Additional financing mechanisms to support Minnesota Climate Innovation Financing Authority activities provided.

A bill for an act

relating to commerce; providing additional financing mechanisms to support

Minnesota Climate Innovation Financing Authority activities; amending Minnesota

Statutes 2024, section 216C.441, subdivisions 3, 4.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 216C.441, subdivision 3, is amended to read:

Subd. 3.

General powers.

(a) For the purpose of exercising the specific powers granted

in this section, the authority has the general powers granted in this subdivision.

(b) The authority may:

(1) hire an executive director and staff to conduct the authority's operations;

(2) sue and be sued;

(3) have a seal and alter the seal;

(4) acquire, hold, lease, manage, and dispose of real or personal property for the

authority's corporate purposes;

(5) enter into agreements, including cooperative financing agreements, contracts, or

other transactions, with a Tribal government, any federal or state agency, county, local unit

of government, regional development commission, person, domestic or foreign partnership,

corporation, association, or organization;

(6) acquire by purchase real property, or an interest therein, in the authority's own name

where acquisition is necessary or appropriate;

(7) provide general technical and consultative services related to the authority's purpose;

(8) promote research and development in matters related to the authority's purpose;

(9) conduct market analysis to determine where the market is underserved;

(10) analyze greenhouse gas emissions reduction project financing needs in the state

and recommend measures to alleviate any shortage of financing capacity;

(11) contract with any governmental or private agency or organization, legal counsel,

financial advisor, investment banker, or others to assist in the exercise of the authority's

powers;

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(12) borrow money or other property for any purpose pertaining to the authority's

activities;

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(12)
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(13)
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enter into agreements with qualified lenders or others insuring or guaranteeing

to the state the payment of qualified loans or other financing instruments;
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and
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(14) sell at a public or private sale a note, mortgage, or other interest or obligation that

evidences or secures a loan; and

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(13)
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(15)
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accept on behalf of the state any gift, grant, or interest in money or personal

property tendered to the state for any purpose pertaining to the authority's activities.

Sec. 2.

Minnesota Statutes 2024, section 216C.441, subdivision 4, is amended to read:

Subd. 4.

Authority duties.

(a) The authority must:

(1) serve as a financial resource to reduce the upfront and total costs of implementing

qualified projects;

(2) ensure that all financed projects reduce greenhouse gas emissions;

(3) ensure that financing terms and conditions offered are well-suited to qualified projects;

(4) strategically prioritize the use of the authority's funds to leverage private investment

in qualified projects, with the aim of achieving a high ratio of private to public money

invested through funding mechanisms that support, enhance, and complement private lending

and investment;

(5) coordinate with existing federal, state, local, utility, and other programs to ensure

that the authority's resources are being used most effectively to add to and complement

those programs;

(6) stimulate demand for qualified projects by:

(i) contracting with the department to provide, including through subcontracts with

community navigators, information to project participants about federal, state, local, utility,

and other authority financial assistance for qualifying projects, and technical information

on energy conservation and renewable energy measures;

(ii) forming partnerships with contractors and informing contractors about the authority's

financing programs;

(iii) developing innovative marketing strategies to stimulate project owner interest,

especially in underserved communities; and

(iv) incentivizing financing entities to increase activity in underserved markets;

(7) finance projects in all regions of the state;

(8) develop participant eligibility standards and other terms and conditions for financial

support provided by the authority;

(9) develop and administer:

(i) policies to collect reasonable fees for authority services; and

(ii) risk management activities to support ongoing authority activities;

(10) develop consumer protection standards governing the authority's investments to

ensure that financial support is provided responsibly and transparently and is in the financial

interest of participating project owners;

(11) develop methods to accurately measure the impact of the authority's activities,

particularly on low-income communities and on greenhouse gas emissions reductions;

(12) hire an executive director and sufficient staff with the appropriate skills and

qualifications to carry out the authority's programs, making an affirmative effort to recruit

and hire a director and staff who are from, or share the interests of, the communities the

authority must serve;

(13) apply for, either as a direct or subgrantee applicant, and accept Greenhouse Gas

Reduction Fund grants authorized by the federal Clean Air Act, United States Code, title

42, section 7434, paragraph (a), clauses (1), (2), and (3). Until the Climate Innovation

Finance Authority is established, the commissioner shall apply for and receive funding

through Public Law 117-169 in order to leverage state investment, on behalf of the authority.

To the extent practicable, applications for these funds by or on behalf of the authority should

be made in coordination with other Minnesota applicants;

(14) acting under its powers as a state energy financing institution under United States

Code, title 42, section 16511, collaborate with the United States Department of Energy Loan

Programs Office to ensure that authorities made available under the Inflation Reduction

Act of 2022, Public Law 117-169, maximally benefit Minnesotans. Until the Climate

Innovation Finance Authority is established, the commissioner may engage with the United

States Department of Energy Loan Programs Office on behalf of the authority; and

(15) ensure that authority contracts with all third-party administrators, contractors, and

subcontractors contain required covenants, representations, and warranties specifying that

contracted third parties are agents of the authority and that all acts of contracted third parties

are considered acts of the authority, provided that the act is within the contracted scope of

work.

(b) The authority may:

(1) employ credit enhancement mechanisms that reduce financial risk for financing

entities by providing assurance that a limited portion of a loan or other financial instrument

is assumed by the authority via a loan loss reserve, loan guarantee, or other mechanism;

(2) co-invest in a qualified project by providing senior or subordinated debt, equity, or

other mechanisms in conjunction with other investment, co-lending, or financing;

(3) aggregate small and geographically dispersed qualified projects in order to diversify

risk
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;
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or
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(4)
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secure additional private investment through securitization or similar resale of the

authority's interest in a completed qualified project;

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(4)
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(5)
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expend up to 25 percent of funds appropriated to the authority for start-up

purposes, which may be used for financing programs and project investments authorized

under this section, prior to adoption of the strategic plan required under subdivision 7 and

the investment strategy under subdivision 8; and

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(5)
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(6)
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require a specific project to agree to implement a project labor agreement as a

condition of receiving financing from the authority.