1.1A bill for an act1.2relating to economic development; establishing a manufacturing equipment 1.3loan program for manufacturing businesses in the state; authorizing sale and 1.4issuance of revenue bonds;proposing coding for new law in Minnesota Statutes, 1.5chapter 116J.1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.7    Section 1. [116J.4361] MANUFACTURING EQUIPMENT LOAN PROGRAM.1.8    Subdivision 1.Definitions.(a) For purposes of this section, the following terms 1.9have the meanings given.1.10(b) "Business entity" means a sole proprietorship, partnership, limited liability 1.11corporation, or corporation.1.12(c) "Manufacturing" means manufacturing, fabricating, mining, or refining of 1.13materials resulting in the production of personal property to be sold at wholesale or retail.1.14(d) "Manufacturing equipment" means machinery and equipment purchased and 1.15used in this state by the purchaser essential to the integrated production process of 1.16manufacturing.1.17(e) "Qualifying manufacturing business" means a business entity with at least .. 1.18employees that is involved in manufacturing and is located or has a physical presence in 1.19the state at which the manufacturing equipment will be used.1.20    Subd. 2.Purpose.The commissioner shall administer a manufacturing equipment 1.21loan program under this section to make low-interest, long-term loans to qualifying 1.22manufacturing businesses to purchase and install manufacturing equipment. A 1.23manufacturing business shall apply for a loan under this section in a manner and on a form 1.24prescribed by the commissioner. Loans under this section are intended to cover up to 50 1.25percent of the cost of the project.2.1    Subd. 3.Loan proposals.At least once a year, the commissioner shall publish in 2.2the State Register a request for proposals for a loan under this section. Within 45 days 2.3after the deadline for receipt of proposals, the commissioner shall select proposals based 2.4on the following criteria:2.5    (1) the business growth and jobs that will be created as a result of the loan;2.6(2) the reliability, efficiency, and cost-effectiveness of the manufacturing equipment 2.7to be installed under the proposal;2.8    (3) the geographic distribution of projects throughout the state;2.9    (4) the percentage of total project cost requested;2.10    (5) the proposed security for payback of the loan; and2.11    (6) other criteria determined by the commissioner to maximize economic 2.12development with loans under this section.2.13    Subd. 4.Loan terms.A loan under this section must be issued at the lowest interest 2.14rate required to recover principal and interest plus the costs of issuing the loan, and must be 2.15for a minimum of 15 years, unless the commissioner determines that a shorter loan period 2.16is necessary and feasible. A grace period of up to 24 months before payments become due 2.17on the loan may be extended by the commissioner to qualifying manufacturing businesses.2.18    Subd. 5.Account.A manufacturing equipment loan account is established in the 2.19state treasury. Money in the account consists of the proceeds of revenue bonds issued 2.20under section 116J.4362, interest and other earnings on money in the account, money 2.21received in repayment of loans from the account, and money from any other source 2.22credited to the account.2.23    Subd. 6.Appropriation.Money in the account is appropriated to the commissioner 2.24to make manufacturing equipment loans under this section and to the commissioner of 2.25management and budget to pay debt service and other costs under section 116J.4362. 2.26Payment of debt service costs and funding reserves take priority over use of money in the 2.27account for any other purpose.2.28    Sec. 2. [116J.4362] MANUFACTURING EQUIPMENT LOAN REVENUE 2.29BONDS.2.30    Subdivision 1.Bonding authority; definition.(a) The commissioner of 2.31management and budget, if requested by the commissioner of employment and economic 2.32development, shall sell and issue state revenue bonds for the following purposes:2.33    (1) to make manufacturing equipment loans under section 116J.4361;2.34    (2) to pay the costs of issuance, debt service, and bond insurance or other credit 2.35enhancements, and to fund reserves; and3.1    (3) to refund bonds issued under this section.3.2    (b) The aggregate principal amount of bonds for the purposes of paragraph (a), 3.3clause (1), that may be outstanding at any time may not exceed $.......; the principal 3.4amount of bonds that may be issued for the purposes of paragraph (a), clauses (2) and 3.5(3), is not limited.3.6    (c) For the purpose of this section, "commissioner" means the commissioner of 3.7management and budget.3.8    Subd. 2.Procedure.The commissioner may sell and issue the bonds on the terms 3.9and conditions the commissioner determines to be in the best interests of the state. The 3.10bonds may be sold at public or private sale. The commissioner may enter into any 3.11agreements or pledges the commissioner determines necessary or useful to sell the bonds 3.12that are not inconsistent with section 116J.4361. Sections 16A.672 to 16A.675 apply to 3.13the bonds. The proceeds of the bonds issued under this section must be credited to the 3.14manufacturing equipment loan account created under section 116J.4361.3.15    Subd. 3.Revenue sources.The debt service on the bonds is payable only from the 3.16following sources:3.17    (1) revenue credited to the manufacturing equipment loan account from the sources 3.18identified in section 116J.4361 or from any other source; and3.19    (2) other revenues pledged to the payment of the bonds.3.20    Subd. 4.Refunding bonds.The commissioner may issue bonds to refund 3.21outstanding bonds issued under subdivision 1, including the payment of any redemption 3.22premiums on the bonds and any interest accrued or to accrue to the first redemption date 3.23after delivery of the refunding bonds. The proceeds of the refunding bonds may, at the 3.24discretion of the commissioner, be applied to the purchases or payment at maturity of the 3.25bonds to be refunded, or the redemption of the outstanding bonds on the first redemption 3.26date after delivery of the refunding bonds and may, until so used, be placed in escrow to 3.27be applied to the purchase, retirement, or redemption. Refunding bonds issued under this 3.28subdivision must be issued and secured in the manner provided by the commissioner.3.29    Subd. 5.Not a general or moral obligation.Bonds issued under this section are 3.30not public debt, and the full faith, credit, and taxing powers of the state are not pledged 3.31for their payment. The bonds may not be paid, directly in whole or in part from a tax of 3.32statewide application on any class of property, income, transaction, or privilege. Payment 3.33of the bonds is limited to the revenues explicitly authorized to be pledged under this 3.34section. The state neither makes nor has a moral obligation to pay the bonds if the pledged 3.35revenues and other legal security for them is insufficient.4.1    Subd. 6.Trustee.The commissioner may contract with and appoint a trustee for 4.2bondholders. The trustee has the powers and authority vested in it by the commissioner 4.3under the bond and trust indentures.4.4    Subd. 7.Pledges.A pledge made by the commissioner is valid and binding from 4.5the time the pledge is made. The money or property pledged and later received by the 4.6commissioner is immediately subject to the lien of the pledge without any physical 4.7delivery of the property or money or further act, and the lien of the pledge is valid and 4.8binding as against all parties having claims of any kind in tort, contract, or otherwise 4.9against the commissioner, whether or not those parties have notice of the lien or pledge. 4.10Neither the order nor any other instrument by which a pledge is created need be recorded.4.11    Subd. 8.Bonds; purchase and cancellation.The commissioner, subject to 4.12agreements with bondholders that may then exist, may, out of any money available for the 4.13purpose, purchase bonds of the commissioner at a price not exceeding (1) if the bonds are 4.14then redeemable, the redemption price then applicable plus accrued interest to the next 4.15interest payment date thereon, or (2) if the bonds are not redeemable, the redemption price 4.16applicable on the first date after the purchase upon which the bonds become subject to 4.17redemption plus accrued interest to that date.4.18    Subd. 9.State pledge against impairment of contracts.The state pledges and 4.19agrees with the holders of any bonds that the state will not limit or alter the rights vested in 4.20the commissioner to fulfill the terms of any agreements made with the bondholders, or 4.21in any way impair the rights and remedies of the holders until the bonds, together with 4.22interest on them, with interest on any unpaid installments of interest, and all costs and 4.23expenses in connection with any action or proceeding by or on behalf of the bondholders, 4.24are fully met and discharged. The commissioner may include this pledge and agreement 4.25of the state in any agreement with the holders of bonds issued under this section.