1.1                          A bill for an act 
  1.2             relating to economic development; providing for job 
  1.3             enhancement as a goal of business financing programs; 
  1.4             converting the Minnesota investment fund to a 
  1.5             revolving loan fund; appropriating money; amending 
  1.6             Minnesota Statutes 2002, sections 41A.036, subdivision 
  1.7             2; 116J.011; 116J.411, by adding a subdivision; 
  1.8             116J.415, subdivisions 1, 5; 116J.8731, subdivisions 
  1.9             1, 4, 5, 7; 116J.994, subdivision 4; 116J.995. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2002, section 41A.036, 
  1.12  subdivision 2, is amended to read: 
  1.13     Subd. 2.  [SMALL BUSINESS DEVELOPMENT LOANS; PREFERENCES.] 
  1.14  The following eligible small businesses have preference among 
  1.15  all business applicants for small business development loans: 
  1.16     (1) businesses located in rural areas of the state that are 
  1.17  experiencing the most severe unemployment rates in the state; 
  1.18     (2) businesses that are likely to expand and provide 
  1.19  additional permanent employment in rural areas of the state, or 
  1.20  enhance the quality of existing jobs in those areas; 
  1.21     (3) businesses located in border communities that 
  1.22  experience a competitive disadvantage due to location; 
  1.23     (4) businesses that have been unable to obtain traditional 
  1.24  financial assistance due to a disadvantageous location, minority 
  1.25  ownership, or other factors rather than due to the business 
  1.26  having been considered a poor financial risk; 
  1.27     (5) businesses that utilize state resources and reduce 
  2.1   state dependence on outside resources, and that produce products 
  2.2   or services consistent with the long-term social and economic 
  2.3   needs of the state; and 
  2.4      (6) businesses located in designated enterprise zones, as 
  2.5   described in section 469.168. 
  2.6      Sec. 2.  Minnesota Statutes 2002, section 116J.011, is 
  2.7   amended to read: 
  2.8      116J.011 [MISSION.] 
  2.9      The mission of the department of trade and economic 
  2.10  development is to employ all of the available state government 
  2.11  resources to facilitate an economic environment that produces 
  2.12  net new job growth in excess of the national average, to improve 
  2.13  the quality of existing jobs, and to increase nonresident and 
  2.14  resident tourism revenues.  It is part of the department's 
  2.15  mission that within the department's resources the commissioner 
  2.16  shall endeavor to: 
  2.17     (1) prevent the waste or unnecessary spending of public 
  2.18  money; 
  2.19     (2) use innovative fiscal and human resource practices to 
  2.20  manage the state's resources and operate the department as 
  2.21  efficiently as possible; 
  2.22     (3) coordinate the department's activities wherever 
  2.23  appropriate with the activities of other governmental agencies; 
  2.24     (4) use technology where appropriate to increase agency 
  2.25  productivity, improve customer service, increase public access 
  2.26  to information about government, and increase public 
  2.27  participation in the business of government; 
  2.28     (5) utilize constructive and cooperative labor-management 
  2.29  practices to the extent otherwise required by chapters 43A and 
  2.30  179A; 
  2.31     (6) report to the legislature on the performance of agency 
  2.32  operations and the accomplishment of agency goals in the 
  2.33  agency's biennial budget according to section 16A.10, 
  2.34  subdivision 1; and 
  2.35     (7) recommend to the legislature appropriate changes in law 
  2.36  necessary to carry out the mission and improve the performance 
  3.1   of the department. 
  3.2      Sec. 3.  Minnesota Statutes 2002, section 116J.411, is 
  3.3   amended by adding a subdivision to read: 
  3.4      Subd. 2a.  [JOB ENHANCEMENT.] "Job enhancement" means:  
  3.5      (1) an increase in wages; 
  3.6      (2) an increase in the responsibility or skill level of job 
  3.7   duties; or 
  3.8      (3) the provision of additional training or education for 
  3.9   employees in existing jobs.  
  3.10     Sec. 4.  Minnesota Statutes 2002, section 116J.415, 
  3.11  subdivision 1, is amended to read: 
  3.12     Subdivision 1.  [ORGANIZATION.] The commissioner shall make 
  3.13  challenge grants to regional organizations to encourage private 
  3.14  investment, to provide jobs or job enhancement for low-income 
  3.15  persons, and to promote economic development in the rural areas 
  3.16  of the state. 
  3.17     Sec. 5.  Minnesota Statutes 2002, section 116J.415, 
  3.18  subdivision 5, is amended to read: 
  3.19     Subd. 5.  [LOAN CRITERIA.] The following criteria apply to 
  3.20  loans made under the challenge grant program:  
  3.21     (1) loans must be made to businesses that are not likely to 
  3.22  undertake a project for which loans are sought without 
  3.23  assistance from the challenge grant program; 
  3.24     (2) a loan must be used for a project designed principally 
  3.25  to benefit low-income persons through the creation of job or 
  3.26  business opportunities or job enhancement for them; 
  3.27     (3) the minimum loan is $5,000 and the maximum is $200,000; 
  3.28     (4) a loan may not exceed 50 percent of the total cost of 
  3.29  an individual project; 
  3.30     (5) a loan may not be used for a retail development 
  3.31  project; and 
  3.32     (6) a business applying for a loan, except a 
  3.33  microenterprise loan under subdivision 6, must be sponsored by a 
  3.34  resolution of the governing body of the local governmental unit 
  3.35  within whose jurisdiction the project is located. 
  3.36     Sec. 6.  Minnesota Statutes 2002, section 116J.8731, 
  4.1   subdivision 1, is amended to read: 
  4.2      Subdivision 1.  [PURPOSE.] The Minnesota investment fund is 
  4.3   created to provide financial assistance, through partnership 
  4.4   with communities, for the creation of new employment or to 
  4.5   maintain existing employment, and for business start-up, 
  4.6   expansions, and retention.  It shall accomplish these goals by 
  4.7   the following means: 
  4.8      (1) creation or retention of permanent private-sector jobs 
  4.9   in order to create above-average economic growth consistent with 
  4.10  environmental protection, which includes investments in 
  4.11  technology and equipment that increase productivity and provide 
  4.12  for a higher wage; 
  4.13     (2) stimulation or leverage of private investment to ensure 
  4.14  economic renewal and competitiveness; 
  4.15     (3) increasing the local tax base, based on demonstrated 
  4.16  measurable outcomes, to guarantee a diversified industry mix; 
  4.17     (4) improving the quality of existing jobs, based on 
  4.18  increases in wages or improvements in the job duties, training, 
  4.19  or education associated with those jobs; 
  4.20     (5) improvement of employment and economic opportunity for 
  4.21  citizens in the region to create a reasonable standard of 
  4.22  living, consistent with federal and state guidelines on low- to 
  4.23  moderate-income persons; and 
  4.24     (5) (6) stimulation of productivity growth through improved 
  4.25  manufacturing or new technologies, including cold weather 
  4.26  testing.  
  4.27     Sec. 7.  Minnesota Statutes 2002, section 116J.8731, 
  4.28  subdivision 4, is amended to read: 
  4.29     Subd. 4.  [ELIGIBLE PROJECTS.] Assistance must be evaluated 
  4.30  on the existence of the following conditions: 
  4.31     (1) creation of new jobs or, retention of existing jobs, or 
  4.32  improvements in the quality of existing jobs as measured by the 
  4.33  wages, skills, or education associated with those jobs; 
  4.34     (2) increase in the tax base; 
  4.35     (3) the project can demonstrate that investment of public 
  4.36  dollars induces private funds; 
  5.1      (4) the project can demonstrate an excessive public 
  5.2   infrastructure or improvement cost beyond the means of the 
  5.3   affected community and private participants in the project; 
  5.4      (5) the project provides higher wage levels to the 
  5.5   community or will add value to current workforce skills; 
  5.6      (6) whether assistance is necessary to retain existing 
  5.7   business; and 
  5.8      (7) whether assistance is necessary to attract out-of-state 
  5.9   business.  
  5.10     A grant or loan cannot be made based solely on a finding 
  5.11  that the conditions in clause (6) or (7) exist.  A finding must 
  5.12  be made that a condition in clause (1), (2), (3), (4), or (5) 
  5.13  also exists. 
  5.14     Applications recommended for funding shall be submitted to 
  5.15  the commissioner. 
  5.16     Sec. 8.  Minnesota Statutes 2002, section 116J.8731, 
  5.17  subdivision 5, is amended to read: 
  5.18     Subd. 5.  [GRANT LIMITS.] A Minnesota investment fund grant 
  5.19  may not be approved for an amount in excess of 
  5.20  $500,000 $1,000,000.  This limit covers all money paid to 
  5.21  complete the same project, whether paid to one or more grant 
  5.22  recipients and whether paid in one or more fiscal years.  The 
  5.23  commissioner may determine a project is not the same project for 
  5.24  purposes of the grant limit even though the projects have some 
  5.25  relationship, if the commissioner finds that the project is 
  5.26  independent of the project for which grants were previously 
  5.27  made.  The portion of a Minnesota investment fund grant that 
  5.28  exceeds $100,000 must be repaid to the state when it is repaid 
  5.29  to the local community or recognized Indian tribal government by 
  5.30  the person or entity to which it was loaned by the local 
  5.31  community or Indian tribal government.  Money repaid to the 
  5.32  state must be credited to the general fund a Minnesota 
  5.33  investment revolving loan account in the state treasury.  Funds 
  5.34  in the account are appropriated to the commissioner and must be 
  5.35  used in the same manner as are funds appropriated to the 
  5.36  Minnesota investment fund.  Funds repaid to the state through 
  6.1   existing Minnesota investment fund agreements must be credited 
  6.2   to the Minnesota investment revolving loan account effective 
  6.3   July 1, 2003.  A grant or loan may not be made to a person or 
  6.4   entity for the operation or expansion of a casino or a store 
  6.5   which is used solely or principally for retail sales.  Persons 
  6.6   or entities receiving grants or loans must pay each employee 
  6.7   total compensation, including benefits not mandated by law, that 
  6.8   on an annualized basis is equal to at least 110 percent of the 
  6.9   federal poverty level for a family of four. 
  6.10     Sec. 9.  Minnesota Statutes 2002, section 116J.8731, 
  6.11  subdivision 7, is amended to read: 
  6.12     Subd. 7.  [CONTRACTUAL OBLIGATION.] A business receiving 
  6.13  Minnesota investment fund grants must demonstrate why the grant 
  6.14  is necessary for a project and enter into an agreement with the 
  6.15  local grantor.  The agreement, among other things, must obligate 
  6.16  the recipient to pay the minimum compensation set by this 
  6.17  section and meet job creation or job enhancement goals.  A 
  6.18  recipient that breaches the agreement must repay the grant 
  6.19  directly to the commissioner.  Repayments under this subdivision 
  6.20  must be deposited in the general fund Minnesota investment 
  6.21  revolving loan account.  If the commissioner determines, during 
  6.22  the repayment period of a Minnesota investment fund loan, that 
  6.23  the project for which the loan was made is in imminent danger of 
  6.24  ceasing operations due to financial difficulties, the 
  6.25  commissioner may elect to delay or forgive loan payments due on 
  6.26  the loan for a period of no more than two years.  In making a 
  6.27  determination about whether a recipient qualifies for possible 
  6.28  forgiveness or delay in payments, the commissioner must consider 
  6.29  all available information regarding the health of the affected 
  6.30  business and the industry in which it operates, the potential 
  6.31  for displacement of workers in the event that operations cease, 
  6.32  and the likelihood that a delay or forgiveness of payments will 
  6.33  provide the business with a reasonable ability to improve its 
  6.34  financial condition. 
  6.35     Sec. 10.  Minnesota Statutes 2002, section 116J.994, 
  6.36  subdivision 4, is amended to read: 
  7.1      Subd. 4.  [WAGE AND JOB GOALS.] The subsidy agreement, in 
  7.2   addition to any other goals, must include:  (1) goals for the 
  7.3   number of jobs created, which may include separate goals for the 
  7.4   number of part-time or full-time jobs, or, in cases where job 
  7.5   loss is specific and demonstrable, goals for the number of jobs 
  7.6   retained; and (2) wage goals for the any jobs created or 
  7.7   retained; and (3) wage goals for any jobs to be enhanced through 
  7.8   increased wages.  After a public hearing, if the creation or 
  7.9   retention of jobs is determined not to be a goal, the wage and 
  7.10  job goals may be set at zero. 
  7.11     In addition to other specific goal time frames, the wage 
  7.12  and job goals must contain specific goals to be attained within 
  7.13  two years of the benefit date. 
  7.14     Sec. 11.  Minnesota Statutes 2002, section 116J.995, is 
  7.15  amended to read: 
  7.16     116J.995 [ECONOMIC GRANTS.] 
  7.17     An appropriation rider in an appropriation to the 
  7.18  department of trade and economic development that specifies that 
  7.19  the appropriation be granted to a particular business or class 
  7.20  of businesses must contain a statement of the expected benefits 
  7.21  associated with the grant.  At a minimum, the statement must 
  7.22  include goals for the number of jobs created or enhanced, wages 
  7.23  paid, and the tax revenue increases due to the grant.  The wage 
  7.24  and job goals must contain specific goals to be attained within 
  7.25  two years of the benefit date.  The statement must specify the 
  7.26  recipient's obligation if the recipient does not attain the 
  7.27  goals.  At a minimum, the statement must require a recipient 
  7.28  failing to meet the job and wage goals to pay back the 
  7.29  assistance plus interest to the department of trade and economic 
  7.30  development provided that repayment may be prorated to reflect 
  7.31  partial fulfillment of goals.  The interest rate must be set at 
  7.32  no less than the implicit price deflator as defined under 
  7.33  section 116J.994, subdivision 6.  The legislature, after a 
  7.34  public hearing, may extend for up to one year the period for 
  7.35  meeting the goals provided in the statement. 
  7.36     Sec. 12.  [APPROPRIATION.] 
  8.1      $....... is appropriated to the commissioner of trade and 
  8.2   economic development for the Minnesota investment fund.