HF 1948

1st Committee Engrossment - 86th Legislature (2009 - 2010) Posted on 03/19/2013 07:29pm

1.1A bill for an act

1.2relating to economic development; establishing an investment fund for eligible
1.3organizations; authorizing loans; appropriating money;proposing coding for new
1.4law in Minnesota Statutes, chapter 116J.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6    Section 1. [116J.417] GREATER MINNESOTA BUSINESS DEVELOPMENT
1.7INVESTMENT FUND.
1.8    Subdivision 1. Eligible organization. For the purposes of this section, "eligible
1.9organization" means an organization selected under section 116J.415, subdivision 3, that
1.10provides business financing to greater Minnesota businesses.
1.11    Subd. 2. Investment fund establishment. The commissioner shall establish an
1.12investment fund from which fund investments can be made in eligible organizations. The
1.13funds repaid by the eligible organizations must be returned to the fund for subsequent
1.14reinvestment in eligible organizations.
1.15    Subd. 3. Authorized investments. The commissioner may make investments in
1.16eligible organizations. The commissioner shall invest funds in the form of loans to eligible
1.17organizations for the purpose of providing capital to new and expanding businesses in the
1.18form of debt or equity, or both.
1.19    Subd. 4. Investment authorized. The commissioner may make investments in
1.20eligible organizations under the following terms:
1.21(1) the organization seeking an investment of funds must guarantee repayment of not
1.22less than 100 percent of the funds invested in the eligible organization;
1.23(2) the investments must be made in the form of a loan to the eligible organization
1.24for a term of ten years, at an interest rate of one percent;
2.1(3) during the ten-year term of the loan, the eligible organization must make annual
2.2interest-only payments;
2.3(4) at the end of the ten-year term, the eligible organization must make a payment in
2.4the entire principal amount of the initial loan;
2.5(5) the state investment by the commissioner in any eligible organization must
2.6not exceed $2,000,000;
2.7(6) the full amount of state investment must be advanced to the approved eligible
2.8organization upon execution of a formal investment agreement, specifying the terms of the
2.9loan, as well as reporting and other requirements outlined in subdivision 5;
2.10(7) the eligible organization must maintain the funds in accounts that allow the funds
2.11to be readily available for business investments;
2.12(8) the eligible organization must make business investments totaling the entire
2.13amount of funds loaned by the state within three years of the execution of the investment
2.14agreement and subsequent transmittal of the funds; and
2.15(9) an eligible organization that receives an investment under this section must
2.16report annually, in a format prescribed by the commissioner, the nature and amount of
2.17the business investments made, including, for each financing transaction involving funds
2.18received pursuant to this section, all forms and amounts of financing provided by the
2.19eligible organization from sources other than the investment fund established pursuant to
2.20this section, along with the number of jobs created and private sector investment leveraged.
2.21    Subd. 5. Requirements for state investments. All investments are subject to an
2.22investment agreement which must include:
2.23(1) a description of the eligible organization, including business finance experience,
2.24qualifications, and investment history;
2.25(2) a description of the uses of investment proceeds by the eligible organization;
2.26(3) an explanation of the investment objectives;
2.27(4) a description of accounting and reporting standards to be used by the eligible
2.28organization; and
2.29(5) a copy of the most recent audited financial statements of the eligible organization.

2.30    Sec. 2. APPROPRIATION.
2.31$12,000,000 is appropriated in fiscal year 2010 from the general fund to the
2.32commissioner of employment and economic development to provide loans authorized
2.33under section 1. This appropriation is available until expended.