Minnesota Legislature
SF 2437
as introduced - 89th Legislature (2015 - 2016) Posted on 03/22/2016 08:39am
Current Version - as introduced
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A bill for an act
relating to economic development; making changes to the Urban Initiative
Board and its related programs; providing for statewide access to the program;
appropriating money; amending Minnesota Statutes 2014, sections 116M.14, subdivisions 2, 4, by adding subdivisions; 116M.15, subdivision 1; 116M.17, subdivisions 2, 4; 116M.18.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2014, section 116M.14, subdivision 2, is amended to read:
Subd. 2.
Board.
"Board" means the deleted text begin Urbandeleted text end new text begin Minnesotanew text end Initiative Board.
Sec. 2.
Minnesota Statutes 2014, section 116M.14, is amended by adding a subdivision
to read:
new text begin Subd. 3a. new text end
new text begin Department. new text end
new text begin
"Department" means the Department of Employment and
Economic Development.
new text end
Sec. 3.
Minnesota Statutes 2014, section 116M.14, subdivision 4, is amended to read:
Subd. 4.
Low-income area.
"Low-income area" means:
(1) Minneapolis, St. Paul;
deleted text begin (2) those cities in the metropolitan area as defined in section 473.121, subdivision
2, that have an average income that is below 80 percent of the median income for a
four-person family as of the latest report by the United States Census Bureau;deleted text end and
deleted text begin (3)deleted text end new text begin (2) new text end those cities deleted text begin in the metropolitan area, which contain two or more contiguous
census tractsdeleted text end in which the average family income is less than 80 percent of the median
family income for the Twin Cities metropolitan areanew text begin as of the latest report by the United
States Census Bureaunew text end .
Sec. 4.
Minnesota Statutes 2014, section 116M.14, is amended by adding a subdivision
to read:
new text begin Subd. 4a. new text end
new text begin Low-income person. new text end
new text begin
"Low-income person" means a person who has an
annual income, adjusted for family size, of not more than 80 percent of the area median
family income for the Twin Cities metropolitan area as of the latest report by the United
States Census Bureau.
new text end
Sec. 5.
Minnesota Statutes 2014, section 116M.14, is amended by adding a subdivision
to read:
new text begin Subd. 4b. new text end
new text begin Metropolitan area. new text end
new text begin
"Metropolitan area" has the meaning given in section
473.121, subdivision 2.
new text end
Sec. 6.
Minnesota Statutes 2014, section 116M.14, is amended by adding a subdivision
to read:
new text begin Subd. 6. new text end
new text begin Minority person. new text end
new text begin
"Minority person" means a person belonging to a racial
or ethnic minority as defined in Code of Federal Regulations, title 49, section 23.5.
new text end
Sec. 7.
Minnesota Statutes 2014, section 116M.14, is amended by adding a subdivision
to read:
new text begin Subd. 7. new text end
new text begin Program. new text end
new text begin
"Program" means the Minnesota Initiative program created
by this chapter.
new text end
Sec. 8.
Minnesota Statutes 2014, section 116M.15, subdivision 1, is amended to read:
Subdivision 1.
deleted text begin Creation; membershipdeleted text end new text begin Membershipnew text end .
The deleted text begin Urbandeleted text end new text begin Minnesota
new text end Initiative Board is created and consists of the commissioner of employment and economic
development, the chair of the Metropolitan Council, and deleted text begin eightdeleted text end new text begin 12new text end members from the general
public appointed by the governor. deleted text begin Sixdeleted text end new text begin Ninenew text end of the public members must be representatives
from minority business enterprises. No more than deleted text begin fourdeleted text end new text begin sixnew text end of the public members may be of
one gender. new text begin Appointments must ensure balanced geographic representation. At least half
of the public members must have experience working to address racial income disparities.
new text end All public members must be experienced in business or economic development.
Sec. 9.
Minnesota Statutes 2014, section 116M.17, subdivision 2, is amended to read:
Subd. 2.
Technical assistance.
The deleted text begin board through thedeleted text end departmentdeleted text begin ,deleted text end shall provide
technical assistance and deleted text begin development information services to state agencies, regional
agencies, special districts, local governments, and the public, with special emphasis on
minority communitiesdeleted text end new text begin informational outreach about the program to lenders, nonprofit
corporations, and low-income and minority communities throughout the state that support
the development of business enterprises and entrepreneursnew text end .
Sec. 10.
Minnesota Statutes 2014, section 116M.17, subdivision 4, is amended to read:
Subd. 4.
Reports.
The board shall submit an annual report to the legislature of an
accounting of loans made under section 116M.18, including information on loans deleted text begin to
minority business enterprisesdeleted text end new text begin madenew text end , new text begin the number of jobs created by the program, new text end the impact
on low-income areas, and recommendations concerning minority business development
and jobs for persons in low-income areas.
Sec. 11.
Minnesota Statutes 2014, section 116M.18, is amended to read:
116M.18 deleted text begin URBAN CHALLENGE GRANTSdeleted text end new text begin MINNESOTA INITIATIVE
new text end PROGRAM.
new text begin Subdivision 1. new text end
new text begin Establishment. new text end
new text begin
The Minnesota Initiative program is established to
award grants to nonprofit corporations to fund loans to businesses owned by minority or
low-income persons or women.
new text end
new text begin Subd. 1a. new text end
new text begin Statewide loans. new text end
new text begin
To the extent there is sufficient eligible demand,
loans shall be made so that an approximately equal dollar amount of loans are made to
businesses in the metropolitan area as in the nonmetropolitan area. If funds remain after
the ninth month of the fiscal year, those funds shall revert to the general loan pool and may
be lent in any part of the state.
new text end
deleted text begin Subdivision 1deleted text end new text begin Subd. 1bnew text end .
deleted text begin Eligibility rulesdeleted text end new text begin Grantsnew text end .
The board shall make deleted text begin urban
challengedeleted text end grants deleted text begin for use in low-income areasdeleted text end to nonprofit corporationsnew text begin to fund loans to
businesses owned by minority or low-income persons or women,new text end to encourage private
investment, to provide jobs for minoritynew text begin and low-incomenew text end persons deleted text begin and others in low-income
areasdeleted text end , to create and strengthen minority business enterprises, and to promote economic
development in a low-income area. deleted text begin The board shall adopt rules to establish criteria for
determining loan eligibility.
deleted text end
Subd. 2.
deleted text begin Challengedeleted text end Grant eligibility; nonprofit corporation.
new text begin (a) new text end The board
may enter into agreements with nonprofit corporations to fund deleted text begin and guaranteedeleted text end loans the
nonprofit corporation makes deleted text begin in low-income areas under subdivision 4. A corporation must
demonstrate thatdeleted text end new text begin to businesses owned by minority or low-income persons or women. The
board shall evaluate applications from nonprofit corporations. In evaluating applications,
the board must consider, among other things, whether the nonprofit corporationnew text end :
(1) deleted text begin itsdeleted text end new text begin has anew text end board of directors new text begin that new text end includes citizens experienced in new text begin business
and community new text end development, minority business enterprises, new text begin addressing racial income
disparities, new text end and creating jobs deleted text begin in low-income areasdeleted text end new text begin for low-income and minority personsnew text end ;
(2) deleted text begin itdeleted text end has the technical skills to analyze projects;
(3) deleted text begin itdeleted text end is familiar with other available public and private funding sources and
economic development programs;
(4) deleted text begin itdeleted text end can initiate and implement economic development projects;
(5) deleted text begin itdeleted text end can establish and administer a revolving loan accountnew text begin or has operated a
revolving loan accountnew text end ; deleted text begin and
deleted text end
(6) deleted text begin itdeleted text end can work with job referral networks which assist minority and deleted text begin other persons in
low-income areasdeleted text end new text begin low-income persons; and
new text end
new text begin (7) has established relationships with minority communitiesnew text end .
new text begin
(b) The department shall review existing agreements with nonprofit corporations
every five years and may renew or terminate the agreement based on the review. In making
its review, the department shall consider, among other criteria, the criteria in paragraph (a).
new text end
Subd. 3.
Revolving loan fund.
(a) The board shall establish a revolving loan fund to
make grants to nonprofit corporations for the purpose of making loans deleted text begin and loan guarantees
deleted text end to deleted text begin new and expandingdeleted text end businesses deleted text begin in a low-income area to promotedeleted text end new text begin owned by minority
or low-income persons or women and to supportnew text end minority business enterprises and job
creation for minority and deleted text begin other persons in low-income areasdeleted text end new text begin low-income personsnew text end .
(b)new text begin Nonprofit corporations that receive grants from the department under the
program must establish a commissioner-certified revolving loan fund for the purpose
of making eligible loans.new text end
new text begin (c) new text end Eligible business enterprises include, but are not limited to, technologically
innovative industries, value-added manufacturing, and information industries. Loan
applications given preliminary approval by the nonprofit corporation must be forwarded to
the board for approval. The commissioner must give final approval for each loan deleted text begin or loan
guaranteedeleted text end made by the nonprofit corporation. The amount of the state funds contributed to
any loan deleted text begin or loan guaranteedeleted text end may not exceed 50 percent of each loan.
Subd. 4.
Business loan criteria.
(a) The criteria in this subdivision apply to loans
made deleted text begin or guaranteeddeleted text end by nonprofit corporations under the deleted text begin urban challenge grantdeleted text end program.
(b) Loans deleted text begin or guaranteesdeleted text end must be made to businesses that are not likely to undertake
a project for which loans are sought without assistance from the deleted text begin urban challenge grant
deleted text end program.
(c) A loan deleted text begin or guaranteedeleted text end must be used deleted text begin for a project designed to benefit persons in
low-income areas through the creation of job or business opportunities for themdeleted text end new text begin to support
a business owned by a minority or a low-income person or womannew text end . Priority must be
given for loans to the lowest income areas.
(d) The minimum state contribution to a loan deleted text begin or guaranteedeleted text end is $5,000 and the
maximum is $150,000.
(e) The state contribution must be matched by at least an equal amount of new
private investment.
(f) A loan may not be used for a retail development project.
(g) The business must agree to work with job referral networks that focus on
minoritynew text begin and low-incomenew text end applicants deleted text begin from low-income areasdeleted text end .
Subd. 4a.
Microenterprise loan.
deleted text begin Urban challengedeleted text end new text begin Program new text end grants may be
used to make microenterprise loans to small, beginning businesses, including a sole
proprietorship. Microenterprise loans are subject to this section except that:
(1) they may also be made to qualified retail businesses;
(2) they may be made for a minimum of deleted text begin $1,000deleted text end new text begin $5,000new text end and a maximum of deleted text begin $25,000
deleted text end new text begin $35,000new text end ; deleted text begin and
deleted text end
new text begin
(3) in a low-income area, they may be made for a minimum of $5,000 and a
maximum of $50,000; and
new text end
deleted text begin (3)deleted text end new text begin (4)new text end they do not require a match.
Subd. 5.
Revolving fund administrationdeleted text begin ; rulesdeleted text end .
(a) The board shall establish a
minimum interest rate for loans or guarantees to ensure that necessary loan administration
costs are covered.
(b) Loan repayment deleted text begin amounts equal to one-halfdeleted text end of deleted text begin thedeleted text end principal deleted text begin and interestdeleted text end must be
deleted text begin deposited in a revolving fund created by the board for challenge grants. The remaining
amount of the loan repayment may bedeleted text end new text begin paid to the department for deposit in the revolving
loan fund. Loan interest payments must be new text end deposited in a revolving loan fund created
by the nonprofit corporation originating the loan being repaid for further distribution,
consistent with the loan criteria deleted text begin specified in subdivision 4deleted text end new text begin of this sectionnew text end .
(c) Administrative expenses of the deleted text begin board anddeleted text end nonprofit corporations with whom
the board enters into agreements deleted text begin under subdivision 2deleted text end , including expenses incurred by
a nonprofit corporation in providing financial, technical, managerial, and marketing
assistance to a business enterprise receiving a loan under subdivision 4, may be paid out of
the interest earned on loans and out of interest earned on money invested by the state Board
of Investment under section 116M.16, subdivision 2, as may be provided by the board.
deleted text begin Subd. 6. deleted text end
deleted text begin Rules. deleted text end
deleted text begin
The board shall adopt rules to implement this section.
deleted text end
Subd. 6a.
Nonprofit corporation loans.
The board may make loans to a nonprofit
corporation with which it has entered into an agreement under subdivision deleted text begin 1deleted text end new text begin 2new text end . deleted text begin These
loans must be used to support a new or expanding business.deleted text end This support may include
such forms of financing as the sale of goods to the business on installment or deferred
payments, lease purchase agreements, or royalty investments in the business. The interest
rate charged by a nonprofit corporation for a loan under this subdivision must not exceed
the Wall Street Journal prime rate plus four percent. For a loan under this subdivision, the
nonprofit corporation may charge a loan origination fee equal to or less than one percent
of the loan value. The nonprofit corporation may retain the amount of the origination fee.
The nonprofit corporation must provide at least an equal match to the loan received by the
board. The maximum loan available to the nonprofit corporation under this subdivision is
$50,000. Loans made to the nonprofit corporation under this subdivision may be made
without interest. Repayments made by the nonprofit corporation must be deposited in the
revolving fund created for deleted text begin urban initiativedeleted text end new text begin program new text end grants.
Subd. 7.
Cooperation.
A nonprofit corporation that receives deleted text begin an urban challenge deleted text end new text begin a
programnew text end grant shall cooperate with other organizations, including but not limited to,
community development corporations, community action agencies, and the Minnesota
small business development centers.
Subd. 8.
Reporting requirements.
A nonprofit corporation that receives a
deleted text begin challengedeleted text end new text begin programnew text end grant shall:
(1) submit an annual report to the board by deleted text begin Septemberdeleted text end new text begin Marchnew text end 30 of each year that
includes a description of deleted text begin projectsdeleted text end new text begin businessesnew text end supported by the deleted text begin urban challengedeleted text end grant
program, an account of loans made during the calendar year, the program's impact on
minority business enterprises and job creation for minority persons and new text begin low-income
new text end persons deleted text begin in low-income areasdeleted text end , the source and amount of money collected and distributed by
the deleted text begin urban challenge grantdeleted text end program, the program's assets and liabilities, and an explanation
of administrative expenses; and
(2) provide for an independent annual audit to be performed in accordance with
generally accepted accounting practices and auditing standards and submit a copy of each
annual audit report to the board.
new text begin Subd. 9. new text end
new text begin Capacity building grants. new text end
new text begin
The department may make grants to nonprofit
corporations for the purpose of building their capacity to meet the eligibility criteria for
the grant program under subdivision 2, or in applying for the Department of Employment
and Economic Development's business development competitive grant program. Funding
priority must be given to those applicants that can demonstrate that they have established
relationships with minority communities and have provided small business-related
services primarily to low-income and minority business enterprises.
new text end
Sec. 12. new text begin APPROPRIATION; MINNESOTA INITIATIVE PROGRAM.
new text end
new text begin
$4,000,000 in fiscal year 2017 is appropriated from the general fund to the
commissioner of employment and economic development for the Minnesota Initiative
program under Minnesota Statutes, section 116M.18. Of this amount, up to five percent
is for administration, outreach, and monitoring of the program. This is a onetime
appropriation.
new text end
Sec. 13. new text begin APPROPRIATION FOR CAPACITY BUILDING GRANTS.
new text end
new text begin
$1,000,000 in fiscal year 2017 is appropriated from the general fund to the
commissioner of employment and economic development for making capacity building
grants under Minnesota Statutes, section 116M.18, subdivision 9. This is a onetime
appropriation.
new text end
Sec. 14. new text begin REVISOR'S INSTRUCTION.
new text end
new text begin
In the next editions of Minnesota Statutes and Minnesota Rules, the Revisor of
Statutes shall change the term "Urban Initiative Board" to "Minnesota Initiative Board,"
"board," or similar terms as the context requires.
new text end
Sec. 15. new text begin EFFECTIVE DATE.
new text end
new text begin
Sections 1 to 14 are effective July 1, 2016.
new text end