| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to economic development; appropriating money for the GroundBreak |
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| 3 | 3 | | 1.3 capital access and innovation fund; requiring a report. |
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| 4 | 4 | | 1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 5 | 5 | | 1.5 Section 1. GROUNDBREAK CAPITAL ACCESS AND INNOVATION FUND. |
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| 6 | 6 | | 1.6 Subdivision 1.Definitions.(a) For the purposes of this section, the following terms have |
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| 7 | 7 | | 1.7the meanings given. |
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| 8 | 8 | | 1.8 (b) "Commissioner" means the commissioner of employment and economic development. |
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| 9 | 9 | | 1.9 (c) "Originating partner" means a community development financial institution or |
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| 10 | 10 | | 1.10nonprofit organization engaged in business development or economic development. |
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| 11 | 11 | | 1.11 (d) "Startup" means a business that is seeking seed funding to initiate or expand revenue. |
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| 12 | 12 | | 1.12 (e) "Equity enhancements" means financial assistance that increases ownership. |
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| 13 | 13 | | 1.13 (f) "GroundBreak" means a coalition of philanthropic, private, and civic partners working |
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| 14 | 14 | | 1.14to expand access to flexible capital and traditional bank loans. |
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| 15 | 15 | | 1.15 (g) "GroundBreak loan pool" is private capital for low-cost, long-term loans. |
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| 16 | 16 | | 1.16 Subd. 2.Appropriation.$50,000,000 in fiscal year 2026 is appropriated from the general |
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| 17 | 17 | | 1.17fund to the commissioner of employment and economic development for a grant to the |
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| 18 | 18 | | 1.18Minneapolis Foundation to improve access to capital for entrepreneurship, commercial real |
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| 19 | 19 | | 1.19estate development, and homeownership through forgivable business loans, commercial |
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| 20 | 20 | | 1.20real estate equity enhancements, and forgivable down payment assistance loans. The base |
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| 21 | 21 | | 1Section 1. |
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| 22 | 22 | | REVISOR SS/LJ 25-0248902/03/25 |
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| 23 | 23 | | State of Minnesota |
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| 24 | 24 | | This Document can be made available |
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| 25 | 25 | | in alternative formats upon request |
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| 26 | 26 | | HOUSE OF REPRESENTATIVES |
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| 27 | 27 | | H. F. No. 1114 |
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| 28 | 28 | | NINETY-FOURTH SESSION 2.1for this appropriation is $25,000,000 in fiscal year 2028, $25,000,000 in fiscal year 2029, |
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| 29 | 29 | | 2.2and $0 in fiscal year 2030. |
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| 30 | 30 | | 2.3 Subd. 3.Forgivable startup business loans.(a) The Minneapolis Foundation shall |
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| 31 | 31 | | 2.4provide capital to originating partners to make forgivable startup loans to eligible businesses |
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| 32 | 32 | | 2.5using criteria and reporting requirements approved by the commissioner. |
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| 33 | 33 | | 2.6 (b) To be eligible for a forgivable business loan under this subdivision, a business must: |
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| 34 | 34 | | 2.7 (1) have primary business operations located in the state; |
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| 35 | 35 | | 2.8 (2) be a startup business seeking capital to grow; |
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| 36 | 36 | | 2.9 (3) lack access to startup capital through a traditional financial institution or other sources; |
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| 37 | 37 | | 2.10 (4) submit a business plan; and |
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| 38 | 38 | | 2.11 (5) complete a technical assistance program provided by an originating partner or obtain |
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| 39 | 39 | | 2.12a letter of recommendation from an originating partner stating that the business plan is |
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| 40 | 40 | | 2.13complete and has been reviewed and recommended for a loan. |
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| 41 | 41 | | 2.14 (c) Forgivable loans may be used for inventory purchases, payroll, rent, technology, |
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| 42 | 42 | | 2.15equipment, marketing, professional services, leasehold improvements, and other similar |
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| 43 | 43 | | 2.16expenses related to business formation or growth. |
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| 44 | 44 | | 2.17 (d) Forgivable loans under this subdivision shall not exceed $50,000. |
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| 45 | 45 | | 2.18 (e) No business or individual may receive more than one forgivable loan under this |
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| 46 | 46 | | 2.19subdivision. |
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| 47 | 47 | | 2.20 (f) The originating partner shall forgive 100 percent of the loan after three years if the |
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| 48 | 48 | | 2.21business uses funds for approved purposes. |
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| 49 | 49 | | 2.22 (g) Preference shall be given to businesses that seek to hire at least one W-2 employee. |
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| 50 | 50 | | 2.23 Subd. 4.Commercial real estate equity enhancements.(a) The Minneapolis Foundation |
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| 51 | 51 | | 2.24shall provide capital to originating partners to provide equity enhancements for commercial |
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| 52 | 52 | | 2.25real estate developments using criteria and reporting requirements approved by the |
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| 53 | 53 | | 2.26commissioner. |
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| 54 | 54 | | 2.27 (b) To be eligible for an equity enhancement under this subdivision, a project must: |
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| 55 | 55 | | 2.28 (1) have primary business operations located in the state; |
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| 56 | 56 | | 2.29 (2) have total project costs under $10,000,000; and |
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| 57 | 57 | | 2.30 (3) submit a complete development plan. |
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| 58 | 58 | | 2Section 1. |
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| 59 | 59 | | REVISOR SS/LJ 25-0248902/03/25 3.1 (c) Preference shall be given to developments that secure at least 60 percent of senior |
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| 60 | 60 | | 3.2debt through a traditional financial institution and up to 35 percent of junior debt through |
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| 61 | 61 | | 3.3an originating partner that provides capital through the GroundBreak loan pool. |
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| 62 | 62 | | 3.4 (d) Equity enhancements under this subdivision must not exceed $250,000. |
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| 63 | 63 | | 3.5 Subd. 5.Forgivable down payment assistance loans.(a) The Minneapolis Foundation |
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| 64 | 64 | | 3.6shall provide capital to originating partners for the Advancing Black Homeownership |
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| 65 | 65 | | 3.7Community Fund Special Purpose Credit Program or a similar special purpose credit program |
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| 66 | 66 | | 3.8for forgivable down payment assistance loans using criteria and reporting requirements |
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| 67 | 67 | | 3.9approved by the commissioner. |
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| 68 | 68 | | 3.10 (b) To be eligible for a forgivable loan under this subdivision, an applicant must qualify |
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| 69 | 69 | | 3.11as an eligible borrower of an approved special purpose credit program under Code of Federal |
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| 70 | 70 | | 3.12Regulations, title 12, section 1002.8, Regulation B, and: |
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| 71 | 71 | | 3.13 (1) be a resident of the seven-county metropolitan area; |
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| 72 | 72 | | 3.14 (2) have no present ownership interest in a principal residence during the previous |
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| 73 | 73 | | 3.15three-year period; and |
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| 74 | 74 | | 3.16 (3) have annual income equal to or less than the Start Up Income Limits for one to two |
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| 75 | 75 | | 3.17person households published by the Minnesota Housing Finance Agency. |
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| 76 | 76 | | 3.18 (c) Forgivable loans under this subdivision must not exceed $25,000. |
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| 77 | 77 | | 3.19 (d) The originating partner shall forgive 100 percent of the loan over five years subject |
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| 78 | 78 | | 3.20to the following: |
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| 79 | 79 | | 3.21 (1) a loan under this subdivision is forgivable at the rate of 20 percent per year. The |
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| 80 | 80 | | 3.22prorated balance is repayable if the property converts to nonowner occupancy, is sold, is |
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| 81 | 81 | | 3.23subjected to an ineligible refinance, an unauthorized transfer of title, or a completed |
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| 82 | 82 | | 3.24foreclosure action within the loan term; |
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| 83 | 83 | | 3.25 (2) recapture may be waived in the event of a financial or personal hardship with the |
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| 84 | 84 | | 3.26approval of the originating partner; and |
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| 85 | 85 | | 3.27 (3) recaptured funds must be returned to the program for redistribution to eligible |
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| 86 | 86 | | 3.28borrowers. |
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| 87 | 87 | | 3.29 (e) Forgivable loans under this subdivision may be combined with other state, federal, |
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| 88 | 88 | | 3.30or local down payment assistance programs. |
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| 89 | 89 | | 3Section 1. |
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| 90 | 90 | | REVISOR SS/LJ 25-0248902/03/25 4.1 Subd. 6.Program administration.(a) The Minneapolis Foundation shall establish |
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| 91 | 91 | | 4.2appropriate accounting practices for the purpose of tracking forgivable loans and equity |
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| 92 | 92 | | 4.3enhancements. |
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| 93 | 93 | | 4.4 (b) Up to five percent of a forgivable startup loan and commercial real estate equity |
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| 94 | 94 | | 4.5enhancement under this section may be used by originating partners for administration and |
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| 95 | 95 | | 4.6monitoring of the program, and up to an additional three percent may be used by the |
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| 96 | 96 | | 4.7originating partner for technical assistance to applicants for help with language, culture, |
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| 97 | 97 | | 4.8and technology. |
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| 98 | 98 | | 4.9 (c) Up to ten percent of a forgivable down payment assistance loan under this section |
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| 99 | 99 | | 4.10may be used for administration of the program. |
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| 100 | 100 | | 4.11 (d) Any money appropriated in fiscal year 2026 not committed by June 30, 2029, must |
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| 101 | 101 | | 4.12be returned to the commissioner and canceled back to the general fund. |
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| 102 | 102 | | 4.13 Subd. 7.Reporting requirements.(a) By February 15, 2027, and annually until February |
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| 103 | 103 | | 4.1415, 2030, the Minneapolis Foundation shall submit a report to the chairs and ranking minority |
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| 104 | 104 | | 4.15members of the legislative committees with jurisdiction over economic development on the |
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| 105 | 105 | | 4.16use of funds and program outcomes. This report shall include the following: |
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| 106 | 106 | | 4.17 (1) the number of businesses, commercial real estate projects, and homeowners to which |
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| 107 | 107 | | 4.18capital was provided; |
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| 108 | 108 | | 4.19 (2) a description of businesses and commercial real estate projects supported by the |
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| 109 | 109 | | 4.20program; |
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| 110 | 110 | | 4.21 (3) aggregated demographic information as specified by the commissioner regarding |
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| 111 | 111 | | 4.22each recipient; and |
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| 112 | 112 | | 4.23 (4) the program's impact on job creation. |
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| 113 | 113 | | 4.24 (b) The Minneapolis Foundation must establish and maintain a public website reporting |
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| 114 | 114 | | 4.25on the use of funds and any relevant performance measures. Up to four percent of funds |
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| 115 | 115 | | 4.26may be used by the Minneapolis Foundation for administration and monitoring of the |
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| 116 | 116 | | 4.27program. |
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| 117 | 117 | | 4.28 (c) By February 15, 2027, the Minneapolis Foundation must complete an independent |
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| 118 | 118 | | 4.29audit of the use of funds under this section in accordance with standard accounting practices. |
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| 119 | 119 | | 4Section 1. |
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| 120 | 120 | | REVISOR SS/LJ 25-0248902/03/25 |
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