Commerce, Bank of North Dakota seek flexibility for development fund; lawmakers weigh $75 million line of credit

Department of Commerce officials and Bank of North Dakota executives told the Appropriations Education & Environment Division they plan to seek changes to the state development fund to give it more flexibility to compete for large economic-development projects.

Kelvin Hullett, chief business development officer at the Bank of North Dakota, told the committee the development fund was originally designed to address early‑stage financing gaps and has been more active after larger appropriations in recent bienniums. Hullett said the bank and Commerce now propose program refinements including a line of credit, modest grant authority for specific defense-contractor leverage, and temporary expansion to allow support for some “non-primary sector” projects in smaller communities.

Proposal details: Committee staff and Commerce Commissioner Chris Shelton described an amendment concept that would authorize a $75 million line of credit to the development fund (the sponsor said the fund is expected to have about $50 million in cash and likely to use roughly $30 million during the biennium, leaving around $20 million in cash). The amendment would also allow targeted grants (small, leverage‑focused awards) for defense‑contract-related applicants and permit the development fund to consider non‑primary‑sector projects on a trial basis to support more rural communities.

Why it matters: Witnesses said the changes would give North Dakota a faster tool to respond to large or time‑sensitive investment opportunities, allow the state to “leverage” small state grants into larger federal or private awards, and help rural communities attract projects that do not fit traditional “primary sector” definitions. Committee members raised budget-policy concerns about lines of credit being used as de facto appropriations that shift repayment obligations into future sessions.

Lawmakers’ concerns and clarifications: Representatives asked how lines of credit are repaid and whether the state is effectively committing next‑biennium dollars. Bank officials explained lines of credit are a cash-management tool; the Bank charges a government rate (prime less two points, currently about 5.5%) on any drawn balance, and agencies typically seek deficiency appropriations or designated repayment sources in the next session to retire the principal and interest. Representatives warned that extensive use of lines of credit could create sizeable repayment obligations for future legislatures.

Next steps: Committee leadership said staff will draft amendment language for committee review. Commerce and bank officials said they would provide the amendment and additional details to members before the committee finalizes action.