Introduced By: Representative Christine Callahan
Date Introduced : February 2, 1999
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 Economic Development Corporation" is hereby amended to read as follows:
42-64-13.1. Assistance to urban communities for economic revitalization. -- (a) The 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 any other programs and activities 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) The " {ADD F ADD} {DEL f DEL}und" {DEL means DEL}
{ADD shall mean ADD} 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.
(2) "Equity" {DEL means DEL} {ADD shall mean ADD}
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.
(3) {DEL "Friendly debt" DEL} {ADD "Equity
Financing" shall be ADD} {DEL is DEL} 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, {DEL "friendly debt" DEL}
{ADD equity financing ADD} shall be deeply subordinated on the balance
sheet of the business, and by this deep subordination is converted
to equity on the balance sheet. {DEL Friendly debt DEL}
{ADD Equity financing ADD} by virtue of its subordination shall be
the last loan to be paid out of the cash flow of the business {ADD . ADD}
{DEL and payment shall be established by the parties based
on the ability to repay. DEL}
(4) "Small business" {DEL means DEL} {ADD shall
mean ADD} any corporation, partnership, sole proprietorship, or
other business entity qualifying as "small" under the
standards contained in 13 CFR section121.
(5) "Urban" {DEL means DEL} {ADD shall mean ADD}
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) In order to provide {DEL "friendly debt", DEL}
{ADD "equity financing", ADD} commonly referred to as either
" {ADD E ADD} {DEL e DEL}quity" or " {ADD E ADD} {DEL e DEL}quity
{ADD D ADD} {DEL d DEL}ebt", to assist small businesses
finance investments, the general assembly establishes the urban
enterprise fund.
This fund will be located at and administered by the economic
development corporation, referred to as the corporation, for the
purposes of providing equity 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 42-64. {ADD 3. ADD}
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. {DEL The DEL} {ADD Such ADD}
rules shall limit the amount of equity from the fund in any small
business to an amount not to exceed one hundred thousand ($100,000)
dollars and shall provide {ADD , inter alia ADD} that {DEL at
no time will DEL} the corporation be allowed to take {DEL Warrant
Positions, or in any other manner or method have any DEL}
{ADD stock, stock options, stock warrants, equity or other ADD} ownership
interest {ADD s ADD} {DEL based on the equity DEL} in the small
business to which it is providing {ADD such ADD} equity financing.
(2) Nothing herein provided with regard to equity and friendly debt shall be deemed to prevent or restrict the corporation or other private lenders form 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 US 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 {ADD S ADD} {DEL s DEL}mall {ADD B ADD} {DEL b DEL}usinesses.
(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) Establishment of an Urban Business Incubator.. - There is
{ADD hereby ADD} authorized, established, and created an urban business
incubator to be located in an enterprise zone, as defined in {DEL section
42-64-3. DEL} {ADD chapter 43-64.3. ADD} 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.
The incubator shall be established as a non-business corporation, and shall have tax exempt status under U.S. Internal Revenue Code section501(c)(3), 26 U.S.C. section501(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.
(e) The General Assembly shall annually appropriate the sums it
deems necessary to carry out the provisions of {DEL subsections DEL}
{ADD 42-64.13.1 ADD} (c) and (d).
SECTION 2. This act shall take effect upon passage.
