HF 994

1st Engrossment - 91st Legislature (2019 - 2020) Posted on 03/20/2019 12:52pm

A bill for an act
relating to economic development; creating the Venture SE Minnesota
Diversification revolving loan program; appropriating money.

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

Section 1. new text begin PURPOSE.
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new text begin The purpose of this act is to implement resources to further the economic development
initiatives identified within the findings of the economic impact study and analysis of the
effects of current projected economic growth in southeast Minnesota funded and completed
pursuant to Laws 2017, chapter 94, article 1, section 2.
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Sec. 2. new text begin VENTURE SE MINNESOTA DIVERSIFICATION LOAN FUND.
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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 Venture SE Minnesota Diversification revolving
loan program to provide loans to eligible borrowers. The commissioner shall collaborate
with Journey to Growth, who shall serve as the loan administrator under this section.
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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, corporation, or a political subdivision of the state that
engages in or is borrowing in support of one of the following industries:
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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 non durable
goods, the majority of which result in sales to customers located outside the state;
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new text begin (3) technology businesses, the majority of which services or products sell primarily to
customers located outside the state;
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new text begin (4) health care related businesses, the majority of which services or products sell primarily
to customers located outside the state;
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new text begin (5) businesses that provide for the transportation of people within the area served by
this program;
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new text begin (6) child care facilities;
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new text begin (7) residential development projects; and
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new text begin (8) political subdivisions of the state in support of:
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new text begin (i) redevelopment projects;
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new text begin (ii) main street commercial district improvements;
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new text begin (iii) local business infrastructure expansions and improvements; or
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new text begin (iv) transportation infrastructure.
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new text begin (b) An eligible borrower under this section must maintain the eligible industry type
under this paragraph throughout the term of the loan.
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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 elsewhere
in the state of Minnesota without consent from the local municipality from which it is
relocating.
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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 income-qualified housing projects
meaning:
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new text begin (1) for owner-occupied residential property, 95 percent of the housing units must be
initially purchased and occupied by individuals whose family income is less than or equal
to the income requirements for qualified mortgage bond projects under section 143(f) of
the Internal Revenue Code; and
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new text begin (2) for residential property, the property must satisfy the income requirements for a
qualified residential rental project as defined in section 142(d) of the Internal Revenue Code,
for the life of the loan.
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new text begin (d) Loan proceeds may include homeowner remodeling projects that add licensed in-home
child care centers. Loans to licensed in-home child care centers need not be income qualified.
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new text begin (e) Loan proceeds may be used for public infrastructure.
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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 that is not more than
one point above the prime rate as published in the Wall Street Journal on the date of
application depending on credit review except that interest rates for political subdivisions
of the state may be negotiated on a case by case basis and may not exceed one point less
than the prime rate as published in the Wall Street Journal on the date of application. 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.
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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 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.
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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, or partner with another nonprofit development organization's loan approval
committees that already exist in the designated counties, comprised of individuals experienced
in economic development projects and that are representative of the areas served by the
loan fund to review and approve loans made under this section. The loan administrator may
contract with another nonprofit development organization. The loan administrator committee
shall develop a loan application form and provide the application along with application
procedures and deadlines to the commissioner of employment and economic development
who shall publish the same on the department's website.
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new text begin (b) When undertaking promotional activities, the commissioner must use and coordinate
with one or more nonprofit organizations that work directly with businesses and investors
to grow an entrepreneurial ecosystem of greater Minnesota or minority-owned and
women-owned businesses.
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new text begin (c) 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 (d) 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 (e) By January 15, 2020, 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.
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new text begin (f) Beginning August 1, 2020, 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. 3. new text begin APPROPRIATION.
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new text begin $25,000,000 in fiscal year 2020 is appropriated from the general fund to the commissioner
of employment and economic development for the Venture SE Minnesota Diversification
loan fund in section 2. Of this appropriation, $250,000 must be used for promotional activities
under section 2, subdivision 5, paragraph (b). This is a onetime appropriation and is available
until expended.
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