SF 4029

as introduced - 90th Legislature (2017 - 2018) Posted on 04/23/2018 04:03pm

A bill for an act
relating to economic development; creating the greater southeast Minnesota
diversification revolving loan program; appropriating money.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin GREATER SOUTHEAST MINNESOTA DIVERSIFICATION LOANS.
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new text begin Subdivision 1. new text end

new text begin Establishment; revolving loan fund. new text end

new text begin The commissioner of employment
and economic development must establish a greater southeast Minnesota diversification
revolving loan program to provide loans to eligible borrowers. The commissioner shall
collaborate with Journey to Growth (J2G), who shall serve as the loan administrator under
this section.
new text end

new text begin Subd. 2. new text end

new text begin Eligible borrower. new text end

new text begin (a) To receive a loan under this section, the borrower must
be a sole proprietorship, partnership, or corporation that has been engaged in one of the
following industries for at least two years:
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new text begin (1) agriculture, including farms that produce or supply inputs into value-added products
produced within the state of Minnesota;
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new text begin (2) manufacturers or suppliers to manufacturers that produce durable and nondurable
goods, the majority of which result in sales to customers located outside the state; and
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new text begin (3) technology businesses, the majority of which whose services or products sell primarily
to customers located outside the state.
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new text begin (b) Health care, real estate development projects, and wholesale and retail sales industries
are ineligible under this section. An eligible borrower under this section must maintain the
eligible industry type under this paragraph throughout the term of the loan.
new text end

new text begin (c) An eligible borrower must be located within the counties of Dodge, Fillmore,
Freeborn, Goodhue, Houston, Mower, Olmsted, Rice, Steele, Wabasha, and Winona, but
not within the city of Rochester, nor is a business eligible if it is relocating from an ineligible
community to an eligible community.
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new text begin (d) The eligible borrower must identify at least one individual owner or partner of a sole
proprietorship, partnership, or corporation that has a personal credit score of at least 680.
The eligible borrower must maintain a credit score of 680 or above throughout the duration
of the loan.
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new text begin Subd. 3. new text end

new text begin Use of loan proceeds. new text end

new text begin (a) Loan proceeds must be used for the purposes described
in this subdivision.
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new text begin (b) Loan proceeds may be used for the purchase of equipment and construction of or
improvement to facilities that improve energy efficiency or competitiveness of overall
business operations. Eligible borrowers seeking loans for this purpose must document in
the loan application how the project completion increases the competitiveness or energy
efficiency of the business.
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new text begin (c) Loan proceeds may be used to assist financing of workforce housing projects or the
construction or improvement of day care facilities, including homeowner remodeling projects
that add licensed in-home day care centers. Loans awarded under this paragraph require a
....... percent financial match from the eligible borrower.
new text end

new text begin Subd. 4. new text end

new text begin Loan terms. new text end

new text begin (a) The maximum term of a loan made under this section must
not exceed ten years. The loan administrator must set an interest rate between 98 and 102
percent of the participating financial institution's rate, depending on credit review. The loan
administrator may charge a onetime fee of up to 0.5 percent of the amount loaned for
administrative services. This fee may be deducted from the loan proceeds.
new text end

new text begin (b) The loan amount may be the lesser of 25 percent of the total project costs or $500,000
per project. The borrower or the participating financial institution must provide the balance
of funds needed to fully fund the proposed project. The fund administrator may subordinate
all or a portion of its position to other financial institutions who provide project funding.
new text end

new text begin Subd. 5. new text end

new text begin Fund administration; report. new text end

new text begin (a) The loan administrator shall establish and
administer a revolving loan fund that contains any appropriation for the purposes of this
section, interest, fees, and loan proceeds. The loan administrator shall form a loan approval
committee comprised of individuals experienced in economic development projects to
review and approve loans made under this section. The loan administrator may contract
with another nonprofit development organization or provide the fund's direct services with
the prior approval of the commissioner. The loan administrator committee shall develop a
loan application form and provide the loan application along with application procedures
and deadlines to the commissioner of employment and economic development who shall
publish the same on the department's Web site.
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new text begin (b) The loan administrator may use up to $500,000 of program income annually generated
from interest and fees to offset any administrative costs.
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new text begin (c) The loan administrator may invest all income over expenses in businesses eligible
under subdivision 2 to develop regional apprenticeship, internship, and mentorship programs.
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new text begin (d) By January 15, 2019, and annually thereafter, the loan administrator must report to
the commissioner of employment and economic development and legislative committees
with jurisdiction over economic development on all uses of funds under this section, including
but not limited to current balance of funds, loan activity, status of all loans made, and costs
associated with administering the program.
new text end

new text begin (e) Beginning August 1, 2019, the commissioner of employment and economic
development shall certify the loan administrators annual budget before the expenditure of
any funds and shall provide the legislative committees with jurisdiction over economic
development a copy of the certification. The program is subject to audit by the legislative
auditor.
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Sec. 2. new text begin APPROPRIATION.
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new text begin $25,000,000 in fiscal year 2019 is appropriated from the general fund to the commissioner
of employment and economic development for the greater southeast Minnesota diversification
revolving loan program in section 1. This is a onetime appropriation and is available until
expended.
new text end