HF 2692

as introduced - 87th Legislature (2011 - 2012) Posted on 03/05/2012 01:53pm

A bill for an act
relating to financial institutions; providing for increased use of community
financial institutions for state banking services; amending Minnesota Statutes
2010, sections 16A.011, by adding a subdivision; 16A.27, subdivision 3;
16A.671, subdivision 6a; proposing coding for new law in Minnesota Statutes,
chapter 16A.

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

Section 1.

Minnesota Statutes 2010, section 16A.011, is amended by adding a
subdivision to read:

new text begin Subd. 8a. new text end

new text begin Community financial institution. new text end

new text begin "Community financial institution"
means a federally insured bank or credit union, chartered as a bank or credit union by this
state or by the United States, that is headquartered in this state.
new text end

Sec. 2.

new text begin [16A.259] STATE INVESTMENT ACCOUNTS AT COMMUNITY
FINANCIAL INSTITUTIONS.
new text end

new text begin (a) The commissioner shall adopt rules to develop a program that gives preference to
community financial institutions through short-term and long-term investment of state
funds in community financial institutions, through purchase of certificates of deposit
or otherwise.
new text end

new text begin (b) The rules shall determine that portion of state funds that is not needed to meet
short-term liquidity needs and create an investment program for that portion of the general
fund in community financial institutions, in order to increase lending by those institutions
to businesses headquartered in this state and residents of this state. The investment
program rules must include accountability and reporting requirements requiring a
participating community financial institution to provide information that enables the
commissioner to evaluate the effectiveness of the program, including how state funds are
used by the community financial institution and the impact of state funds on the ability of
the community financial institution to make loans to businesses and residents of this state.
new text end

new text begin (c) The rules adopted under paragraph (b) must balance the state's investment
priorities, such as preservation of the principal balance, maintenance of liquidity, and
maximum return, with the need for a program in which the state invests in certificates of
deposit that have a term to maturity of at least one year in order to provide community
financial institutions with more reserves to lend to Minnesota businesses.
new text end

Sec. 3.

Minnesota Statutes 2010, section 16A.27, subdivision 3, is amended to read:

Subd. 3.

Competitive bids.

new text begin (a) new text end The depository for a state account must be
selected by competitive bid. The commissioner shall invite bids by written notice to
designated depositories. The notice must specify the considerations, financial activities,
and conditions the commissioner requires for the bid. The account must be awarded to
the lowest bidding depository that can, in the opinion of the commissioner, meet the
requirements.

new text begin (b) The commissioner shall give a preference to a community financial institution to
act as the fiscal agent bank of the state. When proposals are received from a community
financial institution and a nonresident financial institution, the contract shall be awarded
to the community financial institution if:
new text end

new text begin (1) the community financial institution meets the minimum requirements of the
commissioner;
new text end

new text begin (2) the proposal price of the community financial institution when multiplied by a
factor of .9 is lower than the proposal price of a nonresident financial institution; and
new text end

new text begin (3) the community financial institution proposal meets or exceeds the other
evaluation criteria set in the scope of procurement by the commissioner.
new text end

Sec. 4.

Minnesota Statutes 2010, section 16A.671, subdivision 6a, is amended to read:

Subd. 6a.

Fiscal agent bank.

The commissioner may enter into an agreement with
a suitable bank or banks new text begin , including a community financial institution, new text end located within deleted text begin or
outside deleted text end the state to authenticate, issue, pay principal and interest on, cancel or otherwise
deal with certificates of indebtedness issued pursuant to this section, for an agreed
compensation.

Sec. 5. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 4 are effective for fiscal year 2014 and thereafter.
new text end