2022 -- H 7170

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LC003449

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2022

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND COMMERCE

CORPORATION

     

     Introduced By: Representative Anastasia P. Williams

     Date Introduced: January 26, 2022

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 42-64-13.1 of the General Laws in Chapter 42-64 entitled "Rhode

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Island Commerce Corporation" is hereby amended to read as follows:

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     42-64-13.1. Assistance to urban communities for economic revitalization.

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     (a) The Rhode Island commerce corporation shall, in furtherance of its responsibility to

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assist urban communities, provide for the establishment of an urban enterprise equity fund, the

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establishment of an urban business incubator, and such other programs and activities as the

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corporation may deem appropriate to assist with urban revitalization.

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     (b) For purposes of this section, the following words and terms shall have the following

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meanings:

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     (1) "Equity" shall mean cash or cash equivalents, through personal or other assets that are

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either pledged to or become part of a small business venture. Equity constitutes resources that are

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considered part of the balance sheet of the small business.

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     (2) "Equity Financing" shall be a loan from an institution, bank, non-bank or any other

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resource, by which terms and conditions are established for repayment of the debt. For the purposes

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of this legislation, "Equity Financing" shall be deeply subordinated on the balance sheet of the

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business, and by this deep subordination is converted to equity on the balance sheet. "Equity

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Financing" by virtue of its subordination shall be the last loan to be paid out of the cash flow of the

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business.

 

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     (3) "Fund" shall mean a revolving loan fund used to provide equity to assist start-up and

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existing businesses in securing resources from lenders including, but not limited to, private sector

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lending institutions, and federal and non-federal public sector lenders.

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     (4) "Small business" shall mean any corporation, partnership, sole proprietorship, or other

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business entity qualifying as "small" under the standards contained in 13 C.F.R. § 121.101 et seq.

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     (5) "Urban" shall mean any community, which exceeds two thousand (2000) persons per

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square mile as established by the most recent federal census.

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     (c) Establishment of an Urban Enterprise Equity Fund.

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     (1)(i) In order to provide "Equity Financing," commonly referred to as either "Equity" or

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"Equity Debt," to assist small businesses finance investments, the general assembly establishes the

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urban enterprise fund.

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     (ii) This fund will be located at and administered by the commerce corporation, referred to

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as the corporation, hereinafter for the purposes of providing equity financing to assist small

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businesses in obtaining additional resources for capital investments. Seventy-five percent (75%) of

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the fund financing shall be targeted to urban small businesses located in enterprise zones

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established pursuant to chapter 64.3 of title 42. The corporation shall be responsible for the

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establishment of "the urban enterprise fund" and for the adoption of rules and standards and

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guidelines, eligibility qualifications, and performance measures for the fund. Such rules shall limit

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the amount of equity financing from the fund in any small business to an amount not to exceed one

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hundred thousand ($100,000) dollars and shall provide, inter alia that the corporation be allowed

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to take stock, stock options, stock warrants, equity or other ownership interests in the small business

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to which it is providing such Equity Financing.

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     (2) Nothing herein provided with regard to equity and Equity Financing shall be deemed

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to prevent or restrict the corporation or other private lenders from providing additional financing

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to the small business under traditional methods, conventional financing with or without credit

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enhancements for the purposes of fulfilling the necessary instruments to finance the small business.

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     (3) In the implementation of the provisions of this paragraph, the corporation is encouraged

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to utilize credit enhancements such as the U.S. Small Business Administration's (SBA) Guaranteed

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Loan Program in conjunction with SBA's participating lenders to make the small business financing

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transactions in the best interest of the Small Business.

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     (4) The corporation will annually report the status and performance of the Urban Enterprise

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Equity Fund to the general assembly on or before the first Tuesday of November.

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     (d)(1) Establishment of an urban business incubator. There is hereby authorized,

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established, and created an urban business incubator to be located in an enterprise zone, as defined

 

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in chapter 64.3 of this title, or state designated opportunity zone and/or health equity zone. The

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incubator shall be designed to foster the growth of businesses through a multi-tenant, mixed-use

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facility serving companies in a variety of industries including, but not limited to: services,

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distribution, light manufacturing, or technology-based businesses. The incubator shall provide a

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range of services designed to assist these new businesses, including, but not limited to: flexible

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leases, shared office equipment, use of common areas such as conference rooms, and will provide

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(directly or indirectly) easily accessible business management, training, financial, legal,

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accounting, and marketing services.

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     (2) The incubator shall be established as a non-business corporation, and shall have tax

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exempt status under U.S. Internal Revenue Code § 501(c)(3), 26 U.S.C. § 501(c)(3), and shall have

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an independent board of directors. The board of directors, in consultation with the corporations,

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shall adopt guidelines and performance measures for the purposes of operating and monitoring the

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incubator. One incubator shall be located within the 25 Bough Street project that will integrate

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urban entrepreneurship, innovation, workforce development and youth mentorship. The project

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resides in the city of Providence's Olneyville neighborhood which is comprised of seventy-three

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percent (73%) Black, indigenous and people of color; forty-one percent (41%) of the families living

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below the poverty level and within a Providence zip code of 02909; and has the highest per capita

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COVID-19 cases in the state. Olneyville is also within a former state enterprise zone and in the

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current state designated opportunity and health equity zones. A second incubator shall be located

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at the former Urban League of Rhode Island site located at 246 Prairie Avenue within the Upper

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South Providence neighborhood. This neighborhood is comprised of ninety-one percent (91%)

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Black, indigenous and people of color, with thirty-six and four-tenths percent (36.4%) of families

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living below the poverty level. Upper South Providence is also within a former state enterprise zone

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and in the current state designated opportunity and health equity zones.

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     (e) The general assembly shall annually appropriate the sums it deems necessary to carry

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out the provisions of subsections (c) and (d) of this section.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND COMMERCE

CORPORATION

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     This act would require the installation of two (2) urban business incubators, one at the 25

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Bough Street project in the Olneyville neighborhood of Providence, and the other at the former

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Urban League of Rhode Island site located at 246 Prairie Avenue in the Upper South Providence

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neighborhood.

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     This act would take effect upon passage.

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