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Sec. 2161. Short title.
This subtitle may be cited as the "Equitable Impact Assistance for Local Businesses Act of 2020".
Sec. 2162. Definitions.
For the purposes of this subtitle , the term:
(1) "Economically disadvantaged individual" shall have the same meaning as set forth in section 2302(7) of the Small and Certified Business Enterprise Development and Assistance Act of 2005, effective October 20, 2005 (D.C. Law 16-33; D.C. Official Code § 2-218.02(7)) .
(2) (A) "Eligible business" means an equity impact enterprise that has $2 million or less in annual revenue and certifies in writing that the business is unable to obtain conventional financing or is a business enterprise that cannot reasonably be expected to qualify for financing under the standards of commercial lending.
(B) For the purposes of this paragraph, the phrase "unable to obtain conventional financing" means that the business has attempted but failed in the attempt to obtain financing from conventional sources.
(3) "Equity impact enterprise" shall have the same meaning as set forth in section 2303(8A) of the Small and Certified Business Enterprise Development and Assistance Act of 2005, effective October 20, 2005 (D.C. Law 16-33; D.C. Official Code § 2-218.02(8A)) .
(4) "Fund" means the Equity Impact Fund established in section 2163 .
(5) "Fund Manager" means a private financial organization selected by the Mayor pursuant to section 2164 .
(6) "Private financial organization" means a partnership, corporation, trust, limited liability company, Community Development Financial Institution, or a consortium of partnerships, corporations, trusts, limited liability companies, or Community Development Financial Institutions, whether organized on a profit or not-for-profit basis, that has as its primary activity the investment of capital into businesses.
Sec. 2163. Establishment of the Equity Impact Fund.
(a) (1) There is established a fund outside the General Fund of the District of Columbia, designated as the Equity Impact Fund ("Fund"), which shall be managed by a Fund Manager selected by the Mayor.
(2) The Deputy Mayor for Planning and Economic Development shall provide, upon selection of the Fund Manager, $1.25 million in the aggregate in Fiscal Year 2021 for deposit into the Fund ("District's initial investment").
(b) The Fund shall be funded by money appropriated for the purposes of the Fund, other amounts, if any, received by the District or Fund Manager for deposit into the Fund, and any monies received as gifts, grants, donations, and awards.
(c) Money in the Fund shall be used for the following purposes:
(1) To facilitate investment in businesses that lack access to capital;
(2) To make investments into eligible businesses based on an investment strategy determined by the Fund Manager; and
(3) To administer the Fund, including the provision of technical assistance to eligible businesses; provided, that no more than 15% of the District's initial investment may be used annually for this purpose.
Sec. 2164. Fund Manager selection.
(a) The Mayor shall solicit applications, in a form determined by the Mayor, for the position of Fund Manager from private financial organizations. The application shall contain description of:
(1) The qualifications of the applicant, including demonstrable experience in investing in small businesses, businesses owned by economically disadvantaged individuals, businesses owned by individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities, or businesses that otherwise meet the definition of, or are similar to, an equity impact enterprise;
(2) How the applicant will structure the Fund and investment criteria to achieve the goals and objectives of the Fund;
(3) The ability and plans of the applicant to provide or raise sufficient funds to provide matching contributions for the Fund;
(4) The ability of the applicant to maintain a sufficient fund balance to administer the Fund;
(5) The type of businesses to be targeted for priority investment from the Fund;
(6) A demonstrable ability to offer a variety of financing vehicles, including equity financing, revenue-based financing, royalty financing, and debt financing;
(7) The investment strategies the applicant will employ to achieve the goals and objectives of the Fund; and
(8) Other criteria that the Mayor considers necessary or appropriate.
(b) The Fund Manager shall be selected from among the applicants for the position based on a scoring rubric established by the Mayor; provided, that:
(1) A preference be given to applicants that are at least 51% owned, operated, or controlled by economically disadvantaged individuals or individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities; and
(2) If the applicant manages an existing investment fund, the existing fund not exceed $100,000,000 in total investments.
Sec. 2165. Minimum requirements for investment.
(a) The Fund Manager shall source, underwrite, and monitor all investments placed pursuant to this subtitle . Except as otherwise provided by this subtitle , the Mayor shall not determine the recipient, amount, interest rate, or any other requirement related to an investment made pursuant to this subtitle .
(b) The following requirements shall apply to any investment in an eligible business made from the Fund using the District's initial investment or interest earned on the initial investment:
(1) The Fund Manager shall begin accepting applications from eligible businesses seeking investment, on a rolling basis, within 30 days of being selected for the position by the Mayor.
(2) For the Fund Manager to provide an investment from the Fund, the eligible business must agree, in writing, to participate in technical assistance training.
(3) The Fund Manager shall establish, for each selected eligible business, a 12-month individualized business plan. Investments shall be distributed to the eligible business in installments based upon completion of specific milestones clearly described in the business's individualized business plan. The individualized business plan shall include technical assistance, provided at no cost to the business, which shall include education on the management and scale of a business through live training or guided recorded sessions. All eligible businesses that receive an investment from the Fund shall be required to participate in at least 3 months of technical assistance training.
Sec. 2166. Reporting requirements.
The Fund Manager shall submit to the Mayor, on a quarterly basis, a report on the activities of the Fund. The report shall include, at a minimum:
(1) The aggregate amount of dollars invested in eligible businesses during the reporting period;
(2) The number of eligible businesses receiving an investment, including the name and business address for each;
(3) A copy of the individualized business plan for each eligible business, including a description of the technical assistance training provided; and
(4) The aggregate amount of funds in the Fund and a breakdown of the amount of the funds in the Fund used for each of the following, with each amount reported as a percentage of the aggregate amount of the Fund:
(A) The percentage used for technical training assistance;
(B) The percentage used for administration costs; and
(C) The percentage used to compensate the Fund Manager.
Sec. 2167. Recovery of District investment.
The Mayor shall reserve the right to recover the amount of its initial investment into the Fund and may exercise this right if the Fund Manager does not, within a reasonable period, as determined by the Mayor, place investments into eligible businesses in an amount equal to the amount of the District's initial investment into the Fund.