S-4391

AN ACT Relating to the linked deposit program; amending RCW 43.86A.060; and adding a new section to chapter 43.86A RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 43.86A.060 and 1993 c 512 s 30 are each amended to read as follows:

(1) The state treasurer shall establish a linked deposit program for investment of deposits in qualified public depositaries. As a condition of participating in the program, qualified public depositaries must make qualifying loans as provided in this section. The state treasurer may purchase a certificate of deposit that is equal to the amount of the qualifying loan made by the qualified public depositary or may purchase a certificate of deposit that is equal to the aggregate amount of two or more qualifying loans made by one or more qualified public depositaries.

(2) Qualifying loans made under this section are those that:

(a) Are loans that have terms that do not exceed ten years;

(b) Are made to a minority or women's business enterprise that has received state certification under chapter 39.19 RCW;

(c) Are made to minority or women's business enterprises that are considered a small business as defined in RCW ((~~43.31.025~~)) 19.85.020;

(d) Are made where the interest rate on the loan to the minority or women's business enterprise does not exceed an interest rate that is two hundred basis points below the interest rate the qualified public depositary would charge for a loan for a similar purpose and a similar term; and

(e) Are made where the points or fees charged at loan closing do not exceed one percent of the loan amount.

(3) In setting interest rates of time certificate of deposits, the state treasurer shall offer rates so that a two hundred basis point preference will be given to the qualified public depositary.

NEW SECTION. Sec. 2. A new section is added to chapter 43.86A RCW to read as follows:

(1) The state treasurer shall deposit twelve and one-half million dollars of the funds available for the linked deposit program in qualified public depositaries at market interest rates. The qualified public depositary shall remit two hundred basis points of interest on each deposit to entities that have (a) received funding during the previous two years for business loans from one of the following federal sources: (i) Department of housing and urban development under 42 U.S.C. Sec. 3535(d) and 5300-5320 et seq.; (ii) small business administration under 15 U.S.C. Sec. 633 et seq.; (iii) economic development administration under 42 U.S.C. Sec. 3243; (iv) department of agriculture under 7 U.S.C. Sec. 1932 and 1989; and (v) the treasury department through the community development financial institution fund under 12 U.S.C. Sec. 4701 et seq.; (b) been in continuous operation for a minimum of three years; (c) losses averaging less than ten percent of outstanding loans for the previous three years; and (d) no more than fifty percent of capital funding from a single source. The public depositary shall pay the remainder of the interest on each deposit to the state treasurer. As a condition of receiving the remittance of two hundred basis points of interest, the entity receiving the remittance must make qualifying loans as provided in this section.

(2) Qualifying loans made under this section are those that:

(a) Have terms that do not exceed ten years;

(b) Are made to minority or women's business enterprises that have received certification under chapter 39.19 RCW, and are owned by persons qualified as low-income households under RCW 43.185A.010; and

(3) In addition to making loans under subsection (2) of this section, the entity receiving the remittance may use the remittance for technical assistance.

(4) The remittance of two hundred basis points of interest on each deposit shall be administered in accordance with rules which shall be adopted by the department of community, trade, and economic development. The rules will define qualifying entities eligible to participate in this program, and the method of allocating funds to qualifying entities. The qualifying public depositary providing the remittance has no obligation to the qualifying entity, legal or otherwise, other than providing the remittance.

(5) Participation of a qualified public depositary in this program contributes toward meeting the credit needs of the communities it serves as set forth under chapter 30.60 RCW for state banks, chapter 32.40 RCW for state savings banks, and the federal community reinvestment act of 1977 for federal savings banks, federal savings and loan associations, and national banks.

(6) In setting interest rates for funds deposited under this program, the state treasurer shall offer rates that are commensurate with other similar deposits made by the treasurer.