HF 102

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/03/2011 03:12pm

A bill for an act
relating to economic development; establishing a Minnesota science and
technology program; requiring reports; proposing coding for new law in
Minnesota Statutes, chapter 116W.

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

Section 1.

new text begin [116W.25] CITATION.
new text end

new text begin Sections 116W.26 to 116W.34 may be cited as the "Minnesota science and
technology program."
new text end

Sec. 2.

new text begin [116W.26] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Applicability. new text end

new text begin For the purposes of sections 116W.26 to 116W.34,
the terms in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Authority. new text end

new text begin "Authority" means the Minnesota Science and Technology
Authority established under this chapter.
new text end

new text begin Subd. 3. new text end

new text begin Base-year taxation. new text end

new text begin "Base-year taxation" means the 2010 calendar
year state withholding taxes of science and technology employees working for primary
science and technology companies currently located in or operating in this state. Each
year the commissioner of management and budget shall adjust the base-year taxation by
the annual percentage change over the prior year in the consumer price index for all
urban consumers for the St. Paul-Minneapolis metropolitan area prepared by the United
States Department of Labor.
new text end

new text begin Subd. 4. new text end

new text begin College or university. new text end

new text begin "College or university" means an institution of
postsecondary education, public or private, that grants undergraduate or postgraduate
academic degrees, conducts significant research or development activities in the areas of
science and technology.
new text end

new text begin Subd. 5. new text end

new text begin Commercialization. new text end

new text begin "Commercialization" means any of the full spectrum
of activities required for a new technology, product, or process to be developed from
its basic research of conceptual stage through applied research or development to the
marketplace including, without limitation, the steps leading up to and including licensure,
sales, and services.
new text end

new text begin Subd. 6. new text end

new text begin Commercialized research project. new text end

new text begin "Commercialized research project"
means research conducted within a college or university or nonprofit research institution
or by a qualified science and technology company that has shown advanced commercial
potential through license agreements, patents, or other forms of invention disclosure, and
by which a qualified science and technology company has been or is being currently
formed.
new text end

new text begin Subd. 7. new text end

new text begin Fund. new text end

new text begin "Fund" means the Minnesota science and technology fund.
new text end

new text begin Subd. 8. new text end

new text begin Nonprofit research institution. new text end

new text begin "Nonprofit research institution" means an
entity with its principle place of business in Minnesota, that qualifies under section 501(c)
of the Internal Revenue Code, and that conducts significant research or development
activities in this state in the areas of science and technology.
new text end

new text begin Subd. 9. new text end

new text begin Primary science and technology company. new text end

new text begin "Primary science and
technology company" means a corporation, limited liability company, S corporation,
partnership, limited liability partnership, or sole proprietorship operating within a set of
industries that are the primary developers of new scientific, engineered, or technological
products and services and that operate under the following North American Industry
Classification System codes or industry groups, or any successor code sections covering
these areas of research, development, and commercial activities: 3241, 3251, 3252, 3253,
3254, 3255, 3259, 3331, 3332, 3333, 3336, 3339, 3341, 3342, 3343, 3344, 3345, 3353,
3359, 3364, 3369, 3391, 5112, 5172, 5182, 5415, 5417, 541330, 541380, 541620, 541690.
new text end

new text begin Subd. 10. new text end

new text begin Program. new text end

new text begin "Program" means the Minnesota science and technology
program.
new text end

new text begin Subd. 11. new text end

new text begin Qualified science and technology company. new text end

new text begin "Qualified science and
technology company" means a corporation, limited liability company, S corporation,
partnership, limited liability partnership, or sole proprietorship with fewer than 100
employees that is engaged in research, development, or production of science or
technology in this state including, without limitation, research, development, or production
directed toward developing or providing science and technology products, processes, or
services for specific commercial or public purposes.
new text end

new text begin Subd. 12. new text end

new text begin Withholding taxes. new text end

new text begin "Withholding taxes" means the aggregate of all
amounts withheld from amounts paid to primary science and technology company
employees during a calendar year for the payment of state income taxes under chapter 290.
new text end

Sec. 3.

new text begin [116W.27] MINNESOTA SCIENCE AND TECHNOLOGY FUND.
new text end

new text begin (a) A Minnesota science and technology fund is created in the state treasury. The
fund is a direct-appropriated special revenue fund. Money of the authority must be
paid to the commissioner of management and budget as agent of the authority and the
commissioner shall not commingle the money with other money. The money in the fund
must be paid out only on warrants drawn by the commissioner of management and budget
on requisition of the executive director of the authority or designee.
new text end

new text begin (b) By September 1, 2011, the commissioner of revenue and the authority shall
establish the base-year taxation for all primary science and technology companies. Within
120 days after the end of each year beginning with the year ending December 31, 2011,
and for each subsequent year prior to the end of the last funding year, the commissioner
of revenue and the authority shall determine the increase of aggregate withholding taxes
for the year over the base year taxation.
new text end

new text begin (c) Notwithstanding the provisions of section 290.62, beginning with the taxable
year ending December 31, 2011, the commissioner of management and budget shall
pay annually 85 percent of the increase in aggregate withholding taxes that are over the
base-year taxation amount, as certified by the commissioner of revenue, to the fund. The
annual amount of withholding paid into the fund must not exceed $25,000,000. The
commissioner of management and budget may make estimated payments to the fund more
frequently based on estimates provided by the commissioner of revenue but the payments
must be reconciled annually.
new text end

Sec. 4.

new text begin [116W.28] MINNESOTA SCIENCE AND TECHNOLOGY FUND;
AUTHORIZED USES.
new text end

new text begin The Minnesota science and technology fund may be used for the following to:
new text end

new text begin (1) establish the commercialized research program authorized under section
116W.29;
new text end

new text begin (2) establish the federal research and development support program under section
116W.30;
new text end

new text begin (3) establish the industry technology and competitiveness program under section
116W.31; and
new text end

new text begin (4) carry out the powers of the authority authorized under sections 116W.04 and
116W.32 that are in support of the programs in clauses (1) to (3).
new text end

Sec. 5.

new text begin [116W.29] COMMERCIALIZED RESEARCH PROGRAM.
new text end

new text begin (a) The authority may establish a commercialized research program. The purpose of
the program is to accelerate the commercialization of science and technology products,
processes, or services from colleges or universities, nonprofit research institutions or
qualified science and technology companies that lead to an increase in science and
technology businesses and jobs. The program shall:
new text end

new text begin (1) provide science and technology gap funding of up to $250,000 per science and
technology research project to assist in the commercialization and transfer of science and
technology research projects from a college or university or nonprofit research institution
to a qualified science and technology company; and
new text end

new text begin (2) provide funding of up to $250,000 for early stage development for qualified
science and technology companies to conduct commercialized research projects.
new text end

new text begin (b) All activities under the commercialized research program must require:
new text end

new text begin (1) written criteria set by the authority for the application, award, and use of the
funds;
new text end

new text begin (2) matching funds by the participating qualified science and technology company,
college or university, or nonprofit research institution;
new text end

new text begin (3) no more than 15 percent of the funds awarded by the authority may be used
for overhead costs; and
new text end

new text begin (4) a report by the participating qualified science and technology company, college
or university, or nonprofit research institution that provides documentation of the use of
funds and outcomes of the award. The report must be submitted to the authority within
one calendar year of the date of the award.
new text end

Sec. 6.

new text begin [116W.30] FEDERAL RESEARCH AND DEVELOPMENT SUPPORT
PROGRAM.
new text end

new text begin The authority may establish a federal research and development support program.
The purpose of the program is to increase and coordinate efforts to procure federal funding
for research projects of primary benefit to qualified science and technology companies,
colleges or universities, and nonprofit research institutions. The program shall:
new text end

new text begin (1) develop and execute a strategy to identify specific federal agencies and programs
that support the growth of science and technology industries in this state; and
new text end

new text begin (2) provide grants to qualified science and technology companies:
new text end

new text begin (i) to assist in the development of federal Small Business Innovation (SBIR) or
Small Business Technology Transfer (STTR) proposals; and
new text end

new text begin (ii) to match funds received through SBIR or STTR awards. No more than
$1,500,000 may be awarded in a year for matching grants under this clause.
new text end

Sec. 7.

new text begin [116W.31] INDUSTRY INNOVATION AND COMPETITIVENESS
PROGRAM.
new text end

new text begin (a) The authority may establish an industry technology and competitiveness program.
The purpose of the program is to advance the technological capacity and competitiveness
of existing and emerging science and technology industries. The program shall:
new text end

new text begin (1) provide matching funds to programs and organizations that assist entrepreneurs
in starting and growing qualified science and technology companies including, but not
limited to, matching funds for mentoring programs, consulting and technical services,
and related activities;
new text end

new text begin (2) fund initiatives that retain engineering, science, technology, and mathematical
occupations in the state including, but not limited to, internships, mentoring, and support
of industry and professional organizations; and
new text end

new text begin (3) fund initiatives that support the growth of targeted industry clusters and the
competitiveness of existing qualified science and technology companies in developing
and marketing new products and services.
new text end

new text begin (b) All activities under the industry innovation and competitiveness program shall
require:
new text end

new text begin (i) written criteria set by the authority for the application, award, and use of the funds;
new text end

new text begin (ii) matching funds by the participating qualified science and technology company,
college or university, or nonprofit research institution; and
new text end

new text begin (iii) a report by the participating qualified science and technology company, college
or university, or nonprofit research institution providing documentation on the use of the
funds and outcomes of the award. The report must be submitted to the authority within
one calendar year from the date of the award.
new text end

Sec. 8.

new text begin [116W.32] MINNESOTA SCIENCE AND TECHNOLOGY AUTHORITY;
POWERS UNDER FUND.
new text end

new text begin Subdivision 1. new text end

new text begin General powers. new text end

new text begin The authority shall have all of the powers
necessary to carry out the purposes and provisions of sections 116W.26 to 116W.34,
including, but not limited to, those provided under section 116W.04 and the following:
new text end

new text begin (1) The authority may make awards in the forms of grants or loans, and charge and
receive a reasonable interest for the loans, or take an equity position in form of stock, a
convertible note, or other securities in consideration of an award. Interests, revenues, or
other proceeds received as a result of a transaction authorized by use of this fund shall be
deposited to the corpus of the fund and used in the same manner as the corpus of the fund.
new text end

new text begin (2) In awarding money from the fund, priority shall be given to proposals from
qualified science and technology companies that have demonstrable economic benefit to
the state in terms of the formation of a new private sector business entity, the creation of
jobs, or the attraction of federal and private funding.
new text end

new text begin (3) In awarding money from the fund, priority shall be given to proposals from
colleges or universities and nonprofit research institutions that:
new text end

new text begin (i) promote collaboration between any combination of colleges or universities,
nonprofit research institutions, and private industry;
new text end

new text begin (ii) enhance existing research superiority by attracting new research entities,
research talent, or resources to the state; and
new text end

new text begin (iii) create new research superiority that attracts significant researchers and resources
from outside the state.
new text end

new text begin (4) Subject to the limits in this clause, money within the fund may be used
for reasonable administrative expenses by the authority including staffing and direct
operational expenses, and professional fees for accounting, legal, and other technical
services required to carry out the intent of the program and administration of the fund.
Administrative expenses may not exceed five percent of the first $5,000,000 in the fund
and two percent of any amount in excess of $5,000,000.
new text end

new text begin (5) Before making an award, the authority shall enter into a written agreement with
the entity receiving the award that specifies the uses of the award.
new text end

new text begin (6) If the award recipient has not used the award received for the purposes intended,
as of the date provided in the agreement, the recipient shall repay that amount and any
interest applicable under the agreement to the authority. All repayments must be deposited
to the corpus of the fund.
new text end

new text begin Subd. 2. new text end

new text begin Rules. new text end

new text begin The authority may adopt rules to implement the programs
authorized under sections 116W.29 to 116W.31.
new text end

Sec. 9.

new text begin [116W.33] REPAYMENT.
new text end

new text begin An entity must repay all or a portion of the amount of any award, grant, loan, or
financial assistance of any type paid by the authority under sections 116W.29 to 116W.32
if the entity relocates outside the state or ceases operation in Minnesota within three years
from the date the authority provided the financial award. If the entity relocates outside of
this state or ceases operation in Minnesota within two years of the financial award, the
entity must repay 100 percent of the award. If the entity relocates or ceases operation in
Minnesota after a period of two years but before three years from the date of the financial
award, the entity must repay 75 percent of the financial award.
new text end

Sec. 10.

new text begin [116W.34] EXPIRATION.
new text end

new text begin Sections 116W.26 to 116W.33 expire on the expiration date of the authority under
section 116W.03, subdivision 7. Any unused money in the fund shall be deposited in the
general fund.
new text end