Commerce proposes line of credit, eligibility changes to expand Development Fund

The Appropriations - Education and Environment Division committee discussed proposals to expand and add flexibility to North Dakota’s Development Fund, including allowing some non-primary sector businesses to qualify, adding grant authority for federal matching projects, and pursuing a line of credit from the Bank of North Dakota.

The discussion came during a committee meeting when Chris Shilkin, Department of Commerce commissioner, described amendments that would "add non primary sector businesses" to eligibility for the $50,000,000 the governor requested and said an amendment would "add grants to this," to help projects that need matching funds for federal Department of Defense or similar awards.

Why it matters: Committee members said demand for the fund has risen as projects have grown in size and complexity, and they want tools that let state dollars leverage larger private and federal investments without continually increasing appropriations.

Details from Commerce and committee members

Shilkin said the governor’s budget included $50,000,000, and that the Senate moved $30,000,000 into the fund from the State Investment Fund (as discussed in the meeting). He described two main changes under consideration: widening eligibility for a portion of the appropriation to include non-primary businesses, and adding grant authority for certain matching purposes. "We would like to propose a line of credit from the Bank of North Dakota," Shilkin said, adding the line of credit would give the fund flexibility to serve larger, high-capital projects without tying up general fund dollars.

Shaden, a Commerce staff member who oversees development-fund projects, told the committee the agency has been pushing to make the fund "more of a closing fund, but add tools, add programs to the development fund umbrella, which would allow us to have a bigger impact on high CapEx projects." He said Commerce vets applications carefully: "If we talk with a hundred companies, maybe 10 of them apply, maybe 5 or less of them actually make it in front of our committee."

Representative Martinson asked how the state would repay a proposed line of credit; Shilkin replied the expectation is that funds would be repaid from loan payments by the borrower, not by converting the line to grants. On the committee question about interest rates, Shilkin said those would be negotiated with the Bank of North Dakota and that the fund would build an appropriate margin into borrower rates.

Current fund balance and pipeline

Shaden told members the Development Fund currently holds about $50,000,000 and that Commerce expects roughly $30,000,000 in requests before the end of the biennium, leaving an estimated $20,000,000 undeployed going into the next biennium. He said Commerce has several ongoing discussions and anticipates applications from strategic, high-capital projects in the near term.

Staffing and temporary salaries

Allison Wigmer, director of administrative services at the Department of Commerce, said the Commerce budget includes $200,000 in authority for temporary salaries tied to Development Fund work, with the agency’s intent to convert successful interns into full-time positions when openings occur. She said the Senate reduced that request to $100,000 one-time; Wigmer asked the committee to restore the governor’s $200,000 ongoing recommendation to maintain a pipeline of interns.

What the committee directed

The committee did not take a formal vote during the discussion. Committee members asked Shilkin to provide proposed amendment language for legislative counsel to review and discussed pursuing a line of credit with the Bank of North Dakota as a next step. No formal appropriation or statutory change was adopted during the meeting.

Ending note

Committee members said they would continue reviewing proposed language and financial structures before making formal decisions in the legislative process.