BILL REQ. #:  H-0809.1 

Read first time 01/19/09.   Referred to Committee on Financial Institutions & Insurance.

     AN ACT Relating to allowing credit unions to participate in the linked deposit program; and amending RCW 43.86A.010, 43.86A.030, 43.86A.060, and 43.86A.070.

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

Sec. 1   RCW 43.86A.010 and 1983 c 66 s 20 are each amended to read as follows:
     The legislature finds that a procedure should be established for the management of short term treasury surplus funds by the state treasurer in order to insure a maximum return while they are on deposit in public depositaries or federal or state-chartered credit unions. The objectives of this procedure are to minimize noninterest earning demand deposits and provide fair compensation to financial institutions for services rendered to the state through the investment of state funds in time deposits.

Sec. 2   RCW 43.86A.030 and 2008 c 187 s 2 are each amended to read as follows:
     (1) Funds held in public depositaries or federal or state-chartered credit unions not as demand deposits as provided in RCW 43.86A.020 and ((43.86A.030)) this section, shall be available for a time certificate of deposit investment program according to the following formula: The state treasurer shall apportion to all participating depositaries or federal or state-chartered credit unions an amount equal to five percent of the three year average mean of general state revenues as certified in accordance with Article VIII, section 1(b) of the state Constitution, or fifty percent of the total surplus treasury investment availability, whichever is less. Within thirty days after certification, those funds determined to be available according to this formula for the time certificate of deposit investment program shall be deposited in qualified public depositaries or federal or state-chartered credit unions. These deposits shall be allocated among the participating depositaries or federal or state-chartered credit unions on a basis to be determined by the state treasurer.
     (2) Of all funds available under this section, the state treasurer may use up to one hundred seventy-five million dollars per year for the purposes of RCW 43.86A.060(2)(c)(i) and up to fifteen million dollars per year for the purposes of RCW 43.86A.060(2)(c)(ii). The amounts made available to these public depositaries or federal or state-chartered credit unions shall be equal to the amounts of outstanding loans made under RCW 43.86A.060.
     (3) The formula so devised shall be a matter of public record giving consideration to, but not limited to deposits, assets, loans, capital structure, investments or some combination of these factors. However, if in the judgment of the state treasurer the amount of allocation for certificates of deposit as determined by this section will impair the cash flow needs of the state treasury, the state treasurer may adjust the amount of the allocation accordingly.

Sec. 3   RCW 43.86A.060 and 2008 c 187 s 3 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 or federal or state-chartered credit unions. As a condition of participating in the program, qualified public depositaries or federal or state-chartered credit unions 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 federal or state-chartered credit union 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 or federal or state-chartered credit unions.
     (2) Qualifying loans made under this section are those:
     (a) Having terms that do not exceed ten years;
     (b) Where an individual loan does not exceed one million dollars;
     (c)(i) That are made to a minority or women's business enterprise that has received state certification under chapter 39.19 RCW; or
     (ii) That are made to a veteran-owned business that has received state certification under RCW 43.60A.190;
     (d) Where the interest rate on the loan to the minority or women's business enterprise or veteran-owned business does not exceed an interest rate that is two hundred basis points below the interest rate the qualified public depositary or federal or state-chartered credit union would charge for a loan for a similar purpose and a similar term, except that, if the preference given by the state treasurer to the qualified public depositary or federal or state-chartered credit union under subsection (3) of this section is less than two hundred basis points, the qualified public depositary or federal or state-chartered credit union may reduce the preference given on the loan by an amount that corresponds to the reduction in preference below two hundred basis points given to the qualified public depositary or federal or state-chartered credit union; and
     (e) 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 or federal or state-chartered credit union, except that the treasurer shall lower the amount of the preference to ensure that the effective interest rate on the time certificate of deposit is not less than two percent.
     (4) Upon notification by the state treasurer that a minority or women's business enterprise is no longer certified under chapter 39.19 RCW or that a veteran-owned business is no longer certified under RCW 43.60A.190, the qualified public depositary or federal or state-chartered credit union shall reduce the amount of qualifying loans by the outstanding balance of the loan made under this section to the minority or women's business enterprise or the veteran-owned business, as applicable.
     (5) The office of minority and women's business enterprises has the authority to adopt rules to:
     (a) Ensure that when making a qualified loan under the linked deposit program, businesses that have never received a loan under the linked deposit program are given first priority;
     (b) Limit the total principal loan amount that any one business receives in qualified loans under the linked deposit program over the lifetime of the businesses;
     (c) Limit the total principal loan amount that an owner of one or more businesses receives in qualified loans under the linked deposit program during the owner's lifetime; and
     (d) Limit the total amount of any one qualified loan made under the linked deposit program.

Sec. 4   RCW 43.86A.070 and 1993 c 512 s 34 are each amended to read as follows:
     The state and those acting as its agents are not liable in any manner for payment of the principal or interest on qualifying loans made under RCW 43.86A.060. Any delay in payments or defaults on the part of the borrower does not in any manner affect the deposit agreement between the qualified public depositary or federal or state-chartered credit union and the state treasurer.