Certification Page Regular and Emergency Rules · An IDB shall incorporate, and be conditioned upon, all limitations and requirements imposed by the Wyoming Business Council. An IDB

Certification Page Regular and Emergency Rules

Revised May 2014

0 Emergency Rules (After completing all of Sections 1 and 2. proceed to Section 5 below)

1. Generallnfonnation a. Agency/Board Name Wyoming State Treasurer

b. Agency/Board Address c. City Capitol Building, Room 122 • 200 West 24th Street Cheyenne

e. Name of Contact Person f. Contact Telephone Number Sharon Garland 307·777·7408

g. Contact Email Address I h. Adoption Date sharon.gartand@ wyo.gov July 15, 2014

i. Program Industrial Development Bond Investment Program

2. Rule T~Qe and Information: For each chapter listed, Indicate if lhe rule is New. Amended. or Repealed.

j 1f 'New, • provide the Enrolled Act numbers and years enacted:

c. Provide the Chapter Number, Short Title, and Rule Type of Each Chapter being Created/Amended/Repealed (Please use the Additional Rule Information form for more than 10 chapters, and .attach it to this cerlilication)

Chapter Number. Chapter Name: 0New 2 Industrial Development Bond Investment Program Chapter Number: Chapter Name: 0New

Chapter Number: Chapter Name: ONew

Chapter Number: Chapter Name: UNew

Chapter Number: Chapter Name: UNew

Chapter Number: Chapter Name: ONew

Chapter Number. Chapter Name: ONew

Chapter Number: Chapter Name: ONew

Chapter Number: Chapter Name: 0New

Chapter Number: Chapter Name: 0New

d. 0 The Statement of Reasons is attached to this certification.

0 Regular Rules

I d. Zip Code 82002

OAmended D Repealed

0Amended 0 Repealed

0Amended 0 Repealed

[.J Amended U Repealed

[.J Amended U Repealed

[.J Amended U Repealed

[.J Amended U Repealed

[.J Amended U Repealed

0Amended 0 Repealed

[.J Amended U Repealed

e. If applicable, describe the emergency which requires promulgation of these rules without providing notice or an opportunity for a public hearing:

3. State Government Notice of Intended Rulemaking_ a. Date on which the Notice of Intent containing all of the information required by

May 14,2014 W.S. 16-3-103(a) was filed with the Secretary of State: b. Date on which the Notice of Intent and proposed rules in strike and underscore

May 14, 2014 format and a clean copy were provided to the Legislative Service Office: c. Date on which the Notice of Intent and proposed rules in strike and underscore

May 14,2014 format and a clean copy were provided to the Attorney General:

4 . Public Notice oflntended Rulemaking_ a. Notice was mailed 45 days in advance to all persons who made a timely request for advance notice. 0 Yes 0 No D N/A

b. A public hearing was held on the proposed rules. b1 Yes D No

lf 'Yes:' Date: Time: City: Location: July 15, 2014 9:00am Cheyenne Herschler Building

122 West 25th Street Room 1699 Cheyenne, WY 82002

5. Final Filing_ of Rules a. Date on which the Certification Page with original signatures and final rules were sent to the

July 16, 2014 Attorney General's Office for the Governor's signature: b. Date on which final rules were sent to the Legislative Service Office:

July 16, 2014 c. Date on which a PDF of the final rules was electronically sent to the Secretary of State:

July 16, 2014 6. Ag_encvLBoard Certification

The undersigned certifies that the foregoing information is cor~

Signature of Authorized Individual ~~~ (Blue ink as per Rules on Rules. Section 7) -Printed Name of Signatory N\ o.r \( ( ~)r ao"' Signatory Title 'N \LD""' ~ t\d 5-\o;\~ .J \ f e.ASutc.r Date of Signature -~\~ \_~~0\~ 7. Governor's Certifi.cation 0

I have reviewed these rules and determined that they:

1. Are within the scope of the statutory authority delegated to the adopting agency; 2. Appear to be within the scope of the legislative purpose of the statutory authority; and, if emergency rules, 3. Are necessary and that I concur in the finding that they are an emergency.

Therefore, I approve the same.

Governor's Signature

Date of Signature

Attorney General: 1. Statement of Reasons; 2. Original Cert ification Page; 3. Summary of Comments {regular rules); 4. Hard copy of rules: clean and

strike/underscore; and 5. Memo to Governor documenting emergency (for emergency rules only).

!:iQi 1. Statement of Reasons; 2. Copy of Certification Page; 3. Summary of Comments (regular rules); 4. Hard copy of rules: clean and strike/underscore; 5. Electronic

copy of rules (PDFs) emailed to [email protected]: clean and strike/underscore; and 6. Memo to Governor document ing emergency (for emergency rules

only) .

~ 1. PDF of clean copy of rules; and 2. Hard copy of Certificat ion Page as delivered by the AG.

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STATEMENT OF PRINCIPAL REASONS

For

ADOPTION OF RULES & REGULATIONS

For

Chapter 2, Industrial Development Bond Investment Program

The State Treasurer's Office is proposing to adopt rules and regulations for Chapter 2-

Industrial Development Bond Investment Program. This chapter is being adopted to address

issues to assist with the issuance of industrial development bonds pursuant to W.S. § 9-4-

71S(m), which will:

• Assist the public in the process of seeking an investment of permanent state

funds in projects to be financed through industrial development bonds.

• Establish a clear application process.

• Identify the Treasurer's requirements for eligibility.

• Inform the public as to how this authority shall be implemented.

The proposed rule addresses nine areas:

• Authority- W.S. § 16-3-101 through§ 16-3-115, and W.S. § 9-4-715(m).

• Purpose - To invest specified state permanent funds in local government

Industrial Development Bonds.

• Program Structure and Process - To explain the investment application and

approval process.

• Materials Required for State Treasurer's Office Review - To explain the

necessary information to be included in the application process.

• Determination of Eligibility - To determine what projects will and will not be

eligible for Industrial Development Bond financing.

• Risk Analysis- To determine the risk threshold for these state funds.

• Post Closing- To determine subsequent requirements and disbursements after

the approval of an Industrial Development Bond.

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• Confidentiality - To determine as to whether the State Treasurer can disclose

certain information.

• Exceptions- To determine if exceptions to the requirements (on a case-by-case

basis) can be granted.

• These rules were previously submitted to the Governor's Office on January 15,

2014. Two comments were received during the public comment period. We have responded to

these comments, and are ensuring that those changes are properly included in the rules and

other notice documents. Therefore, we are beginning the rule-making process again.

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CONCISE SUMMARY OF COMMENTS AND AGENCY RESPONSE For

ADOPTION OF RULES & REGULATIONS For

Chapter 2, Industrial Development Bond Investment Program

The comment period ended at 5:00pm on Monday, July 7, 2014 for the Industrial Development Bond Program. A notice was published in the Wyoming Tribune Eagle and the Casper Star Tribune on May 23, May 30, June 6, June 13, June 20, and June 27, 2014. A public hearing was scheduled for July 15, 2014 (Tuesday) at 9:00am in Room 1699 of the Herschler Building. No one attended the public hearing.

The Wyoming State Treasurer's Office did not receive any comments during the comment period.

CHAPTER2 INDUSTRIAL DEVELOPMENT BOND INVESTMENT PROGRAM

Section 1. Authority. These rules are promulgated in accordance with the Wyoming Administrative Procedures Act, W.S. 16-3-101 through 16-3-115, and the State Treasurer's rule­making authority in W.S. 9-4-715(m).

Section 2. Purpose. The Office of the State Treasurer may invest specified state permanent funds in local government Industrial Development Bonds (hereafter IDBs) in accordance with W.S. 9-4-715(m). Industrial development projects, for which IDB financing is sought, must promote economic development in Wyoming as generally described in W.S. 9-4-715(m), and as recommended by the Wyoming Business Council and approved by the Governor. The Office of the State Treasurer fully expects that each IDB will provide a return to Wyoming which is equal to or better than the opportunity cost to the state permanent funds. These rules shall further define guidelines for IDB investments authorized pursuant to W.S. 9-4-715(m).

Section 3. Program Structure and Process.

(a) Officials, agencies, political subdivisions and others involved m the IDB investment application and approval process are as follows:

(i) Applicant. An applicant shall consist of the principal owner of a business venture engaged in an industrial development project which, if funded, must "add economic value to goods, services or resources within or outside this state[,]" as mandated by W.S. 9-4-715(m)(ii)(A). Such economic value must manifest through activities described in W.S. 9-4-715(m)(ii)(A)(I- III).

(ii) Issuer. A joint powers board, municipality or county, must resolve to act, or otherwise affirmatively act, as issuer of an IDB pursuant to W.S. 15-1-701 through 15-1-710. See W.S. 9-4-715(m).

(iii) Wyoming Business Council. The Wyoming Business Council shall first receive an applicant's application for an IDB investment, and, after review and consideration, may recommend the State Treasurer's purchase of the proposed IDB investment in the underlying industrial development project. An IDB shall incorporate, and be conditioned upon, all limitations and requirements imposed by the Wyoming Business Council. An IDB investment cannot occur without the Wyoming Business Council's recommendation. See W.S. 9-4-715(m)(i).

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(iv) Governor. Upon the Wyoming Business Council's recommendation, the applicant must receive the State Governor's approval of the !DB-financed project in writing. See W.S. 9-4-715(m)(i). The IDB documents shall incorporate and comply with all limitations and conditions identified by the Governor.

(v) Bond Counsel. Bond counsel shall be involved throughout the entire process. Bond counsel shall deliver the bond counsel opinion letter for the IDB. In addition, bond counsel responsibilities shall include, without limitation, overseeing issuer bond proceedings, drafting all bond documents necessary for the IDB and insuring applicant's submission of all due diligence materials which are satisfactory to the issuer and the State Treasurer.

(vi) Attorney General's Office. The Attorney General's Office must approve all final documents, including, without limitation, the Indenture, the Financing Agreement and the Mortgage or any other document which creates a security interest in the applicant's property in favor of the Trustee or the State Treasurer.

(vi) State Treasurer. Upon rece&vmg the Wyoming Business Council's recommendation and subsequent to the Governor's recommendation and the Wyoming Attorney General's approvals, the State Treasurer will make all final decisions as to whether the State shall purchase the IDB. The State Treasurer may concur with the Wyoming Business Council's recommendation and purchase the IDB or the State Treasurer may reject the recommendation of the Wyoming Business Council and make the decision not to purchase the IDB. A favorable recommendation by the Wyoming Business Council does not create a requirement of the State Treasurer to purchase the recommended IDB. The State Treasurer may impose any additional conditions, and those shall be incorporated within the IDB documents as well. The State Treasurer may not unilaterally reduce or remove conditions placed on the IDB by the Wyoming Business Council or Governor. Review of the application or due diligence materials by the State Treasurer does not imply approval by the State Treasurer.

(vii) Trustee. The State Treasurer shall require the involvement of a trustee to hold and enforce the IDB rights and obligations.

(b) IDB investment decisions are wholly discretionary and subject to the "prudent investor standard" pursuant to W.S. 9-4-715(m)(vi). Eligibility for IDB financing under this program shall not be construed as granting a property right, entitlement or expectation in any applicant. Consequently, decisions of state agencies or officials are not subject to contested case procedures and are not otherwise appealable agency decisions pursuant to the Wyoming Administrative Procedures Act

(c) The IDB application process is generally as follows:

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(i) The applicant shall submit the application and required materials to the Wyoming Business Council, and applicant shall be required to submit information in accordance with these rules and the Wyoming Business Council's guidelines. A recommendation in favor of • the lOB shall be required for the process to continue;

(ii) Upon the Wyoming Business Council's recommendation, the application

and recommendation shall be presented to the Governor's Office, with a copy to the State Treasurer's Office. The State Treasurer shall not proceed with final consideration of the application until after receipt of the review and written approval by the Governor's Office;

(iii) The State Treasurer's Office shall consider the application, along with the Business Council's recommendation and Governor's approval, and may conduct additional due diligence in evaluating the IDB investment opportunity. The State Treasurer's Office, if in its sole discretion it determines to proceed with the investment, shall work with the issuer's bond

counsel and the applicant to prepare all IDB documents.

(iv) If for any reason the terms and conditions for the JOB substantially and adversely change from those recommended by the Wyoming Business Council, or new

information is revealed that the State Treasurer reasonably determines should have been provided to the Wyoming Business Council and/or the Governor, the State Treasurer will seek additional recommendations and approvals before proceeding.

(v) The State Treasurer's determinations are final, and are not subject to the Wyoming Administrative Procedures Act.

(vi) The applicant is required to close the purchase of the IDB with the State Treasurer's Office within six (6) months of the Governor's written approval. The applicant may

request an extension of the closing deadline in writing and must demonstrate good cause why the deadline should not apply and why a new deadline should be set. The State Treasurer, in his or her sole discretion, may agree to extend the closing deadline. Such an extension may require resubmission of the application to the Wyoming Business Council.

Section 4. Materials Required for State Treasurer's Office Review

(a) The process of evaluating an application for JOB financing, which shall include "due diligence" to examine the merits and risks of an application, requires considerable time and resources by all state agencies and officials involved. Likewise, before applying for lOB financing, the applicant should expect that the process will require considerable time and

resources depending upon the complexity and nature of the project to be financed.

(b) Applicants seeking the State Treasurer's purchase of an lOB must submit the

following comprehensive information which must be consistent with information included in

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applicant's application submitted to the Wyoming Business Council and the recommendation of the Wyoming Business Council:

(i) A detailed overview of the applicant business entity, including identification of all principal management and owners;

(ii) A detailed description of the project to be financed, including all costs to be funded and a specific explanation of how the project satisfies the criteria set forth in W.S. 9-4-715(m);

(iii) A business plan accurately describing the existing business and its history, future business endeavors, and all characteristics of the project to be funded through IDB financing. The business plan must address, but should not be limited to, the following components:

(A) The total cost of the industrial development project and amount of financing sought;

(B) The source of applicant's required contribution of no less than twenty-five percent (25%) of the total cost of the project to be financed through IDB financing. The source of applicant's contribution may not be borrowed or financed, and the applicant must have an interest in the project free and clear of debt;

(C) Collateral offered to secure the IDB investment and evidence that the collateral is the property of the applicant and is unencumbered with any other financing or an indication that any such financing will be paid off with proceeds from the IDB;

(D) Analysis demonstrating that securitization of the IDB financing shall comply with the requirement that a loan-to-value ratio shall not exceed seventy-five percent (75%) of the appraised value of the collateral;

(E) Term of financing;

(F) Any other information reasonably necessary to inform the State's agencies and officials about the project to be financed, the nature of which may vary depending upon the type of business and facilities at issue.

(iv) A comprehensive chart and detailed description identifying all business entities related to the applicant, whether by contract or through a corporate affiliation;

(v) Financials for at least three (3) years, including tax returns;

(vi) Existing short- and long-term financing for property associated with the project to be financed through an IDB investment;

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(vii) Existing appraisals on property associated with the project, as well as property offered as collateral, with the most current appraisals not being more than eighteen (18) months old;

(viii) All real and personal property rights offered as collateral to secure the proposed IDB investment;

(ix) Records concerning environmental health of facilities and underlying real property associated with proposed !DB-financed project, including without limitation, a Phase 1 environmental report for any real property which is a part of the collateral;

(x) Notice and identification of any pending or anticipated litigations involving the anticipated project or property offered as collateral;

(xi) A copy of the application submitted to the Wyoming Business Council, copies of all material provided in support of such application, and all other documents and information provided to the Wyoming Business Council;

(xii) Any and all documents provided to the Governor's office in connection with its review of the IDB; and

(xiii) Any relevant ongoing or new information that arises any time after applicant's submission of its application which may influence or bear upon the review of the

proposed IDB, including without limitation, new or altered financing arrangements, statutory, regulatory or rule changes which may impact applicant's project or operations or the proposal thereof, or changes in ownership.

(c) Applicants must provide industry-specific information and documentation reasonably necessary to inform the State Treasurer's Office concerning the applicant's business activities within that industry. Such submissions should include regulatory information related to the project to be undertaken.

(d) To satisfy loan-to-value criteria set forth in W.S. 9-4-715(m)(iii)(C), it may be necessary to obtain appraisals and to otherwise assess the value of existing facilities, collateral, and other real or personal property. The applicant may be required to incur the cost of appraisals or other services necessary to establish valuations.

(e) In addition to information described herein, the State Treasurer may ask for additional information necessary for the State Treasurer's Office to conduct its due diligence and review of the IDB. Applicants shall respond to such requests in a timely manner with complete and current information. An applicant's failure to provide complete and current information in a timely manner shall be grounds for denial of an application.

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(f) Any documents, materials or information provided to the State Treasurer's Office in connection with its review of the IDB may be shared by the State Treasurer's Office with any other State agency, including without limitation, the Governor's Office and the Wyoming Business Council.

Section 5. Determination of Eligibility

(a) Other requirements. In addition to compliance with these rules, projects shall not be eligible for IDB financing unless they satisfy the criteria set forth in W.S. 9-4-715(m)(ii)(A)

and any guidelines established by the Wyoming Business Council pursuant to subsection (m)(ii)(B).

{b) Eligible projects and expenses. Eligible projects must generally consist of an applicant's prospectively planned, well-defined business endeavor, and the project shall have a

set beginning and completion date. lOBs shall not fund past business or construction expenditures. Expenses eligible for reimbursement following execution of an IDB shall relate back no earlier than the application date. IDB financing shall not primarily serve as a refinance mechanism or otherwise serve to substitute the IDB for an applicant's current lenders.

Furthermore, IDB proceeds may not be used for working capital, but only to finance the cost of acquisition of land or rights-of-way and the purchase, construction, and installation of buildings, appurtenant personal property and equipment related to the industrial development project.

(c) Examples of eligible projects. The following economic development projects, to the extent they satisfy the criteria set forth in W.S. 9-4-715(m) and these rules, may be eligible for IDB financing:

(i) Manufacturing, fabrication or other industrial production facilities;

(ii) Agricultural development or food processing;

(iii) Development of, or improved utilization of, natural resources;

(iv) Research and development projects that will add economic value to goods, services or resources within or outside the state;

(v) Destination facilities, other than retail or food service businesses;

(vi) Product distribution facilities;

(vii) Transportation or freight facilities;

(viii) Scientific testing including, but not limited to, medical, clinical or engineering testing services;

(ix) Utilities;

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(x) Facilities associated with the management of waste; and

(xi) Other activities that represent a new technology or type of economic enterprise.

(d) Public purpose. The State Treasurer will favorably consider the purchase ofiDBs for projects that further a public purpose. These public purposes include among others: economic diversification, creation of new jobs, construction occurring before it otherwise would, economic activity during economic slumps, tax dollars remaining in the state, and increased productivity. The applicant is encouraged to demonstrate as many public purposes for the proposed project as can reasonably be anticipated.

(e) Diversification. In determining whether to purchase an IDB, the State Treasurer will consider whether applications for IDB financing increase or decrease the diversification of investments generally and specifically for the IDB program.

(f) Non-disclosed litigation or threats of litigation. An application for IDB financing shall be ineligible if pending litigation or threats of litigation are not disclosed with the application or timely disclosed thereafter.

(g) Six month deadline. An application shall become ineligible if the applicant is unable to close on all IDB documents with the State Treasurer within the six (6) month closing deadline set forth in Section 3(c)(vi), and if the applicant is unable to obtain a written extension from the State Treasurer. If the IDB fails to close, the applicant shall remain responsible for all costs incurred in the due diligence process including, without limitation, the costs of the Wyoming Business Council and any counsel, appraisers and accountants hired in connection with the State Treasurer's review of the IDB.

Section 6. Risk Analysis

(a) Risk threshold. The State Treasurer is authorized to invest only permanent and inviolate funds in IDBs pursuant to W.S. 9-4-715(m). Accordingly, the State Treasurer's risk threshold for these state funds must be relatively low, and the State Treasurer will take necessary measures to reduce risks associated with IDB investments.

(b) Insurance requirements. Insurance requirements shall vary based on the type of industrial development project which is the subject of the IDB but, at a minimum, general liability and property insurance shall be required in amounts and with terms that are acceptable to the State Treasurer. At the sole discretion of the State Treasurer, other types of insurance may be required based on the type of project being financed and/or the property which serves as collateral for the IDB, such as business interruption, flood, earthquake, etc.

(c) Interest rate. The State Treasurer shall establish the interest rate paid on lOBs purchased under this program, taking into consideration the recommendation of the Wyoming

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Business Council. The bonds shall bear interest at a rate commensurate with the risk. The interest rate shall be a fixed or adjustable rate, indexed to the prime or ten-year treasury bill rate, as determined by the state treasurer and as recommended by the Wyoming Business Council; but in no case shall the interest rate on an IDB be less than the average yield for the five prior fiscal years earned by the permanent fund or funds for which the IDB is purchased.

{d) Subordinate financing. The IDB documents shall require that the State maintain a first priority lien on all collateral and no subordinate financing may be placed on any collateral securing the IDB without the written consent of the State Treasurer.

(e) Financial covenants. The State Treasurer may require that the bond documents include financial covenants with which the applicant must comply for the term ofthe IDB. Such covenants may include standards relating to debt service coverage, net worth, leverage, interest coverage or any other financial metrics determined by the State Treasurer necessary to insure the strength and performance of the applicant.

(f) Differing terms. In his or her sole discretion, the State Treasurer may require terms for the purchase of the IDB that are different than those recommended by the Wyoming Business Council, but in no case less stringent.

Section 7. Post Closing

(a) Subsequent requirements. The State Treasurer's Office shall continue to monitor the IDB after its purchase thereo£ The IDB documents shall contain periodic reporting and compliance requirements that applicant shall be required to satisfy. In addition, applicant shall provide to the State Treasurer's Office an annual progress report updating the status of the industrial development project being financed by the IDB.

(b) Subsequent disbursements. Any IDB proceeds which are not disbursed on the day of closing will be held by the Trustee until applicant has submitted a disbursement request and proof of eligible expenses as shall be provided in the IDB documents and as described in Section 5(b) above and approved by the State Treasurer's Office.

Section 8. Confidentiality

(a) Application information and any other documentation submitted in support of an application, once submitted to a state agency or official, shall be governed by the Public Records Act, W.S. 16-4-201 through 205, as amended. Upon receiving a request to disclose an application or supporting information, the State Treasurer's Office will, if it is the custodian, make a determination as to whether the information must be disclosed. The State Treasurer's Office, before it makes said determination or discloses an applicant's information, will inform the applicant. The applicant may be required to justify to the State Treasurer's Office why information submitted should be withheld under the Public Records Act or any other authority.

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Section 9. Exceptions

(a) The State Treasurer may make exceptions to the requirements contained in these rules on a case-by-case basis as he or she may detennine in his or her sole discretion, but no such exception can result in terms of the IDB that are less favorable to the State than any requirements contained in the Wyoming Business Council's recommendation or the approval ofthe Governor.

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