Build Wyoming loan program.

2018
STATE OF WYOMING
18LSO-0068
Numbered
1.4

HOUSE BILL

NO.
HB0154

Build Wyoming loan program.

Sponsored by:
Management Council

A BILL

for

AN ACT relating to administration of government; creating the build Wyoming program providing for loans from the permanent Wyoming mineral trust fund; providing for administration; specifying loan requirements; creating a loss reserve account; providing for rulemaking; providing for the use of specified funds to fund the loss reserve account; providing for a study; and providing for an effective date.

Be It Enacted by the Legislature of the State of Wyoming:

Section 1
.

W.S. 16
‑
1
‑
111 through 16
‑
1
‑
114 are created to read:

16
‑
1
‑
111
.

Definitions.

(a)

As used in W.S. 16
‑
1
‑
111 through 16
‑
1
‑
114:

(i)

"Board" means the state loan and investment board to include the office of state lands and investments;

(ii)

"Build Wyoming program" means the loan program authorized under W.S. 16
‑
1
‑
111 through 16
‑
1
‑
114;

(iii)

"Infrastructure project" means a capital construction project which may lawfully be undertaken within the powers of the political subdivision authorized to receive a loan under the build Wyoming program and includes the purchase of land, buildings, facilities and rights of way needed to complete the project;

(iv)

"Political subdivision" means any city, town, county, school district, community college district, joint powers board or special district in this state as defined in paragraph (vi) of this subsection;

(v)

"Road or street project" means the construction, maintenance or improvement of a public street, road or alley within a city, town or county, including curbs and gutters, and includes the purchase of land, buildings and facilities and rights of way needed to complete the project;

(vi)

Special district means:

(A)

Airport joint powers boards;

(B)

Fire protection districts;

(C)

Museum districts;

(D)

Recreation districts;

(E)

Regional transportation authorities;

(F)

Rural health care districts;

(G)

Sanitary and improvement districts;

(H)

Senior citizens'
service
districts;

(J)

Solid waste disposal districts;

(K)

Water and sewer districts.

16
‑
1
‑
112
.

Loans to political subdivisions; requirements; limitations; rulemaking.

(a)

The state loan and investment board may negotiate and make loans from the permanent Wyoming mineral trust fund to political subdivisions of this state as provided in the build Wyoming program. The aggregate sum of all outstanding loans made under the build Wyoming program shall not exceed five hundred million dollars ($500,000,000.00) including all loans previously made and outstanding. The board shall adopt rules and procedures as it deems advisable or necessary to administer the program.

(b)

Loans shall be available for infrastructure projects to political subdivisions and made in accordance with this section. Loans shall be available for road or street projects only to cities, towns and counties and made in accordance with this section and W.S. 16
‑
1
‑
113. The aggregate sum of loans made for infrastructure projects shall not exceed two hundred fifty million dollars ($250,000,000.00) and shall not exceed two hundred fifty million dollars ($250,000,000.00) for road or street projects, including all loans p
reviously made and outstanding.

(c)

In making loans under the build Wyoming program, the board shall establish requirements and standards which it determines to be necessary or advisable in accordance with the following:

(i)

To qualify for a loan an applicant shall demonstrate:

(A)

A commitment by the applicant to adequately maintain the project for which the loan is requested during a reasonable
period of time
;

(B)

That all project costs will be funded at the time of receipt of the loan, with funding sources specified within the project application;

(C)

Compliance with any other criteria developed by the board consistent with W.S. 16
‑
1
‑
111 through 16
‑
1
‑
114.

(ii)

The determination of whether to make the loan shall include consideration of:

(A)

The contribution of the project to health, safety and welfare;

(B)

The applicant's need for the project and financial needs of the applicant in relation to the project;

(C)

The ability of the applicant to repay the loan;

(D)

The taxation effort of the applicant. No loan shall be made to any county unless the county imposes at least eleven (11) or ninety
‑
one and sixty
‑
seven hundredths percent (91.67%) of the available mills authorized by article 15, section 5 of the Wyoming constitution. No loan shall be made to any municipality unless the municipality imposes at least seven (7) or eighty
‑
seven and five
‑
tenths percent (87.5%) of the available mills authorized by article 15, section 6 of the Wyoming constitution. No loan shall be made to any special district which imposes less than eighty percent (80%) of any authorized mill levy.

(iii)

A loan under this section shall be at an interest rate of one
‑
tenth of one percent (.1%) multiplied by each year of the initial loan term. In the event of prepayment of a loan, the interest rate shall be calculated at the actual loan period, but no refund of interest payment shall be made to the borrowing entity;

(iv)

Loans shall not exceed an initial term of twenty
‑
five (25) years for repayment;

(v)

Adequate security for loans shall be required and may include:

(A)

A pledge of the revenues for the project for which
the
loan was granted;

(B)

A pledge of other revenues available to the entity receiving the loan;

(C)

A mortgage covering all or any part of the project
or
by a pledge of the lease of the project;

(D)

Any other security device or requirement deemed advantag
eous or necessary by the board.

(vi)

The board shall require annual financial statements from entities receiving loans under this section;

(vii)

No loan shall be made without the written opinion of the attorney general certifying the legality of the transaction and all documents connected therewith. An election approving the project and borrowing for the project by the qualified electors of the borrowing entity shall be required only if the attorney general determines such an election is otherwise required by law;

(viii)

The board, whenever it deems necessary for the better protection of the Wyoming state permanent mineral trust fund, may refinance any delinquent loan granted under the build Wyoming program and reamortize the loan over not more than thirty (30) years from the date of refinancing. All costs of refinancing the loan shall be paid by the borrowing entity and no loan shall be refinanced where it appears refinancing will jeopardize the collection of the loan. A fee of one percent (1%) of the amount of the reamortized loan shall be paid by the borrowing entity to the board to be credited to the account created by W.S. 16
‑
1
‑
114. The rate of interest for any refinanced loan shall be that specified under paragraph
(iii) of this subsection multiplied by the total years of the initial and refinanced loan period, but not to exceed a total maximum of two and one
‑
half percent (2.5%);

(ix)

The board shall by rule establish allocations of loans to be made for infrastructure projects under this section. In establishing
allocations
the board shall consider the type and size of political subdivisions eligible for loans and shall allocate a percentage of loans available each year to cities and towns as a group, to schools and community colleges as a group and to counties and remaining eligible entities as a group. Within each group the board shall consider and may further allocate funds based upon the population of eli
gible entities within a group.

(d)

No money shall be loaned under this section to any entity for any water development or sewerage purpose if the funding sought is available under any other program funded in whole or in part with state funds, including W.S. 9
‑
4
‑
604,
16
‑
1
‑
109
,
16
‑
1
‑
201 through 16
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1
‑
207, 16
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1
‑
301 through 16
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1
‑
30
8
or chapter 2 of title 41 of Wyoming
statutes. The board shall establish procedures under which an applicant may demonstrate that funding sought for the project under the build Wyoming program is not in fact available under any other state funded program.

(e)

In accordance with the provisions of W.S. 4
‑
10
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911, in applying the prudent investor standard pursuant to W.S. 9
‑
4
‑
715(d), the state loan and investment board shall
not
consider the interest rate of return provided under the build Wyoming program in comparison to returns which might or might not be
gained from other investments. Rather, the board shall acknowledge the legislative determination that returns to the state through investment in streets and roads and other infrastructure at the local government level can outweigh the return on investments in securities or other investments which might appear greater on their face. The legislature has established fixed low interest rates for the build Wyoming program loans in recognition of that determination and the need to invest permanent Wyoming mineral trust funds in local government infrastructure
in order to
increase and diversify the state's economy, and the legislature's
authority to specify by law conditions and terms under which monies in the permanent Wyoming mineral trust fund may be loaned to political subdivisions of the state. The board shall also recognize the legislature's determination that the full amount of loans authorized under the build Wyoming program is a prudent allocation of investments from the permanent Wyoming mineral trust fund for purposes of assessing diversification of investments under W.S. 9
‑
4
‑
715(d) and
(e)
. The ability of a recipient of a loan under the build Wyoming program
to repay the loan
and security provided under the loan agreement shall be considered as provided in the build Wyoming program.

(
f
)

Political subdivisions receiving loans under the build Wyoming program shall report the expenditures and progress
of the project
related to the loan to the board at least annually or more frequently if deemed advisable by the board. At the end of the term of the loan, the entity shall provide to the board a comprehensive report that shall, at minimum, include a cumulative financial
review
and a list of the accomplishments
as a result of
the loan.

(
g
)

On or before June 30 of each year, the board shall report information on the administration of loans made under the build Wyoming program to the joint appropriations committee and the joint minerals, business and economic development interim committee. The report shall include a list of all loan requests made in the previous twelve (12) months, the amount approved by project, expenditures by project and the progress for each project as of the date of the report, including outstanding loan amounts, repayment schedules and any delinquencies.

(
h
)

A political subdivision may expend any other funds in conjunction with funds from a loan under the build Wyoming prog
ram for any authorized project.

16
‑
1
‑
113
.

Road and street projects.

(a)

The board may make loans from the permanent Wyoming mineral trust fund to cities, towns and counties for road or street projects. Any qualifying city, town or county with a demonstrated need for a road or street project may
submit an application
to the board for a loan
on forms prescribed by and subject to rules promulgated by the board.

(b)

To qualify for a road or street project loan, in addition to the requirements of W.S. 16
‑
1
‑
112, an applicant shall demonstrate that all related infrastructure including water and sewer is or will be in place at the time of receipt of the loan. No loan shall be provided under this section to any city, town or county that has any outstanding or unpaid loan under this section.

(c)

Any loan under this section shall be at an interest rate of one and one
‑
half percent (1.5%). Loans under this section shall not exceed an initial term of twenty (20) years for repayment. Any reamortization of a loan under this section shall be for not more than twenty (20) years from the date of refinancing. The rate of interest for any refinanced loan under this section shall be one and one
‑
half percent
(1.5%)
for the first twenty (20) years of the loan and at an amount set by the board for terms greater than twenty (20) years, but not to exceed two and one
‑
half percent (2.5%)
.

(d)

The total loans under this section provided in any one (1) year shall not exceed one hundred million dollars ($100,000,000.00). Not more than thirty
‑
five million dollars ($35,000,00.00) of road or street loans shall be made in any one (1) year to:

(i)

Towns as defined in W.S. 15
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1
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101(a)(xiv);

(ii)

Cities
as defined in W.S. 15
‑
1
‑
101(a)(iv)
;

(iii)

Counties.

16
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1
‑
114
.

Loss reserve account created; deposits; disposition of funds.

(a)

Revenues received by the board for deposit in the loss reserve account under the build Wyoming program shall be transmitted to the state treasurer for deposit to the credit of the loss reserve account. Funds in the account shall be used for the purposes specified in subsection (b) of this section and to pay the administrative and legal
expenses of the board in making collections and foreclosing on loans made pursuant to the build Wyoming program. If at the end of any fiscal year, the amount in the loss reserve account exceeds five percent (5%) of the outstanding balance of loans under the build Wyoming program, the amount
in excess of
the five percent (5%) shall be transferred and credited to the permanent Wyoming mineral trust fund reserve account in accordance with W.S. 9
‑
4
‑
719.

(b)

If,
as a result of
default in the payment of any loan made under the build Wyoming program, there occurs a nonrecoverable loss either to the corpus of, or interest due to the permanent Wyoming mineral trust fund, the state loan and investment board shall restore the loss to the permanent fund using any funds available in the loss reserve account created by subsection (a) of this section. If the funds in the loss reserve account are insufficient to restore the full amount of the loss, the board shall submit a detailed report of the loss to the legislature and shall request an appropriation to restore the balance of the loss to the permanent fund.

Section 2
.

W.S. 9
‑
4
‑
719(b) is amended to read:

9
‑
4
‑
719
.

Investment earnings spending policy permanent funds.

(b)

There is created the permanent Wyoming mineral trust fund reserve account.
Beginning June 30, 2018, the state treasurer shall transfer funds quarterly from the permanent Wyoming mineral trust fund
reserve account
to the build Wyoming loss reserve account in an amount necessary to ensure that as of the last day of each quarter there is an unobligated, unencumbered balance equal to five percent (5%) of the balance of outstanding loans under the build Wyoming program. Any funds transferred to the loss reserve account pursuant to this subsection which are not necessary to maintain the five percent (5%) balance shall be transferred back to the permanent Wyoming mineral trust fund reserve account on the last day of the quarter.
Beginning July 1, 2016 for fiscal year 2017 and each fiscal year thereafter, the state treasurer shall transfer unobligated funds from this account to the general fund as necessary to ensure that an amount equal to two and
one
‑
half percent (2.5%) of the previous five (5) year average market value of the permanent Wyoming mineral trust fund, calculated on the first day of the fiscal year, is available for expenditure annually during each fiscal year. As soon as possible after the end of each of the fiscal years beginning on and after July 1, 2017, revenues in this account
in excess of
one hundred fifty percent (150%) of the spending policy amount in subsection (d) of this section shall be credited to the permanent Wyoming mineral trust fund.

Section 3.

(a)

The joint minerals, business and economic development
interim
committee shall review all existing programs providing loans or grants from state funds to local governmental entities. The review shall include at least the following aspects of each program:

(i)

Administration of the program;

(ii)

Funding source;

(iii)

Eligible projects;

(iv)

Entities eligible for funds;

(v)

Terms of grants and loans, including fees imposed;

(vi)

Use of funds generated or repaid under the program;

(vii)

Specific limitations on use of funds imposed by law or rule;

(viii)

Other legal requirements specified by law or rule for entities receiving funds or imposed upon the state for the distribution of funds.

(b)

The committee shall evaluate the continued need for each program, whether modifications should be made for each program to bring greater uniformity to programs providing grants and loans of state funds to local
governmental entities and whether the program should be incorporated fully or partially into the build Wyoming program. The committee shall sponsor legislation as it determines appropriate for introduction in the 2019 general and budget session.

Section 4
.

This act is effective immediately upon completion of all acts necessary for a bill to become law as provided by Article 4, Section 8 of the Wyoming Constitution.

(
END
)

1
HB0154