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1 1 Section 1. NEW SECTION. 15E.181 TITLE OF ACT.
1 2 This division shall be known and may be cited as the
1 3 "County Economic Development Fund Entity Act".
1 4 Sec. 2. NEW SECTION. 15E.182 PURPOSE.
1 5 The purpose of the county economic development fund entity
1 6 Act is to promote economic development in Iowa counties by
1 7 providing incentives for the creation of county investment
1 8 entities to provide seed capital for investments in start-up
1 9 and development-stage value adding businesses.
1 10 Sec. 3. NEW SECTION. 15E.183 COUNTY ECONOMIC DEVELOPMENT
1 11 FUND ENTITIES.
1 12 1. A county economic development fund entity may be
1 13 established in a county for promotion of economic development
1 14 through the creation of a pool of ready capital for investment
1 15 in new businesses which will be located within the county.
1 16 The county board of supervisors shall certify that the entity
1 17 is a legally formed corporation or limited partnership, that
1 18 control of the entity is in the hands of county residents, and
1 19 that the entity has met the minimum funding threshold. The
1 20 entity shall use a name which clearly indicates that it is a
1 21 county economic development fund entity.
1 22 2. Only one county economic development fund entity shall
1 23 be established in each county, which shall be a corporation or
1 24 a limited partnership. However, additional county economic
1 25 development fund entities may be established in any county
1 26 upon certification by the county board of supervisors that the
1 27 funds of the initial entity are fully invested within the
1 28 county.
1 29 3. A county economic development fund entity shall have at
1 30 least seventy-five thousand dollars of private funds invested
1 31 in it.
1 32 4. The entity shall be controlled by county residents. If
1 33 the entity is a corporation, the majority of the voting shares
1 34 shall be held by county residents. If the entity is a limited
1 35 partnership, the general partner must be a resident of the
2 1 county or if the general partner is a corporation, the
2 2 majority of the voting shares of the corporation must be held
2 3 by residents of the county. However, investors in the entity
2 4 need not be residents of the county.
2 5 5. Each entity shall only invest in businesses which would
2 6 be eligible to participate in the Iowa industrial new jobs
2 7 training Act, chapter 260E. Primary investments shall be made
2 8 in business assets which are not portable in order to provide
2 9 an incentive for a business not to leave the county. Priority
2 10 shall also be given to investments creating high skilled, high
2 11 performance jobs and to businesses utilizing advanced
2 12 competitive technology.
2 13 6. Each entity may invest idle funds in interest-bearing
2 14 instruments.
2 15 Sec. 4. NEW SECTION. 15E.184 FINANCIAL REPORTS AND
2 16 DISCLOSURE STATEMENTS.
2 17 1. Each entity shall submit an annual report to all
2 18 investors and the treasurer of state which shall contain
2 19 financial statements of the entity and shall list all
2 20 investments of the entity and the current value of those
2 21 investments.
2 22 2. a. Each entity shall prepare a disclosure document
2 23 which complies with the requirements of the Iowa uniform
2 24 securities Act, chapter 502, for public or private placements.
2 25 b. If the entity makes a private placement of less than
2 26 five million dollars, it shall file post-sale disclosure
2 27 documents and form D as required by rules adopted pursuant to
2 28 section 502.203, subsection 16.
2 29 c. If the entity makes a public offering of securities to
2 30 raise up to one million dollars of private funds, the fund
2 31 shall comply with section 502.207A regarding registration for
2 32 small corporate offerings, of the Iowa securities bureau.
2 33 d. Other public offerings by the entity shall comply with
2 34 the registration requirements of chapter 502.
2 35 Sec. 5. NEW SECTION. 15E.185 STATE FUNDS INCENTIVE
3 1 MATCH.
3 2 1. The treasurer of state shall provide to each county
3 3 economic development fund entity, which applies, an investment
3 4 of funds from the general fund of the state in a ratio of one
3 5 dollar of state funds for each three dollars of private funds
3 6 invested in the county economic development fund entity. The
3 7 application to the treasurer shall contain the following:
3 8 a. The certification by the county board of supervisors
3 9 required by section 15E.183.
3 10 b. Certification of compliance with chapter 502, issued by
3 11 the securities bureau of the insurance division of the Iowa
3 12 department of commerce.
3 13 c. One copy of the disclosure document required by section
3 14 15E.184, subsection 2, paragraph "a".
3 15 2. Moneys invested in a county economic development fund
3 16 entity under subsection 1 shall be subordinate in repayment
3 17 priority to the principal amount of moneys invested in the
3 18 entity by private investors. Private investors shall receive
3 19 repayment of their principal invested in the fund, either
3 20 through periodic payments or through the liquidation of the
3 21 entity, before any entity moneys are applied to the state
3 22 investment. Upon liquidation of the entity, after repayment
3 23 of private investors' principal, repayment of state moneys
3 24 invested in the entity, and payment of any remaining
3 25 obligations of the entity, the remainder of the funds shall be
3 26 distributed to the private investors.
3 27 Sec. 6. NEW SECTION. 15E.186 STATE FINANCIAL ASSISTANCE
3 28 GRANTS.
3 29 The treasurer of state shall provide to each county
3 30 economic development entity, which applies, a grant, in each
3 31 of the first three years of the entity's existence, equal to
3 32 three percent of the initial private and public moneys
3 33 invested in the entity. Proceeds from the grants shall be
3 34 distributed to the nearest community college for the purpose
3 35 of hiring the services of a qualified professional financial
4 1 advisor to assist the entity in organization and management,
4 2 including the provision of assistance to businesses in which
4 3 the entity has invested. To be eligible to be hired as a
4 4 professional financial advisor, a person shall have at least
4 5 three years of demonstrated financial management experience in
4 6 the business of providing financial management, money
4 7 management, venture capital funds management, or similar
4 8 services.
4 9 Sec. 7. NEW SECTION. 15E.187 PUBLIC FUNDS RECAPTURE.
4 10 Each county economic development entity shall invest at
4 11 least fifty percent of the initial private and public moneys
4 12 invested in the entity within three years of the date of
4 13 organization. An entity which fails to make that level of
4 14 investment shall repay to the treasurer of state, state moneys
4 15 invested in the entity and the amount of incentive tax credits
4 16 under section 422.11D, 422.33, or 422.60, with interest at an
4 17 annual rate of six percent.
4 18 Sec. 8. NEW SECTION. 15E.188 INCENTIVE TAX CREDIT.
4 19 A private investor in a county economic development entity
4 20 shall receive a credit against the investor's individual,
4 21 corporate, or franchise taxes equal to ten percent of the
4 22 amount invested in any county economic development entity in
4 23 accordance with section 422.11D, 422.33, or 422.60.
4 24 Sec. 9. NEW SECTION. 15E.189 CREDIT NOT LOANED.
4 25 The provisions of sections 15E.185 and 15E.186 shall not be
4 26 considered an extension of the credit of the state under
4 27 Article VII, section 1, of the Iowa Constitution.
4 28 Sec. 10. NEW SECTION. 422.11D COUNTY ECONOMIC
4 29 DEVELOPMENT FUND ENTITY INCENTIVE CREDIT.
4 30 The taxes imposed under this division, less other
4 31 applicable credits, shall be reduced by a county economic
4 32 development fund entity credit. The amount claimed by the
4 33 individual shall be equal to ten percent of the amount
4 34 invested in any county economic development entity by the
4 35 individual. Any credit in excess of the tax liability for the
5 1 tax year may be credited to the tax liability for the
5 2 following years until depleted.
5 3 Sec. 11. Section 422.33, Code 1995, is amended by adding
5 4 the following new subsection:
5 5 NEW SUBSECTION. 9. The taxes imposed under this division
5 6 shall be reduced by a county economic development fund entity
5 7 tax credit equal to ten percent of the amount invested in any
5 8 county economic development fund entity by the corporation.
5 9 Any credit in excess of the tax liability for the tax year may
5 10 be credited to the tax liability for the following years until
5 11 depleted.
5 12 Sec. 12. Section 422.60, Code 1995, is amended by adding
5 13 the following new subsection:
5 14 NEW SUBSECTION. 4. A credit is allowed against the tax
5 15 determined in section 422.63 for a tax year in an amount equal
5 16 to ten percent of the amount invested in any county economic
5 17 development fund entity for that tax year. Any credit in
5 18 excess of the tax liability for the tax year may be credited
5 19 to the tax liability for the following years until depleted.
5 20 EXPLANATION
5 21 This bill authorizes counties to form county economic
5 22 development entities to promote economic development within
5 23 the counties by providing seed capital for investment in
5 24 start-up and development stage businesses which add value to
5 25 Iowa products and which qualify under the Iowa Industrial New
5 26 Jobs Training Act, chapter 260E. The bill provides that the
5 27 county board of supervisors must certify that the corporation,
5 28 or limited partnership formed as the fund entity, is
5 29 controlled by county residents and that the entity has raised
5 30 at least $75,000 of private funds.
5 31 The bill also provides that a county economic development
5 32 entity shall receive from the treasurer, upon application by
5 33 the entity, matching funds on a three-to-one private-to-public
5 34 funds match. Matched funds shall be repaid by the entity to
5 35 the treasurer, although repayment of state funds is
6 1 subordinate to repayment of the principal amounts invested by
6 2 private investors.
6 3 In addition, the bill provides for a state grant from the
6 4 treasurer of state of up to 3 percent of the initial private
6 5 investment in the entity. The grant funds shall be provided
6 6 to a local community college for the purpose of hiring a
6 7 qualified professional financial advisor to assist the entity
6 8 in its organization and management.
6 9 Further, the bill provides for an individual, corporate, or
6 10 franchise tax credit of 10 percent of the amount invested in a
6 11 county economic development entity by a private investor, that
6 12 the entity shall comply with the Iowa Uniform Securities Act,
6 13 chapter 502, in raising private funds, and that the entity
6 14 must make investments in businesses of at least 50 percent of
6 15 its initial capital within three years or be subject to
6 16 certain penalties.
6 17 LSB 1736XS 76
6 18 mk/jj/8.1
Text: SF00261 Text: SF00263 Text: SF00200 - SF00299 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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