74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 334
Senate Bill 150
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Governor Theodore R.
Kulongoski for Economic and Community Development Department)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Creates Mezzanine Financing Fund to bridge financing gap
between loans provided by lending institutions and loans provided
by venture capital investors to Oregon businesses.
A BILL FOR AN ACT
Relating to economic development; and appropriating money.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + (1) There is created within the State Treasury
the Mezzanine Financing Fund, separate and distinct from the
General Fund. Interest earned by the Mezzanine Financing Fund
shall be credited to the fund. Moneys in the fund are
continuously appropriated to the Economic and Community
Development Department for the following purposes:
(a) To provide loans to Oregon businesses that entail a greater
risk than loans typically serviced by banks, but a lesser risk
than financing typically provided by venture capital investors.
(b) To pay administrative expenses of the department that are
incurred in fund-related marketing, application processing,
proposed business development project financing and outstanding
loan servicing.
(c) To provide funding for the direct royalty financing program
under section 2 of this 2007 Act and the Multi-Bank Account under
section 3 of this 2007 Act.
(2) The fund created by subsection (1) of this section shall
consist of:
(a) Revenues derived from fees imposed under section 2 of this
2007 Act.
(b) Appropriations to the fund by the Legislative Assembly.
(c) Moneys obtained from interest accrued on funds.
(d) Moneys from any grant made to the fund by any federal
agency.
(e) Moneys transferred from the Oregon Business Development
Fund, in an amount not to exceed $1 million.
(f) Lottery moneys that are allocated to the fund by the
legislative assembly.
(3) The fund may not be used to retire any debt. Except upon
approval of the Legislative Assembly or, if the Legislative
Assembly is not in session, the Emergency Board, the fund may not
be used to pay administrative expenses of the department.
Expenses that are project related may not be considered to be
administrative expenses of the department. + }
SECTION 2. { + (1)(a) The Economic and Community Development
Department shall develop a direct royalty financing program under
which the department provides loans to Oregon businesses through
the Mezzanine Financing Fund. The department shall require loans
made by the program to be secured by advances on future sales,
with repayment structured as a percentage of sales. In addition,
the program shall require loans to be made for only the following
purposes:
(A) To develop and market new products of established
businesses;
(B) For business acquisitions; or
(C) For other situations in which financing entails a greater
risk than loans typically serviced by banks, but a lesser risk
than financing typically provided by venture capital investors.
(b) The aggregate amount of loans to any person or business
participating in the program created under this section may not
exceed $250,000.
(2) The department shall establish an advisory council
consisting of at least three members to evaluate requests for
financing under sections 2 and 3 of this 2007 Act and, if
appropriate, approve requests for financing under this section.
The advisory council shall include individuals who, by reason of
education or experience in business finance, are qualified to
serve on the council. The advisory council shall include one
member from the department.
(3) In administering the program created by this section, the
department may evaluate specific products and markets in
consultation with:
(a) The advisory council established by the department under
subsection (2) of this section;
(b) Universities and other organizations, in partnership with
the department; or
(c) Any other person with relevant expertise or specialized
knowledge.
(4)(a) When making loan or credit guarantees under the program
established under this section, the department shall establish
fees and other terms for loan or credit guarantees.
(b) The department shall set fees and other terms at levels
sufficient to reasonably assure that the program is
self-financing.
(c) The department may charge an application fee. The fee shall
be in addition to any other fees charged by the department under
this section and may not exceed $250 for each application. + }
SECTION 3. { + (1) The Multi-Bank Account is established in
the Mezzanine Financing Fund, separate and distinct from the
Mezzanine Financing Fund. Interest earned on the account shall be
credited to the account. The following moneys shall be credited
to the Multi-Bank Account:
(a) Funds transferred from the Mezzanine Financing Fund;
(b) Revenues derived from fees imposed under this section; and
(c) Funds that are unrestricted appropriations, grants or
contract proceeds from banks or financial institutions, with
investments or funds from banks or financial institutions.
(2) The purpose of the Multi-Bank Account is to serve as a
repository for both public and private moneys designated to
provide financing for Oregon businesses:
(a) To develop and market new products of established
businesses;
(b) For business acquisitions; and
(c) For other situations in which the risk level of the
financing entails a greater risk than loans typically serviced by
banks, but a lesser risk than financing typically provided by
venture capital investors.
(3) All moneys in the Multi-Bank Account are continuously
appropriated to the Economic and Community Development Department
for the purposes of this section.
(4)(a) When making loans or credit enhancements under this
section, the department shall establish fees and other terms for
loans or credit enhancements.
(b) The department shall set fees and other terms at levels
sufficient to reasonably assure that the program is
self-financing.
(c) The department may charge a loan applicant an application
fee. The fee shall be in addition to any other fees charged by
the department under this section and may not exceed $250 for
each application.
(5)(a) The department shall establish a Multi-Bank Financing
Account Board to determine whether to approve or reject requests
for loans from this account. The board must consist of seven
members appointed by the department.
(b) The financial institutions may nominate individuals who, by
reason of education and experience in business finance, are
qualified to serve, for appointment to the board by providing the
department with the names of the qualified individuals. The
department shall appoint six members to the board from the
nominees provided by the financial institutions and one member to
the board from the department.
(c) In making the determination whether to approve a loan from
this account, the board shall consider the recommendation of the
advisory council established in section 2 of this 2007 Act. A
majority of the members of the board constitutes a quorum for the
transaction of business. + }
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