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2008 SESSION

086988744
HOUSE BILL NO. 1073
Offered January 9, 2008
Prefiled January 9, 2008
A BILL to amend and reenact §§ 2.2-2285, 2.2-2309, 2.2-2310, 15.2-5000 through 15.2-5004, and 36-139, as it shall become effective, of the Code of Virginia, relating to the Department of Housing and Community Development; administration of the Private Activity Bonds program.
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Patron-- Suit
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Referred to Committee on General Laws
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Be it enacted by the General Assembly of Virginia:

1.  That §§ 2.2-2285, 2.2-2309, 2.2-2310, 15.2-5000 through 15.2-5004, and 36-139, as it shall become effective, of the Code of Virginia are amended and reenacted as follows:

§ 2.2-2285. Powers of the Authority.

The Authority is granted all powers necessary or appropriate to carry out and effectuate its purposes including, but not limited to, the following powers to:

1. Have perpetual existence as a public body corporate and as a political subdivision of the Commonwealth;

2. Adopt, amend, and repeal bylaws, rules and regulations not inconsistent with this article, to regulate its affairs and to carry into effect the powers and the purposes of the Authority and for the conduct of its business;

3. Sue and be sued in its name including but not limited to bringing actions pursuant to Article 6 (§ 15.2-2650 et seq.) of Chapter 26 of Title 15.2 to determine the validity of any issuance or proposed issuance of its bonds under this article and the legality and validity of all proceedings previously taken or proposed in a resolution of the Authority to be taken for the authorization, issuance, sale and delivery of such bonds and for the payment of the principal thereof and interest thereon;

4. Have an official seal and alter it at will;

5. Maintain an office at such place within the Commonwealth as it may designate;

6. Make and execute contracts and all other instruments necessary and convenient for the performance of its duties and the exercise of its powers under this article upon such terms and conditions it deems appropriate;

7. Employ office personnel, advisers, consultants, professionals and agents as may be necessary in its judgment, and to fix their compensation;

8. Procure insurance against any loss in connection with its property and other assets, including but not limited to loans in such amounts and from such insurers as it deems advisable;

9. Borrow money and issue bonds as provided by this article;

10. Procure insurance or guarantees from any public or private entities, including any department, agency or instrumentality of the United States of America, or, subject to the provisions of and to the extent moneys are available in the fund created by § 2.2-2290, insure or guarantee the payment of any bonds issued by the Authority, including the power to pay premiums on any such insurance or guarantees or other instruments of indebtedness;

11. Receive and accept from any source aid or contributions of money, property, labor or other things of value to be held, used and applied to carry out the purposes of this article (subject, however, to any conditions upon which grants or contributions are made) including, but not limited to gifts or grants from any department, agency or instrumentality of the United States;

12. Enter into agreements with any department, agency or instrumentality of the United States or of the Commonwealth and with lenders and enter into loans with contracting parties for the purpose of planning, regulating and providing for the financing or assisting in the financing of any eligible business or any project thereof;

13. Enter into contracts or agreements with lenders for the servicing and/or processing of loans;

14. Provide technical assistance to local industrial development authorities and to profit and nonprofit entities in the development or operation by, or assistance to, persons engaged in small business enterprises and distribute data and information concerning the encouragement and improvement of small business enterprises in the Commonwealth;

15. To the extent permitted in the proceedings pursuant to which the bonds of the Authority are issued, consent to any modification with respect to the rate of interest, time for, and payment of, any installment of principal or interest, or any other term of any contract, loan, sales contract, lease, indenture or agreement of any kind to which the Authority is a party;

16. To the extent permitted in the proceedings pursuant to which the bonds of the Authority are issued, enter into contracts with any lender containing provisions authorizing the lender to reduce the charges or fees, exclusive of loan payments, to persons unable to pay the regular schedule thereof when, by reason of other income or payment by any department, agency or instrumentality of the United States or the Commonwealth, the reduction can be made without jeopardizing the economic stability of the eligible business being financed;

17. Allocate any of its property to the insurance or guarantee fund established by § 2.2-2290 or to any other fund of the Authority, such property consisting of:

a. Moneys appropriated by the Commonwealth;

b. Premiums, fees and any other amounts received by the Authority with respect to financial assistance provided by the Authority;

c. Proceeds as designated by the Authority from the loan or other disposition of property held or acquired by the Authority;

d. Income from investments that were made by the Authority or on the behalf of the Authority from moneys in one or more of its funds; or

e. Any other moneys made available to the Authority consistent with this article;

18. Use any fund of the Authority for any and all expenses to be paid by the Authority including, but not limited to: (i) any and all expenses for administrative, legal, actuarial, and other services; (ii) all costs, charges, fees and expenses of the Authority relating to the authorizing, preparing, printing, selling, issuing, and insuring of bonds and the funding of reserves; and (iii) all expenses and costs relating to the guaranteeing, insuring or procurement of guarantees, insurance or other instruments providing credit or the enhancement of credit for the bonds;

19. Collect fees and charges the Authority determines to be reasonable in connection with its loans, insurance, guarantees, commitments and servicing thereof;

20. Sell, at public or private sale, with or without public bidding, any obligation held by the Authority;

21. Invest any funds not needed for immediate disbursement, including any funds held in reserve, in any obligations or securities that may be legally purchased by political subdivisions in the Commonwealth or as may be otherwise permitted by § 2.2-2305;

22. Administer the Private Activity Bonds program in Chapter 50 (§ 15.2-5000 et seq.) of Title 15.2;

23. Create and establish such funds and accounts as may be necessary or desirable for its purposes; and

24.23. Take any action necessary or convenient for the exercise of the powers granted by this article or reasonably implied from them.

§ 2.2-2309. Creation, administration, and management of Virginia Export Fund.

A. In addition to any other fund or account the Authority may create pursuant to subdivision 23 22 of § 2.2-2285, there shall be a permanent fund known as the Virginia Export Fund (the Fund). The Fund shall be comprised of (i) sums appropriated to it by the General Assembly, (ii) receipts by the Fund from loans or loan guarantees made against it, (iii) all income from the investment of moneys held by the Fund, and (iv) any other sums designated for deposit to the Fund from any source, public or private. The Fund shall be administered and managed by the Authority, and all moneys in the Fund shall be used to provide loans or loan guarantees as provided in subsection D. Any balances remaining in the Fund shall not revert to the general fund but shall be retained in order to make additional loans or loan guarantees.

B. All moneys belonging to the Fund shall be deposited to the credit of the State Treasurer and recorded on the books of the State Comptroller. Earnings from investments and interest shall be returned to the Fund.

C. The Authority, or its designated agent, may collect moneys due to the Fund. Proceedings to recover moneys due to the Fund may be instituted by the Authority in the name of the Fund in any appropriate court.

D. The Fund shall be used to make loans or to provide a guarantee for up to ninety percent of the principal amount of any commercial loan or line of credit made by a lender for the purpose of facilitating the sale of goods, products, or services outside of the United States by persons, firms, or corporations utilizing a Virginia air, land, or sea port to ship such goods, products, or services. Such guarantee shall not exceed one million dollars.

E. The Authority shall determine the terms and conditions of any loans or loan guarantee made against the Fund and may allow for use of the Fund in single or multiple transactions. No loan shall exceed a term of twelve months, nor shall a loan guarantee exceed a term of eighteen months. In the case of loans, the Authority shall charge an annual interest rate. In the case of guarantees, the Authority shall charge an annual guarantee fee. However, the Authority may waive such guarantee fees in an economically distressed area as defined in § 58.1-439. In connection with applications for loans or loan guarantees made against the Fund, the Authority may require the production of any document, instrument, certificate, legal opinion, or other information it deems necessary or convenient.

F. All loans or loan guarantees made against the Fund shall be approved by the Board or an authorized committee or subcommittee thereof.

§ 2.2-2310. Creation, administration, and management of Virginia Small Business Growth Fund.

A. In addition to any other fund or account the Authority may create pursuant to subdivision 23 22 of § 2.2-2285, there shall be a permanent fund known as the Virginia Small Business Growth Fund (the "Fund"). The Fund shall be comprised of (i) sums appropriated to it by the General Assembly, (ii) all income from the investment of moneys held by the Fund, and (iii) any other sums designated for deposit to the Fund from any source, public or private. The Fund shall be administered and managed by the Authority, and all moneys in the Fund shall be used to create special reserve funds to cover potential future losses from the loan portfolios of participating banks and lending institutions as provided in subsection D. Any remaining balances in the Fund shall not revert to the general fund but shall be retained in order to create additional special reserve funds.

B. All moneys belonging to the Fund shall be deposited to the credit of the State Treasurer and recorded on the books of the State Comptroller. Earnings from investments and interest shall be returned to the Fund.

C. The Authority, or its designated agent, may collect moneys owed to the Fund. Proceedings to recover moneys owed to the Fund may be instituted by the Authority in the name of the Fund in any appropriate court.

D. The Fund shall be used as a special reserve fund to cover potential future losses from the loan portfolios of participating banks and lending institutions. The Authority shall (i) work with banks and lending institutions to establish a separate account for the Virginia Small Business Growth Fund in each participating bank or lending institution and (ii) deposit into such accounts moneys from the Fund in an amount at least equal to the total of the sum of the bank or lending institution's and the individual borrower's deposits into such account. Such matching sum by the Authority shall not exceed fourteen percent of the principal amount of the loan.

E. The Authority shall determine the qualifications, terms, and conditions for the use of the Fund and the accounts thereof. In connection with applications for claims made against the Fund, the Authority may require the production of any document, instrument, certificate, legal opinion, or any other information it deems necessary or convenient. All claims made against the Fund shall be approved by the Board or an authorized committee or subcommittee thereof. All claims made against each account shall be reported to the Board or an authorized committee thereof.

§ 15.2-5000. Definitions.

As used in this chapter:

"Exempt project" for the purposes of the industrial development portion of the state ceiling means the following facilities:

1. Sewage, solid waste and qualified hazardous waste disposal facilities; and facilities for the local furnishing of electric energy or gas;

2. Certain facilities for the furnishing of water (including irrigation systems);

3. Mass commuting facilities;

4. Local district heating and cooling facilities.

"Industrial development bond" means those obligations issued by the Commonwealth and its issuing authorities which constitute manufacturing and exempt facility private activity bonds and the private use portion of governmental projects over the fifteen million-dollar threshold amount.

"Issuing authority" means any political subdivision, governmental unit, authority, or other entity of the Commonwealth which is empowered to issue private activity bonds.

"Local housing authority" means any issuer of multifamily housing bonds or single family housing bonds, created and existing under the laws of the Commonwealth, excluding the Virginia Housing Development Authority.

"Manufacturing facility" means any facility which is used in the manufacturing or production of tangible personal property, including the processing resulting in a change of condition of such property.

"Multifamily housing bond" means any obligation which constitutes an exempt facility bond under federal law for the financing of a qualified residential rental project within the meaning of § 142 of the Internal Revenue Code of 1986, as amended.

"Private activity bond" means a part or all of any bond (or other instrument) required to obtain an allocation from the state's volume cap pursuant to § 146 of the Internal Revenue Code of 1986, as amended, in order to be tax exempt, including but not limited to the following:

1. Exempt project bonds,

2. Manufacturing facility bonds,

3. Industrial development bonds,

4. Multifamily housing bonds,

5. Single family housing bonds,

6. Student loan bonds,

7. Any other bond eligible for a tax exemption as a private activity bond pursuant to § 141 of the Internal Revenue Code of 1986, as amended.

"Single family housing bonds" means any obligation described as a qualified mortgage bond under § 143 of the Internal Revenue Code of 1986, as amended.

"State ceiling" means the maximum amount of private activity bonds that the Commonwealth of Virginia may issue in a calendar year as limited by federal law under the Internal Revenue Code of 1986, as amended.

"Student loan bond" means an issue to finance student loans as defined in § 144 of the Internal Revenue Code of 1986, as amended.

§ 15.2-5001. Purpose of chapter.

It is the intent of the legislature by the passage of this chapter to allocate Virginia's total private activity bond issuing authority to those issuing authorities empowered to issue private activity bonds.

The Tax Reform Act of 1986 imposes restrictions on the issuance of industrial development bonds, housing bonds, exempt facility bonds, and student loan bonds designated in the Act as "private activity bonds." These restrictions include limitations on the aggregate amount of private activity bonds that may be issued in each state in any calendar year that may be regarded as exempt from federal income taxation. Section 146 (e) of the Tax Reform Act of 1986 provides the authority for each state to establish a system for the allocation of the state ceiling on private activity bonds.

It is the intent of the legislature to provide for the allocation of the state ceiling among issuers of such bonds in a manner which will promote the public purposes and maximize the public benefits created by the issuance of such bonds.

§ 15.2-5002. Allocation of state ceiling for 1990 and beyond.

This section shall apply to all private activity bonds issued by issuing authorities during 1990 and in years subsequent to 1990. The state ceiling for these calendar years shall be allocated as follows:

1. "Housing." For calendar years 1990 and beyond, an amount equal to forty-one 70 percent of the Virginia state ceiling on private activity bonds shall be set aside for single family and multifamily housing bonds. The housing portion of the state ceiling shall be divided between local housing authorities and the Virginia Housing Development Authority. The bond authority allocated to these issuers shall be distributed as follows: 


 Issuer                       Portion of State Ceiling
 Local Housing Authorities                           14%
 Virginia Housing
   Development Authority                             2756%
 Total Housing Allocation                             4170%

2. "Industrial Development." For calendar years 1990 and beyond, an amount equal to forty-one 21 percent of the Virginia state ceiling on private activity bonds shall be set aside for the issuance of industrial development bonds for manufacturing and exempt facilities.

3. "State allocation." For calendar years 1995 and beyond, an amount equal to eighteen nine percent of the Virginia state ceiling on private activity bonds shall be set aside for state issuing authorities and for allocations to housing and to industrial development projects of state and regional interests as determined by the Governor.

§ 15.2-5003. Administration.

The Virginia Small Business Financing Authority Director of the Department of Housing and Community Development shall establish guidelines in accordance with this chapter which detail the specific administrative policies and procedures of the private activity bond program in the Commonwealth. Specific application, allocation, and reporting requirements shall be provided by the guidelines. The guidelines of the Virginia Small Business Financing Authority Director of the Department of Housing and Community Development shall be in accordance with the limitations and restrictions contained in federal law.

§ 15.2-5004. Reallocation of bond authority.

The allocation formulas prescribed in this chapter are established to utilize the entire state ceiling on private activity bonds by providing issuing authority to housing and industrial development projects. The allocation formula allocation for housing and industrial development provided in § 15.2-5002 for industrial development, student loans and the state allocation shall be effective through November 1 of each calendar year. The allocation formula provided in § 15.2-5002 for housing  shall be effective through September 1 such date of each calendar year as is set forth in the guidelines established pursuant to § 15.2-5003 by the Director of the Department of Housing and Community Development.

Any unused bond authority remaining in any category after the effective period of the allocation set forth in such guidelines shall be reallocated to housing and industrial projects and to qualified student loan bonds, according to guidelines established by the Virginia Small Business Financing Authority the Virginia Housing Development Authority (and any unused bond authority allocated to the Virginia Housing Development Authority shall continue to be allocated to the Virginia Housing Development Authority) in the amount requested by the Virginia Housing Development Authority, subject to the receipt by the Director of the Department of Housing and Community Development of assurances from the Virginia Housing Development Authority of anticipated usage of such amount of unused bond authority within the time period permitted by federal law, and any remaining amount that is not so reallocated (or continued to be allocated) to the Virginia Housing Development Authority shall be reallocated according to guidelines established by the Director of the Department of Housing and Community Development. The guidelines shall also provide a priority system for the allocation reallocation of any such remaining unused bond authority not reallocated to the Virginia Housing Development Authority at year-end to projects that are eligible to carry forward issuing authority to later years. The provisions of this section shall not apply to the amount of the state ceiling set aside for the state allocation during any calendar year.

§ 36-139. (Effective July 1, 2008) Powers and duties of Director.

The Director of the Department of Housing and Community Development shall have the following responsibilities:

1. Collecting from the governmental subdivisions of the Commonwealth information relevant to their planning and development activities, boundary changes, changes of forms and status of government, intergovernmental agreements and arrangements, and such other information as he may deem necessary.

2. Making information available to communities, planning district commissions, service districts and governmental subdivisions of the Commonwealth.

3. Providing professional and technical assistance to, and cooperating with, any planning agency, planning district commission, service district, and governmental subdivision engaged in the preparation of development plans and programs, service district plans, or consolidation agreements.

4. Assisting the Governor in the providing of such state financial aid as may be appropriated by the General Assembly in accordance with § 15.2-4216.

5. Administering federal grant assistance programs, including funds from the Appalachian Regional Commission, the Economic Development Administration and other such federal agencies, directed at promoting the development of the Commonwealth's communities and regions.

6. Developing state community development policies, goals, plans and programs for the consideration and adoption of the Board with the ultimate authority for adoption to rest with the Governor and the General Assembly.

7. Developing a Consolidated Plan to guide the development and implementation of housing programs and community development in the Commonwealth for the purpose of meeting the housing and community development needs of the Commonwealth and, in particular, those of low-income and moderate-income persons, families and communities.

8. Determining present and future housing requirements of the Commonwealth on an annual basis and revising the Consolidated Plan, as necessary to coordinate the elements of housing production to ensure the availability of housing where and when needed.

9. Assuming administrative coordination of the various state housing programs and cooperating with the various state agencies in their programs as they relate to housing.

10. Establishing public information and educational programs relating to housing; devising and administering programs to inform all citizens about housing and housing-related programs that are available on all levels of government; designing and administering educational programs to prepare families for home ownership and counseling them during their first years as homeowners; and promoting educational programs to assist sponsors in the development of low and moderate income housing as well as programs to lessen the problems of rental housing management.

11. Administering the provisions of the Industrialized Building Safety Law (§ 36-70 et seq.).

12. Administering the provisions of the Uniform Statewide Building Code (§ 36-97 et seq.).

13. Establishing and operating a Building Code Academy for the training of persons in the content, application, and intent of specified subject areas of the building and fire prevention regulations promulgated by the Board of Housing and Community Development.

14. Administering, in conjunction with the federal government, and promulgating any necessary regulations regarding energy standards for existing buildings as may be required pursuant to federal law.

15. Identifying and disseminating information to local governments about the availability and utilization of federal and state resources.

16. Administering, with the cooperation of the Department of Health, state assistance programs for public water supply systems.

17. Advising the Board on matters relating to policies and programs of the Virginia Housing Partnership Revolving Fund.

18. Designing and establishing program guidelines to meet the purposes of the Virginia Housing Partnership Revolving Fund and to carry out the policies and procedures established by the Board.

19. Preparing agreements and documents for loans and grants to be made from the Virginia Housing Partnership Revolving Fund; soliciting, receiving, reviewing and selecting the applications for which loans and grants are to be made from such fund; directing the Virginia Housing Development Authority as to the closing and disbursing of such loans and grants and as to the servicing and collection of such loans; directing the Virginia Housing Development Authority as to the regulation and monitoring of the ownership, occupancy and operation of the housing developments and residential housing financed or assisted by such loans and grants; and providing direction and guidance to the Virginia Housing Development Authority as to the investment of moneys in such fund.

20. Advising the Board on matters relating to policies for the low-income housing credit and administering the approval of low-income housing credits as provided in § 36-55.63.

21. Establishing and administering program guidelines for a statewide homeless intervention program.

22. Administering 15 percent of the Low Income Home Energy Assistance Program (LIHEAP) Block Grant and any contingency funds awarded and carry over funds, furnishing home weatherization and associated services to low-income households within the Commonwealth in accordance with applicable federal law and regulations.

23. Developing a strategy concerning the expansion of affordable, accessible housing for older Virginians and Virginians with disabilities, including supportive services.

24. Serving as the Executive Director of the Commission on Local Government as prescribed in § 15.2-2901 and perform all other duties of that position as prescribed by law.

25. Developing a strategy, in consultation with the Virginia Housing Development Authority, for the creation and implementation of housing programs and community development for the purpose of meeting the housing needs of persons who have been released from federal, state, and local correctional facilities into communities.

26. Administer the Private Activity Bonds program in Chapter 50 (§ 15.2-5000 et seq.) of Title 15.2.

27. Carrying out such other duties as may be necessary and convenient to the exercise of powers granted to the Department.