House Bill 0207c1

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    Florida House of Representatives - 2000              CS/HB 207

        By the Committee on Community Colleges & Career Prep and
    Representatives Greenstein, Rubio, Harrington and Goodlette





  1                      A bill to be entitled

  2         An act relating to individual development

  3         accounts; providing purposes; providing

  4         definitions; requiring the Department of

  5         Children and Family Services to amend the

  6         Temporary Assistance for Needy Families State

  7         Plan to provide for use of funds for individual

  8         development accounts; specifying criteria and

  9         requirements for contributions to such

10         accounts; specifying purposes for use of such

11         accounts; providing for procedures for

12         withdrawals from such accounts; specifying

13         certain organizations to act as fiduciary

14         organizations for certain purposes; providing

15         for penalties for withdrawal of moneys for

16         certain purposes; providing for resolution of

17         certain disputes; providing for transfer of

18         ownership of such accounts under certain

19         circumstances; providing for establishment of

20         such accounts by certain financial institutions

21         under certain circumstances; providing

22         requirements; providing that account funds and

23         matching funds do not affect certain program

24         eligibility; providing an effective date.

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26  Be It Enacted by the Legislature of the State of Florida:

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28         Section 1.  (1)  The purpose of this act is to provide

29  for the establishment of individual development accounts

30  designed to provide families with limited means an opportunity

31  to accumulate assets, to facilitate and mobilize savings, to

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  1  promote education, homeownership, and microenterprise

  2  development, and to stabilize families and build communities.

  3  This section implements the provisions of s. 404(h) of the

  4  Social Security Act, as amended, 42 U.S.C. s. 604(h), related

  5  to individual development accounts.  Nothing in this section

  6  is intended to conflict with the provisions of federal law.

  7         (2)  As used in this section:

  8         (a)  "Individual development account" means an account

  9  exclusively for the purpose of paying the qualified expenses

10  of an eligible individual or family.  The account is a trust

11  created or organized in this state and funded through periodic

12  contributions by the establishing individual and matched by or

13  through a qualified entity for a qualified purpose.

14         (b)  "Qualified entity" means:

15         1.  A not-for-profit organization described in s.

16  501(c)(3) of the Internal Revenue Code of 1986, as amended,

17  and exempt from taxation under s. 501(a) of such code; or

18         2.  A state or local government agency acting in

19  cooperation with an organization described in subparagraph 1.

20  For purposes of this section, a local WAGES coalition shall be

21  considered a government agency.

22         (c)  "Financial institution" means an organization

23  authorized to do business under state or federal laws relating

24  to financial institutions, and includes a bank, trust company,

25  savings bank, building and loan association, savings and loan

26  company or association, and credit union.

27         (d)  "Eligible educational institution" means:

28         1.  An institution described in s. 481(a)(1) or s.

29  1201(a) of the Higher Education Act of 1965, 20 U.S.C. s.

30  1088(a)(1) or s. 1141(a), as such sections are in effect on

31  the date of the enactment of the Personal Responsibility and

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  1  Work Opportunity Reconciliation Act of 1996, Pub. L. No.

  2  104-193.

  3         2.  An area vocational education school, as defined in

  4  s. 521(4)(C) or (D) of the Carl D. Perkins Vocational and

  5  Applied Technology Education Act, 20 U.S.C. s. 2471(4), in

  6  this state, as such sections are in effect on the date of the

  7  enactment of the Personal Responsibility and Work Opportunity

  8  Reconciliation Act of 1996, Pub. L. No. 104-193.

  9         (e)  "Postsecondary educational expenses" means:

10         1.  Tuition and fees required for the enrollment or

11  attendance of a student at an eligible educational

12  institution.

13         2.  Fees, books, supplies, and equipment required for

14  courses of instruction at an eligible educational institution.

15         (f)  "Qualified acquisition costs" means the costs of

16  acquiring, constructing, or reconstructing a residence. The

17  term includes any usual or reasonable settlement, financing,

18  or other closing costs.

19         (g)  "Qualified business" means any business that does

20  not contravene any law or public policy.

21         (h)  "Qualified business capitalization expenses" means

22  qualified expenditures for the capitalization of a qualified

23  business pursuant to a qualified plan.

24         (i)  "Qualified expenditures" means expenditures

25  included in a qualified plan, including capital, plant,

26  equipment, working capital, and inventory expenses.

27         (j)1.  "Qualified first-time homebuyer" means a

28  taxpayer and, if married, the taxpayer's spouse, who has no

29  present ownership interest in a principal residence during the

30  3-year period ending on the date of acquisition of the

31  principal residence.

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  1         2.  "Date of acquisition" means the date on which a

  2  binding contract to acquire, construct, or reconstruct the

  3  principal residence is entered into.

  4         (k)  "Qualified plan" means a business plan or a plan

  5  to use a business asset purchased, which:

  6         1.  Is approved by a financial institution, a

  7  microenterprise development organization, or a nonprofit loan

  8  fund having demonstrated fiduciary integrity.

  9         2.  Includes a description of services or goods to be

10  sold, a marketing plan, and projected financial statements.

11         3.  May require the eligible individual to obtain the

12  assistance of an experienced entrepreneurial advisor.

13         (l)  "Qualified principal residence" means a principal

14  residence, within the meaning of s. 1034 of the Internal

15  Revenue Code of 1986, as amended, the qualified acquisition

16  costs of which do not exceed 100 percent of the average area

17  purchase price applicable to such residence, determined in

18  accordance with s. 143(e)(2) and (3) of such code.

19         (3)  The Department of Children and Family Services

20  shall amend the Temporary Assistance for Needy Families State

21  Plan which was submitted in accordance with s. 402 of the

22  Social Security Act, as amended, 42 U.S.C. s. 602, to provide

23  for the use of funds for individual development accounts in

24  accordance with the provisions of this section.

25         (4)(a)  Any family subject to time limits and fully

26  complying with work requirements of the WAGES Program that

27  enters into an agreement with an approved fiduciary

28  organization is eligible for participation in an individual

29  development account.

30         (b)  Contributions to the individual development

31  account by an individual may be derived only from earned

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  1  income, as defined in s. 911(d)(2) of the Internal Revenue

  2  Code of 1986, as amended.

  3         (c)  The individual or family shall enter into an

  4  individual development account agreement with a certified

  5  fiduciary organization as described in subsection (7).

  6         (d)  Eligible participants may receive matching funds

  7  for contributions to the individual development account,

  8  pursuant to the WAGES State Plan and the plan of the local

  9  WAGES coalition. When not restricted to the contrary, matching

10  funds may be paid from state and federal funds under the

11  control of the local WAGES coalition, from local agencies, or

12  from private donations.

13         (e)  Eligible participants may receive bonus payments

14  for program compliance, to the extent provided in the WAGES

15  State Plan and the plan of the local WAGES coalition.  Such

16  bonus payments may provide for a matching proportion higher

17  than matching funds described in paragraph (d).

18         (5)  Individual development accounts may be available

19  once the family no longer receives cash assistance for any of

20  the following uses:

21         (a)  Postsecondary educational expenses paid from an

22  individual development account directly to an eligible

23  educational institution;

24         (b)  Qualified acquisition costs with respect to a

25  qualified principal residence for a qualified first-time

26  homebuyer, if paid from an individual development account

27  directly to the persons to whom the amounts are due; or

28         (c)  Amounts paid from an individual development

29  account directly to a business capitalization account which is

30  established in a federally insured financial institution and

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  1  is restricted to use solely for qualified business

  2  capitalization.

  3         (6)  The WAGES Program State Board of Directors shall

  4  establish such policies and procedures as may be necessary to

  5  ensure that funds held in an individual development account

  6  are not withdrawn except for one or more of the qualified

  7  purposes described in this section.

  8         (7)  Fiduciary organizations shall be the local WAGES

  9  coalition or other community-based organizations designated by

10  the local WAGES coalition to serve as an intermediary between

11  individual account holders and financial institutions holding

12  accounts. Responsibilities of such fiduciary organizations may

13  include marketing participation, soliciting matching

14  contributions, counseling program participants, and conducting

15  verification and compliance activities.

16         (8)  The WAGES Program State Board of Directors shall

17  establish penalties and procedures for enforcing compliance

18  with such penalties for the withdrawal of moneys from

19  individual development accounts under false pretenses or for

20  the use of such moneys for other than approved purposes.  The

21  fiduciary organization shall make arrangements with the

22  financial institution to impose any penalties or loss of

23  matching funds as specified by the WAGES Program State Board

24  of Directors on moneys withdrawn.  The WAGES Program State

25  Board of Directors may, at its discretion, specify conditions

26  under which an account shall be closed.

27         (9)  The fiduciary organization shall establish a

28  grievance committee and a procedure to hear, review, and

29  decide in writing any grievance made by a holder of an

30  individual development account who disputes a decision of the

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  1  operating organization that a withdrawal is subject to

  2  penalty.

  3         (10)  In the event of an account holder's death, the

  4  account may be transferred to the ownership of a contingent

  5  beneficiary. An account holder shall name contingent

  6  beneficiaries at the time the account is established and may

  7  change such beneficiaries at any time.

  8         (11)  Financial institutions approved by the WAGES

  9  Program State Board of Directors shall be permitted to

10  establish individual development accounts pursuant to this

11  section. The financial institution shall certify to the local

12  WAGES coalition on forms prescribed by the WAGES Program State

13  Board of Directors and accompanied by any documentation

14  required by the WAGES Program State Board of Directors that

15  such accounts have been established pursuant to all provisions

16  of this act and that deposits have been made on behalf of the

17  account holder. A financial institution establishing an

18  individual development account shall:

19         (a)  Keep the account in the name of the account

20  holder.

21         (b)  Subject to the indicated conditions, permit

22  deposits to be made into the account:

23         1.  By the account holder; or

24         2.  By means of contributions made on behalf of the

25  account holder. Such deposits may include moneys to match the

26  account holder's deposits.

27         (c)  Require the account to earn the market rate of

28  interest.

29         (d)  Permit the account holder to withdraw moneys from

30  the account for any of the permissible uses pursuant to

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  1  procedures adopted by the WAGES Program State Board of

  2  Directors.

  3         (12)  In accordance with s. 404(h)(4) of the Social

  4  Security Act, as amended, 42 U.S.C. s. 604(h)(4), and

  5  notwithstanding any other provision of law, other than the

  6  Internal Revenue Code of 1986, as amended, funds in an

  7  individual development account, including interest accruing in

  8  such account, shall be disregarded in determining eligibility

  9  for any federal or state program. Matching contributions paid

10  directly into such account and contributions by an individual

11  from earnings shall similarly be disregarded in determining

12  eligibility for any state or federal program.

13         Section 2.  This act shall take effect October 1, 2000.

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