2022 -- H 8276

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LC005983

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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: May 20, 2022

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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

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

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

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

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

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

corporation may deem appropriate to assist with urban revitalization.

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

meanings:

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

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

considered part of the balance sheet of the small business.

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

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

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

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

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

business.

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

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

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

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

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

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

square mile as established by the most recent federal census.

     (c) Establishment of an Urban Enterprise Equity Fund.

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

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

urban enterprise fund.

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

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

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

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

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

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

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

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

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

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

to which it is providing such Equity Financing.

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

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

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

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

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

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

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

transactions in the best interest of the Small Business.

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

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

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

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

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

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

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

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

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

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

accounting, and marketing services.

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

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

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

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

incubator. Two incubators shall be located within the 25 Bough Street project and 120 Manton

Avenue, also known as Atlantic Mills Complex, that will integrate urban entrepreneurship,

innovation, workforce development and youth mentorship. The projects reside in the city of

Providence's Olneyville neighborhood which is comprised of seventy-three percent (73%) Black,

indigenous and people of color; forty-one percent (41%) of the families living below the poverty

level and within a Providence zip code of 02909; and has the highest per capita COVID-19 cases

in the state. Olneyville is also within a former state enterprise zone and in the current state

designated opportunity and health equity zones. A third incubator shall be located at the former

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

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

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

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

in the current state designated opportunity and health equity zones.

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

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

     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

***

     This act would require the installation of three (3) urban business incubators, one at the 25

Bough Street project in the Olneyville neighborhood of Providence, one at 120 Manton Avenue,

also known as Atlantic Mills Complex, in the Olneyville neighborhood and the other at the former

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

neighborhood.

     This act would take effect upon passage.

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