FILED 12/19/2017 2:48 PM ARCHIVES DIVISION SECRETARY OF STATE

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1 OFFICE OF THE SECRETARY OF STATE DENNIS RICHARDSON SECRETARY OF STATE LESLIE CUMMINGS DEPUTY SECRETARY OF STATE NOTICE OF PROPOSED RULEMAKING INCLUDING STATEMENT OF NEED & FISCAL IMPACT CHAPTER 123 OREGON BUSINESS DEVELOPMENT DEPARTMENT ARCHIVES DIVISION MARY BETH HERKERT DIRECTOR 800 SUMMER STREET NE SALEM, OR FILED 12/19/2017 2:48 PM ARCHIVES DIVISION SECRETARY OF STATE FILING CAPTION: This new division of rules relates to the Oregon Innovation Fund. LAST DAY AND TIME TO OFFER COMMENT TO AGENCY: 01/22/2018 5:00 PM The Agency requests public comment on whether other options should be considered for achieving the rule's substantive goals while reducing negative economic impact of the rule on business. A public rulemaking hearing may be requested in writing by 10 or more people, or by a group with 10 or more members, within 21 days following the publication of the Notice of Proposed Rulemaking in the Oregon Bulletin or 28 days from the date the Notice was sent to people on the agency mailing list, whichever is later. If sufficient hearing requests are received, the notice of the date and time of the rulemaking hearing must be published in the Oregon Bulletin at least 14 days before the hearing. CONTACT: Mark Brady mark.brady@oregon.gov 121 SW Salmon Street Suite 205 Portland,OR Filed By: Mindee Sublette Rules Coordinator NEED FOR THE RULE(S): These rules are needed to comply with current statute, particularly around reporting requirements. DOCUMENTS RELIED UPON, AND WHERE THEY ARE AVAILABLE: ORS and ORS FISCAL AND ECONOMIC IMPACT: There is no immediate fiscal impact as a result of these rules. Business in the state of Oregon are not required to apply for the program. COST OF COMPLIANCE: (1) Identify any state agencies, units of local government, and members of the public likely to be economically affected by the rule(s). (2) Effect on Small Businesses: (a) Estimate the number and type of small businesses subject to the rule(s); (b) Describe the expected reporting, recordkeeping and administrative activities and cost required to comply with the rule(s); (c) Estimate the cost of professional services, equipment supplies, labor and increased administration required to comply with the rule(s). Only those business who are awarded funding from this program are subject to reporting requirements. DESCRIBE HOW SMALL BUSINESSES WERE INVOLVED IN THE DEVELOPMENT OF THESE RULE(S): Small businesses were not involved in the development of these rules. WAS AN ADMINISTRATIVE RULE ADVISORY COMMITTEE CONSULTED? NO IF NOT, WHY NOT? As these rules have no fiscal impact on businesses in general, an advisory committee was not consulted.

2 RULES PROPOSED: , , , , , ADOPT: RULE SUMMARY: New rule making division for Oregon Innovation Fund Purpose The purpose of these rules is to provide procedures, standards and criteria for funding projects from the Oregon Innovation Fund for the High Impact Opportunity Projects (HIOP) program.

3 ADOPT: RULE SUMMARY: Definitions section adopted for division Definitions For the purposes of this division of administrative rules, additional definitions are found in OAR (Procedural Rules). As used in this OAR 123 division 89, the following terms have the meanings set forth below, unless the context clearly indicates otherwise. (1) "Department" means the Oregon Business Development Department, the State of Oregon's economic development agency. (2) "Director" means the director of the Oregon Business Development Department. (3) "Fund" means the Oregon Innovation Fund established in ORS (4) "Oregon InC" means the Oregon Innovation Council as established and described in ORS to (5) "Traded sector" is defined in Oregon statute as "industries in which member firms sell their goods or services into markets for which national or international competition exists."

4 ADOPT: RULE SUMMARY: HIOP grant funding Objectives and Priorities The Department and Oregon InC will dedicate a portion of the Fund to issue grants that support the growth of emerging, potentially high-value industry sectors. The funding will support discrete projects, called High Impact Opportunity Projects that will remove barriers to growth or increase capacity of an industry sector. These grants are to be awarded in accordance with the intent of the Innovation Plan developed by Oregon InC every biennium. Oregon InC has identified three industry sectors as priorities: Active Lifestyle (digital health, apparel & outdoor gear and wearable technology); Advanced Manufacturing (metals/advanced materials, chemicals/processes and bioscience); and Natural Resources (agricultural technology, wood products, and food & beverage). In addition, Oregon InC identified high tech and data/analytics as priorities for funding that cut across these sectors. In accordance with these rules, the Department will issue one or more requests for proposal for HIOP grants with defined periods for submission.

5 ADOPT: RULE SUMMARY: This rule describes the distinct eligibility criteria used to evaluate project proposal in order to receive an award Project and Proposer Eligibility, Criteria (1) To be eligible to receive an award, project objectives must be designed to benefit more than an individual business in a Traded Sector Industry and either: (a) establish a partnership between industry and research institutions, or (b) the commercialization of technology or research and related development in Oregon. (2) To be eligible to receive an award, organizations must be located in Oregon. (3) The following criteria will be used to evaluate project proposals: (a) Leverage - This includes funding and other resources from the industry sector, project collaborators or other sources. It also includes the use of university research, economic development activities or legislative initiatives as part of the foundation for the investment. (b) Uniquely attributable links to Oregon - This includes geographic advantages or other attributes unique to Oregon, as well as any link to one of Oregon's existing, strong industry sectors. (c) Level of impact derived from Oregon InC's investment - The use of a relatively small amount of Oregon InC dollars will have significant returns for the industry sectors. (d) Ability to scale into significant jobs and/or revenue - Job impacts of projects will be evaluated for their medium to long term potential. (e) Broad impacts - Projects will be evaluated for their location, geographic scope of their impacts as well as impacts on all income levels.

6 ADOPT: RULE SUMMARY: This rule describes how the department will approve eligible projects and what the process is if a project is deemed ineligible Proposal Review and Evaluation Approval (1) Department staff will review Proposals received to determine whether a Proposal is complete and the Proposer and the Project are eligible for program funds. (2) If a Proposer, an organization submitting Proposal, or Project is not eligible for program funds, the Department will notify the Proposer that the Proposal request is ineligible. (3) The Department may deem a Proposal ineligible (a) if the Proposer or Project fails to meet eligibility requirements in these rules, (b) Proposer fails to provide requested information in writing by the date required by the Department, or (c) if the Proposal contains false or misleading information. (4) The Director will consider protests of the eligibility determination for the HIOPs program. Only the affected Proposer may protest. Protests must be submitted in writing to the Director within 30 days of the date the Proposer was notified of being ineligible. The Director's decision is final. (5) Department staff will coordinate with Oregon InC to evaluate Proposals using the criteria listed in section and any other relevant information necessary to compare project Proposals. A review committee will be formed from Oregon InC members, technical advisors, and other experts as identified by the Department and Oregon InC. The committee will make a recommendation to Oregon InC on which projects should be funded. Oregon InC will make funding recommendations to the Director of the Department, which shall approve the awards. (6) Funding decisions approved by the Department are final.

7 ADOPT: RULE SUMMARY: This rules describes the reporting requirements that are necessary when a project is awarded Agreements and Reporting Requirements (1) The Department will negotiate grant agreements with those organizations chosen for funding. (2) The Department shall disburse monies from the Fund only after entering into a binding agreement with the organization. (3) The agreement will be in form and substance as provided by the Department and contain provisions that the Department considers necessary or appropriate, and must include; (a) A provision that the obligation of the Department under the agreement is contingent upon the availability of moneys in the Fund; (b) A provision for Implementation Projects that, for a period of up to five (5) years after project completion, the organization shall submit an annual report to Department that includes data on the economic development benefits of the project, performance measures or return on investment such as information on leveraged funds, new or retained jobs resulting from the project, and other information necessary to evaluate the success and economic impact of the project; and (c) A provision that the organization shall maintain accounts and records of all project-related activities for a period of five years after project completion and shall allow Department access to such records.

FILED 11/14/ :48 AM ARCHIVES DIVISION SECRETARY OF STATE

FILED 11/14/ :48 AM ARCHIVES DIVISION SECRETARY OF STATE OFFICE OF THE SECRETARY OF STATE DENNIS RICHARDSON SECRETARY OF STATE LESLIE CUMMINGS DEPUTY SECRETARY OF STATE NOTICE OF PROPOSED RULEMAKING INCLUDING STATEMENT OF NEED & FISCAL IMPACT CHAPTER 409 OREGON

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