1.1                          A bill for an act
  1.2             relating to economic development; authorizing certain 
  1.3             investments; creating a program; appropriating money; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 116J. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [116J.635] [GREATER MINNESOTA BUSINESS 
  1.8   DEVELOPMENT INVESTMENTS.] 
  1.9      Subdivision 1.  [AUTHORIZED INVESTMENTS.] The commissioner 
  1.10  shall invest funds in the form of long-term loans to qualified 
  1.11  business development organizations that serve and are located in 
  1.12  communities outside the seven-county metropolitan area as 
  1.13  defined in section 473.121, subdivision 2, to provide capital 
  1.14  for business lending and investment by the qualified 
  1.15  organizations. 
  1.16     Subd. 2.  [QUALIFIED ORGANIZATIONS.] The commissioner is 
  1.17  authorized to make investments in the following organizations: 
  1.18     (1) Minnesota-based community development financial 
  1.19  institutions, as certified by the United States Department of 
  1.20  the Treasury, which provide business financing to Minnesota 
  1.21  businesses; and 
  1.22     (2) other nongovernmental Minnesota-based organizations 
  1.23  which provide debt financing for, or equity investment in, 
  1.24  Minnesota businesses and which satisfy the provisions in 
  1.25  subdivision 3. 
  2.1      Subd. 3.  [INVESTMENTS AUTHORIZED.] The commissioner may 
  2.2   make investments in organizations which conform to the following 
  2.3   provisions: 
  2.4      (1) The organization seeking an investment of funds 
  2.5   administered by the commissioner must provide collateral or 
  2.6   security for not less than 100 percent of the funds invested in 
  2.7   the organization. 
  2.8      (2) The minimum projected return on the state investment is 
  2.9   determined based on an evaluation of investment risk which takes 
  2.10  into account the overall amount and quality of the collateral or 
  2.11  security offered to the commissioner by the organizations 
  2.12  seeking the state investment and a calculation of the economic 
  2.13  benefits which will accrue to the state as the result of job 
  2.14  creation and tax revenue which will be generated through 
  2.15  business activity financed through the state investment.  In no 
  2.16  case may the projected return on investment be less than one 
  2.17  percent per annum. 
  2.18     (3) The state investment by the commissioner in any 
  2.19  qualifying organization may not exceed $1,000,000. 
  2.20     Subd. 4.  [REQUIREMENTS FOR STATE INVESTMENTS.] All 
  2.21  investments are subject to an investment agreement which must 
  2.22  include: 
  2.23     (1) a description of the certificate or note which the 
  2.24  state receives for the investment; 
  2.25     (2) a description of the business organization and the 
  2.26  management experience and qualifications of the manager for the 
  2.27  organization seeking the investment; 
  2.28     (3) a description of the fiduciary responsibility of the 
  2.29  managing entity; 
  2.30     (4) a description of the use of investment proceeds and the 
  2.31  underwriting criteria to be used by the organization in making 
  2.32  investment decisions; 
  2.33     (5) an explanation of the investment objectives; 
  2.34     (6) a description of the manager's operating costs and 
  2.35  expenses which would be reimbursable from proceeds of the state 
  2.36  investment; 
  3.1      (7) collateral and security pledged to the state; 
  3.2      (8) basis and calculation of return on investment to the 
  3.3   state; 
  3.4      (9) a description of the distribution of gain and principal 
  3.5   to the state; 
  3.6      (10) a description of accounting and reporting standards; 
  3.7      (11) a description of the liquidation plan and time frame 
  3.8   for accomplishment of investment objectives; and 
  3.9      (12) termination rights of the state and the qualifying 
  3.10  organization. 
  3.11     Subd. 5.  [INVESTMENT FUND.] The commissioner shall 
  3.12  establish an investment fund from which fund investments can be 
  3.13  made in qualifying organizations.  The funds repaid by the 
  3.14  qualifying organizations must be returned to the fund for 
  3.15  subsequent reinvestment in eligible organizations. 
  3.16     Sec. 2.  [APPROPRIATION.] 
  3.17     $5,000,000 is appropriated from the general fund to the 
  3.18  commissioner of employment and economic development to provide 
  3.19  loans authorized under section 1.