Cal. Code Regs. Tit. 10, § 5070 - Trust Fund Account Allocation; Default Penalties

(a) The Agency and each Corporation shall annually negotiate and execute Corporate Contracts and Multi-party Contracts. As used in this section, "Fiscal Year" means the period commencing July 1 and ending June 30 of the following year.

(b) Following the end of each Fiscal Year, the Agency shall calculate the Net Default rate for each Corporation. The Agency shall remove 5% of the funds from the trust fund account of a Corporation with a Net Default Rate not less than 3.5% and not greater than 5%. The Agency shall remove 10% of the funds from the trust fund account of a Corporation with a Net Default Rate greater than 5%. The Net Default Rate shall be calculated and defined as follows:

(1) Add the amount of money paid by the Agency for Guarantees and Farm Loans which were executed by the Corporation during the previous five Fiscal Years and which went into Default.

(2) Subtract from the subsection (b)(1) amount any recoveries received by the Agency on the Default Guarantees and Farm Loans during the previous five Fiscal Years.

(3) For each of a Corporation's five previous Fiscal Years, add the amount of Guarantees and Farm Loans made by the Corporation which are outstanding as of the end of each month of each year and divide the total amount for each year by twelve (12), "Average Annual Guarantees and Farm Loans".

(4) Calculate the sum of the Average Annual Guarantees and Farm Loans.

(5) Divide the subsection (b)(2) number by the subsection (b)(4) number. The resulting number is the Net Default Rate.

(c) Appropriations remaining in the Expansion Fund following the subsection (a) Allocations and default penalties collected pursuant to subsection (b) shall be Allocated as described below:

(1) Divide the dollar amount of outstanding Bonds, Farm Loans and Loans Guaranteed as of the end of the Fiscal Year (collectively referred to in this section as "Financings" of the Corporation) by the dollar amount of Financings of all Corporations. Multiply this number times .75.

(2) Divide the number of Financings of the Corporation by the number of Financings of all Corporations. Multiply this number times .25.

(3) Add the amount of Appropriation remaining in the Expansion Fund following the subsection (a) Allocations and the amount of default penalties removed from trust fund accounts pursuant to subsection (b).

(4) Add the (c)(1) and (c)(2) numbers. Multiply the resulting number by the subsection (c)(3) number and transfer that amount to the Corporation's trust fund account.

(d) No earlier than May 1 of any year, the Agency shall be authorized to transfer funds between trust fund accounts. Funds shall be removed from any trust fund account where the ratio of existing Bonds, Farm Loans and Guarantees to the amount of funds in the trust fund account is less than 2:1. Sufficient funds shall be removed to leave a ratio of 2:1.

(e) The funds removed from a trust fund account pursuant to subsection (d) shall be allocated to Corporations which did not have subsection (d) removals in the current Fiscal Year, defined in this section, respectively, as "Ineffective Funds" and "Effective Corporations." Ineffective Funds shall be allocated to Effective Corporations using the following formula:

(1) Divide the dollar amount of the outstanding Farm Loans and Guarantees executed by the Corporation as of April 30th of the current Fiscal Year by the dollar amount of outstanding Farm Loans and Guarantees executed by all Effective Corporations as of April 30 of the current Fiscal Year. Multiply this number times .75.

(2) Divide the number of Farm Loans and Guarantees executed by the Corporation by the number of Farm Loans and Guarantees executed by all Effective Corporations. Multiply this number times .25.

(3) Add the (e)(1) and (e)(2) numbers. Multiply the resulting number times the amount of Ineffective Funds and transfer that amount to the Corporation's trust fund account.

Notes

Cal. Code Regs. Tit. 10, § 5070

Note: Authority cited: Section 14024, Corporations Code. Reference: Sections 14036,14038, 14041 and 14071, Corporations Code.

1. Amendment of article and section headings and new section filed 11-4-93 as an emergency; operative 11-4-93 (Register 93, No. 45). A Certificate of Compliance must be transmitted to OAL by 3-4-94 or emergency language will be repealed by operation of law on the following day. For prior history, see Register 85, No. 26.
2. Certificate of Compliance as to 11-4-93 order transmitted to OAL 3-3-94 and filed 3-15-94 (Register 94, No. 11).
3. Repealer and new section filed 1-19-99 as an emergency; operative 1-19-99 (Register 99, No. 4). A Certificate of Compliance must be transmitted to OAL by 7-19-99 or emergency language will be repealed by operation of law on the following day.
4. Editorial correction of subsection (c)(2) (Register 99, No. 28).
5. Certificate of Compliance as to 1-19-99 order, including further amendment of subsection (b)(3), transmitted to OAL 6-3-99 and filed 7-9-99 (Register 99, No. 28).
6. Amendment of section heading and section filed 12-27-2004 as a deemed emergency pursuant to Corporations Code section 14024; operative 12-27-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 6-27-2005 or emergency language will be repealed by operation of law on the following day.
7. Editorial correction of History6 (Register 2005, No. 27).
8. Certificate of Compliance as to 12-27-2004 order, including amendment of Note, transmitted to OAL 5-25-2005 and filed 7-7-2005 (Register 2005, No. 27).