SF 2301

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/15/2023 11:56am

A bill for an act
relating to energy; establishing the Minnesota Innovative Finance Authority to
provide financing and leverage private investment for clean energy and other
projects; requiring a report; proposing coding for new law in Minnesota Statutes,
chapter 216C.

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

Section 1.

new text begin [216C.441] MINNESOTA INNOVATION FINANCE AUTHORITY.
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new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
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new text begin (b) "Advisory task force" means the Minnesota Innovation Finance Authority advisory
task force.
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new text begin (c) "Authority" means the Minnesota Innovation Finance Authority.
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new text begin (d) "Clean energy project" has the meaning given to "qualified project" in paragraph
(k), clauses (1) to (4).
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new text begin (e) "Credit enhancement" means a pool of capital set aside to cover potential losses on
loans made by private lenders. Credit enhancement includes but is not limited to loan loss
reserves and loan guarantees.
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new text begin (f) "Energy storage system" has the meaning given in section 216B.2422, subdivision
1, paragraph (f).
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new text begin (g) "Fuel cell" means a cell that converts the chemical energy of hydrogen directly into
electricity through electrochemical reactions.
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new text begin (h) "Greenhouse gas emissions" has the meaning given to "statewide greenhouse gas
emissions" in section 216H.01, subdivision 2.
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new text begin (i) "Loan loss reserve" means a pool of capital set aside to reimburse a private lender if
a customer defaults on a loan, up to an agreed-upon percentage of loans originated by the
private lender.
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new text begin (j) "Microgrid system" means an electrical grid that (1) serves a discrete geographical
area from distributed energy resources, and (2) can operate independently from the central
electric grid on a temporary basis.
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new text begin (k) "Qualified project" means a project, technology, product, service, or measure
predominantly focused on clean energy, electrification, or energy or climate resilience as
follows:
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new text begin (1) a project, technology, product, service, or measure that:
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new text begin (i) results in the reduction of energy use while providing the same level of service or
output obtained before the project, technology, product, service, function, or measure was
applied;
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new text begin (ii) shifts the use of electricity by retail customers in response to changes in the price of
electricity that vary over time or provides other incentives designed to shift electricity
demand from times when market prices are high or when system reliability is jeopardized;
or
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new text begin (iii) significantly reduces greenhouse gas emissions relative to greenhouse gas emissions
produced before the project is implemented, excluding projects that generate power from
the combustion of fossil fuels;
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new text begin (2) the development, construction, deployment, alteration, or repair of any:
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new text begin (i) project, technology, product, service, or measure that generates electric power from
renewable energy; or
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new text begin (ii) distributed generation system, energy storage system, smart grid technology, microgrid
system, fuel cell system, or combined heat and power system;
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new text begin (3) the installation, construction, or use of end-use electric technology that replaces
existing fossil-fuel-based technology;
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new text begin (4) a project, technology, product, service, or measure that supports the development
and deployment of electric vehicle charging stations and associated infrastructure;
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new text begin (5) a project that reduces net greenhouse gas emissions or improves climate resiliency,
including but not limited to reforestation, afforestation, forestry management, and
regenerative agriculture;
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new text begin (6) the construction or enhancement of infrastructure that is planned, designed, and
operated in a manner that anticipates, prepares for, and adapts to current and projected
changing climate conditions so that the infrastructure withstands, responds to, and more
readily recovers from disruptions caused by the current and projected changing climate
conditions; and
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new text begin (7) the development, construction, deployment, alteration, or repair of any project,
technology, product, service, or measure that: (i) reduces water use while providing the
same or better level and quality of service or output that was obtained before implementing
the water-saving approach; or (ii) protects, restores, or preserves the quality of groundwater
and surface waters, including but not limited to actions that further the purposes of the Clean
Water Legacy Act, as provided in section 114D.10, subdivision 1.
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new text begin (l) "Regenerative agriculture" means farming methods that reduce agriculture's
contribution to climate change by increasing the soil's ability to absorb atmospheric carbon
and convert the atmospheric carbon to soil carbon.
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new text begin (m) "Renewable energy" has the meaning given in section 216B.2422 and includes fuel
cells generated from renewable energy.
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new text begin (n) "Smart grid" means a digital technology that (1) allows for two-way communication
between a utility and the utility's customers, and (2) enables the utility to control power
flow and load in real time.
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new text begin Subd. 2. new text end

new text begin Establishment; purpose. new text end

new text begin (a) By September 1, 2023, the department must
establish and convene a Minnesota Innovation Finance Authority Advisory Task Force.
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new text begin (b) By February 1, 2024, the Minnesota Innovation Finance Authority Advisory Task
Force must establish the Minnesota innovation finance authority as a nonprofit corporation,
including the development of the nonprofit board under chapter 317A, and must seek
designation as a charitable tax-exempt organization under section 501(c)(3) of the Internal
Revenue Code of 1986, as amended. The advisory task force must engage independent legal
counsel with relevant experience in nonprofit corporate law to help establish the nonprofit
corporation. The nonprofit corporation must be governed by a board of directors.
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new text begin (c) The authority must establish bylaws, subject to approval by the commissioner.
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new text begin (d) The initial board of directors must include at least a majority of the members of the
advisory task force established under subdivision 5.
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new text begin (e) When incorporated, the authority must serve as an independent, nonprofit corporation
for public benefit whose purpose is to (1) promote investments in qualified clean energy,
efficiency, electrification, and other climate-mitigation-related projects, and (2) accelerate
the deployment of qualified projects by reducing the up-front and total cost of adoption.
The authority may achieve the purposes under this paragraph by leveraging public sources
and additional private sources of capital through the strategic deployment of public money
in the form of loans, credit enhancements, and other financing mechanisms, along with
strategies that stimulate demand.
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new text begin (f) The authority must:
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new text begin (1) identify underserved markets for qualified projects in Minnesota, develop programs
to overcome market impediments, and provide access to financing to serve the projects and
underserved markets;
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new text begin (2) except for projects within identified disadvantaged communities, as determined by
the commissioner, that may limit an investment, strategically prioritize money to leverage
private investment in qualified projects, achieving a high ratio of private to public money
invested through funding mechanisms that support, enhance, and complement private
investment;
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new text begin (3) coordinate with existing government- and utility-based programs to ensure (i) the
most effective use of the authority's resources, (ii) that financing terms and conditions
offered are well-suited to qualified projects, (iii) coordination of communication with respect
to all financing options under this section and other state and utility programs, and (iv) the
authority's activities add to and complement the efforts of state and utility partners;
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new text begin (4) serve as an informational resource for contractors interested in installing qualified
projects by (i) forming partnerships with and educating contractors regarding the authority's
financing programs, and (ii) coordinating multiple contractors on projects that install multiple
qualifying technologies;
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new text begin (5) develop innovative and inclusive marketing strategies to stimulate project owner
interest in targeted underserved markets;
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new text begin (6) serve as a financial resource to reduce the up-front and total costs to borrowers;
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new text begin (7) prioritize projects that maximize greenhouse gas emission reductions or address
disparities in access to clean energy projects for underserved communities;
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new text begin (8) ensure that workers employed by contractors and subcontractors performing
construction work on projects over $100,000, financed all or in part by the authority, are
paid wages not less than the prevailing wage on similar construction projects in the applicable
locality;
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new text begin (9) develop rules, policies, and procedures specifying borrower eligibility and other
terms and conditions for financial support offered by the fund that must be met before
financing support is provided for any qualified clean energy project;
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new text begin (10) develop and administer (i) policies to collect reasonable fees for authority services,
and (ii) risk management activities that are sufficient to support ongoing authority activities;
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new text begin (11) subject to review by the department, develop and adopt a work plan to accomplish
all of the activities required of the authority and update the work plan on an annual basis;
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new text begin (12) develop consumer protection standards governing the authority's investments to
ensure the authority and partners provide financial support in a responsible and transparent
manner that is in the financial interest of participating project owners and serves the defined
underserved markets and disadvantaged communities; or
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new text begin (13) establish and maintain an online and mobile-access portal that provides access to
all authority programs and financial products, including rates, terms, and conditions of all
financing support programs, unless disclosure of the information constitutes a trade secret
or confidential commercial or financial information.
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new text begin Subd. 3. new text end

new text begin Additional department responsibilities. new text end

new text begin In addition to the responsibilities
listed in this section, the department must:
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new text begin (1) review consumer protection standards established by the authority; and
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new text begin (2) provide standard state oversight to money appropriated under this section.
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new text begin Subd. 4. new text end

new text begin Additional authorized activities. new text end

new text begin (a) The authority is authorized to:
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new text begin (1) engage in any activities of a Minnesota nonprofit corporation operating under chapter
317A;
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new text begin (2) develop and employ financing methods to support qualified projects, including:
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new text begin (i) credit enhancement mechanisms that reduce financial risk for private lenders by
providing assurance that a limited portion of a loan is assumed by the fund via a loan loss
reserve, loan guarantee, or other mechanism;
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new text begin (ii) co-investment, where the fund invests directly in a clean energy project by providing
senior or subordinated debt, equity, or other mechanisms in conjunction with a private
financier's investment; and
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new text begin (iii) serving as an aggregator of many small and geographically dispersed qualified
projects, where the authority may provide direct lending, investment, or other financial
support in order to diversify risk; and
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new text begin (3) seek to qualify as a community development financial institution under United States
Code, title 12, section 4702.
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new text begin (b) If the authority is qualified as a community development financial institution, the
authority must be treated as a qualified community development entity for the purposes of
sections 45D and 1400(m) of the Internal Revenue Code.
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new text begin Subd. 5. new text end

new text begin Advisory task force; membership. new text end

new text begin (a) The Minnesota Innovation Finance
Authority Advisory Task Force is established and consists of 15 members as follows:
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new text begin (1) the commissioner of commerce or the commissioner's designee, who serves as chair
of the advisory task force;
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new text begin (2) the commissioner of employment and economic development or the commissioner's
designee;
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new text begin (3) the commissioner of the Pollution Control Agency or the commissioner's designee;
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new text begin (4) the commissioner of agriculture or the commissioner's designee;
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new text begin (5) two additional members appointed by the governor;
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new text begin (6) two additional members appointed by the speaker of the house;
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new text begin (7) two additional members appointed by the president of the senate; and
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new text begin (8) five members that have extensive life or work experience within economically
disadvantaged communities that the authority aims to serve, appointed by the governor and
the commissioners identified in clauses (1) to (4).
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new text begin (b) The members appointed to the advisory task force under paragraph (a), clauses (6)
and (7), must have expertise in matters relating to energy conservation, clean energy,
economic development, banking, law, finance, or other matters relevant to the work of the
advisory task force.
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new text begin (c) When appointing a member to the advisory task force, consideration must be given
to whether the advisory task force members collectively reflect the geographical and ethnic
diversity of Minnesota.
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new text begin (d) Members of the advisory task force must abide by the conflict of interest provisions
under section 43A.38.
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new text begin (e) In order to ensure participation, the commissioner may provide a nominal grant to
any advisory task force member that demonstrates financial need in order to participate.
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new text begin Subd. 6. new text end

new text begin Report; audit. new text end

new text begin Beginning February 1, 2025, the authority must annually submit
a comprehensive report on the authority's activities for the previous fiscal year to the governor
and the chairs and ranking minority members of the legislative committees with primary
jurisdiction over energy policy. The report must contain, at a minimum, information
regarding:
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new text begin (1) the amount of authority capital invested, itemized by project type;
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new text begin (2) the amount of private capital leveraged as a result of authority investments, itemized
by project type;
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new text begin (3) the number of qualified projects supported, itemized by project type and location
within Minnesota;
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new text begin (4) the estimated number of jobs created and tax revenue generated as a result of the
authority's activities;
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new text begin (5) the number of clean energy projects financed in low- and moderate-income
households; and
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new text begin (6) the authority's financial statements.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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