1.1 	A bill for an act
1.2 	relating to economic development; providing an angel investment grant; 
1.3 	delaying phase-in of single sales apportionment; appropriating money;amending 
1.4 	Minnesota Statutes 2008, section 290.191, subdivision 2; proposing coding for 
1.5 	new law in Minnesota Statutes, chapter 116J.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. [116J.8737] ANGEL INVESTMENT GRANT PROGRAM.
1.8 		Subdivision 1.Definitions. (a) For the purposes of this section, the following terms 
1.9 	have the meanings given.
1.10 	(b) "Immediate family" means the investor's parent, sibling, or child, or the spouse 
1.11 	of any person listed in this paragraph.
1.12 	(c) "Qualified biotechnology or medical device field" means the business of 
1.13 	manufacturing, processing, assembling, researching, or developing biotechnology, 
1.14 	medical device, pharmaceutical, or diagnostic products, including products of those types 
1.15 	used in agriculture.
1.16 	(d) "Qualified business venture" means a business that satisfies all of the following 
1.17 	conditions:
1.18 	(1) the business has its headquarters in Minnesota;
1.19 	(2) at least 51 percent of the business's employees are employed in Minnesota, and 
1.20 	51 percent of the business's total payroll is paid or incurred in the state;
1.21 	(3) the business is engaged in, or is committed to engage in:
1.22 	(i) using advanced technology to add value to a product, process, or service in a 
1.23 	qualified high-technology field or qualified biotechnology or medical device field;
1.24 	(ii) conducting research in and development of a product, process, or service in a 
1.25 	qualified high-technology field or qualified biotechnology or medical device field;
2.1 	(iii) developing a new product, process, or service in a qualified high-technology 
2.2 	field or qualified biotechnology or medical device field; or
2.3 	(iv) qualified green manufacturing;
2.4 	(4) the business is not engaged in real estate development, insurance, banking, 
2.5 	lending, lobbying, political consulting, information technology consulting, wholesale or 
2.6 	retail trade, leisure, hospitality, transportation, construction, ethanol production from 
2.7 	corn, or professional services provided by attorneys, accountants, business consultants, 
2.8 	physicians, or health care consultants;
2.9 	(5) the business has fewer than 25 employees;
2.10 	(6) a business with more than five employees, measured on a full-time equivalent 
2.11 	basis, pays wages and benefits to all of its employees, other than its first five employees, 
2.12 	equal to or greater than 175 percent of the federal poverty level for a family of four;
2.13 	(7) the business has not been in operation for more than ten consecutive years;
2.14 	(8) the business has not previously received total equity investments of more than 
2.15 	$2,000,000, including any grants received under this section;
2.16 	(9) the business had less than $2,000,000 in annual gross sales receipts for the 
2.17 	previous year; and 
2.18 	(10) the business is not a subsidiary or an affiliate of a business that employs 
2.19 	more than 100 employees or has gross sales receipts for the previous year of more than 
2.20 	$2,000,000, computed by aggregating all of the employees and gross sales receipts of the 
2.21 	business entities affiliated with the business.
2.22 	(e) "Qualified green manufacturing" means a business whose primary business 
2.23 	activity is production of products, processes, methods,  technologies, or services intended 
2.24 	to do one or more of the following:
2.25 	(1) increase the use of energy from renewable sources, as defined in section 
2.26 	216B.1691;
2.27 	(2) increase the energy efficiency of the electric utility infrastructure system or to 
2.28 	increase energy conservation related to electricity use, as provided in sections 216B.2401 
2.29 	and 216B.241;
2.30 	(3) reduce greenhouse gas emissions, as defined in section 216H.01, subdivision 
2.31 	2, or to mitigate greenhouse gas emissions through, but not limited to, carbon capture, 
2.32 	storage, or sequestration;
2.33 	(4) monitor, protect, restore, and preserve the quality of surface waters;
2.34 	(5) expand use of biofuels, including expanding the feasibility or reducing the 
2.35 	cost of producing biofuels or the types of equipment, machinery, and vehicles that can 
2.36 	use biofuels; or
3.1 	(6) reduce waste products resulting from a process, method, or technology.
3.2 	(f) "Qualified high-technology field" means aerospace, agricultural processing, 
3.3 	alternative energy, environmental engineering, food technology, cellulosic ethanol, 
3.4 	information technology, materials science technology, nanotechnology, and 
3.5 	telecommunications. 
3.6 	(g) "Qualified investor" means:
3.7 	(1) a qualified individual investor; or
3.8 	(2) a qualified investment fund.
3.9 	(h) "Qualified individual investor" means an accredited investor, within the 
3.10 	meaning of Regulation D of the Securities and Exchange Commission, Code of Federal 
3.11 	Regulations, title 17, section 230.501(a), whether part of a pass-through entity or not, who:
3.12 	(1) does not own, control, or hold power to vote 20 percent or more of the 
3.13 	outstanding securities of the qualified new business venture in which the eligible 
3.14 	investment is proposed; or
3.15 	(2) does not receive more than 50 percent of the gross annual income from the 
3.16 	qualified new business venture in which the eligible investment is proposed. 
3.17 	A member of the immediate family of an investor disqualified by this paragraph is not a 
3.18 	qualified individual investor.
3.19 	(i) "Qualified investment fund" means a pooled investment fund that:
3.20 	(1) invests in qualifying business ventures;
3.21 	(2) is organized as a limited liability company or other pass-through entity; and
3.22 	(3) has no fewer than five separate investors, each of whom is a qualified individual 
3.23 	investor, and owns no more than 20 percent of the outstanding ownership interests in the 
3.24 	fund. For purposes of determining the number of investors and the ownership interests 
3.25 	of an investor under this clause, the ownership interests of an investor include a member 
3.26 	of the investor's immediate family, and any corporation, limited liability company, 
3.27 	partnership, or trust in which the investor or a member of the investor's immediate family 
3.28 	has a controlling equity interest or in which the investor exercises management control.
3.29 	(j) "Qualified private investment" means an equity investment made in the qualified 
3.30 	business venture by a qualified investor.
3.31 		Subd. 2.Angel investment grants authorized. The commissioner may make grants 
3.32 	to qualified business ventures that have obtained at least $100,000 in qualified private 
3.33 	investments. The grant amount equals one-third of the qualified private investment, but 
3.34 	the total grant to a qualified business venture made may not exceed:
3.35 	(1) the sum of the lesser of the following amounts for each qualified investor in the 
3.36 	qualified business venture:
4.1 	(i) one-third of the investment made; or
4.2 	(ii) $100,000; or
4.3 	(2) $500,000.
4.4 		Subd. 3.Application; provisional certification of qualified business ventures. (a) 
4.5 	A qualified business venture must apply to the commissioner for provisional certification 
4.6 	to receive grants under this section. The application must be in the form, contain 
4.7 	the information, and be made under the procedures specified by the commissioner, 
4.8 	accompanied by an application fee of $250. Fees are appropriated to the commissioner for 
4.9 	personnel and administrative expenses related to administering the program.
4.10 	(b) The commissioner shall provide a provisional certification to each qualified 
4.11 	business venture, upon a showing by the applicant that it meets the requirements of 
4.12 	subdivision 1, paragraph (d), and that it intends to seek and obtain qualified private 
4.13 	investments within the following 12-month period. The provisional certification must 
4.14 	state the maximum dollar amount of the grant to which the business would be entitled 
4.15 	based upon the business's application, but not to exceed the maximum grant permitted 
4.16 	under subdivision 2.
4.17 	(c) A provisional certification expires 12 months after it is issued, unless the 
4.18 	commissioner grants an extension of up to 90 days based on a showing that the business 
4.19 	intends to close on financing qualifying for a grant under this section during that period.
4.20 	(d) The commissioner shall maintain and regularly update a list, posted on the 
4.21 	department's Web site, itemizing the qualified business ventures with provisional 
4.22 	certifications, the provisional dollar amounts certified for each business, and the remaining 
4.23 	available funding for grants for each fiscal year under this section. The commissioner may 
4.24 	post other information on the funding availability and pending grant awards that the 
4.25 	commissioner determines to be useful to apprise the public of the availability of grants. A 
4.26 	qualified business venture may use its provisional certification and the information on the 
4.27 	availability of funding in soliciting qualified private investments.
4.28 		Subd. 4.Grant awards. (a) Upon verification, provided in the form and following 
4.29 	the procedures specified by the commissioner, that the qualified business venture has 
4.30 	received a qualified private investment of $100,000 or more, the commissioner shall 
4.31 	award an angel investment grant to the qualified business venture up to the amount of 
4.32 	its provisional certification to the extent that funding is available under subdivision 6 
4.33 	for the fiscal year. 
4.34 	(b) If insufficient funding is available for the fiscal year, award of the grant is 
4.35 	deferred until funding becomes available in the following fiscal year or a subsequent fiscal 
4.36 	year. Each qualified business has priority for funding based on the date on which the grant 
5.1 	was approved following verification by the commissioner of its entitlement. If two grants 
5.2 	were approved on the same day, funding must be allocated based on a secondary priority 
5.3 	of the date of issuance of the provisional certification of the business.
5.4 		Subd. 5.Funding; appropriation. (a) For purposes of paying the grants authorized 
5.5 	by this section, the following amounts are appropriated to the commissioner from the 
5.6 	general fund:
5.7 	(1) $11,000,000 for fiscal year 2011;
5.8 	(2) $14,000,000 for fiscal year 2012; and
5.9 	(3) $15,000,000 for fiscal year 2013.
5.10 	(b) Notwithstanding the provisions of section 16A.28, the appropriations under this 
5.11 	subdivision are available until expended, except any amounts remaining unexpended 
5.12 	on October 15, 2013, cancel at that time.
5.13 		Subd. 6.Repayment obligation. (a) A qualified business venture must repay the 
5.14 	amount of the grant received under this section during the current year and four preceding 
5.15 	years if it:
5.16 	(1) no longer has its headquarters in Minnesota; or
5.17 	(2) no longer employs at least 51 percent of its employees in Minnesota or no longer 
5.18 	pays or incurs 51 percent of its total payrolls in Minnesota.
5.19 	(b) A qualified business that ceases business operations is not subject to the 
5.20 	repayment obligation in this subdivision.
5.21 		Subd. 7.Data availability. (a) Notwithstanding the provisions of chapter 13, data 
5.22 	collected by the commissioner in awarding grants under this section is available to the 
5.23 	public to the same extent and must be treated by the commissioner in the same manner 
5.24 	as return information under chapter 270B.
5.25 	(b) Notwithstanding paragraph (a), information related to provisional certification 
5.26 	of a qualified business venture is public, including the name, address, and amount 
5.27 	of the provisional grant certification for the business, as well as the information the 
5.28 	commissioner posts on the department's Web site under subdivision 3, paragraph (d).
5.29 		Subd. 8.Report. By February 1 of each year, the commissioner must report to the 
5.30 	committees of the legislature with jurisdiction over economic development issues, in 
5.31 	compliance with sections 3.195 and 3.197, on the number and amount of grants awarded 
5.32 	under this section, the number of employees, payroll, and other relevant activities of 
5.33 	grant recipients in the aggregate, and the geographic distribution of businesses receiving 
5.34 	grants. These reports must be made in a manner that preserves the proprietary and trade 
5.35 	secret information of the grant recipients, but provides sufficient information to permit the 
5.36 	legislature to evaluate the public costs and benefits of the grant program. Upon request 
6.1 	and upon entering appropriate agreements to preserve the nonpublic nature of any of the 
6.2 	information, more detailed information must be made available to researchers affiliated 
6.3 	with the University of Minnesota or other similar higher education institutions seeking to 
6.4 	evaluate the grant program.
6.5 		Subd. 9.Rulemaking. The commissioner's actions in establishing procedures and 
6.6 	requirements and in making determinations and certifications to administer this section are 
6.7 	not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act 
6.8 	contained in chapter 14, and are not subject to section 14.386.
6.9 		Subd. 10.Expiration. The authority to make grants under this section expires on 
6.10 	June 30, 2013, but grants made prior to that date may be paid through October 15, 2013.

6.11 	EFFECTIVE DATE. This section is effective July 1, 2010, and only applies 
6.12 	to investments made after the qualified business venture has been certified by the 
6.13 	commissioner of employment and economic development.

6.14 	Sec. 2. Minnesota Statutes 2008, section 290.191, subdivision 2, is amended to read:
6.15 		Subd. 2.Apportionment formula of general application. (a) Except for those 
6.16 	trades or businesses required to use a different formula under subdivision 3 or section 
6.17 	290.36, and for those trades or businesses that receive permission to use some other 
6.18 	method under section 290.20 or under subdivision 4, a trade or business required to 
6.19 	apportion its net income must apportion its income to this state on the basis of the 
6.20 	percentage obtained by taking the sum of:
6.21 	(1) the percent for the sales factor under paragraph (b) of the percentage which 
6.22 	the sales made within this state in connection with the trade or business during the tax 
6.23 	period are of the total sales wherever made in connection with the trade or business during 
6.24 	the tax period;
6.25 	(2) the percent for the property factor under paragraph (b) of the percentage which 
6.26 	the total tangible property used by the taxpayer in this state in connection with the trade or 
6.27 	business during the tax period is of the total tangible property, wherever located, used by 
6.28 	the taxpayer in connection with the trade or business during the tax period; and
6.29 	(3) the percent for the payroll factor under paragraph (b) of the percentage which 
6.30 	the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor 
6.31 	performed in this state in connection with the trade or business during the tax period are 
6.32 	of the taxpayer's total payrolls paid or incurred in connection with the trade or business 
6.33 	during the tax period.
6.34 	(b) For purposes of paragraph (a) and subdivision 3, the following percentages apply 
6.35 	for the taxable years specified:

7.1
7.2	Taxable years beginning 
during calendar year
		Sales factor 
percent
		Property factor 
percent
		Payroll factor
percent
	
7.3	2007
			78
			11
		11
	
7.4	2008
			81
			9.5
		9.5
	
7.5	2009 through 2011
			84
			8
		8
	
7.6	2010
			87
			6.5
		6.5
	
7.7	2011
			90
			5
		5
	
7.8	2012
			93 87
			3.5 6.5
		3.5 6.5
	
7.9	2013
			96
			2
		2
	
7.10	2014 and later calendar years 
	100
			0
		0

7.11 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
7.12 	December 31, 2009.