HOUSE BILL 342
53rd legislature - STATE OF NEW MEXICO - first session, 2017
INTRODUCED BY
Georgene Louis
AN ACT
RELATING TO ECONOMIC DEVELOPMENT; ENACTING THE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION ACT TO PROVIDE FINANCIAL AND TECHNICAL ASSISTANCE TO CERTIFIED COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS; CREATING A FUND; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Community Development Financial Institution Act".
SECTION 2. [NEW MATERIAL] FINDINGS AND PURPOSE OF ACT.--
A. The legislature finds that:
(1) access to credit, banking services and investment capital are vital to the growth of small businesses, the creation of jobs and economic development throughout the state;
(2) many communities with great potential for growth, but the greatest need for jobs and investment, lack access to the services and capital of traditional banking and lending institutions;
(3) access to capital and banking services can be improved through community development financial institutions; and
(4) community development financial institutions provide effective lending and financial services and fill a vital role in meeting the needs of New Mexico's underserved communities in furthering economic development.
B. The purpose of the Community Development Financial Institution Act is to implement the provisions of the 1994 amendment to Article 9, Section 14 of the constitution of New Mexico to allow public support of economic development to foster, promote and enhance local economic development efforts while continuing to protect against the unauthorized use of public money and other public resources.
SECTION 3. [NEW MATERIAL] DEFINITIONS.--As used in the Community Development Financial Institution Act:
A. "applicant" means a community development financial institution that has applied for financial or technical assistance from the commission pursuant to the Community Development Financial Institution Act;
B. "commission" means the economic development commission;
C. "community development financial institution" or "institution" means an organization located in the state that has been certified as a community development financial institution by the federal community development financial institutions fund;
D. "department" means the economic development department;
E. "fund" means the community development financial institution fund;
F. "investment area" means:
(1) a county or census track that has:
(a) a poverty rate higher than the state's previous year average as determined by the United States census bureau;
(b) an average income of eighty percent or less of the state's previous year average as determined by the United States census bureau; or
(c) has an unemployment rate above the state average as reported by the bureau of labor statistics at the United States department of labor;
(2) a county classified as a persistent poverty county by the economic research service of the United States department of agriculture; or
(3) a geographic area that has a significant unmet need for loans as determined by the commission;
G. "low income" means that a household consisting of a single individual or a family or unrelated individuals living together has a total annual income that does not exceed eighty percent of the median income for the area, as determined by the United States department of housing and urban development and as adjusted for family size, or other income ceiling determined for the investment area on the basis of that department's findings that such variations are necessary because of prevailing levels of construction costs, fair market rents or unusually high or low family income; and
H. "target population" means an individual or an identifiable group of individuals who are low income; lack adequate access to non-predatory financial services; or who are Native American, ethnic minorities, women or immigrants.
SECTION 4. [NEW MATERIAL] APPLICATIONS FOR ASSISTANCE.--
A community development financial institution shall submit to the department an application for financial or technical assistance in a form and manner as prescribed by the commission. An application shall contain:
A. a business plan;
B. an analysis of the needs of the investment area or target population and a strategy for addressing those needs;
C. an explanation of all proposed activities and information on how the activities are consistent with any existing economic, community or housing development plans adopted by or applicable to an investment area or target population;
D. a description of how the applicant will coordinate with community organizations and financial institutions and leverage private sector investments, including loans, secondary markets or other services, to the investment area or target population;
E. if applicable, in the case of an applicant with prior experience serving investment areas or target populations, a demonstration that the applicant:
(1) has a record of success in serving investment areas or target populations; and
(2) will expand its operations into a new investment area or serve a new target population, offer more products or services or increase the volume of its current business;
F. if applicable, a description of how the applicant will provide financial services for community businesses that employ or will create jobs for a target population, or to businesses that are owned by a target population or enhance the availability of products and services to a target population;
G. a description of how the applicant will provide a target population with access to financial services and invest proceeds in the investment area or target population; and
H. any additional information required by the commission.
SECTION 5. [NEW MATERIAL] SELECTION OF APPLICANTS FOR GRANTING AWARDS OF ASSISTANCE.--In granting awards of assistance, the department shall select from the eligible applicants based on criteria that may include:
A. the likelihood of success of the applicant in meeting the goals of the applicant's strategic plan, including realistic projections of how funds will be leveraged;
B. the experience and background of the applicant's board of directors or management team;
C. the extent of need for loans or development services within the investment area or target population;
D. the extent of economic distress within the investment area or the extent of need within the target population;
E. the extent to which the proposed activities will expand economic opportunities within the investment area or target population;
F. the extent of support from the investment area or target population;
G. the extent of the applicant's current and planned community involvement;
H. the extent to which the applicant will increase the applicant's resources through coordination with other institutions or participation in a secondary market;
I. in the case of an applicant with prior experience serving investment areas or target populations, the extent of success in serving investment areas or target populations; and
J. any other factors deemed appropriate by the commission.
SECTION 6. [NEW MATERIAL] DEPARTMENT AND COMMISSION POWERS AND DUTIES.--
A. The department may provide to an eligible community development financial institution:
(1) financial assistance through deposits, credit union shares, loans or grants; or
(2) technical assistance and training, regardless of whether or not the community development financial institution has received financial assistance from the fund. Technical assistance and training may be provided:
(a) directly;
(b) through grants; or
(c) by contracting with organizations that possess expertise in community development finance, without regard to whether or not the organizations receive or are eligible to receive assistance pursuant to the Community Development Financial Institution Act.
B. The commission shall promulgate rules necessary to implement the provisions of the Community Development Financial Institution Act.
SECTION 7. [NEW MATERIAL] PERMISSIBLE USES OF FINANCIAL ASSISTANCE.--A community development financial institution that is approved for financial assistance by the department may use the financial assistance for:
A. the development of commercial facilities that promote revitalization, community stability and the creation or retention of jobs;
B. the development or improvement of community facilities;
C. the provision of basic financial services, including the provision of small consumer loans, credit-builder loans or alternatives to payday loans;
D. the provision of financial counseling and coaching;
E. housing that is principally affordable to low-income individuals, except that assistance used to facilitate homeownership shall only be used for services and lending products that serve a target population and are not provided by other lenders in the area or that complement the services and lending products provided by other lenders in the area;
F. the development or support of businesses that:
(1) provide jobs for a target population or are owned by a target population; or
(2) enhance the availability of products or services to a target population; or
G. the development or support of other businesses or activities deemed appropriate by the commission.
SECTION 8. [NEW MATERIAL] ADVISORY COMMITTEE.--The commission may create an advisory committee composed of at least five members, to advise the commission and department in the promotion, implementation and administration of the Community Development Financial Institution Act. Advisory committee members shall have experience with community development financial institutions and shall, to the extent practicable, reflect diversity in the geographic locations and communities served.
SECTION 9. [NEW MATERIAL] REPORTING REQUIREMENTS.--The department shall submit annually, on or before July 1, a report to the governor and the legislative finance committee describing the financial and technical assistance provided pursuant to the Community Development Financial Institution Act. The report shall include the number of applications filed and accepted, the amount and type of assistance provided, a description of projects financed or assisted by the fund, the number of jobs created or retained through the investment of money in the fund, the amount and source of funds leveraged and such other information as the commission may deem appropriate.
SECTION 10. [NEW MATERIAL] COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION FUND CREATED.--The "community development financial institution fund" is created in the state treasury. The fund consists of appropriations, gifts, grants and donations to the fund and income from investment of the fund. Money in the fund shall not revert to any other fund at the end of a fiscal year. The department shall administer the fund, and money is appropriated to the department to provide financial assistance to community development financial institutions as approved by the commission and to fund activities that enhance the capacity of a community development financial institution, including training of management and other personnel and development of programs, investment or loan products. Money in the fund shall be disbursed on warrants signed by the secretary of finance and administration pursuant to vouchers signed by the secretary of economic development or the secretary's authorized representative.
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