2006 Massachusetts Code - Chapter 40F — Section 4. Purchase of corporate shares by commonwealth; disposition of funds; capital participation instruments; financing certain projects.

[Text of section effective until July 1, 2010. Repealed by 1987, 324, Sec. 6. See, also, 1990, 528, Sec. 6 and 2000, 159, Sec. 302.]

Section 4. The state treasurer, subject to appropriation or the authorization of the issuance of bonds for this purpose, may purchase shares of the Corporation in the amount of ten million dollars.

In return for said investment the commonwealth shall receive one million shares of common stock in the corporation.

The corporation shall hold the proceeds of said investment in an account or accounts separate from other funds. The corporation shall use said proceeds for only two purposes: (1) to purchase capital participation instruments from community development corporations in return for an investment in a specific project only when the board of the CDFC finds that community development corporation will use the funds in support of a project consistent with the purposes of this chapter and (2) to invest said funds in any security eligible for investment under the provisions of section thirty-eight of chapter twenty-nine. Proceeds of these investments may be used to pay for the normal business expenses of the CDFC.

Upon application of a CDC for a specific project the CDFC may, subject to the restrictions set forth in section four agree to purchase capital participation instruments from said CDC, provided that the CDFC shall find and incorporate in its minutes that:

(1) The project is within the scope of this chapter and may reasonably be expected to contribute to the redevelopment of target areas and the economic development of the commonwealth or will increase or maintain threatened primary employment.

(2) The project plans conform to all applicable environmental, zoning, building, planning, or sanitation laws.

(3) The project will be of public benefit and for a public purpose, and that the benefits, including increased employment and improved standard of living, shall primarily accrue to residents of the area served by the CDC.

(4) There is a reasonable expectation that the project will be successful.

(5) Private industry has not provided sufficient capital required for the project or sufficient primary employment opportunities in the project’s area.

(6) The CDFC determines that its participation is necessary to the successful completion of the proposed project because funding for the project is unavailable in the traditional capital markets, or that credit has been offered on terms that would preclude the success of the project.

(7) The applicant CDC meets the standards of a CDC as defined in section one and appears able to manage its proposed project responsibilities.

(8) The proceeds of the purchase or contract will be used solely in connection with the costs of the project.

(9) Provision has been made in contract for adequate reporting of financial data from the CDC to the CDFC. Such provisions may include a requirement for an annual or other periodic audit of the project books.

(10) The CDFC, or the CDFC in combination with its subsidiary, shall not own more than forty-nine per cent of the voting stock in any enterprise.

(11) The CDC will maintain sufficient control over the project to ensure that public benefit and public purposes are maintained. This determination shall be satisfactorily complied with if any one of the following is satisfied:

(a) The project is conducted by a wholly-owned subsidiary of the CDC.

(b) The CDC owns a majority of the capital stock of the corporation or other organization conducting the project.

(c) The CDC owns a majority of the voting stock of the corporation or other organization conducting the project.

(d) The project is conducted by a limited-dividend corporation or other association organized under the laws of the commonwealth to provide public benefit and which exists for a public purpose.

(e) The project is conducted by a nonprofit corporation including local development corporations organized under the Small Business Act, or by a fishing cooperative.

(f) In all other cases, adequate provision is made for reporting to the CDC, and that the CDC must approve all major transactions including but not limited to any sale, merger, dissolution, the sale or issue of substantial amounts of stock, and corporate reorganization.

(12) Provision has been made that should the CDFC desire to sell or otherwise dispose of stock received pursuant to such a contract, that the CDC or its nominee shall have within one hundred and twenty days the right of first refusal upon said sale and the right to meet any subsequent bona fide offer by a third party.

(13) The CDFC has not invested or loaned more than twenty percent of all of the lendable or investable resources made available to it under this chapter in any one CDC, including this investment.

Such findings when adopted by the CDFC shall be conclusive.