Session Laws

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to immediately increase the availability of financial assistance and suitable facilities to industrial and commercial enterprises in the commonwealth, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. The last paragraph of section 30 of chapter 23A of the General Laws, as appearing in section 19 of chapter 189 of the acts of 1984, is hereby amended by inserting after the word "inclusive", in line 2, the words:- , and in any sections of chapter forty D applicable to the agency.

SECTION 2. Said last paragraph of said section 30 of said chapter 23A, as so appearing, is hereby further amended by inserting after the definition of "Bonds" the following definition:-

"Financing document", a lease, installment sale agreement, conditional sale agreement, mortgage or loan agreement between the agency as lessor, seller, mortgagee or lender and a user as lessee, purchaser, mortgagor or borrower, or an agreement between the agency and a lending institution which has agreed to make a loan to a user to finance a project.

SECTION 3. Said last paragraph of said section 30 of said chapter 23A, as so appearing, is hereby further amended by inserting after the definition of "Industrial Mortgage Insurance Fund" the following definition:-

"Lending institution", any bank or trust company; Federal National Mortgage Association; approved mortgage banker; savings bank; credit union; national banking association; insurance company; financial institution or governmental agency approved by the agency to participate in the financing of a project.

SECTION 4. Said last paragraph of said section 30 of said chapter 23A, as so appearing, is hereby further amended by adding the following definition:-

"User", means one or more persons, other than a lending institution, acting as lessee, purchaser, mortgagor or borrower who has obtained or is seeking to obtain financing for a project, either from the agency or from a lending institution which has obtained or is seeking to obtain funds from the agency to finance a project and may include a party who transfers the right of use and occupancy to another party by lease, sublease or otherwise.

SECTION 4A. Section 31 of said chapter 23A is hereby amended by striking out paragraph (d), as appearing in section 3 of chapter 496 of the acts of 1978, and inserting in place thereof the following paragraph:-

(d) The provisions of chapter two hundred and sixty-eight A shall apply to all ex-officio directors or their designees and employees of the agency. The provisions of chapter two hundred and sixty-eight A shall apply to all other directors of the agency, except that the agency may purchase from, sell to, borrow from, loan to, contract with or otherwise deal with any person in which any director of the agency is in any way interested or involved provided that such interest or involvement is disclosed in advance to the members of the board and recorded in the minutes of the board, and provided, further, that no director having such an interest or involvement may participate in any decision of the board relating to such person. Employment by the commonwealth or service in any agency thereof shall not be deemed to be such an interest or involvement. Residence of a member of the board in the city or town where the project is or is to be located shall be deemed to be such an interest or involvement.

SECTION 5. Paragraph (k) of subsection (a) of said section 31 of said chapter 23A, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- Upon the termination of the existence of the agency, all right, title and interest in and to all of its assets and all of its obligations, duties, covenants, agreements and obligations shall vest in and be possessed, performed and assumed by the commonwealth.

SECTION 6. Section 32 of said chapter 23A, as so appearing, is hereby amended by striking out paragraph (g) and inserting in place thereof the following paragraph:-

(g) invest any funds held in reserves or sinking funds, or in the Industrial Mortgage Insurance Fund, or any funds not required for immediate disbursement, in such investments as may be provided in any resolution or trust agreement relating to the use of such funds, or, if not so provided, as the board may determine.

SECTION 7. Said section 32 of said chapter 23A, as so appearing, is hereby further amended by striking out paragraph (k) and inserting in place thereof the following paragraph:-

(k) consent, subject to the provisions of any contract with noteholders or bondholders, and without the requirement for making additional findings pursuant to section twelve of chapter forty D, whenever it deems it necessary or desirable in the fulfillment of the purposes of this chapter, to the modification, with respect to rate of interest, time of payment of any installment of principal or interest, maturity date or any other terms, of any bond, mortgage, mortgage loan, mortgage loan commitment, contract or agreement of any kind to which the agency is a party.

SECTION 8. Said section 32 of said chapter 23A, as so appearing, is hereby further amended by striking out paragraph (n) and inserting in place thereof the following paragraph:-

(n) enter into agreements or other transactions with any person, the purpose of which is to effectuate the accomplishment of the purposes of sections twenty-nine to thirty-eight, inclusive, including construction agreements, purchase or acquisition agreements, loan or lease agreements including agreements conditioned upon the subleasing of the demised premises, partnerships agreements including limited partnership agreements, joint ventures, participation agreements or loan agreements with leasing corporations or other financial institutions or intermediaries, and agreements with one or more persons for the servicing of loans made by the agency including the receipt by such servicer of payments made by a user under a financing document. Any such payments shall constitute trust funds to be held and applied solely as provided in such agreement for the servicing of loans, shall constitute pledged funds of the agency and shall be entitled to the same protection when received by a person for the servicing of loans, without the need for filing and recording of the servicing agreement under the provisions of chapter one hundred and six or otherwise except in the records of the agency, as is afforded to funds received by an issuer and pledged to a trustee under section fourteen of chapter forty D.

SECTION 9. Said section 32 of said chapter 23A, as so appearing, is hereby further amended by striking out paragraph (q) and inserting in place thereof the following paragraph:-

(q) make loans to any person for the acquisition, construction, alteration, or any combination thereof, of a project, including but not limited to loans to lending institutions under terms and conditions requiring the proceeds of such loans to be used by such lending institutions for the making of loans to users for qualified projects.

SECTION 9A. Said chapter 23A is hereby further amended by striking out section 33, as most recently amended by section 20 of chapter 189 of the acts of 1984, and inserting in place thereof the following section:-

Section 33. There is hereby established an Industrial Mortgage Insurance Fund to which shall be credited all premiums received by the agency for insurance or reinsurance provided by it and not payable for reinsurance or insurance provided by other insurers, any other sums realized by the agency pursuant to its industrial mortgage loan insurance agreements or related financing documents, whether by way of subrogation or otherwise, and any state appropriations or other monies made available to the fund. The fund shall be held in the custody of one or more banks or trust companies having a principal place of business in the commonwealth. The fund shall be held for the security of the holders of industrial mortgage loans or reserves or portions thereof insured under section thirty-four, either as a single fund for all such holders or, subject to the rights of the holders of such loans so insured on November fifteenth, nineteen hundred and eighty-three, in such separate funds for the holders of such loans, reserves or portions thereof as the agency may determine. If any fund is established which is separate from that in existence on November fifteenth, nineteen hundred and eighty-three, the holders of insured loans secured by such existing fund on November fifteenth, nineteen hundred and eighty-three and the holders of insured loans, reserves or portions thereof secured by such separate fund shall be secured by such existing fund and such separate fund pro-rata, without preference or priority; but the holders of insured loans, reserves or portions thereof secured by a separate fund established after November fifteenth, nineteen hundred and eighty-three shall not be secured by any other such separate fund unless the documents governing such separate fund otherwise provide. The Industrial Mortgage Insurance Fund or funds shall be governed by one or more trust agreements entered into by the agency with the trustees. Each trust agreement may contain provisions and limitations, which need not be uniform, as to the investment and disbursement of monies in the fund or funds to which it applies, the payment of expenses of such funds, the appointment, resignation and discharge of trustees, the delegation of enforcement and collection powers under the insurance agreements to the trustees, the duties of the trustees, amendments of the trust agreement and such other lawful provisions and limitations as may be deemed appropriate. Unless otherwise provided in the trust agreement applicable to any such fund, income earned by such funds may be used for the purposes of the agency. Without limiting the foregoing but subject to the pro-rata rights of holders of loans insured on November fifteenth, nineteen hundred and eighty-three, such trust agreement may require agency findings and loan criteria in addition to or stricter than those required by section thirty-four; may limit the amount and characteristics of insured loans, reserves or portions thereof to be secured by a fund or funds; may authorize, restrict or prohibit disbursement of monies in the fund or funds for costs of enforcing or preserving the mortgage security under the applicable financing documents, for costs of stop-loss or similar insurance to protect the fund or funds, or for other costs the agency considers appropriate to maintain the integrity of the fund or funds; may require income earned by the fund or funds to be retained for the benefit of the fund; may provide additional security for holders of particular loans, reserves or portions thereof; and may determine the order in which claims, costs and expenses or categories thereof will be paid from the fund or funds. The trust agreement may pledge premiums and other monies which are to be deposited in the fund or funds. Such pledge shall be valid and binding from the time when the pledge is made. The premiums and other monies so pledged and thereafter received by the fund or funds or on its or their behalf by the trustees shall immediately be subject to the lien of such pledge and shall be valid and binding as against all parties having claims of any kind against the fund or funds, irrespective of whether such parties have notice thereof. No filing need be made under the provisions of chapter one hundred and six. Whenever the agency issues bonds any part of the proceeds of which are used to finance insured loans, reserves or portions thereof, all provisions and limitations which may be contained in a trust agreement governing the Industrial Mortgage Insurance Fund or funds may instead or in addition be contained in the resolution or trust agreement securing such bonds, without the need for any filing under the provisions of said chapter one hundred and six. Subject to the provisions of the trust agreement securing the same, any holder of the bonds of the agency the proceeds of which were used to finance the insured loans, and the trustee under any trust agreement securing such bonds shall have the right to bring suit to require the application of any amounts in the Industrial Mortgage Insurance Fund in accordance with the provisions of this section or of the trust agreement, including, but not limited to, appointment of a receiver for the Industrial Mortgage Insurance Fund or any fund held thereunder.

SECTION 10. Section 34 of said chapter 23A, as most recently amended by section 21 of said chapter 189, is hereby further amended by striking out paragraph (a) and inserting in place thereof the following paragraph:-

(a) The agency is empowered:-

(1) to provide insurance or reinsurance of loans or portions thereof, or their debt service, including amounts payable as premiums or penalties in the event of mandatory or optional prepayment, made to finance the acquisition, construction, rehabilitation or alteration, or any combination thereof, of industrial development facilities, pollution control facilities, and solid waste disposal facilities, and to provide insurance or reinsurance or reserves or portions thereof, or the yield therefrom, established to secure bonds issued to fund such loans or reserves;

(2) to enter into or arrange agreements for such insurance or reinsurance with users, mortgagors, lending institutions, insurers or others, the agency being authorized to reinsure or cede risks to such insurers in such amounts as the agency may determine and such insurers, if otherwise authorized to reinsure or insure such risks in the commonwealth, being hereby authorized to reinsure the agency or cede risks to the agency to the same extent as if the agency were a company, as defined in chapter one hundred and seventy-five, authorized under that chapter to reinsure or insure such risks;

(3) to fix a rate or rates of premium for such insurance or reinsurance, which need not be uniform and may reflect such risks and classifications of risk as the agency determines to be reasonable; and

(4) to exercise such other powers as are necessary or incidental to the foregoing, including without limitation making conditional or unconditional commitments for such insurance or reinsurance, authorizing such commitments to be pledged or assigned as security for financing and setting appropriate fees therefor.

SECTION 11. Said section 34 of said chapter 23A is hereby further amended by striking out paragraph (b), as appearing in said section 21 of said chapter 189, and inserting in place thereof the following paragraph:-

(b) The insurance and reinsurance provided by the agency shall not be subject to the provisions of chapter one hundred and seventy-five, or any successor thereto, shall be payable solely from the Industrial Mortgage Insurance Fund established by section thirty-three and shall not constitute a debt or pledge of the faith and credit of the commonwealth or of any subdivision thereof.

SECTION 12. Paragraph (c) of said section 34 of said chapter 23A, as so appearing, is hereby amended by striking out the introductory clause and inserting in place thereof the following introductory clause:-

The board shall not approve the insurance or reinsurance of a loan unless it makes the following findings prior to the disbursement of the proceeds of a loan to a user or mortgagor:.

SECTION 13. Clause (1) of said paragraph (c) of said section 34 of said chapter 23A, as so appearing, is hereby further amended by inserting after the word "of", in line 1, the words:- or first security interest in,- and by inserting after the word "loan", in line 5, the words:- in connection with any such loan, any lending institution providing funds, a letter of credit or other property, or any reinsurer providing reinsurance or a commitment to reinsure such loan, may participate in any such mortgage, security interest or assignment and the proceeds thereof following any default, in such manner and in such order of priority of payment as the board shall determine; any such mortgage, security interest or assignment may be assigned by the agency or granted to the trustee for any bonds of the agency sold to provide funds for any such loan.

SECTION 14. Said paragraph (c) of said section 34 of said chapter 23A, as so appearing, is hereby further amended by striking out clause (3), and inserting in place thereof the following clause:-

(3) that if not occupied by the user or mortgagor, the project or projects will, or are likely to be, occupied by a responsible party or parties.

SECTION 15. Said paragraph (c) of said section 34 of said chapter 23A, as so appearing, is hereby further amended by striking out clause (5) and inserting in place thereof the following clause:-

(5) that the project will provide or retain employment having a reasonable relationship to the principal amount of loans to be insured therefor, taking into account, among other things, the investment per employee of comparable industrial development facilities.

SECTION 16. Said paragraph (c) of said section 34 of said chapter 23A, as so appearing, is hereby further amended by striking out clause (8) and inserting in place thereof the following clause:-

(8) that the principal amount of the loan, excluding any portion thereof the proceeds of which are to fund reserves and disregarding any other funds or other arrangements obtained for reserve purposes, does not exceed the sum of ninety per cent of the value of the industrial development facility exclusive of machinery and equipment, plus eighty per cent of the cost of the machinery and equipment, plus the reasonable cost of arranging, insuring and issuing bonds to finance such loan as determined by the agency.

SECTION 17. Said paragraph (c) of said section 34 of said chapter 23A, as so appearing, is hereby further amended by striking out clauses (12) and (13) and inserting in place thereof the following two clauses:-

(12) that with respect to all loans on account of a project or projects for any one user or mortgagor, excluding any portions of loans the proceeds of which are to fund reserves and disregarding any other funds or other arrangements obtained for reserve purposes, the debt service or portion thereof including amounts payable as premiums or penalties in the event of mandatory or optional prepayment insured or reinsured by the agency and not reinsured or insured by other insurers coming due in any one calendar year does not exceed twenty per cent of the amount in the particular fund or funds in the Industrial Mortgage Insurance Fund securing such loans when the finding is made; and

(13) that the balance of all loans or portions thereof, excluding portions of loans the proceeds of which are to fund reserves and disregarding any other funds or other arrangements obtained for reserve purposes, insured or reinsured by the agency and not reinsured or insured by other insurers does not exceed nine times the amount in the Industrial Mortgage Insurance Fund when the finding is made.

SECTION 18. The last paragraph of said section 34 of said chapter 23A, as so appearing, is hereby amended by inserting after the word "mean", in line 3, the words:- facilities used in connection with any.

SECTION 19. Said section 34 of said chapter 23A is hereby further amended by adding the following paragraph:-

Any insurance or reinsurance provided by the agency under this section shall be conclusive evidence that the board has made such determinations and findings, has given such approvals and has reached such conclusions as are a prerequisite to providing such insurance or reinsurance and the validity of such insurance or reinsurance shall be incontestable except for fraud or misrepresentation on the part of the mortgagor or user.

SECTION 20. Paragraph (a) of section 35 of said chapter 23A, as appearing in section 3 of chapter 496 of the acts of 1978, is hereby amended by striking out, in line 10, the word "section" and inserting in place thereof the word:- chapter.

SECTION 21. Said section 35 of said chapter 23A, as so appearing, is hereby further amended by striking out paragraph (b) and inserting in place thereof the following paragraph:-

(b) the following provisions of chapter forty D shall not apply to the agency: sections two, three, four, five, six, the third paragraph of section eight, the fourth paragraph of section ten, section twelve, except the findings required to be made under subsection (2), the sixth to eleventh sentences, inclusive, of section eighteen, section nineteen and paragraphs (a) to (e), inclusive, of section twenty-one. The agency may issue bonds for any of its purposes without obtaining a certificate of convenience and necessity from the department of commerce and development.

SECTION 22. Paragraph (d) of said section 35 of said chapter 23A, as so appearing, is hereby amended by inserting after the word "therewith", in line 5, the words:- or from reserve funds.

SECTION 23. Said section 35 of said chapter 23A, as so appearing, is hereby further amended by striking out paragraph (e) and inserting in place thereof the following paragraph:-

(e) Notwithstanding the provisions of clause (ii) of section eight, sections nine, ten, thirteen and fourteen of chapter forty D or other provisions of this chapter, (1) the resolution or resolutions authorizing the issuance of bonds of the agency may delegate to the chairman, vice chairman, executive director, deputy director or any director of the agency or any combination of them, the power to determine any of the matters set forth in section ten of chapter forty D and the power to award the bonds to a purchaser or purchasers at public sale or to negotiate a sale to a purchaser or purchasers, provided in the latter case that such issue of bonds is to be re-offered to the public; and (2) in such manner and upon such terms and conditions provided in the resolution of the agency authorizing the issuance of, or the trust agreement securing, such bonds, the agency may combine in a single offering and issue bonds, the proceeds of which will be used to finance more than one project approved or to be approved by the agency. Without limiting the powers of the agency contained elsewhere in this chapter or in chapter forty D, in connection with any such issue of bonds, the agency may create and establish one or more special funds, hereafter referred to as "bond reserve funds", and may establish one or more costs of issuance accounts, and shall pay into each such bond reserve fund or costs of issuance account any proceeds of sale of bonds to the extent provided in the resolution authorizing the issuance of, or trust agreement securing, such bonds and any other moneys which may be available to the agency for the purpose of each such fund or account from any other source or sources. Whenever the agency issues such bonds to fund reserves or costs of issuance, it may determine whether or not the cost of funding such reserves or costs of issuance, shall be treated as a cost of the project and whether or not a financing document shall be required to provide payments to amortize principal and interest of such bonds. In any event, the expected yield on bond reserve funds may, with the approval of the agency, be taken into account in determining the sufficiency of payments required under a financing document to amortize bonds issued for costs of the project. All moneys held in any bond reserve fund are hereby pledged to, and charged with, the payment of the principal of and the interest on the bonds with respect to which such bond reserve fund may be established, as the same shall become due, and the redemption or purchase price of such bonds retired by call or purchase as therein provided. Such pledge shall be valid and binding from the time when the pledge is made. The use and disposition of moneys to the credit of such bond reserve fund shall be subject to the provisions of the resolution authorizing the issuance of, or trust agreement securing, such bonds. Except as may otherwise be provided in such resolution or such trust agreement, such bond reserve fund shall be a fund for bonds issued to finance all such projects without any distinction or priority of any bond over another; provided the agency in any such resolution or trust agreement may provide that such bond reserve fund shall be the fund for a particular project and for the bonds issued to finance a particular project and may, additionally, permit and provide for the issuance of bonds having a subordinate lien in respect of the security authorized to other bonds of the agency and, in such case, the agency may create separate or other similar funds in respect of such subordinate lien bonds. Notwithstanding the provisions of paragraphs (a) and (c) of this section, the bonds of any such issue may be issued prior to the making by the agency of the findings required to be made by the finance board in chapter forty D, provided that the agency makes such findings prior to the disbursement of the proceeds of a loan to a user. If bonds are issued in anticipation of refinancing by the issue of other bonds or by the purchase of the related financing documents and the agency determines that refinancing by one or the other of such methods is reasonably assured, such financing documents shall be sufficient if they provide for payments sufficient to amortize the principal and interest required under such refinancing and such principal and interest, if any, of the bonds first issued as will be required assuming such refinancing occurs as expected.

SECTION 24. Section 36 of said chapter 23A, as so appearing, is hereby amended by inserting after the word "insurance", in lines 2 and 15, in each instance, the words:- or reinsurance or an insurance or reinsurance commitment.

SECTION 25. Said chapter 23A is hereby further amended by striking out section 37, as so appearing, and inserting in place thereof the following section:-

Section 37. The agency shall annually submit to the governor, the chairman of the senate ways and means committee, the chairman of the house ways and means committee, the commissioner of administration, and the comptroller within ninety days after the end of its fiscal year, a complete and detailed report setting forth its operation and accomplishments, including all projects, loans, or bonds insured under the guaranteed loan program and other insured loan programs secured by the mortgage insurance loan fund; its receipts and expenditures during such fiscal year in accordance with the categories and classifications established by the agency for its operating and capital outlay purposes; and its assets and liabilities at the end of the fiscal year, including a schedule of its commitments and the status of funds.

SECTION 26. The third paragraph of subsection (2) of section 12 of chapter 40D of the General Laws, as appearing in section 10 of chapter 495 of the acts of 1978, is hereby amended by striking out clause (k) and inserting in place thereof the following clause:-

(k) the project has, so far as feasible, been located in a low income area of a municipality so that employment opportunities will become available to residents of such area, and in the case of a project including a commercial enterprise which is not otherwise qualified as an industrial enterprise or incidental thereto, the project is located in a predominantly commercial area for which a commercial area revitalization plan has been adopted by the governing body of the municipality and approved by the secretary of communities and development and the project is consistent with the plan. The purpose of a commercial area revitalization plan shall be to prevent or arrest and reverse the decay of the area covered by the plan. The plan shall describe the area, set forth the development or redevelopment, including public improvements, proposed to carry out the purposes of the plan, and detailed design standards and a design review process to insure that any project financed under this chapter is of architectural and design quality to further the purposes of the plan. Nothing herein shall preclude the undertaking of such development or redevelopment through urban renewal or an economic and industrial corporation or by other means, subject to the laws applicable thereto. In exercising the power of approval granted by this clause, the secretary shall, among other lawful and relevant considerations, seek to avoid and correct the deterioration of older commercial centers which results from the movement of commercial enterprise to previously noncommercial areas.

SECTION 27. The agency shall maintain its existing industrial mortgage insurance program as an account within the Industrial Mortgage Insurance Fund established pursuant to section thirty-three of chapter twenty-three A for the purpose of insuring mortgage loans or portions thereof which are eligible for insurance under section thirty-four of said chapter twenty-three A utilizing the assets of said account to continue this particular program. Said account shall be credited with any monies appropriated or authorized by the board from the operating funds of the agency for the purpose of ensuring the ongoing operation of the program.