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$ SENATE BILL NO. 448
INTRODUCED BY E. FRANKLIN, C. CHRISTIAENS, D. ECK, J. ELLINGSON, K. GALVINHALCRO,
G.GOLIE, M. HALLIGAN, J. MCKENNEY, K. MESAROS, B. RYAN, C. TUSS, D. WYATT
A BILL FOR AN ACT ENTITLED: "AN ACT REQUIRING THE DEPARTMENT OF COMMERCE TO DEVELOP
A REPAYMENT SCHEDULE FOR OUTSTANDING RESEARCH AND DEVELOPMENT LOANS TO A
BIOMEDICAL RESEARCH FACILITY THAT INCLUDES PROVISIONS CALLING FOR A PAYBACK OF AT
LEAST TWO TIMES THE ORIGINAL LOAN AMOUNT PAID AS A PERCENTAGE OF THE INCOME STREAM
DERIVED FROM THE SALE OR OTHER COMMERCIALIZATION OF PRODUCTS OR PROCESSES
DEVELOPED WITH THE STATE FINANCING; AMENDING SECTION 17-6-308, MCA; AND PROVIDING AN
IMMEDIATE EFFECTIVE DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1.ĠSection 17-6-308 , MCA, is amended to read:
"17-6-308.
٠(Temporary)
Authorized investments. (1) Except as provided in subsections (2) and
(3) and subject to the provisions of 17-6-201, the Montana permanent coal tax trust fund must be
invested as authorized by rules adopted by the board.
(2)The board may make loans from the permanent coal tax trust fund to the capital reserve
account created pursuant to 17-5-1515 to establish balances or restore deficiencies in the account. The
board may agree in connection with the issuance of bonds or notes secured by the account or fund to
make the loans. Loans must be on terms and conditions determined by the board and must be repaid from
revenue realized from the exercise of the board's powers under 17-5-1501 through 17-5-1518 and
17-5-1521 through 17-5-1529, subject to the prior pledge of the revenue to the bonds and notes.
(3)The board shall allow the Montana board of science and technology development, provided
for in 2-15-1818, to administer $12.5 million of the permanent coal tax trust fund for seed capital project
loans or mezzanine financing loans and $11.1 million of the permanent coal tax trust fund for research and
development project matching funds for projects at Montana public universities. The board may grant up
to $2 million of interest and income from investments to research and development projects at Montana
public universities. The research and development projects may include grant matching fund purposes. This
authority does not extend beyond June 30, 1999, for seed capital project loans and beyond June 30,1999, for research and development projects. Except for $915,000, all uncommitted seed capital funds
must revert to the coal severance tax permanent fund. The department may use up to $75,000 each year
of the seed capital funds for administrative purposes. The board of science and technology development,
with the concurrence of the director of the department, may extend an additional loan to an existing seed
capital portfolio company by up to $700,000. In the fiscal year ending June 30, 1998, the department
shall transfer $250,000 of interest and earnings to the Montana supreme court to be used to fund the
judges' retirement system. Until the Montana board of science and technology development makes a loan
pursuant to the provisions of Title 90, chapter 3, the funds under its administration must be invested by
the board pursuant to the provisions of 17-6-201. As seed capital and mezzanine financing loans made
pursuant to this subsection are repaid, the proceeds of the seed capital portion of the Montana board of
science and technology development loans must be deposited in the coal severance tax permanent fund
until all loans have been repaid plus the amount of 7% simple interest for the years that the loans have
been outstanding. The board shall calculate the amount of the interest charge. The board may use up to
$25,000 of the repayments for administrative costs in the fiscal year ending June 30, 1997.
(4)The board shall adopt rules to allow a nonprofit corporation to apply for economic assistance.
The rules must recognize that different criteria may be needed for nonprofit corporations than for for-profit
corporations.
(5)Beginning July 1, 1999, all repayments proceeds in excess of $4.395 million must be
deposited in the coal severance tax permanent fund. In the fiscal year ending June 30, 1998, the
department shall transfer $250,000 from the interest and earnings from job investment loans to the
Montana supreme court to be used to fund the judges' retirement system.
17-6-308.
٠(Effective July 1, 1999)
Authorized investments. (1) Except as provided in subsections
(2) and (3) and subject to the provisions of 17-6-201, the Montana permanent coal tax trust fund must
be invested as authorized by rules adopted by the board.
(2)The board may make loans from the permanent coal tax trust fund to the capital reserve
account created pursuant to 17-5-1515 to establish balances or restore deficiencies in the account. The
board may agree in connection with the issuance of bonds or notes secured by the account or fund to
make the loans. Loans must be on terms and conditions determined by the board and must be repaid from
revenue realized from the exercise of the board's powers under 17-5-1501 through 17-5-1518 and
17-5-1521 through 17-5-1529, subject to the prior pledge of the revenue to the bonds and notes.
(3)The department shall manage the seed capital and research and development loan portfolioscreated by the former Montana board of science and technology development. The department shall
establish an appropriate repayment schedule for all outstanding research and development loans made to
the university system. The department shall
report the schedule to the 56th legislature
develop a
repayment schedule for outstanding research and development loans to a biomedical research facility that
includes provisions calling for a payback of at least two times the original loan amount paid as a
percentage of the income stream derived from the sale or other commercialization of products or processes
developed with the state financing. This percentage rate may not exceed 5%. In developing the repayment
schedule, the department shall provide that interest may not be charged on the loan and that all
payments are considered repayment of principal. The department shall develop a business investment
strategy for investing in Montana business and shall present the proposal to the 56th legislature. The
department is the successor in interest to all agreements, contracts, loans, notes, or other instruments
entered into by the Montana board of science and technology development as part of the seed capital and
research and development loan portfolios. Until the department makes a loan pursuant to the provisions
of part 5 of this chapter, the $915,000 in funds under its administration must be invested by the board
pursuant to the provisions of 17-6-201. As loans made pursuant to part 5 of this chapter are repaid, the
department may reinvest the principal in new loans pursuant to part 5 of this chapter.
(4)The board shall adopt rules to allow a nonprofit corporation to apply for economic assistance.
The rules must recognize that different criteria may be needed for nonprofit corporations than for for-profit
corporations.
(5)Beginning July 1, 1999, all repayments proceeds in excess of $4.395 million must be
deposited in the coal severance tax permanent fund.
In the fiscal year ending June 30, 1998, the
department shall transfer $250,000 from the interest and earnings from job investment loans to the
Montana supreme court to be used to fund the judges' retirement system.
"
NEW SECTION.ĠSection 2.Effective date. [This act] is effective on passage and approval.
h) END