Authorizes the North Country Alliance Local Development Corporation to utilize interest derived from such entity's trust fund to cover adminsitrative costs

Title of bill

An act in relation to authorizing the North Country Alliance Local Development Corporation to utilize interest derived from the North Country Alliance trust fund to cover administrative costs

Purpose

To authorize the North Country Alliance Local Development Corporation to utilize interest derived from the North Country Alliance trust fund to finance its administrative costs

Summary of provisions

Section 1 provides the regional corporation, North Country Alliance, is authorized to pay administrative costs using interest derived from the trust fund. For this purpose, "administrative costs," "regional corporation," and "trust fund," shall have the same meaning as defined in the 1989 agreement between the North Country Alliance Local Development Corporation and the New York State Urban Development Corporation.

Section 2 provides the effective date.

Existing law

Under Section 6 of the Omnibus Economic Development Act of 1987, North Country Alliance entered into what is known as the Regional Revolving Loan Trust Fund Agreement with the New York State Urban Development Corporation in 1989.

Justification

In March 1989, North Country Alliance (NCA) entered into what is known as the Regional Revolving Loan Trust Fund Agreement with the New York State Urban Development Corporation (UDC). The Agreement established NCA's Regional Revolving Loan Fund to provide low interest loans for working capital to small businesses. The Agreement initially provided for administrative funds to be paid from the Trust Fund Account proceeds. This fund is comprised of the original grant funds from the UDC, as well as repayments on loans. However, the administrative funds NCA received were always paid from a General and Administrative Account held by the UDC, which was capitalized with dividends and interest earned on the investments of the Trust Fund Account.

Since 2010, the UDC has capitalized the General and Administrative Account. Therefore, NCA has not been able to receive its eligible allotment of administrative funds pursuant to the original Agreement. This is providing a serious burden on the NCA and will likely result in the corporation having to increase fees to borrower in order to recover costs associated with overseeing the program. Because NCA promotes small business growth and job creation, increasing borrower fees is antithetical to the mission of the organization.

This legislation alleviates the need for NCA to increase its borrower fees by authorizing NCA to use interest derived from the Trust Fund Account to pay certain administrative costs as outlined by the Agreement. Providing such statutory authorization does not have any negative fiscal impact on the State, as this is not a new appropriation, but the authorization for the use of existing funds.

Legislative history

New bill.

Fiscal implications

None. This measure will not require a new appropriate and is simply authorizing the use of existing funds.

Effective date

This act shall take effect immediately.