Sec. 32-265. Connecticut Capital Access Fund. Written procedures. Bond authorization for Capital Access Fund and small business assistance program.
Sec. 32-265. Connecticut Capital Access Fund. Written procedures. Bond authorization for Capital Access Fund and small business assistance program. (a) As
used in this section: (1) "Authority" means the Connecticut Development Authority,
and (2) "financial institution" means an eligible financial institution, as defined in subsection (e) of section 32-23d, which is approved by the authority to participate in the
program established by this section.
(b) In order to stimulate and encourage the growth and development of the state
economy, the Connecticut Capital Access Fund is created to provide portfolio insurance
to participating financial institutions to assist them in making loans that are somewhat
riskier than conventional loans. The insurance shall be based on a portfolio insurance
mechanism applicable to loans enrolled by a financial institution in the program, rather
than loans by loan guarantees. The state, acting through the Connecticut Development
Authority, shall enter into a participation agreement with each financial institution approved to participate in the program. A participation agreement entered into by the
authority and a financial institution shall establish a separate loan loss reserve account,
owned and controlled by the Connecticut Development Authority, but earmarked to
cover losses on loans enrolled by that financial institution in the program. A separate
loan loss reserve account shall be established for each participating financial institution.
Each time a financial institution enrolls a loan in the program, payments shall be made
into the earmarked loan loss reserve account by the borrower, financial institution and
the authority, in amounts consistent with the provisions of the participation agreement.
The financial institution shall be allowed to recover the cost of its payment from the
borrower.
(c) To carry out the purposes of this section, the authority shall have those powers
set forth in section 32-23. The authority shall also have the power to take all reasonable
steps and exercise all available remedies necessary or desirable to protect the obligations
or interests of the authority including, but not limited to, the purchase or redemption in
foreclosure proceedings, bankruptcy proceedings or in other judicial proceedings of any
property on which it holds a mortgage or other lien or in which it has an interest, and
for such purposes payment may be made from the Connecticut Capital Access Fund.
(d) Approval of loans for which payments may be made into an account established
under this section shall be within the sole discretion of the financial institution making
the loan except that such loans shall comply with the requirements specified in the
participation agreement.
(e) The authority shall adopt written procedures in accordance with section 1-121
for implementing the program. Such written procedures shall include the form of participation agreement which shall set forth procedures for use of the program and the rights
and responsibilities of participating financial institutions and the authority. The participation agreement shall require that loans enrolled in the program shall be for a business
purpose in the state and shall not be used for residential housing, passive real estate
ownership, an insider transaction or to refinance a prior loan by the financial institution
which was not covered under the program, except that if new funds are provided to a
borrower, an amount equal to the amount of the new funds may be covered under the
program.
(f) (1) For the purposes described in subdivision (2) of this subsection, the State
Bond Commission shall have the power, from time to time, to authorize the issuance
of bonds of the state in one or more series and in principal amounts not exceeding in
the aggregate five million dollars.
(2) The proceeds of the sale of said bonds, to the extent of the amount stated in
subdivision (1) of this subsection, shall be used by the Department of Economic and
Community Development to make grants to the Connecticut Development Authority
for deposit in the Connecticut Capital Access Fund to be used for the purposes authorized
under this section and section 32-341.
(3) All provisions of section 3-20, or the exercise of any right or power granted
thereby which are not inconsistent with the provisions of this section are hereby adopted
and shall apply to all bonds authorized by the State Bond Commission pursuant to this
section, and temporary notes in anticipation of the money to be derived from the sale
of any such bonds so authorized may be issued in accordance with said section 3-20
and from time to time renewed. Such bonds shall mature at such time or times not
exceeding twenty years from their respective dates as may be provided in or pursuant
to the resolution or resolutions of the State Bond Commission authorizing such bonds.
None of said bonds shall be authorized except upon a finding by the State Bond Commission that there has been filed with it a request for such authorization, which is signed
by or on behalf of the Secretary of the Office of Policy and Management and states such
terms and conditions as said commission, in its discretion, may require. Said bonds
issued pursuant to this section shall be general obligations of the state and the full faith
and credit of the state of Connecticut are pledged for the payment of the principal of
and interest on said bonds as the same become due, and accordingly and as part of the
contract of the state with the holders of said bonds, appropriation of all amounts necessary for punctual payment of such principal and interest is hereby made, and the Treasurer shall pay such principal and interest as the same become due.
(P.A. 92-236, S. 6, 48; P.A. 93-382, S. 41, 69; June Sp. Sess. P.A. 93-1, S. 22, 35, 45; P.A. 95-250, S. 1; 95-272, S. 21,
29; P.A. 96-211, S. 1, 5, 6; P.A. 00-187, S. 57, 75.)
History: P.A. 93-382 amended Subsec. (f)(2) to require bond proceeds to also be used for purposes of Sec. 32-341,
effective July 1, 1993; June Sp. Sess. P.A. 93-1 amended Subsec. (f) to increase bond authorization from $5,000,000 to
$10,000,000 and to specify that grants are to be made to Connecticut Development Authority and used for purposes
of section, effective July 1, 1993; P.A. 95-250 and P.A. 96-211 replaced Commissioner and Department of Economic
Development with Commissioner and Department of Economic and Community Development; P.A. 95-272 amended
Subsec. (f)(1) to reduce authorization to $5,000,000, effective July 1, 1995; P.A. 00-187 amended Subsec. (a) to redefine
"financial institution" and make a technical change, effective July 1, 2000.