February 17, 2005, Introduced by Senators BROWN, VAN WOERKOM, BIRKHOLZ, GILBERT, JELINEK, GOSCHKA, CROPSEY, SANBORN, STAMAS, KUIPERS and ALLEN and referred to the Committee on Agriculture, Forestry and Tourism.
A bill to amend 1855 PA 105, entitled
"An act to regulate the disposition of the surplus funds in the
state treasury; to provide for the deposit of surplus funds in
certain financial institutions; to lend surplus funds pursuant to
loan agreements secured by certain commercial, agricultural, or
industrial real and personal property; to authorize the loan of
surplus funds to certain municipalities; to authorize the
participation in certain loan programs; to authorize an
appropriation; and to prescribe the duties of certain state
agencies,"
(MCL 21.141 to 21.147) by adding section 2g.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2g. (1) The state treasurer may invest surplus funds
under the state treasurer's control in certificates of deposit or
other instruments of a financial institution qualified under this
act to receive deposits or investments of surplus funds for the
purpose of facilitating qualified agricultural energy production
loans. The state treasurer shall endeavor to make investments under
this subsection in financial institutions such that qualified
agricultural energy production loans will be conveniently available
in all geographic regions in this state. The state treasurer may
enter into an investment agreement with a financial institution to
provide for the investment under this subsection. The investment
agreement shall contain all of the following:
(a) The term of the investment which shall be not more than 15
years.
(b) A requirement that the interest accruing on the investment
shall not be more than the interest earned by the financial
institution on qualified agricultural energy production loans made
after the date of the investment.
(c) A requirement that the financial institution shall provide
good and ample security as the state treasurer requires and shall
identify the qualified agricultural energy production loans and the
terms and conditions of those loans that are made after the date of
the investment that are attributable to that investment together
with other information required by this act.
(d) A requirement that a qualified agricultural energy
production loan made by the financial institution that is
attributable to the investment shall be issued at a rate or rates
of interest that are established in the investment agreement.
(e) A requirement that a qualified agricultural energy
production loan made by the financial institution that is
attributable to the investment shall be made not later than 5 years
after the effective date of this section.
(f) A requirement that a qualified agricultural energy
production loan made by the financial institution that is
attributable to the investment shall be issued for a loan repayment
period of not more than 15 years.
(g) A requirement that a qualified agricultural energy
production loan made by the financial institution that is
attributable to the investment shall not exceed $5,000,000.00 per
applicant.
(h) A requirement that a qualified agricultural energy
production loan made by the financial institution that is
attributable to the investment shall not be released by the
financial institution unless the loan applicant has certified that
it is an eligible farmer.
(i) A requirement that, to the extent the financial
institution has not made qualified agricultural energy production
loans in an amount at least equal to the amount of the investment
within 90 days after the investment, the rate of interest payable
on that portion of the outstanding investment shall be increased to
a rate of interest provided in the investment agreement, with the
increase in the rate of interest applied retroactively to the date
on which the state treasurer made the investment.
(j) Incentives for the early repayment of the investment and
for the acceleration of payments in the event of a state cash
shortfall as prescribed by the investment agreement, if required by
the state treasurer.
(k) Other terms as prescribed by the state treasurer.
(2) An investment made under this section is found and
declared to be for a valid public purpose.
(3) The attorney general shall approve documentation for an
investment under this section as to legal form.
(4) The aggregate amount of investments made under this
section shall not exceed $25,000,000.00.
(5) Earnings from an investment made under this section that
are in excess of the average rate of interest earned during the
same period on other surplus funds, other than surplus funds
invested under section 1, shall be credited to the general fund of
the state. If interest from an investment made under this section
is below the average rate of interest earned during the same period
on other surplus funds, other than surplus funds invested under
section 1, the general fund shall be reduced by the amount of the
deficiency on an amortized basis over the remaining term of the
investment. A loss of principal from an investment made under this
section shall reduce the earnings of the general fund by the amount
of that loss on an amortized basis over the remaining term of the
investment.
(6) The state treasurer may take any necessary action to
ensure the successful operation of this section, including making
investments with financial institutions to cover the administrative
and risk-related costs associated with a qualified agricultural
energy production loan.
(7) Annually, each financial institution in which the state
treasurer has made an investment under this section shall file an
affidavit, signed by a senior executive officer of the financial
institution, stating that the financial institution is in
compliance with the terms of the investment agreement.
(8) The state treasurer shall annually prepare and submit a
report to the legislature regarding the disposition of money
invested for purposes of facilitating qualified agricultural energy
production loans under this section. The report shall include all
of the following information:
(a) The total number of eligible farmers who have received a
qualified agricultural energy production loan.
(b) By county, the total number and amounts of the qualified
agricultural energy production loans that were issued.
(c) The name of each financial institution participating in
the qualified agricultural energy production loan program and the
amount invested in each financial institution for purposes of the
loan program.
(9) As used in this section:
(a) "Agricultural biomass" means agricultural crops, residue
and waste generated from the production and processing of
agricultural products, animal wastes, or food processing wastes.
(b) "Eligible farmer" means a person or entity that processes
agricultural products or a natural or corporate person who is
engaged as an owner-operator of a farm in the production of
agricultural goods as defined by section 35(1)(h) of the single
business tax act, 1975 PA 228, MCL 208.35. Eligible farmer does not
include a person who has been found guilty of a criminal violation
under, or a person who has been determined responsible for a civil
violation under, part 31 of the natural resources and environmental
protection act, 1994 PA 451, MCL 324.3101 to 324.3133, within a 1-
year period immediately preceding the date of application for the
qualified agricultural energy production loan.
(c) "Qualified agricultural energy production loan" means a
loan to an eligible farmer for the construction and operation of a
qualified agricultural ethanol plant or a qualified agricultural
energy production system.
(d) "Qualified agricultural energy production system" means
the structures, equipment, and apparatus necessary to produce a
gaseous fuel from the noncombustive decomposition of agricultural
biomass and the apparatus and equipment used to generate
electricity or heat from the gaseous fuel or store the gaseous fuel
for future generation of electricity or heat. A qualified
agricultural energy production system includes, but is not limited
to, a methane digester, biomass gasification technology, or thermal
depolymerization technology.
(e) "Qualified agricultural ethanol plant" means a facility
that produces ethanol that meets all the specifications of the
American society for testing and materials specification D 4806 and
is denatured to make it unfit for human consumption and is produced
from the fermentation of agricultural biomass.
(f) "Surplus funds" means, at any given date, the excess of
cash and other recognized assets that are expected to be resolved
into cash or its equivalent in the natural course of events and
with a reasonable certainty, over the liabilities and necessary
reserves at the same date and any other available funds.