as prescribed by the authority to acquire, develop, redevelop, construct, renovate, or expand real or personal property for business use. [Any such real property shall be owned either by the authority or by a local development organization.] No expenditure or loan shall be made by the authority under this section unless it is with the approval of, or in cooperation with, a local development organization.
II. Prior to the expenditure or loan of any money under this section [for property to be owned by a local development organization], the authority shall enter into one or more agreements with such organization to provide for the conditions on which the expenditures or loans will be made, the terms of repayment of such expenditure or loan, the time and manner of such repayment, conditions under which the property is to be used by or leased to one or more businesses, the form and amount of security if any, to be pledged to the authority for such repayment, and such other provisions as the authority may determine are necessary or desirable. Repayment of any expenditure or loan made by the authority may be with or without interest and may take the form of cash, real or personal property, or services.
III. Any property acquired, developed, redeveloped, constructed, renovated, or [expended] expanded under this section may be leased by the authority or the local development organization, as appropriate, for business use, and under such terms and conditions as they shall deem
appropriate. Any such lease may include options of the lessee to purchase the property, provided that the purchase price upon the exercise of any such option shall not be less than the amount necessary to reimburse the authority, with interest if applicable, for any unpaid balance of expenditures made by the authority for such property. Any lease shall obligate the lessee to pay all costs and expenses of upkeep, maintenance and operation of the property during the lease term.
IV. The authority shall not expend or loan any money or make a binding commitment to spend any money for a particular project under this section unless after a hearing the governor and council have made the findings specified in RSA 162-A:18.
335:6 Collection Expenses and Costs Added. Amend RSA 162-A:8, I to read as follows:
I. Upon recommendation of the authority for the proper implementation of the declared purposes of this chapter, the governor and council may award a state guarantee of the principal of [and], interest on and related reasonable collection expenses and costs of any loan made by a private financial institution to any business that is or will be operating in the state, provided that the loan is also guaranteed in part under a program administered by the United States Small Business Administration. Such state guarantee [shall] may be up to 90 percent of the portion of the loan not guaranteed through the United States Small Business Administration. The authority may execute and deliver any agreement or document required by the United States Small Business Administration to implement the guarantee program authorized in this section. The full faith and credit of the state [shall] may be
pledged for any such guarantee, but the total outstanding amount guaranteed by the state under this section [and RSA 162-A:10, III] shall not exceed in the aggregate at any time [$20,000,000] $40,000,000. [plus] In addition, the guarantee shall also include interest and related reasonable collection expenses and costs and shall not cause the contingent credit limit under RSA 162-A:22 to be exceeded.
335:7 Minimum Requirements Modified. RSA 162-A:8, III is repealed and reenacted to read as follows:
III. The sum of the guarantees issued to any one borrower by both the authority and the United States Small Business Administration shall not exceed $1,500,000 of principal. The total principal amount of any loan or loans guaranteed under this section made to one borrower to finance working capital shall not exceed $1,500,000. In addition, the guarantee shall also include interest and related reasonable collection costs and expenses.
335:8 Costs Added. Amend RSA 162-A:10, III to read as follows:
III. In order to facilitate the resale of loans acquired under this section the governor and council, at the request of the authority, may award a state guarantee of up to 90 percent of the principal of [and] such loans. In addition, the guarantee shall also include interest on and related reasonable collection expenses and costs of such loans. The full faith and credit of the state [shall] may be pledged for such guarantee, but the total amount guaranteed by the state under this section [shall be subject to the limit specified in RSA 162-A:8, I and] shall not exceed in the aggregate at any time $40,000,000. In addition, the total amount guaranteed shall also include interest and related reasonable collection expenses and costs and shall not cause the contingent credit
limit under RSA 162-A:22 to be exceeded. The state's guarantee of loans under this section shall be evidenced by a guarantee agreement between the state and the purchaser of the loans. Such guarantee agreement shall be assignable to any subsequent purchaser or purchasers of the loans and shall contain such provisions as the authority and the governor and council may deem appropriate. Any guarantee agreement authorized in accordance with this section shall be executed on behalf of the state by the chairman, vice chairman, or executive director of the authority. The governor, with the advice and consent of the council, is authorized to draw his warrant for such sum as may be necessary out of money in the state treasury not otherwise appropriated, for the purpose of honoring any guarantee awarded under this section. The amount of any guarantee awarded under this section shall be reduced in proportion to any reduction in the principal balance of the loan.
335:9 Costs Added. Amend RSA 162-A:13, I to read as follows:
I. Upon recommendation of the authority for the proper implementation of the declared purposes of this chapter, the governor and council may award a state guarantee of the principal of [and,] such loans. In addition, the guarantee shall also include interest on and related reasonable collection expenses and costs of any loan made to a business that is or will be operating in the state[, provided that the loan does not qualify for a state guarantee under RSA 162-A:8]. Such state guarantee shall not at any time exceed 90 percent of the principal of such loan. In addition, the guarantee shall also include interest on and related reasonable collection expenses and costs of the loan [plus
interest thereon]. The full faith and credit of the state shall be pledged for any such guarantee, but the total outstanding amount of principal guaranteed by the state under this section shall not exceed in the aggregate at any time [$20,000,000] $40,000,000. [plus] In addition, the guarantee shall also include interest and related reasonable collection expenses and costs and shall not cause the contingent credit limit of RSA 162-A:22 to be exceeded.
335:10 Appraisal and Certification. RSA 162-A:13, III(a) and (b) are repealed and reenacted to read as follows:
(a) The authority shall have received an appraisal of an independent party which shall state that the appraised fair market value equals or exceeds 125 percent of the total debt secured by the property.
(b) The authority shall have received a certification from the lender and the borrower which shall state that no more than 40 percent of the total principal amount of the loan shall be used to finance working capital.
335:11 Principal Reduction. Amend RSA 162-A:13, III(d) to read as follows:
(d) After the project has been placed in service, the principal balance of the loan shall be scheduled to be reduced annually by an amount equal to not less than  5 percent of the original principal amount of the loan, provided that in connection with any renewal of a loan such principal reduction shall not be required.
335:12 Expenses of Authority. Amend RSA 162-A:21 to read as follows:
162-A:21 Revenues and Expenses of Authority. The revenues received by
and due to the authority from any and all sources under this chapter and RSA 162-I shall be retained by the authority and shall be used in such manner as may be determined by the authority consistent with the provisions of this chapter. The authority may expend said funds in connection with transactions and projects consummated or reasonably expected to be consummated under the provisions of this chapter and RSA 162-I as it shall determine in its sole discretion. It is the intent of the legislature that the authority be self-funding and that payment of its operating expenses shall not require state appropriation.
335:13 Definition of Local Development Organization Clarified. Amend RSA 162-A:2, XII to read as follows:
XII. "Local development organization" means any local or regional development agency, authority, corporation, association, foundation or other entity, regardless of the name or manner of organization, provided it shall have as a principal function the promotion, encouragement, or development of business. The term "local development organization" shall include a town, city or county if such town, city or county has published written procedures for participating in economic development activities through the loaning of funds or the enhancement of credit.
335:14 Unified Contingent Credit Limit. Amend RSA 162-A:22 to read as follows:
162-A:22 Unified Contingent Credit Limit. The total amount of state guarantees in force under RSA 162-A:8, RSA 162-A:10, III, RSA 162-A:13, RSA 162-A:17, and RSA 162-I:9-b shall not exceed in the aggregate at any time $50,000,000 plus interest, provided that such amount shall be increased to
[$65,000,000] $80,000,000 plus interest on January 1, 1993, [to $80,000,000 plus interest on January 1, 1994,] and to $95,000,000 plus interest on January 1,  1994.
335:15 Industrial Authority. Amend RSA 162-I:2, VII to read as follows:
VII.(a) "Industrial facility" shall be an eligible facility and means any facility which shall be suitable for any of, or any combination of, the following activities, uses or purposes:
[(a)](1) Manufacturing, processing, assembling or warehousing goods or materials for sale or distribution, but shall not include raw materials, work in process or stock in trade.
[(b)](2) The conduct of research and development activities.
[(c)](3) Use as the national or regional headquarters for a multistate business enterprise.
[(d)](4) Collecting or processing any kind of waste material for reuse or disposal or for converting any kind of waste material or derivative of any waste material, whether by itself or in combination with other material, into other products of any kind, including steam and electricity.
[(e)](5) Reducing, mitigating or eliminating pollution of land, air or water by substances, heat or sound.
(b) "Industrial facility" shall also include any facility described in Section 142(a) of the Internal Revenue Code of 1986 as in effect on July 1, 1993, other than residential rental projects.
335:16 New Subparagraph; Nonpublic Sessions. Amend RSA 91-A:3, II by inserting after subparagraph (g) the following new subparagraph:
(h) Consideration of applications by the business finance authority under RSA 162-A:7-10 and 162-A:13, where consideration of an application in public session would cause harm to the applicant or would inhibit full discussion of the application.
335:17 Ambulatory Care Clinics Added to Definition of "Participating Health Care Institution." Amend RSA 195-D:3, VIII to read as follows:
VIII. "Participating health care institution" means a hospital, [or] nursing home, [or] health maintenance organization [or], home health care provider, or ambulatory care clinic which, pursuant to the provisions of this chapter, undertakes the financing and construction or acquisition of a project or undertakes the refunding or refinancing of bonds or other obligations or of a mortgage or of advances as provided in and permitted by this chapter.
335:18 New Paragraph; Definition of "Ambulatory Care Clinic." Amend RSA 195-D:3 by inserting after paragraph XVI the following new paragraph:
XVII. "Ambulatory care clinic" means any nonprofit or charitable institution or organization, public or private, which is exempt from federal taxation pursuant to section 501 of the United States Internal Revenue Code of 1986 as amended, and which is engaged in the operation of, or formed for the purpose of operating, an ambulatory health care facility in which health care services are offered to the public on an outpatient basis by or under the direction of physicians licensed by the state of New Hampshire and licensed health care professionals.
335:19 New Section; Designation of Eligible Lender for Federal Guaranteed Student Loans. Amend RSA 195-E by inserting after section 15 the following new section:
195-E:15-a Designation of Eligible Lender for Federally Guaranteed Student Loans. NH Higher Education Loan Corporation, a New Hampshire voluntary, nonprofit corporation, is hereby designated as "eligible lender" within the meaning of 20 U.S.C. section 1085(d)(1)(D), to enable it to provide a secondary market for federally guaranteed student loans.
335:20 Effective Date. This act shall take effect upon its passage.
Approved: June 29, 1993
Effective: June 29, 1993