Summary: H.R.13295 — 95th Congress (1977-1978)All Information (Except Text)

There is one summary for H.R.13295. Bill summaries are authored by CRS.

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Introduced in House (06/26/1978)

National Development Bank Act - Title I: Congressional Findings and Statement of Purpose - Sets forth findings and purposes of this Act.

Title II: Definitions - Defines terms used in this Act. Defines "distressed area" as a geographical area encompassed by a local government which is characterized by at least three of the following conditions: (1) an above average unemployment rate; (2) a below average growth rate in employment; (3) a below average growth rate in per capita income; and (4) a below average growth rate in population. Includes, within the definition of "distressed area," without qualification, Puerto Rico, specified territories of the United States, and any area under the sovereignty or governance of an Indian tribe.

Title III: Establishment of Bank - Establishes the National Development Bank as an agency and instrumentality of the United States under the direction of the President. States that the only office of such Bank shall be located in Washington, D. C. Declares the purpose of the Bank to be to facilitate private businesses in locating, expanding, and maintaining development projects in distressed areas.

Vests management of the Bank in a Board consisting of the Secretary of Commerce, the Secretary of Housing and Urban Development, and the Secretary of the Treasury with the Secretary of Commerce and the Secretary of Housing and Urban Development serving in alternate years as Chairperson of the Board. Provides for the appointment of alternate members to the Board. Sets forth requirements for the meetings and proceedings of the Board.

Directs the President to appoint, with the advice and consent of the Senate, a President and Vice-President to serve as executive officers of the Bank.

Provides for the appointment, by the President of the United States, of a nine-member Advisory Committee.

Provides for the protection of confidential material submitted to the Board or Advisory Committee.

Requires the Bank to report to the President and the Congress within 90 days after the end of each fiscal year. Sets forth the information to be included in such report.

Title IV: Powers - Enumerates the corporate powers of the Bank.

Title V: Role of Local Development Authorities - States that there shall be only one local development authority for each distressed area.

States that such authority may be: (1) the local government; (2) an entity of the local government; or (3) with respect to a specific project, a State, State agency or nonprofit entity designated by the local government.

Requires such authorities to act as the principal negotiators for private companies seeking financial assistance from the Bank for projects in distressed areas. Directs that all applications for financial assistance be submitted by such authorities.

Establishes procedures for review of the status of projects granted financial assistance by the Bank.

Authorizes ownership of a project by a local development authority and allows for payments by such authority in lieu of taxes that would be paid by a private owner.

Permits a member of a local development authority to be affiliated with a company seeking assistance under this Act, provided such person: (1) files a statement of such affiliation with the Bank and the local development authority; and (2) does not participate in any activities of the local development authority regarding such company. Prohibits assistance by the Bank when such an affiliation raises a significant issue concerning the independence of a local development authority.

Limits the assistance which may be provided by the Bank to distressed portions of areas encompassed by local governments which are not, as a whole, distressed areas, to ten percent of the total amount of all financial assistance provided by the Bank in any fiscal year.

Title VI: Restrictions on Financial Assistance - Requires a finding by the Bank, before providing assistance to a project, that such assistance is a necessary or dominant factor in inducing a company to undertake the project. Requires such findings to be submitted in writing, to the General Accounting Office.

Directs the Bank, in deciding among applications for assistance, to give primary consideration to: (1) the proposed project's provision of private sector employment opportunities; and (2) the contribution of the project to the economic and fiscal base of the distressed area. Sets forth other factors to be considered by the Bank in approving applications.

Title VII: Guarantees - Authorizes the Bank to guarantee the principal and interest of up to 75 percent of the long-term debt (other than publicly-distributed securities and tax-exempt bonds) for any eligible project in a distressed area up to a maximum amount of $15,000,000.

Conditions the extension of a guarantee upon contractual arrangements among the Bank, the eligible company, the lenders extending all of the long-term debt, and, the appropriate local development authority. Sets forth the required provisions of such contracts.

Requires the terms of the guaranteed long term debt to be at least as favorable to the lender of such debt as those terms applicable to the nonguaranteed debt for a project.

Prohibits the guarantee of long-term debts that bear interest at rates that the bank, in consultation with the Secretary of the Treasury, determines are excessive, taking into account the rates for similar debt securities in the private market and the risk assumed by the United States.

Conditions the extension of a guarantee on a determination by the Bank that the lender is responsible and the the financial interests of the United States shall be protected.

Permits the Bank to require its prior consent to the resale of a guaranteed debt. Restricts the resale of the non-guaranteed debt of a project to the Bank, to private financial institutions, or through public distributions.

Prohibits the extension of a guarantee where the nonguaranteed portion of a debt bears an excessive rate of interest. Prohibits the extension of any nonguaranteed long-term debt which is guaranteed or otherwise assisted by any government program other than: (1) the tax exemption for industrial development bonds; (2) the subsidies provided by this Act; or (3) the taxable bond option of the Internal Revenue Code or which is extended by any person who is affiliated with the eligible company.

Directs that an amount equal to up to 25 percent of the total outstanding loans guaranteed under this title be maintained as a reserve to enable the Bank to honor its guarantees.

Title VIII: Interest Rate Subsidies - Authorizes the Bank to subsidize the interest payments on the guaranteed portion of a long-term debt provided the borrower's effective annual interest remains above two and one-half percent.

Authorizes interest subsidies for nonguaranteed debts provided such subsidies do not exceed 35 percent of the interest costs for 1979 or 1980, and 40 percent for each year thereafter.

Restricts the subsidies for nonguaranteed loans. Limits the total principal amount of a long-term debt subsidized, plus the aggregate principal amount of a all outstanding industrial development bonds eligible for tax exempt status that were issued by the borrower or related persons for projects in the same distressed area, to $20,000,000.

Prohibits subsidies for tax-exempt industrial development bonds or other long term debts guaranteed, subsidized or otherwise assisted by any Federal, State or municipal government entity.

Terminates the Bank's responsibility to make subsidy payments if the borrower defaults in the payment of the underlying interest obligation.

Prohibits subsidizing interest payable to affiliates of the borrower except in the case of publicly- issued debt securities where 40 percent of the face amount of such securities is acquired by persons not affiliated with the issuer.

Title IX: Grants - Authorizes the Bank to provide grants to assist projects in distressed areas for which it has extended a guarantee or interest subsidy, or in connection with which a local development entity has issued tax exempt industrial development bonds. Directs that such grants be drawn from funds appropriated specifically for use by the Bank under the Public Works and Economic Development Act of 1965 and the Housing and Community Development Act of 1974.

Limits such grants: (1) to the lesser of $3,000,000 or 15 percent of the applicable project cost; (2) to projects which the Bank finds consistent with the statute through which the funds are appropriated; and (3) to eligible companies under contract to assure the prior or simultaneous incurrence of the related debt transaction or to refund the grant if the project does not reach fruition.

Authorizes the Secretary of Commerce or the Secretary of Housing and Urban Development, depending upon the statute from which the funds are drawn, to waive the requirements otherwise applicable in specific cases.

Authorizes the respective Secretary to waive requirements relating to specified other urban development and economic grant programs which the Secretary and the Bank determine are inconsistent with the provisions of this Act.

Title X: Liquidity Facility - Authorizes the Bank to purchase a long-term debt extended by private financial institutions to finance projects in distressed areas. Prohibits the purchase any part of a loan which is; (1) guaranteed or subsidized under this Act; (2) tax exempt under the Internal Revenue Code; or (3) extended, guaranteed or subsidized by any Federal, State or municipal government entity.

Requires the seller of a loan to assign all its rights under such loan to the Bank with full recourse to the seller in the event of default. Requires the seller to repurchase the loan upon default at a price equal to the unpaid principal and interest and to secure such obligation with a pledge of marketable debt securities equal to at least 25 percent of the price paid by the Bank.

Requires the seller to reinvest the proceeds of a purchase by the Bank in new loans, approved by the local development authority, for projects in distressed areas within six months.

Authorizes the Bank: (1) to purchase such loans at a limited premium; (2) to arrange for the servicing of such loans by other financial institutions; and (3) to resell such loans to the Federal Financing Bank.

Directs that an amount equal to up to 25 percent of the total outstanding loans guaranteed under this title be maintained as a reserve to enable the Bank to honor its guarantees.

Title XI: Designation of Eligible Areas - Establishes the procedure and criteria for an annual designation of distressed areas by the Bank.

Defines the statistics and methods to be used in designating distressed areas.

Authorizes the Bank to designate as distressed areas, certain areas that would not otherwise qualify if such areas: (1) are composed of contiguous territory and have a population of at least 10,000; and (2) would qualify if they were encompassed by a local government.

Title XII: Appropriations - Authorizes the appropriation of specified sums to carry out the provisions of this Act during fiscal years 1979, 1980, and 1981. Amends the Housing and Community Development Act of 1974 and the Public Works and Economic Development Act of 1965 to provide for the allocation of funds appropriated under such Acts to the purposes of this Act during fiscal years 1979, 1980, and 1981.

Title XIII: Miscellaneous - Authorizes the Bank to waive its priority in judgments involving claims against a debtor. Makes the Bank priority of lien secondary to State and local taxes on debts secured by property.

Sets forth other provisions regarding service fees, tax exemptions, Federal jurisdiction and the authority of the Attorney General to bring suits involving the Bank.