Bill Text: IA SF613 | 2021-2022 | 89th General Assembly | Introduced

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Bill Title: A bill for an act creating a downtown loan guarantee program under the purview of the economic development authority.(Formerly SSB 1271.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2021-06-22 - Referred to Appropriations. S.J. 1148. [SF613 Detail]

Download: Iowa-2021-SF613-Introduced.html

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Senate File 613 - Introduced
SENATE FILE 613
BY COMMITTEE ON APPROPRIATIONS
(SUCCESSOR TO SSB 1271)
A BILL FOR
An Act creating a downtown loan guarantee program under the
purview of the economic development authority.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. NEW SECTION . 15.431 Downtown loan guarantee
program.
1. The economic development authority, in partnership with
the Iowa finance authority, shall establish and administer a
downtown loan guarantee program to encourage Iowa downtown
businesses and banks to reinvest and reopen following the
COVID-19 pandemic.
2. In order for a loan to be guaranteed, all of the
following conditions must be true:
a. The loan finances an eligible downtown resource center
community catalyst building remediation grant project or main
street Iowa challenge grant within a designated district.
b. The loan finances a rehabilitation project, or finances
acquisition or refinancing costs associated with the project.
c. At least twenty-five percent of the project costs are
used for construction on the project or renovation.
d. The project includes a housing component.
e. The loan is used for construction of the project,
permanent financing of the project, or both.
f. A federally insured financial lending institution issued
the loan.
g. The loan does not reimburse the borrower for working
capital, operations, or similar expenses.
h. The project meets downtown resource center and main
street Iowa design review.
3. a. For a loan amount less than or equal to five hundred
thousand dollars, the economic development authority may
guarantee up to fifty percent of the loan amount.
b. For a loan amount greater than five hundred thousand
dollars, the economic development authority may provide a
maximum loan guarantee of up to two hundred fifty thousand
dollars.
4. A project loan must be secured by a mortgage against the
project property.
5. The economic development authority may guarantee loans
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S.F. 613
for up to five years. The economic development authority
may extend the loan guarantee for an additional five years
if an underwriting review finds that an extension would be
beneficial.
6. The lender shall pay an annual loan guarantee fee as set
forth by rule.
7. The economic development authority reserves the right
to deny a loan guarantee for unreasonable bank loan fees or
interest rate.
8. The loan must not be insured or guaranteed by another
local, state, or federal guarantee program.
9. The loan guarantee is not transferable if the loan or the
project is sold or transferred.
10. In the event of a loss due to default, the loan
guarantee proportionally pays the guarantee percentage of the
loss to the lender.
11. Moneys for the program may consist of any moneys
appropriated by the general assembly for purposes of this
section, and any other moneys that are lawfully available
to the economic development authority, including moneys
transferred or deposited from other funds created pursuant to
section 15.106A, subsection 1, paragraph “o” .
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill creates a downtown loan guarantee program to be
administered by the economic development authority and the Iowa
finance authority. The purpose of the program is to encourage
downtown businesses and banks to reinvest and reopen following
the COVID-19 pandemic.
In order for a loan to be guaranteed under the program,
numerous conditions apply, including the following: the loan
finances an eligible downtown resources center community
catalyst building remediation grant project or main street
Iowa challenge grant within a designated district; the loan
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S.F. 613
finances a rehabilitation project or acquisition or refinancing
costs associated with the project; 25 percent of the project
cost is used for construction on the project or renovation;
the financed project includes a housing component; the loan is
used for the construction or permanent financing of a project;
a federally insured financial lending institution issued the
loan; the loan does not reimburse the borrower for working
capital or operations; and the project meets certain design
reviews.
The bill requires the loan to be secured by a mortgage
against the project property, prohibits the loan guarantee to
be transferred, and charges the lender an annual loan guarantee
fee as set forth by rule.
The bill limits the amount of the loan guarantee as follows:
for a loan amount of less than or equal to $500,000, the loan
guarantee shall not exceed 50 percent of the loan; for a
loan amount greater than $500,000, the economic development
authority may provide a maximum loan guarantee of up to
$250,000.
The economic development authority may guarantee the loan
for up to five years, which may be extended by the authority
for an additional five years. The authority may also deny a
loan guarantee for any unreasonable bank loan fees or interest
rate.
In the event of a loss due to default, the bill requires the
loan guarantee to proportionally pay the guarantee percentage
of the loss to the lender.
Moneys available for the program may consist of moneys
appropriated for use in the program, and any other moneys that
are lawfully available to the economic development authority,
including moneys transferred or deposited from other funds
created pursuant to Code section 15.106A(1)(o).
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