Minnesota Energy and Economic Development Authority v. Printy

• Decision Date: 11 May 1984
• Docket Number: No. CX-84-399,CX-84-399
• Citation: 351 N.W.2d 319
• Parties: MINNESOTA ENERGY AND ECONOMIC DEVELOPMENT AUTHORITY, Respondent, v. David L. PRINTY, as Secretary of the Minnesota Energy and Economic Development Authority, Appellant.
• Court: Minnesota Supreme Court

Page 319

351 N.W.2d 319

MINNESOTA ENERGY AND ECONOMIC DEVELOPMENT AUTHORITY, Respondent, v. David L. PRINTY, as Secretary of the Minnesota Energy and Economic Development Authority, Appellant.

No. CX-84-399.

Supreme Court of Minnesota.

May 11, 1984.

Lindquist & Vennum, R. Walter Bachman, and James P. McCarthy, Minneapolis, for appellant.

Hubert H. Humphrey, III, Atty. Gen., Christie B. Eller and Barry R. Greller, Sp. Asst. Attys. Gen., St. Paul, for respondent.

Heard, considered and decided by the court en banc.

ORDER

SCOTT, Justice.

IT IS ORDERED that:

The order filed herein on May 4, 1984, is hereby withdrawn, and the following order is substituted:

1. The judgment of the Hennepin County District Court, the Honorable David R. Leslie, entered February 27, 1984, be, and the same is, affirmed;

2. The findings of fact, conclusions of law, order for judgment, and the memorandum of the Hennepin County District Court, the Honorable David R. Leslie, filed February 27, 1984, attached hereto and incorporated herein, are adopted as the opinion of this court.

                STATE OF MINNESOTA                          DISTRICT COURT
                COUNTY OF HENNEPIN                FOURTH JUDICIAL DISTRICT
                Minnesota Energy and Economic      Court File No. MC84-347
                Development Authority, an Agency
                of the State of Minnesota
                                      Plaintiff
                              vs
                David L. Printy, as Secretary
                of the Minnesota Energy and
                Economic Development Authority
                                      Defendant.
                                            __________
                

FINDINGS OF FACTS,

------------------

CONCLUSIONS OF LAW

------------------

AND ORDER FOR JUDGMENT

----------------------

DAVID R. LESLIE, Judge.

This matter came on for hearing before the undersigned on February 23, 1984, upon the parties' separate motions for summary judgment. The plaintiff was represented by Barry R. Greller and Christie B. Eller, Special Assistant Attorneys General. The defendant was represented by R. Walter Bachman, Esq. and James P. McCarthy, Esq. of the firm of Lindquist and Vennum. Based upon the oral argument of counsel and upon all the pleadings, affidavits, exhibits,

stipulation, files and records and proceedings herein, the Court makes the following determinations.

FINDINGS OF FACT

The Authority and the Act

1. The Minnesota Energy and Economic Development Authority (hereinafter "the Authority") is a public agency of the State of Minnesota created by Minn.Laws 1983 ch. 289 (codified as Minn.Stat. §§ 116J.875 to 116J.926 and hereinafter referred to as "the Act"). The Authority is the legal successor to the Minnesota Small Business Finance Agency created by Minn.Laws 1980 ch. 547 as amended.

2. The members and governing body of the Authority consist of the Commissioner of the Department of Energy and Economic Development (hereinafter "the Department") and ten individuals appointed by the Governor. (Minn.Stat. § 116J.89, subd. 8 (Supp.1983)).

3. The Governor appoints the Chairman of the Authority (Minn.Stat. § 116J.89, subd. 8 (Supp.1983)). In August, 1983, Mark B. Dayton, the Commissioner of the Department, was duly appointed as Chairman of the Authority.

4. The Commissioner of the Department is required to appoint staff as necessary for the administration of the Authority. (Minn.Stat. § 116J.89, subd. 10 (Supp.1983)). The Financial Management Division of the Department provides staff, performs credit checks, financial analysis and other duties as required by the Authority. Affidavit of M. Jean Laubach.

5. The Act was passed to promote the welfare and prosperity of the State by maintaining and increasing the career and job opportunities of its citizens; by reducing, controlling, and preventing environmental pollution and waste of resources; and by protecting and enhancing the tax base on which state and local governments depend for the financing of public services. (Minn.Stat. § 116J.89, subd. 2 (1982), as amended by Minn.Laws 1983 ch. 289 § 74).

6. The Authority is empowered to issue bonds, implement loan programs, insure loans and provide financial assistance as a partnership between the public and private sectors, for the public purposes of:

(a) providing financial assistance to eligible small businesses for projects on sufficiently favorable terms to assist and encourage the establishment, maintenance and growth of small businesses and employment opportunities in Minnesota;

(b) providing financial assistance to eligible small businesses for projects which will help prevent, reduce, abate or control noise, air or water pollution or contamination; and

(c) providing financial assistance to promote the conservation of energy, the reduction of the uses of conventional fuels as a source of energy, and the development of alternative and renewable energy resources.

(Minn.Stat. §§ 116J.875, 116J.89 and 116J.921).

7. The Authority is empowered by the Act to issue and sell bonds and to use the proceeds to make loans to eligible small businesses for business development projects, pollution control projects and qualified energy projects (Minn.Stat. §§ 116J.90, 116J.91 and 116J.925).

8. Neither the State of Minnesota nor any agency or political subdivision of the State is liable on any bonds issued by the Authority, and such bonds do not constitute a debt or loan of credit of the State. Therefore, neither the full faith and credit nor the taxing power of the State is pledged to the repayment of such bonds. (Minn.Stat. § 116J.89, subd. 3.)

9. Minn.Stat. § 116J.89, subd. 1c creates the economic development fund and provides that all money in the fund is appropriated to the Authority to accomplish the Authority's business development and pollution control purposes. Minn.Laws 1983 ch. 301 § 28 appropriated $15,000,000 to the economic development fund.

10. Minn.Stat. § 116J.925, subd. 3 creates the energy development fund and provides 11. The Authority is empowered by the Act to issue and sell bonds and to use the proceeds to make loans to eligible small businesses for business development projects (Minn.Stat. §§ 116J.90 and 116J.91).

                that the Authority may use the fund in connection with bonds issued to make loans for qualified energy projects.   Minn.Laws 1983 ch. 301 § 28 appropriated $1,800,000 to the energy development fund
                

12. The Authority is empowered by the Act to insure loans made to eligible borrowers by private lending institutions for qualified energy projects (Minn.Stat. § 116J.924). Minn.Stat. § 116J.924, subd. 2 creates the energy loan insurance fund and provides that the Authority may use the fund in connection with insurance of such loans. Minn.Laws 1983 ch. 301 § 28 appropriated $7,500,000 to the energy loan insurance fund.

13. In an effort to meet the needs of Minnesota businesses for financing, the Authority established three pilot programs pursuant to Minn.Stat. §§ 116J.875 to 116J.926 (1982 & Supp.1983). These programs are: the Business Loan Bond Insurance Pilot Program, the Energy Development Loan Pilot Program; and the Energy Loan Insurance Pilot Program. Dayton Aff.

The Business Loan Bond Insurance Pilot Program

14. The Business Loan Bond Insurance Pilot Program was created pursuant to Minn.Stat. §§ 116J.875 to 116J.91 (1982 & Supp.1983). It is intended to provide "business loans" to "eligible small businesses" located in Minnesota which are starting or expanding and are creating new jobs and/or installing or improving equipment or facilities to control pollution. Loans may also be made to assist businesses which would otherwise reduce their employment or other activities within Minnesota without the financing provided by the program. Dayton Aff.; Laubach Aff.; Exs. K, K-1, L.

15. Funds for business loans primarily will be raised through the sale of revenue bonds issued by the Authority, the interest on which is generally exempt from federal income taxes. These debt instruments will generally take the form of long term, fixed rate loans for land, buildings, capital improvements or equipment. Business development loans generally will be provided at interest rates below those normally available to the small business. By pooling bond issues and increasing the investment of private capital in connection with business loans, the Authority's program facilitates a partnership between the private and public sectors. Ex. K-1.

16. Additional security for the business loan bonds will be provided through the use of appropriated dollars in the Economic Development Fund either (1) to purchase private bond insurance and/or to fund a debt service reserve fund to be used in conjunction with the private bond insurance, or (2) through segregated accounts within the Economic Development Fund pledged to each loan made under the Program. By so securing the bond issue, it will be possible to provide financial assistance to small businesses which otherwise would be unable to receive financing at all or only at such unfavorable terms or conditions as to make their projects not economically feasible. Ex. K-1.

17. Ultimate approval of an application for a loan under the Business Development Loan Bond Insurance Pilot Program will depend upon a determination that the business entity applying for a loan is creditworthy under generally accepted commercial lending credit evaluation practices, that the financial analysis of the business's performance shows it is adequate to reasonably assure that the loan will be repaid, and that the State of Minnesota will benefit in the form of new jobs created, expanded state or local tax bases, improvement of economic activities in depressed areas of the State, other economic and employment benefits, or pollution abatement or other environmental enhancements. Ex. K-1; Dayton Aff.; Laubach Aff 18. The Business Loan Rules previously adopted by the Small Business Finance Agency were transferred to the Authority, as successor to the Small Business Finance Agency. These rules are set forth in 4 MCAR §§ 14.001-14.023. Ex. J.; Dayton Aff.

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