HF 3638

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to economic development; authorizing certain investments; creating a
program; appropriating money; proposing coding for new law in Minnesota
Statutes, chapter 116J.

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

Section 1.

new text begin [116J.635] GREATER MINNESOTA BUSINESS DEVELOPMENT
INVESTMENTS.
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new text begin new text end

new text begin Subdivision 1. new text end

new text begin Authorized investments. new text end

new text begin The commissioner shall invest funds in
the form of long-term loans to qualified business development organizations that service
and are located in communities outside the seven-county metropolitan area as defined in
section 473.121, subdivision 2, to provide capital for business lending and investment by
the qualified organizations.
new text end

new text begin Subd. 2. new text end

new text begin Qualified organizations. new text end

new text begin The commissioner is authorized to make
investments in the following organizations:
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new text begin (1) Minnesota-based community development financial institutions, as certified
by the United States Department of the Treasury, that provide business financing to
Minnesota businesses; and
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new text begin (2) other nongovernmental Minnesota-based organizations that provide debt
financing for, or equity investment in, Minnesota businesses and that satisfy the provisions
in subdivision 3.
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new text begin Subd. 3. new text end

new text begin Investments authorized. new text end

new text begin The commissioner may make investments in
organizations that conform to the following provisions:
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new text begin (1) the organizations seeking an investment of funds administered by the
commissioner must provide collateral or security for not less than 100 percent of the
funds invested in the organization;
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new text begin (2) the minimum projected return on the state investment is determined based on
an evaluation of investment risk that takes into account the overall amount and quality
of the collateral or security offered to the commissioner by the organizations seeking the
state investment and a calculation of the economic benefits that will accrue to the state as
the result of job creation and tax revenue that will be generated through business activity
financed through the state investment. In no case may the projected return on investment
be less than one percent per annum; and
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new text begin (3) the state investment by the commissioner in any qualifying organization may
not exceed $2,000,000.
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new text begin Subd. 4. new text end

new text begin Requirements for state investments. new text end

new text begin All investments are subject to an
investment agreement that must include:
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new text begin (1) a description of the certificate or note that the state receives for the investment;
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new text begin (2) a description of the business organization and the management experience and
qualifications of the manager for the organization seeking the investment;
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new text begin (3) a description of the fiduciary responsibility of the managing entity;
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new text begin (4) a description of the use of investment proceeds and the underwriting criteria to
be used by the organization in making investment decisions;
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new text begin (5) an explanation of the investment objectives;
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new text begin (6) a description of the manager's operating costs and expenses that would be
reimbursable from proceeds of the state investment;
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new text begin (7) collateral and security pledged to the state;
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new text begin (8) the basis and calculation of return on investment to the state;
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new text begin (9) a description of the distribution of gain and principal to the state;
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new text begin (10) a description of accounting and reporting standards;
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new text begin (11) a description of the liquidation plan and time frame for accomplishment of
investment objectives; and
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new text begin (12) termination rights of the state and the qualifying organization.
new text end

new text begin Subd. 5. new text end

new text begin Investment fund. new text end

new text begin The commissioner shall establish an investment fund
from which fund investments can be made in qualifying organizations. The funds repaid
by the qualifying organizations must be returned to the fund for subsequent reinvestment
in eligible organizations.
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Sec. 2. new text begin APPROPRIATION.
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new text begin $12,000,000 is appropriated from the general fund to the commissioner of
employment and economic development to provide loans authorized under section 1.
new text end