(1) There is hereby created in the authority the economic development fund. The authority shall deposit into such economic development fund: (a) Any moneys appropriated and made available by the state for purposes of such economic development fund; (b) Any proceeds from the sale of bonds to the extent provided in the resolutions of the authority authorizing the issuance thereof; and (c) Any moneys which may be made available by or to the authority from any other sources for the purposes of such economic development fund. (2) Moneys held in the economic development fund shall be expended by the authority for the following purposes: (a) To pay the principal of, premium, if any, and interest on bonds issued by the authority pursuant to this part 7 to finance the authority's economic development program; (b) To finance projects or provide capital as provided in this part 7; (c) To provide guaranties, insurance, coinsurance, or reinsurance as provided in this part 7 and to establish reserves therefor by separate accounts or in such other manner as may be determined by the board in its sole discretion; (d) Notwithstanding the provisions of section 29-4-730, to make equity investments in business enterprises, including but not limited to direct investments in such business enterprises, investments in a legal entity which makes investments in such enterprises, and investments in an investment fund which makes investments in such enterprises, on such terms and conditions and as evidenced by such certificates, instruments, or documents, all as may be determined by the board in its sole discretion; except that properties, or revenues of the authority, other than the amount of such investments, shall not be placed at risk on account of such investments, and neither the authority nor the members of the board or employees of the authority shall be personally liable for the debts or obligations of the business enterprises in which such investments are made; and (e) Notwithstanding the provisions of sections 29-4-710.5 and 29-4-710.6, and upon a finding by the board that investment in, or purchase or participation in the purchase of, loans or interests therein is necessary or useful to the financing of projects or the provision of capital to business enterprises, to invest in, purchase, or participate in the purchase from lenders of loans to finance projects or provide capital to business enterprises if such loans shall be insured or guaranteed, in whole or in part, by the federal government or by an agency or instrumentality thereof. (f) Repealed. (3) Moneys held in the economic development fund may be transferred to any of the other funds created by the authority pursuant to this part 7. (4) (a) There is hereby created within the economic development fund the Colorado strategic seed fund, which fund shall be administered by the authority in consultation with the Colorado strategic seed fund council created in section 29-4-735. The Colorado strategic seed fund is established for the purpose of providing seed capital to small businesses. For the purposes of this subsection (4), "seed capital" means moneys which are provided for: The preparation of a business plan, the performance of an initial market analysis, the assembling of a management team, the initial legal and accounting work, the development of a working prototype of a product or process, the development of follow-up financing, and such similar purposes as may be determined by the board. (b) The general assembly may make appropriations to the department of local affairs for the Colorado strategic seed fund. Any moneys not used to make loans shall remain in said fund and shall not be transferred to or revert to the general fund of the state at the end of any fiscal year. Any interest earned on the investment or deposit of moneys in the Colorado strategic seed fund shall remain in the fund and shall not be credited to the general fund of the state. (c) The authority shall utilize moneys in the Colorado strategic seed fund to make loans to operating seed funds. Such loans shall be made only if the board determines that: (I) The businesses to be assisted are small businesses with no prior sales or small businesses with existing sales, which small businesses are undergoing substantial changes in their businesses or product lines; (II) No professional or institutional investor has made any prior investment in any business to be assisted prior to the investment by the operating seed fund; (III) The businesses to be assisted have the potential to be rapidly growing businesses or value-added businesses which have the potential of having a long-term presence in Colorado's economy and the amount invested by any operating seed fund in businesses outside of Colorado do not exceed more than fifty percent of the capital of the operating seed fund; (IV) Private sector financial support equal to the amount of any loan will be obtained by an operating seed fund. The authority may make a preliminary commitment of funds to an operating seed fund before the private sector financial support is obtained, but the authority shall not close the loan until at least one-third of the private sector financial support has been contributed, with the remainder to be paid not later than two years after the date of closing. (d) The authority shall establish criteria for making loans to operating seed funds, and such criteria shall include qualifications for the managers of such funds. The authority shall consult with the Colorado strategic seed fund council as to the criteria for determining which operating seed funds shall be eligible to receive loans from the fund, and no more than one operating seed fund, which fund shall be the rural economic development seed fund created in paragraph (g) of this subsection (4), shall be assisted pursuant to this subsection (4). (e) Loans made by the authority to operating seed funds shall be in the form of nonrecourse, noncompounding loans bearing interest, which shall be accrued at a rate determined by the board. The principal and accrued interest on any such loan shall be due not later than the initially scheduled termination date of the operating seed fund or ten years from the date of closing of the loan, whichever date is earlier. (f) The authority may require that an operating seed fund receiving a loan under this subsection (4) submit a quarterly financial statement, an audited annual financial statement, and such other reports regarding its finances and operations as the board determines to be necessary or appropriate. (g) Of the seed funds established pursuant to paragraph (d) of this subsection (4), one shall be a rural economic development seed fund, which shall be established for the purpose of assisting economic development in rural areas of Colorado. The moneys in the rural economic development seed fund shall be used to assist value-added businesses, and all of the provisions of this subsection (4) relating to loans made by the authority to operating seed funds shall also apply to the rural economic development seed fund. The salary of the fund manager shall be paid out of moneys appropriated to the fund by the general assembly and not from matching private sector funds.
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