Senate File 417 - Introduced SENATE FILE 417 BY COMMITTEE ON ECONOMIC GROWTH (SUCCESSOR TO SF 274) A BILL FOR An Act creating a technology prairie by promoting an 1 environment to foster the growth of technology, start-up, 2 and small businesses and to attract a skilled workforce by 3 providing incentives and financial assistance to businesses. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1850SV (3) 85 ad/sc

S.F. 417 DIVISION I 1 LEGISLATIVE FINDINGS —— PURPOSES 2 Section 1. LEGISLATIVE FINDINGS —— PURPOSES. 3 1. The general assembly finds all of the following: 4 a. That small businesses and start-up businesses may not 5 qualify for conventional financing and may lack the resources 6 to expand a business. 7 b. That the limited availability of a skilled workforce 8 hampers economic growth of small and start-up businesses in the 9 state. 10 c. That to enhance competitiveness and foster economic 11 development, this state must focus on the technological, 12 cultural, and community environment in order to attract a 13 skilled workforce and improve the economic climate for small 14 businesses throughout the state. 15 2. The general assembly declares the purposes of this Act to 16 be all of the following: 17 a. To promote a cultural and community environment which 18 encourages the retention of skilled technology workers in the 19 state and attracts other skilled technology workers to the 20 state. 21 b. To create incentives and assistance to compete with other 22 markets in attracting a skilled technology workforce. 23 c. To create incentives and assistance to increase the flow 24 of capital to start-up businesses and small businesses seeking 25 to expand in the state. 26 d. To promote the advancement of technology in the state to 27 assist small businesses throughout the state. 28 e. To create a technology prairie which promotes a cultural, 29 technological, community, and economic development environment 30 that fosters the growth of small businesses and start-up 31 companies and attracts a skilled technology workforce. 32 DIVISION II 33 EXCITE IOWA GRANT PROGRAM 34 Sec. 2. NEW SECTION . 303.96 Excite Iowa grant program. 35 -1- LSB 1850SV (3) 85 ad/sc 1/ 11

S.F. 417 1. The department of cultural affairs shall establish and 1 administer an excite Iowa grant program. The excite Iowa grant 2 program is established to provide grants to nonprofit entities 3 seeking to invest in community economic activities. A grant 4 shall not be awarded to a nonprofit entity unless the entity 5 can match at least twenty percent of the amount of the grant 6 to be awarded. The matching funds may be from the nonprofit 7 entity, businesses, private foundations, federal or local 8 government funds, financial institutions, or individuals. 9 2. The grants are to be used by the nonprofit entity to 10 invest in community economic activities. Community economic 11 activities are those activities that promote and assist 12 with the visual arts, music, literature, drama, fine arts, 13 recreation including trails, and other related community 14 activities and events as deemed appropriate by the department. 15 3. In awarding a grant to a nonprofit entity to invest in 16 community economic activities, the department may consider the 17 following: 18 a. The nonprofit entity’s relationship to the community. 19 b. The location of the community and the need for community 20 economic activity in the community. 21 c. The overall geographic diversity of the applicants for 22 grants, including urban and rural communities. 23 d. The type of activity in which the nonprofit entity seeks 24 to invest. 25 e. Any other information the department deems relevant. 26 4. The department may accept, reject, or defer a nonprofit 27 entity’s application for a grant under this section. 28 5. A grant awarded under the program to a nonprofit entity 29 shall not exceed two hundred fifty thousand dollars. 30 6. The department may enter into an agreement with a 31 nonprofit entity selected to receive financial assistance 32 pursuant to this section for purposes of ensuring the program 33 is administered pursuant to the requirements of this section. 34 7. a. The department may seek the repayment of a grant 35 -2- LSB 1850SV (3) 85 ad/sc 2/ 11

S.F. 417 provided pursuant to this section as provided in paragraph “b” . 1 b. If, after receiving a grant from the department pursuant 2 to this section, the nonprofit entity fails to use the awarded 3 moneys for the purposes described in subsections 1 and 2, all 4 or a portion of the grant received is subject to immediate 5 repayment to, and recapture by, the department. 6 c. All repayments and recaptures of grants awarded under the 7 program shall be remitted to the department. 8 8. The department shall adopt rules pursuant to chapter 17A 9 as necessary to administer the program. 10 Sec. 3. NEW SECTION . 303.97 Excite Iowa grant fund. 11 1. An excite Iowa grant fund is created in the state 12 treasury under the control of the department of cultural 13 affairs and consisting of moneys appropriated by the general 14 assembly and any other moneys available to and obtained or 15 accepted by the department for deposit in the fund. 16 2. The fund shall be used to provide grants under the excite 17 Iowa grant program established in section 303.96. 18 3. Interest payments and repayments and recaptures 19 of moneys provided as grants pursuant to section 303.96, 20 subsection 7, shall be deposited in the fund. 21 4. Moneys in the fund are not subject to section 8.33. 22 Notwithstanding section 12C.7, subsection 2, interest or 23 earnings on moneys in the fund shall be credited to the fund. 24 DIVISION III 25 SMALL BUSINESS MICROLOAN PROGRAM 26 Sec. 4. NEW SECTION . 15E.25 Small business microloan 27 program. 28 1. The economic development authority shall establish and 29 administer a small business microloan program. The small 30 business microloan program is established to provide loans to 31 local economic organizations to provide microloans to small 32 businesses. 33 2. To receive a loan from the program, the local economic 34 development organization shall demonstrate a dollar-for-dollar 35 -3- LSB 1850SV (3) 85 ad/sc 3/ 11

S.F. 417 fund match. The matching funds may be from a business, private 1 foundations, or individuals. 2 3. A loan awarded under the program to any local economic 3 development organization shall not exceed two hundred fifty 4 thousand dollars. 5 4. In awarding loans to local economic development 6 organizations to provide microloans to small businesses, the 7 authority may consider the following: 8 a. The local economic development organization’s 9 relationship to the community. 10 b. The local economic development organization’s ability to 11 provide accounting and audits of the microloans. 12 c. The location of the local economic development 13 organization. 14 d. The overall geographic diversity of the applicants for 15 loans, including urban and rural communities. 16 e. Any other information the authority deems relevant. 17 5. The authority may accept, reject, or defer a local 18 economic development organization’s application for funds under 19 this section. 20 6. a. The authority shall enter into an agreement with a 21 local economic development organization selected to receive 22 a loan pursuant to this section for purposes of ensuring the 23 program is administered pursuant to the requirements of this 24 section. 25 b. Upon repayment of the microloan by the business to 26 the local economic development organization, the authority 27 may require payment of an administrative fee of up to one 28 percent of the microloan to be deposited in the small business 29 microloan program revolving loan fund established in section 30 15E.26. 31 7. a. A local economic development organization awarded 32 financial assistance pursuant to this section shall establish 33 a microloan application process and conduct a microloan 34 program for small businesses. A local economic development 35 -4- LSB 1850SV (3) 85 ad/sc 4/ 11

S.F. 417 organization receiving financial assistance pursuant to this 1 section may accept and evaluate, and approve, deny, or defer, 2 applications for financial assistance from small businesses 3 pursuant to the requirements of this section. 4 b. A local economic development organization receiving 5 assistance shall only provide a microloan using the loan 6 awarded by the authority pursuant to this section for a new 7 or expanding business in this state which has twenty or fewer 8 employees at the time of the business’s application to the 9 local economic development organization. 10 c. The amount of a microloan awarded by a local economic 11 development organization using the loan awarded by the 12 authority pursuant to this section shall not exceed fifteen 13 thousand dollars to any single business. 14 d. The local economic development organization shall conduct 15 an annual audit of the small businesses to which it provided a 16 microloan using funds received pursuant to this section. 17 8. a. The authority may seek the recapture of a loan 18 provided pursuant to this section as provided in paragraph “b” . 19 b. If, after receiving financial assistance from the 20 authority pursuant to this section, the local economic 21 development organization fails to use the moneys for the 22 purposes described in subsections 1 and 7, all or a portion 23 of the financial assistance received is subject to immediate 24 repayment to, or recapture by, the authority. 25 c. All payments, repayments, and interest on loans awarded 26 to an economic development organization under the program shall 27 be remitted to the authority. 28 9. The authority shall adopt rules pursuant to chapter 17A 29 as necessary to administer the program. 30 Sec. 5. NEW SECTION . 15E.26 Small business microloan 31 program revolving loan fund. 32 1. A small business microloan program revolving loan fund 33 is created in the state treasury under the control of the 34 economic development authority. The revolving loan fund shall 35 -5- LSB 1850SV (3) 85 ad/sc 5/ 11

S.F. 417 be administered by the authority and shall consist of moneys 1 appropriated by the general assembly, moneys collected by the 2 authority as fees, and any other moneys obtained or accepted 3 by the authority for deposit in the revolving loan fund. The 4 proceeds of the revolving loan fund are appropriated to the 5 authority and shall be used to provide loans under the small 6 business microloan program established in section 15E.25. 7 2. Payments of interest on loans and repayments or 8 recaptures of moneys provided to an economic development 9 organization shall be deposited in the revolving loan fund. 10 3. Moneys in the fund are not subject to section 8.33. 11 Notwithstanding section 12C.7, subsection 2, interest or 12 earnings on moneys in the fund shall be credited to the fund. 13 DIVISION IV 14 BROADBAND LOAN PROGRAM 15 Sec. 6. NEW SECTION . 15E.367 Broadband loan program. 16 1. The economic development authority shall establish and 17 administer a broadband loan program to provide low-interest 18 loans to broadband and telecommunications businesses to expand 19 broadband access in the state. 20 2. In awarding loans to businesses to invest in expanding 21 broadband access, the authority may consider the following: 22 a. The business’s relationship to the community. 23 b. The location of the community and the need for broadband 24 access in the community. 25 c. The overall geographic diversity of the applicants for 26 loans, including urban and rural communities. 27 d. Any other information the authority deems relevant. 28 3. The authority may accept, reject, or defer a business 29 entity’s application for funds under this section. 30 4. In awarding financial assistance, the authority shall 31 ensure that businesses that seek to expand broadband access to 32 communities that are underserved or are not served by broadband 33 technology shall receive financial assistance prior to 34 awarding financial assistance to businesses that seek to expand 35 -6- LSB 1850SV (3) 85 ad/sc 6/ 11

S.F. 417 broadband access to communities that have adequate service. 1 5. A loan awarded under the program to any single business 2 entity shall not exceed two hundred fifty thousand dollars. 3 6. The authority shall enter into an agreement with a 4 business entity selected to receive financial assistance 5 pursuant to this section for purposes of ensuring the program 6 is administered pursuant to the requirements of this section. 7 The agreement shall set the loan period and interest rate of 8 the loan. 9 7. a. The authority may seek immediate repayment or 10 recapture of the financial assistance awarded pursuant to this 11 section as provided in paragraph “b” . 12 b. If, after receiving financial assistance from the 13 authority pursuant to this section, the business entity 14 fails to use the awarded moneys for the purposes described in 15 subsection 1, all or a portion of the financial assistance 16 received is subject to immediate repayment or recapture. 17 c. All repayments, recaptures, and interest on loans awarded 18 under the program shall be remitted to the authority to be 19 deposited in the broadband loan program fund established in 20 section 15E.368. 21 8. The economic development authority shall have the power 22 to bond as necessary to carry out the purposes of the broadband 23 loan program. The bonds shall be issued in the same manner 24 as, and under the same conditions and restrictions of, section 25 15.106D. 26 Sec. 7. NEW SECTION . 15E.368 Broadband loan program fund. 27 1. A broadband loan program fund is created in the state 28 treasury under the control of the economic development 29 authority and consisting of moneys appropriated by the general 30 assembly and any other moneys available to and obtained or 31 accepted by the authority for placement in the fund. 32 2. Payments or repayments of moneys provided, and interest, 33 shall be deposited in the fund. 34 3. The fund shall be used to provide low-interest loans 35 -7- LSB 1850SV (3) 85 ad/sc 7/ 11

S.F. 417 under the broadband loan program established in section 1 15E.367. 2 4. Moneys in the fund are not subject to section 8.33. 3 Notwithstanding section 12C.7, subsection 2, interest or 4 earnings on moneys in the fund shall be credited to the fund. 5 EXPLANATION 6 This bill relates to the establishment of programs to 7 provide financial and community incentives and financial 8 assistance to businesses in the state. 9 Division I provides the legislative findings and establishes 10 the purposes of the bill. 11 Division II of the bill requires the department of cultural 12 affairs (DCA) to establish an excite Iowa grant program 13 and establishes an excite Iowa grant program fund under the 14 department’s control for the purpose of providing grants to 15 nonprofit entities seeking to invest in community economic 16 activities, as defined in the bill. 17 To receive an excite Iowa grant, a nonprofit entity must 18 match at least 20 percent of the amount of the grant with 19 funds from the business, private foundations, federal or local 20 government funds, financial institutions, or individuals. A 21 grant awarded under the program may not exceed $250,000. 22 The bill allows DCA to consider the nonprofit entity’s 23 relationship with the community, the location of the community 24 in which the nonprofit entity seeks to invest, the geographic 25 diversity of the applicants, the type of activity in which the 26 nonprofit entity seeks to invest, and other information DCA 27 deems relevant in awarding the grants. 28 The bill authorizes DCA to enter into an agreement with a 29 nonprofit entity selected to receive financial assistance to 30 ensure compliance with the program requirements. The bill 31 allows DCA to seek repayments or recaptures of all or a portion 32 of grant moneys if the nonprofit entity receiving the grant 33 fails to use the awarded moneys to invest in a community 34 economic activity. 35 -8- LSB 1850SV (3) 85 ad/sc 8/ 11

S.F. 417 The bill requires DCA to adopt rules to administer the 1 program. 2 Division III of the bill requires the economic development 3 authority to establish and administer a small business 4 microloan program and revolving loan fund to provide loans to 5 local economic development organizations to provide microloans 6 to small businesses. 7 The bill requires a local economic development organization 8 to demonstrate a dollar-for-dollar match to receive assistance 9 under the program. The bill provides that the maximum amount 10 of a loan to any single economic development organization may 11 not exceed $250,000. 12 The bill requires the authority to consider factors 13 specified in the bill and other information the authority deems 14 relevant when awarding the loans to local economic development 15 organizations. 16 The bill requires the authority to enter into an agreement 17 with the local economic development organization selected to 18 receive financial assistance under the program for purposes 19 of ensuring compliance with the program requirements. 20 The bill also allows the authority to require the local 21 economic development organization to pay up to a 1 percent 22 administrative fee upon a small business’s repayment of a 23 microloan to the organization for deposit in the small business 24 microloan program revolving fund. 25 The bill requires the local economic development 26 organization receiving financial assistance under the program 27 to establish a microloan application process and conduct a 28 microloan program for small businesses. The local economic 29 development organization may only use the financial assistance 30 received pursuant to the program to provide a microloan for 31 a new or expanding business in the state which has 20 or 32 fewer employees at the time of the business’s application 33 for a microloan. A microloan awarded by the local economic 34 development organization using financial assistance from the 35 -9- LSB 1850SV (3) 85 ad/sc 9/ 11

S.F. 417 program may not exceed $15,000 to any single business. The 1 bill requires the local economic development organization to 2 conduct an audit of the small businesses to which it provided a 3 microloan. 4 Financial assistance awarded under the program is subject 5 to immediate repayment or recapture if the local economic 6 development organization fails to use the financial assistance 7 for the program’s intended purposes. 8 Division IV of the bill requires the economic development 9 authority to establish and administer a broadband loan 10 program to provide low-interest loans to broadband and 11 telecommunications businesses to expand broadband access in the 12 state. 13 When determining whether to award a loan to a business, 14 the authority may consider factors specified in the bill and 15 other information the authority deems relevant. When awarding 16 financial assistance, the authority must ensure that businesses 17 seeking to expand broadband access in communities that are 18 underserved or are not served by broadband technology shall 19 receive financial assistance prior to awarding assistance to 20 businesses seeking to expand broadband access into communities 21 that have adequate service. 22 The bill provides that a loan awarded under the program to 23 any single business entity may not exceed $250,000. 24 The bill requires the authority to enter into an agreement 25 with business entities selected to receive assistance under the 26 program to ensure compliance with the program’s requirements. 27 The agreement must also set the loan period and the interest 28 rate of the loan. 29 The bill authorizes the authority to seek immediate 30 repayment or recapture of a loan awarded pursuant to the 31 program if the business entity fails to use the loan moneys 32 to expand broadband access in the state. All payments, 33 repayments, or recaptures, and interest on loans awarded under 34 the program must be remitted to the authority for deposit in 35 -10- LSB 1850SV (3) 85 ad/sc 10/ 11