§ 42-64-13.1 - Assistance to urban communities for economic revitalization.
SECTION 42-64-13.1
§ 42-64-13.1 Assistance to urbancommunities for economic revitalization. – (a) The Rhode Island economic development corporation shall, in furtherance ofits responsibility to assist urban communities, provide for the establishmentof an urban enterprise equity fund, the establishment of an urban businessincubator, and such other programs and activities as the corporation may deemappropriate to assist with urban revitalization.
(b) For purposes of this section, the following words andterms shall have the following meanings:
(1) "Equity" shall mean cash or cash equivalents, throughpersonal or other assets that are either pledged to or become part of a smallbusiness venture. Equity constitutes resources that are considered part of thebalance 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 areestablished for repayment of the debt. For the purposes of this legislation,"Equity Financing" shall be deeply subordinated on the balance sheet of thebusiness, and by this deep subordination is converted to equity on the balancesheet. "Equity Financing" by virtue of its subordination shall be the last loanto be paid out of the cash flow of the business.
(3) "Fund" shall mean a revolving loan fund used to provideequity to assist start-up and existing businesses in securing resources fromlenders including, but not limited to, private sector lending institutions, andfederal and non-federal public sector lenders.
(4) "Small business" shall mean any corporation, partnership,sole proprietorship, or other business entity qualifying as "small" under thestandards contained in 13 CFR § 121.
(5) "Urban" shall mean any community, which exceeds twothousand (2000) persons per square mile as established by the most recentfederal census.
(c) Establishment of an Urban Enterprise Equity Fund.
(1) In order to provide "Equity Financing", commonly referredto as either "Equity" or "Equity Debt", to assist small businesses financeinvestments, the general assembly establishes the urban enterprise fund.
(ii) This fund will be located at and administered by theeconomic development corporation, referred to as the corporation, hereinafterfor the purposes of providing equity financing to assist small businesses inobtaining additional resources for capital investments. Seventy-five percent(75%) of the fund financing shall be targeted to urban small businesses locatedin enterprise zones established pursuant to chapter 64.3 of title 42. Thecorporation shall be responsible for the establishment of "the urban enterprisefund" and for the adoption of rules and standards and guidelines, eligibilityqualifications, and performance measures for the fund. Such rules shall limitthe amount of equity financing from the fund in any small business to an amountnot to exceed one hundred thousand ($100,000) dollars and shall provide, interalia that the corporation be allowed to take stock, stock options, stockwarrants, equity or other ownership interests in the small business to which itis providing such Equity Financing.
(2) Nothing herein provided with regard to equity and EquityFinancing shall be deemed to prevent or restrict the corporation or otherprivate lenders from providing additional financing to the small business undertraditional methods, conventional financing with or without credit enhancementsfor the purposes of fulfilling the necessary instruments to finance the smallbusiness.
(3) In the implementation of the provisions of thisparagraph, the corporation is encouraged to utilize credit enhancements such asthe US Small Business Administration's (SBA) Guaranteed Loan Program inconjunction with SBA's participating lenders to make the small businessfinancing transactions in the best interest of the Small Business.
(4) The corporation will annually report the status andperformance of the Urban Enterprise Equity Fund to the general assembly on orbefore the first Tuesday of November.
(d) Establishment of an Urban Business Incubator.There is hereby authorized, established, and created an urban businessincubator to be located in an enterprise zone, as defined in chapter 64.3 ofthis title. The incubator shall be designed to foster the growth of businessesthrough a multi-tenant, mixed-use facility serving companies in a variety ofindustries including, but not limited to: services, distribution, lightmanufacturing, or technology-based businesses. The incubator shall provide arange of services designed to assist these new businesses, including, but notlimited to: flexible leases, shared office equipment, use of common areas suchas conference rooms, and will provide (directly or indirectly) easilyaccessible business management, training, financial, legal, accounting, andmarketing services.
(2) The incubator shall be established as a non-businesscorporation, 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 independentboard of directors. The board of directors, in consultation with thecorporations, shall adopt guidelines and performance measures for the purposesof operating and monitoring the incubator.
(e) The general assembly shall annually appropriate the sumsit deems necessary to carry out the provisions of subsections (c) and (d) ofthis section.