Second Regular Session Seventieth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 16-0036.01 Jery Payne x2157 HOUSE BILL 16-1226 HOUSE SPONSORSHIP Young and Arndt, Coram, Vigil SENATE SPONSORSHIP Grantham, House Committees Senate Committees Agriculture, Livestock, & Natural Resources Appropriations A BILL FOR AN ACT Concerning a program for funding the development of agricultural businesses, and, in connection therewith, making an appropriation. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill creates an agricultural grant and reimbursement program within the department of agriculture. The Colorado agricultural value-added development board will oversee the program. The board will create an advisory body containing people with expertise in technology, agriculture, business, and finance. The following grants and requirements are established: To be eligible for a proof-of-concept and feasibility study grant, the applicant must: Submit a description of the project; Provide an analysis of the potential economic benefit or competitive advantage for Colorado agriculture; and Have a dedicated source of funding that is at least 25% of the amount of the requested grant. To be eligible for an early-stage capital and business-expansion grant, an applicant must: Be headquartered in Colorado, have at least 50% of the applicant's employees residing in Colorado, or indicate that Colorado's agricultural industry will be the primary beneficiary of the project; Submit a description outlining the need for capital; Provide an analysis indicating that the project could enhance the commercialization of an agricultural product or service within Colorado; and Have a dedicated source of funding that is at least equal to the amount of the requested grant. To be eligible for a reimbursement of market development and promotion expenses, the applicant must: Employ fewer than 100 employees; Be headquartered in Colorado, have at least 50% of the applicant's employees residing in Colorado, or indicate that Colorado's agricultural industry will be the primary beneficiary of the project; Have a product that is market-ready; Have a dedicated source of funding that is at least half the amount of the requested grant; and Have a project and reimbursable expenses authorized by the board before the applicant incurs the expense. The bill sets basic requirements for the programs and authorizes the board to establish administration policies. Funding limits are placed on each grant or reimbursement. Rural counties are given priority. An appropriation is made to implement the bill. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) The general assembly finds that: (a) Colorado's food and agriculture industry contributes annually more than forty billion dollars to the state's economy and supports more than one hundred seventy thousand jobs; (b) The food and agriculture industry accounts for at least one of every ten jobs in nearly one-half of Colorado's counties; (c) Colorado food and agricultural product exports have tripled in the past decade, now exceeding two billion dollars annually, and are purchased by customers in nearly one hundred twenty countries around the world; (d) Colorado's food and agriculture industry is recognized as a key industry network for advancing the Colorado blueprint for economic development, addressing the core objectives of: (I) Building a business-friendly environment; (II) Recruiting, growing, and retaining businesses; (III) Increasing access to capital; (IV) Creating and marketing a stronger Colorado brand; (V) Educating and training the future work force; and (VI) Cultivating innovation and technology; (e) Colorado's food and beverage manufacturing jobs increased by eight percent from 2008 to 2013, generating one thousand nine hundred new jobs during a time when Colorado's total jobs from manufacturing decreased six and seven-tenths percent, an overall loss of nineteen thousand five hundred jobs; and (f) In November 2014, a Colorado State University study identified the emergence of a food and agriculture innovation cluster in Colorado and a need for greater access to capital to assist in the creation and growth of food and agricultural businesses. (2) The general assembly therefore declares that the creation of a development, investment, and promotional program for agriculture will: (a) Help advance innovations and technologies for the benefit of Colorado's food and agriculture industry and all of Colorado; and (b) Help homegrown businesses and expertise stay in rural Colorado. (3) The general assembly intends that this grant program will, to the extent feasible and reasonable, primarily benefit rural counties of Colorado. SECTION 2. In Colorado Revised Statutes, add 35-75-206 as follows: 35-75-206. Agricultural innovations and market promotion - repeal. (1) (a) Program administered by board. There is hereby created the agricultural development and investment partnership program to aid agricultural innovation and support promotional marketing opportunities for agricultural products and services. The board shall administer the program, which includes proof-of-concept and feasibility study grants, early-stage capital and business-expansion grants, and reimbursement of market development and promotion expenses. (b) The board shall appoint a seven-member advisory body to review grant and reimbursement applications. The advisory body must contain at least one member who represents the board and one member with expertise and experience in each of the following fields: Technology and science, agricultural production, business management, and finance. (c) The advisory body serves at the pleasure of the board. (d) The advisory body shall review each application and make recommendations to the board. (2) Proof-of-concept and feasibility study grant. (a) To be eligible for a proof-of-concept and feasibility study grant, an applicant must: (I) Submit a description of the project; (II) Provide an analysis of the potential economic benefit or competitive advantage of the project for Colorado agriculture; and (III) Have funding dedicated to the project that is at least twenty-five percent of the amount of the requested grant. (b) The board shall not award a grant of more than one hundred thousand dollars. (3) Early-stage capital and business-expansion grant. (a) To be eligible for an early-stage capital and business-expansion grant, an applicant must: (I) Be headquartered in Colorado, have at least fifty percent of the applicant's employees residing in Colorado, or indicate that Colorado's agricultural industry will be the primary beneficiary of the project; (II) Submit a description outlining the need for capital; (III) Provide an analysis indicating that the scope of the project could enhance the commercialization of an agricultural product or service within Colorado; and (IV) Have funding dedicated to the project that is at least equal to the amount of the requested grant. (b) The board shall not award a grant of more than two hundred fifty thousand dollars. (4) Reimbursement of market development and promotion expenses. (a) To be eligible for a reimbursement of market development and promotion expenses, the applicant must: (I) Employ fewer than one hundred employees; (II) Be headquartered in Colorado, have at least fifty percent of the applicant's employees residing in Colorado, or indicate that Colorado's agricultural industry will be the primary beneficiary of the project; (III) Have a product that is market-ready; (IV) Have funding dedicated to the project that is at least fifty percent of the amount of the requested grant; and (V) Have the expenses to be reimbursed and the project authorized by the board before the applicant incurs the expense. (b) Expenses eligible for reimbursement may include: (I) Design and production of market materials; (II) Participation in an international or domestic trade show; (III) Legal fees for marketing and promotion of the product or service; (IV) Due diligence on or credit reviews of potential buyers and distributors; and (V) Compliance with international requirements for labeling, packaging, or shipping. (c) The board shall not reimburse expenses of more than fifteen thousand dollars to an applicant in a fiscal year. (5) Grant and award policies. (a) To be eligible for a grant or reimbursement, an applicant must: (I) Be registered with and in good standing with the secretary of state; and (II) Identify: (A) The number of jobs that could be created or retained in the state; (B) The anticipated capital invested or retained in the state; and (C) Any other projected economic effects that could result from the grant or reimbursement. (b) The board shall not reimburse a recipient unless the recipient has used the matching funds required for the grant or reimbursement. (c) Upon completion of the project that was the basis for the award of a grant, a recipient shall identify how the funds were used, the number of jobs created or retained in the state, capital invested or retained, and any other economic effects that resulted from the grant. (6) Rural county priority - definition. (a) (I) The board shall give priority to a business that: (A) Is located in a rural county or is developing technology that primarily benefits a rural county; (B) Has demonstrated support from a rural county, including financial support; and (C) Can identify potential partnerships and support from one or more rural education institutions, financial institutions, or community members. (II) To be given priority under this subsection (6), the grant recipient must sign an agreement to continue to remain in or benefit the rural county. (b) For the purposes of this subsection (6), "rural county" means any county, but not any city and county, in this state that, as of July 1, 2016, has a population of not more than one hundred fifty thousand people and, if the county's population exceeds twenty thousand people, has a growth rate that does not exceed the statewide average for the immediately preceding year by more than twenty-five percent as defined in the two most recent decennial censuses. (7) Fund administration. (a) The board shall establish procedures and timelines for: (I) The application process; (II) Criteria used in determining award amounts and project time periods; (III) Grantee reporting requirements; (IV) Any other program policies; (V) Giving priority to a business affecting or located in rural counties in accordance with subsection (6) of this section; and (VI) The selection and appointment of the advisory body. (b) The board may amend these policies at any time. (8) Business incubators and aggregators. The board may implement this section by making grants to business incubators and aggregators who agree to make grants based on the requirements and purposes of this section. (9) Appropriation - repeal. (a) The general assembly shall annually appropriate from the general fund one million dollars to implement this section. The board may use up to five percent of the appropriation to administer this section. (b) This subsection (9) is repealed, effective July 1, 2020. SECTION 3. Appropriation. For the 2016-17 state fiscal year, $1,000,000 is appropriated to the department of agriculture for use by the Colorado agricultural value-added development board. This appropriation is from the general fund. To implement this act, the department may use this appropriation for administration of this act or to make grants or reimbursements to fund agricultural innovations under this act. Any money appropriated in this section and not expended prior to July 1, 2017, is further appropriated to the department of agriculture for the 2017-18 state fiscal year for the same purpose. SECTION 4. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 10, 2016, if adjournment sine die is on May 11, 2016); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2016 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.