Opinion ID: 1578403
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Heading: The Energy Development Loan Pilot Program

Text: 26. The Energy Development Loan Pilot Program of the Minnesota Energy and Economic Development Authority is created pursuant to Minn.Stat. §§ 116J.921 to 116J.923 and 116J.925 (Supp.1983). It is intended to provide energy loans to individuals, partnerships, corporations or other entities for the financing of capital improvements to be used in connection with a trade or business if the principal purpose of the improvement is energy conservation or the reduction of the use of conventional fuels as a source of energy. Exs. L, L-1 and M; Dayton Aff. 27. The program is intended to assist businesses located in Minnesota which require financing to improve the efficiency with which they use energy or to finance the costs of conversion from conventional to alternative sources of energy. Energy development loans may also be used to finance certain costs associated with the production of energy or fuels from alternative energy resources. Eligible business entities engaged in the production of peat, biomass, solar energy, wind, municipal wastes, agricultural or forestry wastes, hydropower and agricultural crops suitable for conversion to an energy fuel, as well as certain other alternative energy production enterprises, may also receive energy loans. Ex. L-1; Dayton Aff. 28. Funds for energy development loans will primarily be raised through the sale of revenue bonds issued by the Authority, the interest on which is generally exempt from federal income taxes. Loans are expected to carry interest rates below those generally available in the financial markets for loans with similar terms and security. These debt instruments will generally take the form of long term, fixedrate loans for land, buildings, capital improvements or equipment. By pooling bonds and inducing the investment of private capital in connection with the energy development loans, the Authority's program facilitates a partnership between the private and public sectors. Ex. L-1; Dayton Aff. 29. Additional security for the bonds may be provided through segregated reserve accounts within the Energy Development Fund pledged to each loan made under the Program. By providing such security for the bond issue, it will be possible to provide financial assistance to businesses which otherwise would be unable to receive financing due to risk factors associated with loans to such loan recipients. Ex. L-1; Dayton Aff. 30. Ultimate approval of an application for a loan under the Program depends, in part, upon a determination that the business entity applying for the energy development loan is creditworthy under generally accepted commercial lending credit evaluation practices, that the financial analysis of the performance of the business shows it is adequate to reasonably assure that the loan will be repaid and that the State of Minnesota will benefit through a reduction in the State's dependence on conventional fuels, through energy conservation, or through development of alternative or renewable. Ex. L-1; Dayton Aff.; Laubach Aff.