MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Economic Dev, Tourism and Parks; Finance

By: Senator(s) Minor

AN ACT TO AMEND SECTION 57-10-511, MISSISSIPPI CODE OF 1972, TO INCLUDE THE MISSISSIPPI DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT IN THE ENTITIES TO WHOM PLANNING AND DEVELOPMENT DISTRICTS AND QUALIFIED ENTITIES ARE REQUIRED TO SUBMIT SEMIANNUAL REPORTS UNDER THE MISSISSIPPI SMALL BUSINESS ASSISTANCE ACT; TO CHANGE THE DATES UPON WHICH SUCH REPORTS ARE REQUIRED TO BE SUBMITTED; TO EXTEND THE REPEAL DATE ON THIS SECTION TO JULY 1, 2003; TO AMEND SECTION 57-10-513, MISSISSIPPI CODE OF 1972, TO CLARIFY THE RESIDENCY REQUIREMENT FOR SMALL BUSINESSES RECEIVING ASSISTANCE UNDER THE MISSISSIPPI SMALL BUSINESS ASSISTANCE ACT; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 57-10-511, Mississippi Code of 1972, is amended as follows:

57-10-511. (1) DECD shall grant funds under this article to a planning and development district or qualified entity in accordance with the following terms and conditions:

(a) Grant funds received by a planning and development district or qualified entity in accordance with this article shall be used by the planning and development district or qualified entity to establish a revolving assistance fund for the purpose of providing assistance to small businesses in accordance with this article. Except as otherwise allowed in this article, all principal and interest payments by small businesses in repayment of such assistance shall be eligible for and used by the planning and development district or qualified entity for additional assistance to small businesses in accordance with this article.

(b) Each planning and development district meeting the criteria set forth in this article shall receive an initial grant of not to exceed One Million Dollars ($1,000,000.00) for the purpose of establishing the program within its area in accordance with this article. Each qualified entity meeting the criteria set forth in this article shall be eligible to receive an initial grant of Five Hundred Thousand Dollars ($500,000.00) for the purpose of establishing the program within the area it serves in accordance with this article. The total amount of initial grants to planning and development districts shall not exceed Ten Million Dollars ($10,000,000.00) and the total amount of initial grants for qualified entities shall not exceed Two Million Dollars ($2,000,000.00). Each planning and development district or qualified entity receiving an initial grant shall have twelve (12) months in which to make binding commitments to provide assistance to small businesses in the principal amount of the initial grant in accordance with this article. Grant funds not committed to provide assistance to small businesses at the end of twelve (12) months after receipt thereof by the planning and development district or qualified entity shall be returned to DECD for placement in a pool to be redistributed by DECD to planning and development districts or qualified entities which have binding commitments to distribute as assistance all their initial grant funds and have pending applications for additional assistance in accordance with this article. Any planning and development district or qualified entity returning any such grant funds to DECD shall be required at the time such initial grant funds are returned to deliver to the State Treasury, for deposit in the General Fund, interest on the amount of such returned funds at the same rate as any bonds or notes of the State of Mississippi issued pursuant to this article to provide such grant funds.

(c) After all of the initial grant funds have been provided as assistance to small businesses in accordance with this article, DECD shall distribute additional grant funds to each planning and development district or qualified entity qualified under this article to receive and requesting such funds in whatever amounts DECD deems appropriate and when needed by such planning and development districts or qualified entities to provide additional assistance to small businesses in accordance with this article. The schedule for distributing such funds shall be determined by DECD. Funds distributed to planning and development districts and qualified entities pursuant to this paragraph shall be in addition to funds distributed to planning and development districts and qualified entities pursuant to paragraph (b) of this section. The total amount of grants issued pursuant to this paragraph shall not exceed Seventeen Million Dollars ($17,000,000.00) for planning and development districts or qualified entities. Grant funds not committed to provide assistance to small businesses at the end of twelve (12) months after receipt thereof by the planning and development district or qualified entity shall be returned to DECD for placement in a pool to be redistributed by DECD to planning and development districts or qualified entities which have binding commitments to distribute as assistance all their initial grant funds and have pending applications for additional assistance in accordance with this article. Any planning and development district or qualified entity returning any such grant funds to DECD shall be required at the time such grant funds are returned to deliver to the State Treasury, for deposit in the General Fund, interest on the amount of such returned funds at the same rate as any bonds or notes of the State of Mississippi issued pursuant to this article to provide such grant funds.

(d) A planning and development district or qualified entity participating in the program may utilize not more than fifty percent (50%) of interest earned on assistance provided to small businesses in accordance with this article for administration and management of the program, unless specifically authorized to utilize more by DECD; provided, however, any interest earned on grant funds held by a planning and development district or qualified entity prior to the utilization of such grant funds to provide assistance to small business shall be placed in the revolving assistance fund of the planning and development district or qualified entity and shall not be expended for administration or management costs. Planning and development districts and qualified entities may retain fifty percent (50%) of the interest earned on repayment funds that are being held on deposit in anticipation of relending to aid in the administration and management of the program. Each planning and development district and qualified entity shall file annually with the Secretary of the Senate and the Clerk of the House of Representatives not later than the first day of each regular legislative session a report which details any interest retained or utilized by the planning and development district or qualified entity pursuant to this paragraph (d).

(e) If a planning and development district or qualified entity participating in the program experiences losses from assistance provided pursuant to the program in excess of fifty percent (50%) of the amount of grant funds received by the planning and development district or qualified entity, the planning and development district or qualified entity shall repay the State of Mississippi the amount of such losses in excess of fifty percent (50%) by delivering that amount to the State Treasury for deposit in the General Fund.

(f) DECD shall assist each planning and development district or qualified entity participating in the program in connection with such planning and development district's or qualified entity's compliance with this article.

(g) Each planning and development district or qualified entity participating in the program shall submit the following reports to the House Ways and Means Committee, the Senate Economic Development, Tourism and Parks Committee and DECD:

(i) An annual audit of grant funds received in connection with the program; and

(ii) A semiannual report on July 30 and January 30 of each year, describing all assistance provided to small businesses pursuant to the program, such reports to include without limitation the following: a description of each small business receiving assistance; the project to be assisted and purpose of assistance; a description of each loan and equity investment, including the terms and conditions thereof and use of the funds assistance by the small business; history of the assistance pool, including principal amount loaned, interest earned, interest expended for administration and management, principal amount of equity investments, assistance funds available, and losses; and a statement of jobs created or retained as a result of the assistance program.

(h) If DECD determines that a district or entity has provided assistance to small businesses in a manner inconsistent with the provisions of this article, then the amount of such assistance so provided shall be withheld by DECD from any additional grant funds to which the district or entity becomes entitled under this article. If DECD determines, after notifying such district or entity twice in writing and providing such district or entity a reasonable opportunity to comply, that a planning and development district or qualified entity has consistently failed to comply with this article in connection with the program, DECD may declare such planning and development district or qualified entity in default under the program and, upon receipt of notice thereof from DECD, such planning and development district or qualified entity shall immediately cease providing assistance under the program, shall refund to DECD for distribution to other planning and development districts or qualified entities all funds held in its revolving assistance fund and, if required by DECD, shall convey to DECD all administrative and management control of assistance provided by it under the program.

(2) This section shall stand repealed on July 1, 2003.

SECTION 2. Section 57-10-513, Mississippi Code of 1972, is amended as follows:

57-10-513. The planning and development districts and qualified entities are authorized, empowered and directed to deposit all grant funds received pursuant to this article in a revolving assistance fund and to provide assistance therefrom to small businesses in accordance with this article and the following criteria, terms and conditions:

(a) To be eligible for assistance under this article, the small business and the project to be assisted must meet the following criteria:

(i) Assistance must be in connection with an identifiable project or business plan, and the principal amount of all assistance may not exceed fifty percent (50%) of the total cost of said project or business plan;

(ii) Assistance may be used in connection with the purchase or lease of land, buildings, equipment and inventory, and for working capital; provided, however, no more than one-third (1/3) of the total assistance to a small business pursuant to this article or Fifty Thousand Dollars ($50,000.00), whichever is less, may be used for working capital;

(iii) Assistance may not be provided for speculative land or real estate investments;

(iv) Assistance may not be provided under the program to finance or satisfy any existing debt;

(v) Assistance may not be provided to a small business unless at least sixty percent (60%) of the small business is owned, directly or indirectly, by individuals who have been residents of the State of Mississippi for * * * two (2) years immediately prior to the application for assistance; and

(vi) The project or business plan for which assistance is provided must create or retain full-time jobs, and the planning and development district or qualified entity must receive a certificate to that effect from the small business before any assistance is provided.

(b) The interest rate on loans shall not be less than five percent (5%) per annum or more than four percent (4%) above the federal discount rate, plus the servicing fees established in this article.

(c) As security for any loan under the program, the planning and development district or qualified entity shall take a security interest in assets of the small business and require personal guarantees of all persons and entities owning twenty percent (20%) or more of the small business. Such security interests may be subordinate to other security interests in such assets.

(d) The maximum term of any loan under the program shall not exceed the following: fifteen (15) years if used to purchase or lease land or buildings, ten (10) years if used to purchase or lease equipment, five (5) years if used to provide working capital and three (3) years if used to purchase inventory.

(e) In the event of a default by a small business on a loan under the program, the planning and development district or qualified entity shall foreclose and enforce its security interests and personal guarantees relating to such loan and take all necessary and appropriate action to recover all principal and interest owed, and all amounts so recovered shall be deposited in the revolving assistance fund administered by said planning and development district or qualified entity. Any small business which defaults on a loan under the program shall not be eligible for any other loan under the program.

(f) A planning and development district or qualified entity may acquire, subscribe for, own, hold, sell, assign, transfer, mortgage or pledge an equity investment in a small business incorporated under the laws of the State of Mississippi, provided such equity investment constitutes less than fifty percent (50%) of the voting shares of the small business and does not exceed Fifty Thousand Dollars ($50,000.00), and while the owner or holder thereof, the planning and development district or qualified entity may exercise all the rights, powers and privileges of ownership, including the right to vote thereon. Any such equity investment in a small business may be redeemed by such small business upon payment to the planning and development district or qualified entity of the principal amount of such equity investment, plus six percent (6%) interest, compounded annually from the date of such equity investment, provided such repayment is tendered within seven (7) years of the date of such equity investment.

(g) A planning and development district or qualified entity shall not utilize more than one-third (1/3) of all grant funds received for equity investments in small businesses.

(h) No small business shall receive assistance under the program in excess of One Hundred Thousand Dollars ($100,000.00).

(i) All assistance applications must be reviewed by, and the terms and conditions of the assistance must be recommended to the planning and development district or qualified entity, by a small business assistance review board established by the planning and development district or qualified entity, consisting of the following members appointed by the planning and development district or qualified entity:

(i) Two (2) individuals with current experience in banking or finance;

(ii) Two (2) principal or majority owners of private, for-profit commercial enterprises qualifying as small businesses under this article;

(iii) One (1) senior officer of a private, for-profit commercial enterprise not qualifying as a small business under this article or the executive director of an industrial or economic development foundation;

(iv) One (1) individual who is a minority and who has current experience in banking or finance or who is the principal or majority owner of a private, for-profit commercial enterprise qualifying as a small business under this article; and

(v) One (1) individual who is female and who has current experience in banking or finance or who is the principal or majority owner of a private, for-profit commercial enterprise qualifying as a small business under this article.

As used in this paragraph, "minority" shall mean individuals who are Asian, Black, Hispanic or Native American as defined in Section 31-7-13(s), Mississippi Code of 1972.

All members of such small business assistance review boards shall be residents of the area served by the planning and development district or qualified entity. Small business assistance review boards shall meet at least quarterly and shall meet anytime there are at least two (2) assistance applications pending that require review.

(j) If the small business assistance review board recommends that assistance be provided, the planning and development district or qualified entity may either approve and provide the assistance on the exact terms and conditions recommended by the small business assistance review board or determine not to provide such assistance. Under no circumstances may the planning and development district or qualified entity provide such assistance on any terms or conditions not approved and recommended by the small business assistance review board. If the planning and development district or qualified entity determines not to provide the assistance that the small business assistance review board has recommended to be provided, the board of directors of such district or the governing body of such entity shall place in its minutes an explanation of the reasons for such refusal. If the small business assistance review board recommends against providing the assistance, the board of directors of the planning and development district or the governing body of the qualified entity may not determine to provide such assistance under any terms and conditions.

SECTION 3. This act shall take effect and be in force from and after its passage.