Mississippi Small Enterprise Development Finance Act

Miss. Code Ann. tit. 57, ch. 71
in effect

Miss. Code Ann. § 57-71-1 Short title.

This act shall be known and may be cited as the Mississippi Small Enterprise Development Finance Act.

Miss. Code Ann. § 57-71-3 Purpose.

It is the purpose of this act to promote business and economic development in the State of Mississippi through job producing programs and by providing loans to the Certified Development Company of Mississippi, Inc., as defined in this act; to assist in securing investment in small communities by private companies locating or expanding in the state; and to authorize the issuance of state bonds or notes for funding such programs.

Miss. Code Ann. § 57-71-5 Definitions.

The following words and phrases when used in this act shall have the meaning given to them in this section unless the context clearly indicates otherwise: “MBFC” or “company” means the Mississippi Business Finance Corporation. “Private company” means any agricultural, aquacultural, horticultural, industrial, manufacturing or research and development enterprise or enterprises, or the lessor thereof, or any commercial enterprise approved by the Mississippi Business Finance Corporation; however, the term “private company” shall not include any business, corporation or entity having a gaming license issued under Section 75-76-1 et seq. “Qualified financial institution” means any commercial bank or savings and loan institution approved by the Mississippi Business Finance Corporation to provide letters of credit under this act. “Letter of credit” means a letter of credit obligation from a qualified financial institution approved by the Mississippi Business Finance Corporation. “Planning and development districts” means the organized planning and development districts in Mississippi. “Director” means the Executive Director of the Mississippi Business Finance Corporation. “Seller” means the State Bond Commission.

Miss. Code Ann. § 57-71-7 Small enterprise development finance program.

There is hereby established, under the direction of the Certified Development Company of Mississippi, Inc., a program to be known as the Mississippi Small Enterprise Development Finance Program for the purpose of making loans to qualified private companies in order to provide financing to small businesses which will increase employment and investment in small communities.

Miss. Code Ann. § 57-71-9 Application for loan.

Any private company desiring to borrow from the program shall make application to the company. The company shall define and publish criteria for eligibility for the program and timetable for review. All loan applications shall identify a qualified financial institution which will issue a letter of credit to the Certified Development Company guaranteeing the loan made pursuant to this act. Such letter of credit will be in a form satisfactory to the Certified Development Company.

Miss. Code Ann. § 57-71-11 Terms and conditions of loans.

No loan made under the provisions of this act shall be in an amount exceeding Four Million Dollars ($4,000,000.00) principal. The maximum loan term shall not exceed twenty (20) years. All loans made pursuant to this act shall be guaranteed by a letter of credit in a form acceptable to the Mississippi Business Finance Corporation from a qualified financial institution. A letter of credit may be replaced by another letter of credit from a qualified financial institution if the letter is in a form acceptable to the Mississippi Business Finance Corporation. The cost of the letter of credit shall not exceed two percent (2%) per annum of the loan. If a letter of credit, upon expiration, is not renewed by the financial institution or otherwise replaced, the company shall draw upon the letter of credit for the payment of the principal of and accrued interest on the bonds, including any penalties, premium on bonds or other costs incident to the loan. No more than Four Million Dollars ($4,000,000.00) in loans may be outstanding in the aggregate to any one (1) borrower, either directly or indirectly, at any one time. The interest rate on such loans shall not be less than the net interest rate on the bonds or notes issued pursuant to this act to finance the loan being repaid, plus company servicing fees. The total amount of a loan secured by real and/or personal property, including any previous indebtedness incurred against real and/or personal property offered as security for such loan shall not exceed ninety percent (90%) of the market value thereof as determined by an appraisal made by the lender. In determining the amount of indebtedness to be incurred against any real or personal property securing such a loan, the lender may consider the enhanced value of the real property and any other additional capital assets accruing to the borrower through loans provided under this act. No loan shall be made under this act to finance any existing debt.

Miss. Code Ann. § 57-71-13 Lending guidelines, rules and regulations; identifying eligible projects; requirement of job creation; purchases exempt from taxation.

The Mississippi Business Finance Corporation shall promulgate lending guidelines, rules and regulations as may be necessary to carry out the provisions of this act. The Mississippi Business Finance Corporation may work closely with the planning and development districts in identifying eligible projects and making the program available in all areas of the state. As part of the lending criteria, the Mississippi Business Finance Corporation must receive a commitment that the proposed project will create a minimum of ten (10) net new full-time equivalent jobs. Notwithstanding the provisions of Section 27-65-101(1), Mississippi Code of 1972, and other applicable laws, all purchases required to establish any project and financed by proceeds from bonds issued under this act shall be exempt from all taxation in the State of Mississippi except the contractors’ tax imposed by Sections 27-65-21 and 27-65-24(1)(b).

Miss. Code Ann. § 57-71-15 Authorization to hire attorneys, accountants, and others to review and close loans.

The Certified Development Company of Mississippi, Inc., is hereby authorized to engage legal services, financial advisors, appraisers and consultants if needed to review and close loans made pursuant to this act. The costs of such professionals shall be paid by the borrower or from loan proceeds as determined and approved by the company.

Miss. Code Ann. § 57-71-17 Default on loan; penalty.

In the event of a default, the Certified Development Company shall call upon the letter of credit guaranteeing the principal amount of the loan plus interest due. Failure to comply with lending criteria shall result in a penalty which the company may establish by regulation, and penalties shall not be treated as interest income for the purposes of Section 148 of the Internal Revenue Code of 1986.

Miss. Code Ann. § 57-71-19 Certification of nondiscrimination as condition of loan.

No loan shall be made to a private company under this act unless the private company certifies to the Certified Development Company of Mississippi, Inc., in a form satisfactory to the company, that it will not discriminate against any employee or against any applicant for employment because of race, religion, color, national origin, sex or age.

Miss. Code Ann. § 57-71-21 Mississippi Small Enterprise Development Finance Fund; Mississippi Small Enterprise Development Finance Sinking Fund.

There is hereby created a special fund in the State Treasury to be known as the Mississippi Small Enterprise Development Finance Fund out of which the Certified Development Company of Mississippi, Inc., shall provide loans authorized by this act. All monies received by the company to carry out the purposes of this act by issuance of bonds shall be deposited into the Mississippi Small Enterprise Development Finance Fund or funds. Expenditures authorized from the fund shall be paid by the State Treasurer upon warrants drawn on the Mississippi Small Enterprise Development Finance Fund, and the State Fiscal Management Board shall issue warrants upon requisitions signed by the director. Any monies repaid to the state from loans funded through the Mississippi Small Enterprise Development Finance Fund shall be deposited into the Mississippi Small Enterprise Development Finance Sinking Fund, which is hereby created in the State Treasury.

Miss. Code Ann. § 57-71-23 Redemption of and payment of interest on bonds; cancellation of bonds; report to state on amount of annual payments due on bonds; rate of interest on loans.

All bonds issued under the authority of this act shall be redeemed at maturity, together with all interest due, from time to time, on the bonds, and these principal and interest payments shall be paid from the Mississippi Small Enterprise Development Finance Sinking Fund. All monies paid into the Mississippi Small Enterprise Development Finance Sinking Fund not appropriated to pay accruing bonds and interest shall be invested by the State Treasurer in such securities as are provided by law for the investment of the sinking funds of the state. In the event that all or any part of the bonds and notes are purchased, they shall be canceled and returned to the loan and transfer agent as canceled and paid bonds and notes; and thereafter all payments of interest thereon shall cease and the canceled bonds, notes and coupons together with any other canceled bonds, notes and coupons shall be destroyed as promptly as possible after cancellation but not later than two (2) years after cancellation. A certificate evidencing the destruction of the canceled bonds, notes and coupons shall be provided by the loan and transfer agent to the seller. The State Treasurer shall determine and report to the State Fiscal Management Board and Legislative Budget Office by September 1 of each year the amount of money necessary for the payment of the principal of and interest on outstanding obligations for the following fiscal year and the times and amounts of the payments. It shall be the duty of the Governor to include in every executive budget submitted to the Legislature full information relating to the issuance of bonds and notes under the provisions of this act and the status of the Mississippi Small Enterprise Development Finance Sinking Fund of the state for the payment of the principal of and interest on the bonds and notes. Except as otherwise provided by law, the rate of interest on any loan made using funds from the Mississippi Small Enterprise Development Finance Fund shall be that rate as established by Section 57-71-11(5). Notwithstanding the provisions of any other law to the contrary, the interest rate charged shall not be set such that the aggregate of the interest, penalties and other payments to the state on loans and other assistance made using funds from the Mississippi Small Enterprise Development Finance Fund will cause the bonds issued pursuant to this act to be deemed arbitrage bonds pursuant to Section 148 of the Internal Revenue Code of 1986 and the regulations promulgated thereunder. In the case of loans initially funded from the proceeds of notes and subsequently funded from renewal bonds and notes, the interest rate to be charged on the loans shall be established in accordance with Section 57-71-11(5) upon the sale of bonds or notes, as the case may be, for the loans.

Miss. Code Ann. § 57-71-25 Authorization for seller to borrow funds to carry out purposes of act; issuance of bonds.

The seller is authorized to borrow, on the credit of the state, upon receipt of a resolution from the company requesting the same, money not exceeding the aggregate sum of One Hundred Forty Million Dollars ($140,000,000.00), outstanding at any one time, not including money borrowed to refund outstanding bonds, notes or replacement notes, as may be necessary to carry out the purposes of this act. The rate of interest on any such bonds or notes which are not subject to taxation shall not exceed the rates set forth in Section 75-17-101, Mississippi Code of 1972, for general obligation bonds. As evidence of indebtedness authorized in this chapter, general or limited obligation bonds of the state shall be issued from time to time to provide monies necessary to carry out the purposes of this chapter for such total amount, in such form, in such denominations, payable in such currencies (either domestic or foreign or both), and subject to such terms and conditions of issue, redemption and maturity, rate of interest and time of payment of interest as the seller directs, except that such bonds shall mature or otherwise be retired in annual installments beginning not more than five (5) years from date thereof and extending not more than twenty (20) years from date thereof. All bonds and notes issued under authority of this chapter shall be signed by the chairman of the seller, or by his facsimile signature, and the official seal of the seller shall be affixed thereto, attested by the secretary of the seller. All bonds and notes issued under authority of this chapter may be general or limited obligations of the state, and the full faith and credit of the State of Mississippi as to general obligation bonds, or the revenue derived from projects assisted as to limited obligation bonds, are hereby pledged for the payment of the principal of and the interest on such bonds and notes. Such bonds and notes and the income therefrom shall be exempt from all taxation in the State of Mississippi. The bonds may be issued as coupon bonds or registered as to both principal and interest as the seller may determine. If interest coupons are attached, they shall contain the facsimile signature of the chairman and the secretary of the seller. As to bonds issued hereunder and designated as taxable bonds by the seller, any immunity of the state to taxation by the United States Government of interest on bonds or notes issued by the state is hereby waived.

Miss. Code Ann. § 57-71-27 Bond offerings; temporary bonds; deposit of proceeds of sale; registration of bonds; cost and expenses of bond offerings.

Whenever bonds are issued, they shall be offered for sale at not less than par value and accrued interest and shall be sold by the seller at public or private sale, from time to time, in such manner and at such price as may be determined by the seller to be most advantageous. Any portion of any bond issue so offered and not sold or subscribed for at public sale may be disposed of by private sale by the seller in such manner and at such prices not less than par and accrued interest, as the seller shall direct. When bonds are issued from time to time, the bonds of each issue shall constitute a separate series to be designated by the seller or may be combined for sale as one (1) series with other general obligation bonds of the State of Mississippi. Until permanent bonds can be prepared, the seller may in its discretion issue, in lieu of permanent bonds, temporary bonds in such form and with such privileges as to registration and exchange for permanent bonds as may be determined by the seller. Pending their application to the purposes authorized, bond proceeds held or deposited by the State Treasurer may be invested or reinvested as are other funds in the custody of the State Treasurer in the manner provided by law. All earnings received from the investment or deposit of such funds shall be paid into the State Treasury to the credit of the Mississippi Small Enterprise Development Finance Fund. The State Treasurer shall prepare the necessary registry book to be kept in the office of the duly authorized loan and transfer agent of the state for the registration of any bonds, at the request of owners thereof, according to the terms and conditions of issue directed by the seller. All costs and expenses in connection with the issue of and sale and registration of the bonds and notes in connection with this act may be paid from the proceeds of bonds and notes issued under this act. The seller may provide in the resolution authorizing the issuance of such bonds for the employment of one or more persons or firms to assist in the sale of the bonds; to enter into contracts with financial institutions located either within or without the State of Mississippi to act as registrars, paying agents, transfer agents or otherwise; for rating of the bonds; and to purchase insurance.

Miss. Code Ann. § 57-71-29 Temporary borrowings in anticipation of bond offering; replacement notes.

Pending the issuance of bonds of the state as authorized under this act, the seller is hereby authorized in accordance with the provisions of this act and on the credit of the state, to make temporary borrowings not to exceed two (2) years in anticipation of the issue of bonds in order to provide funds in such amounts as may, from time to time, be deemed advisable prior to the issue of bonds. In order to provide for and in connection with such temporary borrowings, the seller is hereby authorized in the name and on behalf of the state to enter into any purchase, loan or credit agreement, or agreements, or other agreement or agreements with any financial institution or persons in the United States having power to enter into the same, which agreements may contain such provisions not inconsistent with the provisions of this act as may be authorized by the seller. All temporary borrowings made under this section shall be evidenced by notes of the state which shall be issued, from time to time, for such amounts not exceeding in the aggregate the applicable statutory and constitutional debt limitation, in such form and in such denominations and subject to terms and conditions of sale and issue, prepayment or redemption and maturity, rate or rates of interest and time of payment of interest as the seller shall authorize and direct and in accordance with this act. Such authorization and direction may provide for the subsequent issuance of replacement notes to refund, upon issuance thereof, such notes, and may specify such other terms and conditions with respect to the notes and replacement notes thereby authorized for issuance as the seller may determine and direct. When the authorization and direction of the seller provide for the issuance of replacement notes, the seller is hereby authorized in the name and on behalf of the state to enter into agreements with any financial institutions or persons in the United States having the power to enter the same: To purchase or underwrite an issue or series of issues of notes. To enter into any purchase, loan or credit agreements, and to draw monies pursuant to any such agreements on the terms and conditions set forth therein and to issue notes as evidence of borrowings made under any such agreements. To appoint or act as issuing and paying agent or agents with respect to notes. To do such other acts as may be necessary or appropriate to provide for the payment, when due, of the principal of and interest on such notes. Such agreements may provide for the compensation of any purchasers or underwriters of notes or replacement notes by payment of a fixed fee or commission at the time of issuance thereof, and for all other costs and expenses, including fees for agreements related to the notes issuing and paying agent costs. Costs and expenses of issuance may be paid from the proceeds of the notes. When the authorization and direction of the seller provides for the issuance of replacement notes, it shall, at or prior to the time of delivery of these notes or replacement notes, determine the principal amounts, dates of issue, interest rate or rates, rates of discount, denominations and all other terms and conditions relating to the issuance. The State Treasurer shall perform all acts and things necessary to pay or cause to be paid, when due, all principal of and interest on the notes being refunded by replacement notes and to assure that the same may draw upon any monies available for that purpose pursuant to any purchase loan or credit agreements established with respect thereto, all subject to the authorization and direction of the seller. Outstanding notes evidencing such borrowings may be funded and retired by the issuance and sale of the bonds of the state as hereinafter authorized. The refunding bonds must be issued and sold not later than a date two (2) years after the date of issuance of the first notes evidencing such borrowings to the extent that payment of such notes has not otherwise been made or provided for by sources other than proceeds of replacement notes. The proceeds of all such temporary borrowing shall be paid to the State Treasurer to be held and disposed of in accordance with the provisions of Section 57-71-31.

Miss. Code Ann. § 57-71-31 Disposition of proceeds realized from sale of bonds and notes.

The proceeds realized from the sale of bonds and notes under this act, other than refunding bonds and replacement notes, shall be paid to the State Treasurer and deposited into the Mississippi Small Enterprise Development Finance Fund or funds and specifically dedicated to the purposes enumerated in this act. All nonfederal funds which may become available for the purposes of this act shall be deposited in the Mississippi Small Enterprise Development Finance Fund or funds and shall be allocated for the purposes of this act. The proceeds of the sale of refunding bonds and replacement notes shall be applied solely to the payment of the principal of and the accrued interest on and premium, if any, and costs of redemption of the bonds and notes for which such obligations have been issued.

Miss. Code Ann. § 57-71-33 State Attorney General to represent seller in issuing, selling and validating bonds or notes; seller authorized to use proceeds to pay administrative, legal and other expenses.

Except as otherwise authorized in Section 7-5-39, the Attorney General of the State of Mississippi shall represent the seller in issuing, selling and validating bonds or notes herein provided for, and the seller is hereby authorized and empowered to expend from the proceeds derived from the sale of the bonds or notes authorized hereunder all necessary administrative, legal and other expenses incidental and related to the issuance of bonds or notes authorized under this act.

Miss. Code Ann. § 57-71-35 Term “this act” defined.

The term “this act” referred to in Sections 57-71-1 through 57-71-33 hereof shall mean the Mississippi Small Enterprise Development Finance Act unless the context clearly indicates otherwise.

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