Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H975 Compare Versions

Only one version of the bill is available at this time.

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1	1	1 of 1
2	2	HOUSE DOCKET, NO. 2677 FILED ON: 1/19/2023
3	3	HOUSE . . . . . . . . . . . . . . . No. 975
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Mike Connolly and Antonio F. D. Cabral
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act to establish a Massachusetts public bank.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Mike Connolly26th Middlesex1/19/2023Antonio F. D. Cabral13th Bristol1/19/2023Lindsay N. Sabadosa1st Hampshire1/19/2023Steven Owens29th Middlesex1/25/2023David Henry Argosky LeBoeuf17th Worcester1/25/2023Samantha Montaño15th Suffolk1/25/2023James K. Hawkins2nd Bristol1/27/2023Carol A. Doherty3rd Bristol1/30/2023Vanna Howard17th Middlesex2/1/2023Rebecca L. RauschNorfolk, Worcester and Middlesex2/6/2023James B. EldridgeMiddlesex and Worcester2/19/2023Erika Uyterhoeven27th Middlesex2/22/2023 1 of 24
16	16	HOUSE DOCKET, NO. 2677 FILED ON: 1/19/2023
17	17	HOUSE . . . . . . . . . . . . . . . No. 975
18	18	By Representatives Connolly of Cambridge and Cabral of New Bedford, a petition (accompanied
19	19	by bill, House, No. 975) of Mike Connolly, Antonio F. D. Cabral and others for legislation to
20	20	establish a Massachusetts public bank. Financial Services.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Third General Court
24	24	(2023-2024)
25	25	_______________
26	26	An Act to establish a Massachusetts public bank.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 SECTION 1. The General Laws are hereby amended by inserting after chapter 10 the
30	30	2following chapter:-
31	31	3 CHAPTER 10A
32	32	4 MASSACHUSETTS PUBLIC BANK
33	33	5 Section 1. Declarations.
34	34	6 (a) There shall be a Massachusetts public bank (the Bank), wholly owned by the
35	35	7commonwealth, to provide a safe depository for a portion of the public funds in the
36	36	8commonwealth and to support the economic well-being of the commonwealth, its cities and
37	37	9towns, its residents, its businesses and its state and municipal institutions, with an accountable
38	38	10and responsive governance structure that ensures community input.
39	39	11 (b) In order to obtain these benefits, the Massachusetts public bank (the Bank) shall: 2 of 24
40	40	12 (1) hold a portion of the commonwealth’s funds as deposits in the Bank and invest those
41	41	13funds within the commonwealth so as to further the Bank’s goals as detailed below;
42	42	14 (2) promote economic development and job creation within the commonwealth by
43	43	15providing affordable financing to small and medium-sized businesses, especially in under-served
44	44	16communities;
45	45	17 (3) assist businesses and municipalities in recovering from the economic repercussions of
46	46	18external shocks, including pandemics, recessions, and natural disasters;
47	47	19 (4) respond to the unmet affordable financing needs of cities and towns in the
48	48	20commonwealth;
49	49	21 (5) address the historic and current disadvantages experienced by the state’s minority and
50	50	22women-owned enterprises by providing affordable financing;
51	51	23 (6) assist workers and communities in creating jobs by supporting cooperative business
52	52	24models including worker-owned coops;
53	53	25 (7) increase available affordable housing options for all residents of the commonwealth;
54	54	26 (8) promote sustainable agriculture and address food insecurity, particularly by providing
55	55	27financing to family-owned farms and rural businesses that serve them;
56	56	28 (9) support non-profit and community-based organizations that work to address the
57	57	29results of racial injustice and/or to promote women’s economic and social equity; 3 of 24
58	58	30 (10) support the expansion and development of public and private measures to mitigate
59	59	31the grave dangers that climate change poses to the public and local enterprises, and to promote
60	60	32reductions in greenhouse gas emissions;
61	61	33 (11) provide economic support to state-based public or quasi-public agencies including
62	62	34community development financial institutions, community development corporations and
63	63	35economic development corporations;
64	64	36 (12) strengthen state-chartered private banks, particularly through participatory loan
65	65	37programs;
66	66	38 (13) enable the commonwealth to share in the methods of monetary support the federal
67	67	39government provides to commercial banks;
68	68	40 (14) be supervised for safety and soundness by the commissioner of banks.
69	69	41 Section 2. Definitions.
70	70	42 The following words as used in this chapter, unless the context otherwise requires, shall
71	71	43have the following meanings:
72	72	44 “Affiliate”, a company that controls, is controlled by, or is under common control with
73	73	45another company.
74	74	46 “Affordable financing”, as defined in section 13 below.
75	75	47 “Affordable housing”, housing that: (1) satisfies the definition in section 1 of chapter 60
76	76	48or section 38D of chapter 121B; (2) is a qualified low-income housing project as defined in 26
77	77	49U.S.C. 42(g); or (3) is owned by families that (i) reside in a census tract in which the median 4 of 24
78	78	50income does not exceed 80 per cent of the area median income or (ii) have an income that does
79	79	51not exceed area median income and that resides in a minority census tract.
80	80	52 “Business plan”, a public document that lays out the Bank’s strategy for accomplishing
81	81	53its statutory directives through safe and sound operations of the Bank.
82	82	54 “Commissioner”, as defined in section 1 of chapter 167.
83	83	55 “Community development corporation”, as defined in section 2 of chapter 40H.
84	84	56 “Community development financial institution”, a private financial entity dedicated to
85	85	57delivering non-predatory affordable lending to help low-income, low-wealth and other
86	86	58disadvantaged people and communities that shall have the meaning ascribed to it under 12
87	87	59U.S.C. 472(5)(a), including, but not limited to, those institutions that are not certified by the
88	88	60United States Treasury Community Development Financial Institution Fund.
89	89	61 “Eligible recipients”, as defined in section 12.
90	90	62 “Land trust”, a private, non-profit corporation or organization that acquires, manages,
91	91	63develops or maintains land or easements to promote the preservation or restoration of land in the
92	92	64commonwealth either for recreational, agricultural, scenic, residential or commercial use
93	93	65including, but not limited to, affordable housing, climate security or water resource protection
94	94	66uses.
95	95	67 “Massachusetts bank”, an association or corporation chartered by the commonwealth
96	96	68under chapter 168, 170, 171 or 172. 5 of 24
97	97	69 “Massachusetts Public Bank” or “Bank”, a bank chartered by the commonwealth and
98	98	70wholly owned by the commonwealth to accept deposits of public funds and provide affordable
99	99	71financing to eligible recipients so as to enhance the economic health of the commonwealth.
100	100	72 “Participation loan”, a loan in which the Bank shares funding or overseeing an advance
101	101	73of credit under a written agreement between the originator of the loan and the Bank.
102	102	74 “Rural area”, a municipality with population density of less than 500 residents per square
103	103	75mile, according to the latest decennial census of the United States.
104	104	76 “Rural business concern”, a business that (1) is a smaller business entity; (2) has its
105	105	77principal business operations in 1 or more rural areas in the commonwealth; and (3) is engaged
106	106	78in an occupation that directly supports the economy of the rural area or areas in which it is
107	107	79located.
108	108	80 “Underserved neighborhood”, a neighborhood that meets 1 or more of the following
109	109	81criteria: (1) the annual median household income is not more than 65 per cent of the statewide
110	110	82annual median household income; (2) minorities comprise 40 per cent or more of the population;
111	111	83(3) 25 per cent or more of households lack English language proficiency; or (4) minorities
112	112	84comprise 25 per cent or more of the population and the annual median household income of the
113	113	85municipality in which the neighborhood is located does not exceed 150 per cent of the statewide
114	114	86annual median household income.
115	115	87 “Smaller business entity”, a business that has 40 per cent of the employee count of a
116	116	88small business as defined under section 57 of chapter 23A.
117	117	89 Section 3. Authorities and Examinations. 6 of 24
118	118	90 (a) Unless explicitly provided otherwise under this chapter, the Bank shall have all the
119	119	91powers under the provisions of chapter 167F, as well as the other powers available to
120	120	92Massachusetts banks under the law.
121	121	93 (b) The Bank is authorized, but not required, to become a member of the Federal Reserve
122	122	94System.
123	123	95 (c) The Bank is authorized, but not required, to become a member of the Federal Deposit
124	124	96Insurance Corporation.
125	125	97 (d) To the extent convenient for its operations, the Bank may pursue its goals through
126	126	98subsidiaries, to be established under the same rules and regulations applying to other state-
127	127	99chartered depository institutions. These subsidiaries shall be subject to the same restrictions
128	128	100applying to the Bank with respect to deposits, eligible recipients and affordable financing as set
129	129	101forth in sections 9, 12 and 13.
130	130	102 (e) The Bank may accept and solicit property, including any gifts, donations, grants or
131	131	103bequests or any public funds for any of the purposes of this chapter.
132	132	104 (f) Beginning 1 year after the Bank has commenced operations and at least annually
133	133	105thereafter, the commissioner of banks shall examine the bank under its authority to examine
134	134	106Massachusetts banks. The Bank shall be subject to the provisions of chapter 167 and section 13
135	135	107of chapter 167J; provided, however, that sections 2I, 14, 14A, 14C, 15-15K, 19, 20, 34, 37, 37A,
136	136	10837B, 40, 41, 42, 43, 44, 45 and 46 of chapter 167 shall not apply to the Bank. 7 of 24
137	137	109 (g) In examining the Bank, the commissioner shall pay special attention to transaction
138	138	110testing the Bank’s compliance with its Business Plan. This part of the examination shall become
139	139	111public 6 months after the conclusion of the examination.
140	140	112 Section 4. Governance Structure of the Bank.
141	141	113 The provisions of this section are subject to the initial organization provisions of section
142	142	1146.
143	143	115 (a) There shall be a board of directors to govern the Bank consisting of 9 members,
144	144	116including the state treasurer or the state treasurer’s designee, and 8 members who bring
145	145	117professional experience, across their number, in the following fields. Four individuals, to be
146	146	118appointed by the state treasurer, who collectively represent expertise in the operation of (1)
147	147	119community development financial institutions, (2) state-chartered depository institutions doing
148	148	120business primarily in the state, (3) credit unions or cooperative banks chartered under chapter
149	149	121170 or chapter 171, and (4) public finance. Four individuals, to be appointed by the governor,
150	150	122who collectively represent expertise in (5) small business enterprises located in the
151	151	123commonwealth, (6) economic development, (7) local government and administration and (8)
152	152	124environmentally-conscious financing.
153	153	125 The members of the board of directors, including the state treasurer, or its designee, may
154	154	126be reimbursed for travel and other expenses incurred in preparing for and attending the meetings.
155	155	127 (b) Board representation shall reflect the geographical, racial and gender diversity of the
156	156	128commonwealth as periodically determined by the state secretary as the commonwealth’s chief
157	157	129census officer. The members of the board of directors shall represent all geographic areas of the
158	158	130commonwealth, including urban, rural and suburban areas. 8 of 24
159	159	131 (c) A board member shall be a resident of the commonwealth at least 90 days before
160	160	132appointment and, with the exception of the state treasurer or the state treasurer’s designee, while
161	161	133serving on the board, shall not: (1) hold or be a candidate for federal, state or local elected office;
162	162	134(2) hold an appointed office in a federal, state or local government; (3) serve as an official in a
163	163	135political party; or (4) have served in any such office in the previous 4 years. The board members
164	164	136shall take an oath to faithfully and impartially execute their duties as board members. The
165	165	137members of the board shall be compensated for work performed for the board at such rate as the
166	166	138secretary of administration and finance shall determine.
167	167	139 (d) The board of directors shall elect its own chair by majority vote. This election shall
168	168	140take place whenever (1) a chair’s term on the board of directors ends without reappointment or
169	169	141(2) 2 or more members of the board of directors shall call for an election. Seven board members
170	170	142shall constitute a quorum and the affirmative vote of a majority of board members present and
171	171	143voting shall be required for any action of the board of directors. The board shall meet quarterly
172	172	144and at other times as it shall deem necessary or upon the written request of 4 board members or
173	173	145the chair. The chair of the board of advisors as established under section 7, the chair’s designee
174	174	146or both may attend all such meetings as a nonvoting participant. Notice of all meetings shall be
175	175	147given to the board members, the chair of the board of advisors and to other persons who request
176	176	148such notice. The board shall adopt regulations establishing procedures related to its meetings,
177	177	149which may include electronic meetings and communications.
178	178	150 (e) All board meetings shall be staffed with a bank officer to serve as secretary. The
179	179	151secretary shall keep a record of the proceedings of the board and shall be the custodian and
180	180	152keeper of the records of all books, documents and papers filed by the board and of its minute
181	181	153book. The secretary shall cause copies to be made of all minutes and other records and 9 of 24
182	182	154documents of the board and shall certify that such copies are true copies, and all persons dealing
183	183	155with the board may rely upon such certification.
184	184	156 (f) The board shall appoint a chief executive officer of the Bank with at least 6
185	185	157affirmative votes. At the discretion of the chair of the board, the board may utilize a form of
186	186	158ranked-choice voting to ensure that the 6-vote threshold is satisfied. The chief executive officer
187	187	159shall not be a member of the board. If at any time, six board members shall declare a vote of no
188	188	160confidence in the current chief executive officer, the chief executive officer shall be terminated,
189	189	161and the board shall initiate the process of hiring a new chief executive officer immediately. In the
190	190	162case of an absence or vacancy in the office of the chief executive officer, or in the case of
191	191	163disability as determined by the board, the board may designate an acting chief executive officer
192	192	164by a 5-vote majority to serve as chief executive officer until the vacancy is filled, or the absence
193	193	165or disability ceases. Notwithstanding the provisions of any general or special law to the contrary,
194	194	166all board meetings regarding the hiring or termination of the chief executive officer or acting
195	195	167chief executive officer shall be executive sessions, and the voting records of the directors at these
196	196	168meetings shall be kept confidential. The chief executive officer, acting chief executive officer,
197	197	169the chair of the board of advisors or any designee thereof shall not attend executive sessions.
198	198	170 The chief executive officer shall serve at the pleasure of the board, shall receive such
199	199	171salary as may be determined by the board and shall devote full time and attention to the duties of
200	200	172the office. The chief executive officer shall be a person with skill and experience in management
201	201	173and banking, shall be the executive and administrative head of the Bank and shall be responsible
202	202	174for administering and enforcing the provisions of law relative to the Bank and to the
203	203	175administrative units of the Bank. The acting chief executive officer shall have all of the powers
204	204	176and duties of the chief executive officer and shall have similar qualifications as the chief 10 of 24
205	205	177executive officer. The chief executive officer may employ other employees, consultants, agents
206	206	178and advisors, including legal counsel and shall attend meetings of the board. The chief executive
207	207	179officer shall be responsible for all aspects of the Bank’s management, including its physical
208	208	180facilities, investments, loan portfolio, accounting, risk management and regulatory compliance,
209	209	181as well as the drafting and subsequent execution of its Business Plan. The chief executive officer
210	210	182shall manage the Bank consistently with the Business Plan.
211	211	183 (g) (1) The Business Plan shall be effective for four years, and such further time as may
212	212	184be needed to draft a new Business Plan.
213	213	185 (2) The chief executive officer shall send a draft Business Plan to the chair of the board
214	214	186of advisors concomitantly with conveying it to the board of directors, but at least 30 days before
215	215	187the board of advisors' next scheduled quarterly meeting. The board of advisors shall
216	216	188immediately make it publicly accessible via the internet and publicly announce that it is available
217	217	189for public comment through the board of advisors’ internet-based comments portal. Within 30
218	218	190days after said meeting, the chair of the board of advisors shall combine the board of advisors
219	219	191members’ comments and suggestions, along with any public input that the board deems
220	220	192pertinent, into a concise list of recommended modifications to the Business Plan and distribute
221	221	193those recommendations to the members of the board of advisors and of the board of directors.
222	222	194The board of directors shall promptly convey these recommendations, together with any
223	223	195comments of its own, to the chief executive officer. The chief executive officer shall then
224	224	196prepare a new draft Business Plan taking these recommendations into account as the chief
225	225	197executive officer sees fit and convey it to the board of directors and board of advisors within 30
226	226	198days of the recommendations’ receipt. This updated draft Business Plan shall be voted upon by
227	227	199the board of directors within 30 days of receiving the updated draft from the chief executive 11 of 24
228	228	200officer, at an ad hoc board of directors meeting if necessary. The board of advisors’ comments
229	229	201and recommendations, together with the public’s input from the board of advisors’ meetings and
230	230	202from the comments portal and the approved Business Plan itself, shall be made publicly available
231	231	203via the internet.
232	232	204 (3) A Business Plan, once approved, may not be overridden by the board of directors
233	233	205except through a declaration of emergency, as described in section 5. If the board of directors
234	234	206disapproves a draft Business Plan, this process shall begin anew and be repeated until a Business
235	235	207Plan is approved. Upon the third consecutive disapproval of a draft Business Plan, the chief
236	236	208executive officer who drafted those Business Plans shall be deemed to have been terminated by
237	237	209the board of directors, and the board of directors shall hire a new chief executive officer before a
238	238	210further draft Business Plan may be considered.
239	239	211 (h) Employees of the Bank determined eligible by the Massachusetts State Board of
240	240	212Retirement shall be members of the Massachusetts State Employees Retirement System pursuant
241	241	213to the provisions of Chapter 32.
242	242	214 Section 5. Powers and Duties of the Board of Directors
243	243	215 Subject to Section 3(a), the board of directors shall have all powers necessary or
244	244	216convenient to carry out and effectuate its purposes, including, but not limited to, the power to:
245	245	217 (a) approve of the Business Plan of the Bank, to ensure that the Plan pays due attention to
246	246	218the recommendations of the Bank’s board of advisors and to monitor the Bank’s subsequent
247	247	219compliance with the currently operative Plan. Approval of the Business Plan by the board
248	248	220requires six votes. 12 of 24
249	249	221 (b) keep the board of advisors of the Bank fully informed of the Bank’s operations and
250	250	222loan portfolio and to convey the recommendations of the advisors to the chief executive officer.
251	251	223To this end, there shall be an annual joint meeting of the board of directors, the board of advisors
252	252	224and the chief executive officer. The chair of the board of directors shall preside over the joint
253	253	225meeting. When requested by a majority of the board of advisors as established in section 7, the
254	254	226board of directors shall schedule and hold a second joint meeting within the year.
255	255	227 (c) regularly review the Bank’s financial statements and other records to ensure that it is
256	256	228in compliance with all applicable laws and regulations and with all reporting requirements under
257	257	229section 11.
258	258	230 (d) in the event of a natural or man-made disaster, to declare a state of emergency that
259	259	231requires the chief executive officer to override the currently operative Business Plan, in such
260	260	232manner as the board of directors shall deem necessary to address and recover from the disaster.
261	261	233Seven members of the board of directors shall approve the declaration of emergency, following
262	262	234consultation with the chair of the board of advisors and shall specify a duration for the
263	263	235emergency of no more than 1 year. At the conclusion of a 1-year declaration of emergency, the
264	264	236board shall only approve an extension of the declaration of emergency by unanimous re-
265	265	237approval.
266	266	238 Section 6. Initial Organization Development
267	267	239 (a) The initial board of directors members shall be appointed within 120 days of the
268	268	240effective date of this Act.
269	269	241 (b) Four of the 8 initially-appointed members of the board of directors shall serve 2-year
270	270	242terms. 13 of 24
271	271	243 (c) The board shall elect its officers at its first meeting. Initial board meetings shall be
272	272	244staffed by an interim board employee acting as secretary.
273	273	245 (d) The board chair shall publicly solicit applications for the chief executive officer
274	274	246immediately upon the board’s appointment. The board shall expeditiously determine the
275	275	247applicant to hire.
276	276	248 (e) The chief executive officer shall cause to be drafted the initial Business Plan within 1
277	277	249year of being hired by the board of directors.
278	278	250 (f) The initial board of advisors shall be appointed within 90 days of the appointment of
279	279	251the initial board of directors. Of the advisors initially appointed by the governor, 8 shall serve 2-
280	280	252year terms and the remaining 8 shall serve 4-year terms, with half the appointees from each
281	281	253category to serve each length term. The board of advisors shall elect its own chair at its first
282	282	254meeting for a term of two years.
283	283	255 (g) Members of the board of directors and the board of advisors shall serve for a term of
284	284	2562 or 4 years, depending on the term of their initial appointment, and shall be eligible for a single
285	285	257reappointment to that board.
286	286	258 Section 7. Appointment and Duties of the Board of Advisors.
287	287	259 The board of advisors shall consist of 18 members, 1 of whom shall be the lieutenant
288	288	260governor or the lieutenant governor’s designee and 1 of whom may be designated by the Federal
289	289	261Reserve Bank of Boston by its community development experts. The governor shall appoint the
290	290	262remaining 16 members for 4-year terms. The governor shall make appointments from persons
291	291	263nominated by organizations representing the following stakeholder communities, taking 2 14 of 24
292	292	264persons from each category except where 1 person is indicated, with a limit of 1 candidate per
293	293	265nominating entity: (1) state-chartered depository institutions or credit unions that derive over 90
294	294	266per cent of their deposits in-state, or associations representing predominately these organizations;
295	295	267(2) community development finance institutions and community development organizations that
296	296	268focus primarily on supporting economic development in the commonwealth, including, but not
297	297	269limited to, rural and economic cooperative models and worker-owned enterprises; (3)
298	298	270organizations recognized under 26 U.S.C. 501(c)(3) to support underserved neighborhoods; (4)
299	299	271associations representing the interests of small business entities, particularly businesses owned
300	300	272by cognizable groups currently receiving less credit than proportional to their size or serving in
301	301	273areas operating in underserved neighborhoods; (5) 1 appointee each from the following
302	302	274organizations recognized under 26 U.S.C. 501(c)(3) to support the following ends: (i) sustainable
303	303	275agriculture; (ii) food security; (iii) climate change amelioration and environmental finance and
304	304	276(iv) environmental justice; (6) municipalities, as represented singly, by state-based associations
305	305	277of municipalities or by state-based chapters of municipal planners or professionals; (7)
306	306	278organizations in which employees or workers participate and which exist for the purpose, in
307	307	279whole or in part, of representing the interests of workers concerning grievances, labor disputes,
308	308	280wages, rates of pay, hours of employment or conditions of work, at least one organization of
309	309	281which represents the interests of low-income workers.
310	310	282 The terms of members of the board of advisors who are gubernatorial appointees shall be
311	311	283staggered: one-half of the board’s membership, consisting of 1 nomination from each category
312	312	284above shall terminate at 2-year intervals. In order to submit a nomination, an entity or
313	313	285organization shall have been in existence for at least 4 years. All nominations and 15 of 24
314	314	286determinations shall be public consistent with state law, and the Bank shall post them on the
315	315	287Bank’s website.
316	316	288 (b) An election for chair of the board of advisors shall take place whenever a chair’s
317	317	289term on the board of advisors ends or when a majority of those currently serving on the board of
318	318	290advisors shall call for an election. The board of advisors shall meet quarterly to review the
319	319	291Bank’s activities. The board of advisors’ meetings shall be open to the public consistent with the
320	320	292state’s open meeting law and publicized at least 30 days in advance. The chair of the board of
321	321	293advisors may attend all board of directors’ meetings and be recognized to speak.
322	322	294 (c) The public shall further be able to provide input to the board of advisors on an
323	323	295ongoing basis through an internet-based comments portal. The board of advisors shall make the
324	324	296establishment of the comments portal its first order of business and shall provide the board of
325	325	297directors, as well as the chief executive officer and staff, full access to the portal. The chair of the
326	326	298board of advisors shall be responsible for managing the comments portal and shall ensure that
327	327	299the comments on the portal are fully accessible to the public.
328	328	300 (d) The responsibilities of the board of advisors shall include (1) establishing its rules of
329	329	301procedure; (2) scheduling and publicizing its quarterly meetings and providing minutes on a
330	330	302timely basis to the public; (3) establishing an internet-based comments portal in which the public
331	331	303can review and comment on the bank’s activities and make proposals regarding future initiatives
332	332	304for the Bank’s consideration; (4) reviewing the bank’s draft business plan prepared by the chief
333	333	305executive officer and providing feedback; and (5) communicating policy recommendations and
334	334	306any significant concerns that may arise from quarterly meetings or the portal to the board of
335	335	307directors and chief executive officer. 16 of 24
336	336	308
337	337	309 (e) The members of the board of advisors may be reimbursed for travel and other
338	338	310expenses incurred in preparing for and attending the meetings. This reimbursement may include
339	339	311a stipend for members not otherwise compensated for their time by an employer. These and all
340	340	312other expenses incurred by the board of advisors in fulfilling its obligations, including the
341	341	313comments portal, shall be paid for from the Bank’s operating budget.
342	342	314 Section 8. Capitalization.
343	343	315 (a) The commonwealth shall make a $200,000,000 initial equity investment for the Bank
344	344	316under the schedule set forth in subsection (b). That amount shall be funded by direct legislative
345	345	317appropriation.
346	346	318 (b) The general court shall appropriate $50,000,000 to the Bank in fiscal year 2024,
347	347	319$50,000,000 in fiscal year 2025, $50,000,000 in fiscal year 2026 and $50,000,000 in fiscal year
348	348	3202027.
349	349	321 (c) The board of directors may decide to allocate a portion of the Bank’s initial capital
350	350	322and retained earnings between the Bank and its subsidiaries, established under section 3(e) under
351	351	323the same terms governing other state-chartered depository institutions.
352	352	324 Section 9. Deposits.
353	353	325 (a) The state treasurer, along with the Bank’s board of directors and its chief executive
354	354	326officer, shall determine when the Bank has sufficient capacity after the first appropriation of
355	355	327capital to receive public funds. On or near that date, the state treasurer shall deposit $350 million
356	356	328dollars of state funds in the bank. For each additional appropriation of Bank capital pursuant to 17 of 24
357	357	329Sections 8(a)-(b), the state treasurer shall deposit an additional $350 million of state funds,
358	358	330within three months of the effective date of such appropriation. After that date, the state
359	359	331treasurer shall so allocate state funds to ensure that the Bank maintains a minimum average
360	360	332annual deposit balance of $1,400,000,000.
361	361	333 (b) The state treasurer shall fund the minimum average deposit balance from state
362	362	334revenues held with the Massachusetts Municipal Deposit Trust; provided, however, that the state
363	363	335treasurer shall not withdraw funds from the “Move Money” program.
364	364	336 (c) The state treasurer shall use deposits in the Bank to make any payments, provided
365	365	337further that the state treasurer shall not take action that (1) disrupts the public bank’s liquidity
366	366	338position, or (2) reduces the size of the Bank’s minimum average annual deposit balance of
367	367	339$1,400,000,000.
368	368	340 (d) Given that the commonwealth is the sole shareholder of the Bank, the Bank shall not
369	369	341pay interest on the commonwealth’s deposits; provided, however, that the Bank shall pay interest
370	370	342to cities and towns with deposits held at the Bank at rates that the Bank sets.
371	371	343 (e) After the Bank is well established, has a record of sound operation, and the state
372	372	344treasurer, the board of directors and its chief executive officer have deemed the Bank to have the
373	373	345requisite capacity, the board of directors and chief executive officer may agree to accept
374	374	346deposits of funds from the commonwealth, cities, towns and quasi-public entities that have a
375	375	347maturity of over 180 days.
376	376	348 (g) Nothing in this provision shall derogate from the Bank’s powers to incur non-deposit
377	377	349liabilities, including, but not limited to, money market borrowing, Federal Reserve borrowing,
378	378	350capital market borrowing or its other powers under section 3. 18 of 24
379	379	351 Section 10. State Guarantee.
380	380	352 All deposits and other liabilities of the Bank shall be guaranteed by the full faith and
381	381	353credit of the commonwealth.
382	382	354 Section 11. Sound Operation and Reporting.
383	383	355 The board of directors shall operate the Bank to ensure its soundness and sustainability.
384	384	356According to the board of directors’ determination, the Bank’s annual monetary return may be
385	385	357provided to the commonwealth or reinvested in the capital of the Bank.
386	386	358 (a) Annually, the Bank shall publicly issue its financial reports to the governor and to the
387	387	359clerks of the house of representatives and senate. An external party shall audit these reports
388	388	360 (b) Annually, the state treasurer shall publicly report the current and average amount of
389	389	361cash and cash equivalents held by the commonwealth to the governor and to the clerks of the
390	390	362house of representatives and senate. Under section 2 the reported amounts shall be used in the
391	391	363calculation of the updated MAAB.
392	392	364 (c) The Bank shall maintain records of all banking transactions and amounts throughout
393	393	365the year.
394	394	366 (d) The Bank shall submit an annual public report to the state treasurer, describing the
395	395	367benefits of its activities to the commonwealth. In the report, the Bank shall include:
396	396	368 (1) Analysis of the extent to which it was able to meet priorities listed in section 13. 19 of 24
397	397	369 (2) For each type of eligible recipients specified under section 12 subsections (a) through
398	398	370(l), the number of recipients to whom the bank extended affordable financing and the total
399	399	371amount of the Bank’s regulatory capital dedicated to each type of eligible recipient.
400	400	372 (3) A description of the main forms of affordable finance extended by the Bank in the 14
401	401	373counties of the commonwealth.
402	402	374 (e) The Bank shall file an annual report on the compensation paid by the Bank to the
403	403	375board of directors, the chief executive officer and other bank employees and consultants.
404	404	376 (f) The Bank shall be subject to chapter 66; provided however, that the Bank shall not be
405	405	377required to reveal the identity of an eligible recipient as defined in section 12 or information
406	406	378containing an eligible recipient’s financial data.
407	407	379 Section 12. Eligible Recipients.
408	408	380 The Bank shall use its powers to extend affordable financing to the following eligible
409	409	381recipients:
410	410	382 (a) Public or quasi-public entities, including, but not limited to, cities or towns located
411	411	383within the commonwealth, enterprises managed in whole or in part by cities or towns and public
412	412	384or quasi-public entities located in and primarily serving the commonwealth;
413	413	385 (b) Nonprofit organizations that are exempt from federal taxation under 26 U.S.C.
414	414	386501(c)(3), whose primary goal is to benefit the commonwealth or its residents through
415	415	387community development;
416	416	388 (c) Land trusts; 20 of 24
417	417	389 (d) Entities operating as, or transitioning to be cooperatives, including, but not limited to,
418	418	390housing, worker and consumer cooperatives, employee stock ownership plans and worker-owned
419	419	391cooperative enterprises;
420	420	392 (e) Entities created by financial institutions that pool funds to lend for affordable housing
421	421	393development;
422	422	394 (f) Developers of housing or preservation projects, only when entities financing the
423	423	395project invite the Bank to participate with financing;
424	424	396 (g) State-chartered depository institutions, to the extent that the affordable financing
425	425	397extended to these institutions is used to support the other eligible recipients in this provision;
426	426	398 (h) Community development corporations that operate in Massachusetts;
427	427	399 (i) Community development financial institutions that operate in Massachusetts;
428	428	400 (j) Investment vehicles established by the eligible recipients set forth in subsection (h) or
429	429	401(i);
430	430	402 (k) Smaller business enterprises, defined as in section 2 and doing business primarily in
431	431	403the commonwealth, that offer sustainable business plans and merit credit but are unable to
432	432	404procure affordable financing from other Massachusetts banks with or without participation by the
433	433	405Bank;
434	434	406 (l) Small- and medium-sized farms and related industries;
435	435	407 (m) Conduits or investment vehicles created for the primary purpose of supporting other
436	436	408eligible recipients listed in this section. 21 of 24
437	437	409 Section 13. Affordable Financing.
438	438	410 The term “affordable financing” shall include the following types of finance, all to the
439	439	411extent consistent with the Bank’s authorities in section 3(a) and subject to general banking
440	440	412regulations set by the commissioner:
441	441	413 (a) For all eligible recipients listed in section 12:
442	442	414 (1) The provision of credit and loans, including long-term loans and unsecured loans.
443	443	415The Bank may
444	444	416 employ underwriting methods which are flexible in their criteria, terms and uses and shall
445	445	417provide loans at affordable rates;
446	446	418 (2) The provision of letters of credit, guarantees, subordinate loans and other forms of de-
447	447	419risking for the purpose of crowding-in additional financing by non-Bank sources;
448	448	420 (3) The provision of technical assistance;
449	449	421 (b) For the eligible recipients listed in Section 12, subsections (c), (e), (h) and (m), the
450	450	422term “affordable financing” shall additionally include the following:
451	451	423 (1) The provision of equity financing, including preferred stock, common stock, equity
452	452	424equivalent capital and other hybrid instruments;
453	453	425 (2) The provision of grants, donations and contributions, including grants given over a
454	454	426period of years (such as those for technical assistance) to provide predictability for eligible
455	455	427recipients;
456	456	428 (3) The other activities permissible to the Bank under section 3(a). 22 of 24
457	457	429 (c) Nothing in this provision is meant to derogate from the Bank’s powers under section
458	458	4303(a) to hold assets necessary for its liquidity management.
459	459	431 Section 14. Bank Priorities.
460	460	432 In formulating its Business Plan, the Bank shall give priority to the following
461	461	433considerations:
462	462	434 (a) Supporting eligible recipients subject to the historic and current economic inequities
463	463	435by communities in underserved neighborhoods, including, but not limited to, enterprises
464	464	436established by residents there, as well as eligible recipients working to remedy those inequities;
465	465	437 (b) Supporting eligible recipients subject to the historic and current economic inequities
466	466	438experienced by women throughout the commonwealth;
467	467	439 (c) Supporting rural business and farming concerns;
468	468	440 (d) Supporting businesses with compensation structures that provide a livable wage,
469	469	441establish an equitable ratio between the least- and highest-paid members of the business or
470	470	442otherwise demonstrate a commitment to equitable pay.
471	471	443 (e) Supporting entities that address the impacts of climate change and the reduction of
472	472	444greenhouse gases.
473	473	445 (f) Funding the need of cities and towns in the commonwealth to update and build safe
474	474	446and sustainable infrastructure.
475	475	447 (g) The Bank shall seek to complement and support the operation of public and quasi-
476	476	448public agencies, non-profit organizations, Massachusetts banks and community development 23 of 24
477	477	449financial institutions and community development corporations. The Bank shall partner rather
478	478	450than compete with those entities to strengthen them and to expand affordable financing in the
479	479	451commonwealth.
480	480	452 (h) When appropriate, the Bank’s provision of lending and de-risking under section 13(a)
481	481	453shall be conducted through participation lending programs, with these institutions originating and
482	482	454servicing the loans.
483	483	455 (i) The bank shall promote equitable distribution of Bank resources across the
484	484	456commonwealth, including ensuring that rural areas of the commonwealth are given full and fair
485	485	457consideration.
486	486	458 (j) Provided that certain smaller towns in the commonwealth have scant resources for
487	487	459administrative staff, the Bank shall make every effort to make the application process for these
488	488	460towns as simple and affordable as possible.
489	489	461 Section 15. Conflicts of Interests.
490	490	462 (a)The Bank shall not transact with or extend financing to a member of the board of
491	491	463directors, the chief executive officer or an officer of the Bank, including an immediate family
492	492	464member of that person as defined in section 1 of chapter 268A or an entity in which that person
493	493	465has an interest. This prohibition shall remain in effect for 4 years after the conclusion of the term
494	494	466of the board member, chief executive officer or another officer of the Bank.
495	495	467 (b) The Bank shall not transact with or extend financing to a member of the board of
496	496	468advisors, including an immediate family member of that person as defined in section 1 of chapter 24 of 24
497	497	469268. Nothing in this provision shall prevent the Bank from transacting with or extending
498	498	470financing to an entity with which a member of the board of advisors is associated.
499	499	471 Section 16. Liberal Construction.
500	500	472 The provisions of this chapter shall be interpreted and construed liberally in aid of its
501	501	473declared purpose.
502	502	474 SECTION 2. Section 38 of chapter 29 of the General Laws is hereby amended by adding
503	503	475the following subsection:-
504	504	476 (j) In the Massachusetts Public Bank established under chapter 10A.
505	505	477 SECTION 3. Notwithstanding any general or special law to the contrary, the
506	506	478capitalization amounts set forth in section 8 of this act shall be available to the Bank by fiscal
507	507	479year 2027, subject to appropriation.