SF5161

Purpose

• Reorganize and update how Minnesota allocates economic development funding. The bill ends the current PROMISE grant program funding and shifts money into a broader set of programs aimed at supporting small businesses, job training, child care, rural development, and regional economic growth.

Main Provisions

• Termination and reallocation

  • Ends the existing PROMISE grant program funding from Laws 2025 First Special Session and moves funds to a wide range of economic development and workforce programs.
  • Aligns funding across multiple departments and funds to support infrastructure, business assistance, and rural development, with some funds available only through 2029 or in two-year grant terms.

• Business and economic development programs

  • Grants and loans for small businesses, including partnerships with centers and foundations across rural Minnesota.
  • Support for business-focused centers and networks (for example: SBDC-related activities, Center for Rural Policy and Development, Neighborhood Development Center, MNSBIR Inc., Enterprise Minnesota, and other regional partners).
  • New or expanded roles for foundations and partner organizations to help startups, manufacturing, and local economic development in both rural and urban areas.
  • Special emphasis on technology transfer, research and development, and commercialization activities to help startups grow and connect to federal funding (via MNSBIR Inc. and related initiatives).

• Child care and workforce-related investments

  • Grants to local communities to increase the number of quality child care providers as part of economic development, with a requirement that at least 50% of grant funds go to communities outside the seven-county metro area.
  • Local reporting requirements on child care outcomes (new providers, jobs, slots, and local funding invested), plus annual reporting to key legislative committees.
  • Funding for the Office of Child Care Community Partnerships and related labor market research to support child care and workforce development.

• Regional and targeted investments

  • Funds set aside to help specific regions and populations (e.g., North Minneapolis, South Minneapolis, St. Paul neighborhoods, rural areas, and minority-owned businesses).
  • Grants to organizations focused on Black, Indigenous, People of Color, women, and immigrant-owned businesses to build capacity, provide training, and support startup growth.

• Research, planning, and reporting

  • Requirements for regular reporting on grant outcomes, financial impact, and leverage of federal dollars.
  • Some funds require annual or biennial reporting to legislative chairs and minority ranking members.
  • Administrative caps on certain programs (e.g., can use up to a small percentage for administration).

• Notable program adjustments

  • The Minnesota Investment Fund funds may be used for redevelopment programs at the commissioner’s discretion, beyond existing statutory limits.
  • A onetime or short-term focus on specific organizations and programs (e.g., PROMISE, CanNavigate, Neighborhood Development Center, African Development Center, Coalition of Asian American Leaders, WomenVenture, Latino Economic Development Center, Isuroon) with clear delivery and accountability expectations.
  • Creation and funding for MNSBIR Inc. to act as a federal R&D resource for Minnesota small businesses, focusing on securing federal R&D funds and enabling technology transfer from major institutions (e.g., University of Minnesota, Mayo Clinic).

Significant Changes to Law

• A broad shift in where and how economic development money is spent, moving away from a dedicated PROMISE grant program to a diversified portfolio of programs and partners.
• Increased emphasis on rural and minority-owned businesses, child care as an economic driver, and regional economic planning.
• Allowance for some funds to be used beyond standard grant limits to encourage redevelopment, innovation, and regional collaboration.
• New reporting and accountability requirements to track outcomes, economic impact, and federal funding leverage.

Implementation Timeline and Durations

• Several appropriations are one-time or have end dates around 2029, with some bases established for 2028 and continuing thereafter.
• Grants to some programs are two-year terms with money awarded in the first year and ongoing commitments in the second year.
• Administrative allowances exist for certain programs, with annual reporting deadlines to legislative chairs.

Relevant Terms - PROMISE grant program - Minnesota Investment Fund - Minnesota Initiative Foundations - Neighborhood Development Center (NDC) - African Development Center - Coalition of Asian American Leaders - WomenVenture - Latino Economic Development Center - Isuroon - CanNavigate - Upper Minnesota Film Office - SBDC (Small Business Development Center) - Minnesota job skills partnership program - Office of Child Care Community Partnerships - Center for Rural Policy and Development - Energy Transition Office - Destination Medical Center - Redevelopment program (116J.575 and 116J.5761) - Rural and seven-county metro area distinctions - Quality child care providers and child care shortages - Two-year grant terms - Federal research and development funding (federal R&D; MNSBIR Inc.) - Technology transfer and commercialization - 116J.431, 116J.68, 116J.5491, 116J.682, 116J.551-558, 116J.8731, 116J.8748, 116L.01-116L.17, 116L.41 (statutory references for programs)