3. a. There is established a five-year social innovation loan pilot program within the New Jersey Economic Development Authority to administer and determine the effectiveness of a social innovation loan pilot program. The pilot program shall concern nonprofit health care services with the purpose of encouraging private investment in public health care services, including, but not limited to, treatment and prevention services, and to reduce federal, State, and municipal expenditures related to those services. The pilot program shall assess the feasibility of expanding a social innovation loan pilot program Statewide and expanding the scope of social impact loan guarantees, made pursuant to subsection b. of this section, beyond the health care sector.

b. Under the pilot program established pursuant to subsection a. of this section, the authority shall guarantee loans issued to eligible organizations for the provision of public health care services which generate positive social outcomes and public sector cost savings. Each loan shall be facilitated by the study commission established pursuant to section 4 of P.L.2021, c.434 (C. 34:1B-268.6) and shall consist of:

(1) a lending agreement between an eligible organization, a lender, and a public sector entity which shall include terms that provide:

(a) the eligible organization with direct funding from a lender in exchange for the provision of public health care services;

(b) the public sector entity with public health care services in exchange for defined payments to the lender in an amount proportional to the amount of public sector savings generated by the provision of those services; and

(c) the lender with loan repayments in exchange for the provision of funding to an eligible organization.

(2) a loan guarantee agreement between the authority and all parties to the lending agreement authorized pursuant to paragraph (1) of this subsection which shall require the terms of the lending agreement to conform to any loan requirements established pursuant to P.L.2021, c.434 (C. 34:1B-268.3 et seq.) or by the authority; and

(3) an agreement between the authority, the public sector entity making performance payments, the eligible organization, and the lender which includes terms that require a method of measurement and verification of the public health care services to be performed, how the public sector savings are to be calculated, how the interest rate will be determined, and how funds shall flow between the parties according to each of the agreements made pursuant to this subsection.

c. Up to 100 percent of the value of a loan agreement entered into pursuant to subsection b. of this section may be guaranteed by the authority, provided that the total amount in the aggregate of all loans guaranteed under the social innovation loan pilot program established pursuant to P.L.2021, c.434 (C. 34:1B-268.3 et seq.) shall not exceed $15,000,000.

d. The authority, in cooperation with the study commission and the Department of Human Services, shall offer to guarantee loans made pursuant to subsection b. of this section utilizing funds from the social innovation loan fund established pursuant to section 5 of P.L.2021, c.434 (C. 34:1B-268.7) to finance a project undertaken for the purposes of subsection b. of this section. The authority shall consider the following factors:

(1) The economic feasibility of the project;

(2) The degree to which the project will advance Statewide and regional strategies and objectives;

(3) The degree to which the project maximizes the leverage of other State funds; and

(4) The factors listed in paragraph (1) of subsection e. of section 4 of P.L.2021, c.434 (C. 34:1B-268.6).

e. A lender or nonprofit or for-profit organization seeking to participate in the social innovation loan pilot program shall submit an application in a form as the authority shall require. The application shall include any information the authority shall determine is necessary in consideration of the provisions of P.L.2011, c.123 (52:14B-21.1 et seq.).

f. A loan guarantee agreement entered into pursuant to subsection b. of this section shall provide that any loan guaranteed by the authority shall:

(1) be for a loan having a fair effective interest rate as determined by the authority; and

(2) contain other terms and conditions considered appropriate by the authority that are consistent with the purposes of P.L.2021, c.434 (C. 34:1B-268.3 et seq.) and with rules and regulations promulgated by the authority, pursuant to section 8 of P.L.2021, c.434, to implement P.L.2021, c.434 (C. 34:1B-268.3 et seq.).

g. (1) Consistent with federal law, rule, or regulation, each eligible organization that receives a loan guarantee under P.L.2021, c.434 (C. 34:1B-268.3 et seq.) shall undergo an audit, at the organization’s own expense, at least once every two calendar years. The authority shall designate an independent auditor to conduct the audit.

(2) If an audit is performed under a requirement of federal law, rule, or regulation, the authority shall waive the audit required pursuant to this subsection with respect to all issues addressed by the federally required audit. However, the authority may require an audit of matters that are not, in the authority’s judgment, addressed by the federally required audit, including, but not limited to, measurement and verification of health care intervention activities, and public sector savings.

h. A loan guarantee agreement made pursuant to subsection b. of this section shall provide that any loan guarantee issued by the authority shall be voided if the terms and conditions of the agreement are violated by any party to that loan securitization agreement.

i. The authority shall solicit grants from interested public or private sources for the establishment and administration of the pilot program and study commission as well as the capitalization of the “social innovation loan fund” established pursuant to section 5 of P.L.2021, c.434 (C. 34:1B-268.7).

j. The pilot program shall expire on the 30th day following the closing of all loans guaranteed pursuant to P.L.2021, c.434 (C. 34:1B-268.3 et seq.).

L.2021, c.434, s.3.