Text: HF02048 Text: HF02050 Text: HF02000 - HF02099 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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1 1 Section 1. NEW SECTION. 15E.221 FINDINGS – PURPOSE.
1 2 The general assembly finds the following: Fundamental
1 3 changes have occurred in national and international financial
1 4 markets and in the financial markets of this state. A
1 5 critical shortage of seed and venture capital resources exists
1 6 in the state, and such shortage is impairing the growth of
1 7 commerce in the state. A need exists to increase the
1 8 availability of venture equity capital for emerging,
1 9 expanding, and restructuring enterprises in Iowa, including,
1 10 without limitation, enterprises in the life sciences, advanced
1 11 manufacturing, information technology, and value-added
1 12 agriculture areas. Such investments will create jobs for
1 13 Iowans and will help to diversify the state's economic base.
1 14 This division is enacted to fulfill the following purposes:
1 15 1. To mobilize private investment in a broad variety of
1 16 venture capital partnerships in diversified industries and
1 17 locales.
1 18 2. To retain the private-sector culture of focusing on
1 19 rate of return in the investing process.
1 20 3. To secure the services of the best managers in the
1 21 venture capital industry, regardless of location.
1 22 4. To facilitate the organization of the Iowa fund of
1 23 funds in which to seek such private investment and to create
1 24 interest in such investments by offering state incentives for
1 25 private persons to make investments in the Iowa fund of funds.
1 26 5. To enhance the venture capital culture and
1 27 infrastructure in the state of Iowa so as to increase venture
1 28 capital investment within the state and to promote venture
1 29 capital investing within Iowa.
1 30 6. To accomplish these purposes in such a manner as to
1 31 minimize any appropriations by the state of Iowa.
1 32 7. To effectuate specific, measurable results, including
1 33 all of the following:
1 34 a. The creation of five new venture capital fund offices
1 35 in Iowa within three years of the effective date of this Act.
2 1 b. The investment of a minimum of twenty-five million
2 2 dollars in Iowa businesses within three years of the effective
2 3 date of this Act.
2 4 c. A cumulative rate of return on venture investments of
2 5 the Iowa fund of funds equal to at least seventeen percent by
2 6 the end of five years following the effective date of this
2 7 Act.
2 8 Sec. 2. NEW SECTION. 15E.222 DEFINITIONS.
2 9 As used in this division, unless the context otherwise
2 10 requires:
2 11 1. "Board" means the Iowa capital investment board created
2 12 in section 15E.223.
2 13 2. "Certificate" means a contract between the board and a
2 14 designated investor pursuant to which a tax credit is
2 15 available and issued to the designated investor.
2 16 3. "Designated investor" means a person, other than the
2 17 Iowa capital investment corporation, who purchases an equity
2 18 interest in the Iowa fund of funds or a transferee of a
2 19 certificate or tax credit.
2 20 4. "Iowa capital investment corporation" means a private,
2 21 nonprofit corporation created pursuant to section 15E.224.
2 22 5. "Iowa fund of funds" means a private, for-profit
2 23 limited partnership or limited liability company established
2 24 by the Iowa capital investment corporation pursuant to section
2 25 15E.225 in which a designated investor purchases an equity
2 26 interest.
2 27 6. "Tax credit" means a contingent tax credit issued
2 28 pursuant to section 15E.226 that is available against tax
2 29 liabilities imposed by chapter 422, divisions II, III, and V,
2 30 and by chapter 432.
2 31 Sec. 3. NEW SECTION. 15E.223 IOWA CAPITAL INVESTMENT
2 32 BOARD.
2 33 1. The Iowa capital investment board is created as a state
2 34 governmental board and the exercise by the board of powers
2 35 conferred by this division shall be deemed and held to be the
3 1 performance of essential public purposes. The purpose of the
3 2 board shall be to mobilize venture equity capital for
3 3 investment in such a manner that will result in a significant
3 4 potential to create jobs and to diversify and stabilize the
3 5 economy of the state.
3 6 2. The board shall consist of five voting members and two
3 7 nonvoting advisory members. The five voting members shall be
3 8 appointed by the governor and confirmed by the senate pursuant
3 9 to section 2.32. The five voting members shall be appointed
3 10 to five-year staggered terms that shall be structured to allow
3 11 the term of one member to expire each year. One nonvoting
3 12 member shall be appointed by the majority leader of the senate
3 13 after consultation with the president of the senate and the
3 14 minority leader of the senate. One nonvoting member shall be
3 15 appointed by the speaker of the house of representatives after
3 16 consultation with the majority and minority leaders of the
3 17 house of representatives. The nonvoting members shall be
3 18 appointed for two-year terms which shall expire upon the
3 19 convening of a new general assembly. Vacancies shall be
3 20 filled in the same manner as the appointment of the original
3 21 members. Members shall be compensated by the board for direct
3 22 expenses and mileage but members shall not receive a
3 23 director's fee, per diem, or salary for service on the board.
3 24 Members shall be selected based upon demonstrated expertise
3 25 and competence in the supervision of investment managers, in
3 26 the fiduciary management of investment funds, or in the
3 27 management and administration of tax credit allocation
3 28 programs. Members shall not have an interest in any person to
3 29 whom a tax credit is allocated and issued by the board.
3 30 3. The board shall have the power to engage consultants,
3 31 expend funds, invest funds, contract, bond or insure against
3 32 loss, or perform any other act necessary to carry out its
3 33 purpose, provided, however, that the board shall not hire
3 34 employees.
3 35 4. Members of the board shall be indemnified against loss
4 1 to the broadest extent permissible under chapter 669.
4 2 5. Meetings of the board shall, except to the extent
4 3 necessary to protect confidential information with respect to
4 4 investments in and investments made by the Iowa fund of funds,
4 5 be subject to chapter 21.
4 6 6. The board shall, in cooperation with the department of
4 7 revenue and finance, establish criteria and procedures for the
4 8 allocation and issuance of tax credits to designated investors
4 9 by means of certificates issued by the board. The criteria
4 10 shall include the contingencies that must be met for a
4 11 certificate to be redeemable by a designated investor or
4 12 transferee in order to receive a tax credit. The
4 13 contingencies to redemption shall be tied to the scheduled
4 14 rates of return and scheduled redemptions of equity interests
4 15 purchased by designated investors in the Iowa fund of funds.
4 16 The procedures established by the board, in cooperation with
4 17 the department of revenue and finance, shall relate to the
4 18 procedures for the issuance of the certificates and the
4 19 related tax credits, for the transfer of a certificate and
4 20 related tax credit by a designated investor, and for the
4 21 redemption of a certificate and related tax credit by a
4 22 designated investor or transferee. The board shall also
4 23 establish criteria and procedures for assessing the likelihood
4 24 of future certificate redemptions by designated investors and
4 25 transferees, including, without limitation, criteria and
4 26 procedures for evaluating the value of investments made by the
4 27 Iowa fund of funds and the returns from the Iowa fund of
4 28 funds.
4 29 7. Pursuant to section 15E.226, the board shall issue
4 30 certificates which may be redeemable for tax credits to
4 31 provide incentives to designated investors to make equity
4 32 investments in the Iowa fund of funds. The board shall issue
4 33 the certificates so that not more than twenty million dollars
4 34 of tax credits may be initially redeemable in any fiscal year.
4 35 8. The board may charge a placement fee to the Iowa fund
5 1 of funds with respect to the issuance of a certificate and
5 2 related tax credit to a designated investor, but the fee shall
5 3 be charged only to pay for reasonable and necessary costs of
5 4 the board and shall not exceed one-half of one percent of the
5 5 equity investment of the designated investor.
5 6 9. The board shall, in consultation with the Iowa capital
5 7 investment corporation, publish an annual report of the
5 8 activities conducted by the Iowa fund of funds, and present
5 9 the report to the governor and the general assembly. The
5 10 annual report shall include a copy of the audit of the Iowa
5 11 fund of funds and a valuation of the assets of the Iowa fund
5 12 of funds, review the progress of the investment fund
5 13 allocation manager in implementing its investment plan, and
5 14 describe any redemption or transfer of a certificate issued
5 15 pursuant to this division, provided, however, that the annual
5 16 report shall not identify any specific designated investor who
5 17 has redeemed or transferred a certificate. Every five years,
5 18 the board shall publish a progress report which shall evaluate
5 19 the progress of the state of Iowa in accomplishing the
5 20 purposes stated in section 15E.221.
5 21 10. The board shall redeem a certificate submitted to the
5 22 board by a designated investor and shall calculate the amount
5 23 of the allowable tax credit based upon the investment returns
5 24 received by the designated investor and its predecessors in
5 25 interest and the provisions of the certificate. Upon
5 26 submission of a certificate for redemption, the board shall
5 27 issue a verification to the department of revenue and finance
5 28 setting forth the maximum tax credit which may be claimed by
5 29 the designated investor with respect to the redemption of the
5 30 certificate.
5 31 11. The board shall adopt rules pursuant to chapter 17A
5 32 necessary to administer the duties of the board.
5 33 Sec. 4. NEW SECTION. 15E.224 IOWA CAPITAL INVESTMENT
5 34 CORPORATION.
5 35 1. An Iowa capital investment corporation may be organized
6 1 as a private, not-for-profit corporation under chapter 504A.
6 2 The Iowa capital investment corporation is not a public
6 3 corporation or instrumentality of the state and shall not
6 4 enjoy any of the privileges and shall not be required to
6 5 comply with any of the requirements of a state agency. Except
6 6 as otherwise provided in this division, this division does not
6 7 exempt the corporation from the requirements under state law
6 8 which apply to other corporations organized under chapter
6 9 504A. The purposes of an Iowa capital investment corporation
6 10 shall be to organize the Iowa fund of funds, to select a
6 11 venture capital investment fund allocation manager to select
6 12 venture capital fund investments by the Iowa fund of funds, to
6 13 negotiate the terms of a contract with the venture capital
6 14 investment fund allocation manager, to execute the contract
6 15 with the selected venture capital investment fund manager on
6 16 behalf of the Iowa fund of funds, to receive investment
6 17 returns from the Iowa fund of funds, and to reinvest the
6 18 investment returns in additional venture capital investments
6 19 designed to result in a significant potential to create jobs
6 20 and to diversify and stabilize the economy of the state. The
6 21 corporation shall not exercise governmental functions and
6 22 shall not have members. The obligations of the corporation
6 23 are not obligations of this state or any political subdivision
6 24 of this state within the meaning of any constitutional or
6 25 statutory debt limitations, but are obligations of the
6 26 corporation payable solely and only from the corporation's
6 27 funds. The corporation shall not pledge the credit or taxing
6 28 power of this state or any political subdivision of this state
6 29 or make its debts payable out of any moneys except those of
6 30 the corporation.
6 31 2. To facilitate the organization of an Iowa capital
6 32 investment corporation, both of the following persons shall
6 33 serve as incorporators as provided in section 504A.28:
6 34 a. The chairperson of the Iowa economic development board
6 35 or a designee of the chairperson.
7 1 b. The director of the department of economic development
7 2 or a designee of the director.
7 3 3. After incorporation, the initial board of directors
7 4 shall be elected by the members of an appointment committee.
7 5 The members of the appointment committee shall be appointed by
7 6 the Iowa economic development board. The initial board of
7 7 directors shall consist of five members. The persons elected
7 8 to the initial board of directors by the appointment committee
7 9 shall include persons who have an expertise in the areas of
7 10 the selection and supervision of investment managers or in the
7 11 fiduciary management of investment funds, and other areas of
7 12 expertise as deemed appropriate by the appointment committee.
7 13 After the election of the initial board of directors,
7 14 vacancies in the board of directors of the corporation shall
7 15 be elected by the remaining directors of the corporation.
7 16 Members of the board of directors shall be subject to any
7 17 restrictions on conflicts of interest specified in the
7 18 organizational documents and shall have no interest in any
7 19 venture capital investment fund allocation manager selected by
7 20 the corporation pursuant to the provisions of this division or
7 21 in any investments made by the Iowa fund of funds.
7 22 4. The members of the appointment committee shall exercise
7 23 due care to assure that persons elected to the initial board
7 24 of directors have the requisite financial experience necessary
7 25 in order to carry out the duties of the corporation as
7 26 established in this division, including in areas related to
7 27 venture capital investment, investment management, and
7 28 supervision of investment managers and investment funds.
7 29 5. Upon the election of the initial board of directors,
7 30 the terms of the members of the appointment committee shall
7 31 expire.
7 32 6. The department of economic development shall assist the
7 33 incorporators and the appointment committee in any manner
7 34 determined necessary and appropriate by the director of the
7 35 department in order to administer this section.
8 1 7. After incorporation, the Iowa capital investment
8 2 corporation shall conduct a national solicitation for
8 3 investment plan proposals from qualified venture capital
8 4 investment fund allocation managers for the raising and
8 5 investing of capital by the Iowa fund of funds in accordance
8 6 with the requirements of this division. Any proposed
8 7 investment plan shall address the applicant's level of
8 8 experience, quality of management, investment philosophy and
8 9 process, probability of success in fund-raising, prior
8 10 investment fund results, and plan for achieving the purposes
8 11 of this division. The selected venture capital investment
8 12 fund allocation manager shall be a person with substantial,
8 13 successful experience in the design, implementation, and
8 14 management of seed and venture capital investment programs and
8 15 in capital formation. The corporation shall only select a
8 16 venture capital investment fund allocation manager with
8 17 demonstrated expertise in the management and fund allocation
8 18 of investments in venture capital funds. The corporation
8 19 shall select the venture capital investment fund allocation
8 20 manager deemed best qualified to generate the amount of
8 21 capital required by this division and to invest the capital of
8 22 the Iowa fund of funds.
8 23 8. The Iowa capital investment corporation may charge a
8 24 management fee on assets under management in the Iowa fund of
8 25 funds. The fee shall be in addition to any fee charged to the
8 26 Iowa fund of funds by the venture capital investment fund
8 27 allocation manager selected by the corporation, but the fee
8 28 shall be charged only to pay for reasonable and necessary
8 29 costs of the Iowa capital investment corporation and shall not
8 30 exceed one-half of one percent per year of the value of assets
8 31 under management.
8 32 9. Directors of the Iowa capital investment corporation
8 33 shall be compensated for direct expenses and mileage but shall
8 34 not receive a director's fee or salary for service as
8 35 directors.
9 1 10. The Iowa capital investment corporation shall have the
9 2 power to engage consultants, expend funds, invest funds,
9 3 contract, bond or insure against loss, or perform any other
9 4 act necessary to carry out its purpose. However, the
9 5 corporation shall not hire staff as employees except to
9 6 administer the rural and small business loan guarantee program
9 7 of the Iowa fund of funds.
9 8 11. Upon the dissolution of the Iowa fund of funds, the
9 9 Iowa capital investment corporation shall be liquidated and
9 10 dissolved, and any assets owned by the corporation shall be
9 11 distributed to the state of Iowa and deposited in the general
9 12 fund.
9 13 Sec. 5. NEW SECTION. 15E.225 IOWA FUND OF FUNDS.
9 14 1. The Iowa capital investment corporation shall organize
9 15 the Iowa fund of funds. The Iowa fund of funds shall be
9 16 authorized to make investments in private seed and venture
9 17 capital partnerships or entities in a manner which will
9 18 encourage the availability of a wide variety of venture
9 19 capital in the state, strengthen the economy of the state,
9 20 help business in Iowa gain access to sources of capital, help
9 21 build a significant, permanent source of capital available to
9 22 serve the needs of Iowa businesses, and accomplish all these
9 23 benefits in a way that minimizes the use of tax credits.
9 24 2. The Iowa capital investment corporation shall organize
9 25 the Iowa fund of funds in the following manner:
9 26 a. The Iowa fund of funds shall be organized as a private,
9 27 for-profit, limited partnership or limited liability company
9 28 under Iowa law pursuant to which the Iowa capital investment
9 29 corporation shall be the general partner or manager. The
9 30 entity shall be organized so as to provide for equity
9 31 interests for designated investors which provide for a
9 32 designated scheduled rate of return and a scheduled redemption
9 33 which shall occur not less than five years following the
9 34 issuance of such equity interests. The interest of the Iowa
9 35 capital investment corporation in the Iowa fund of funds shall
10 1 be to serve as general partner or manager and to be paid a
10 2 management fee for the service as provided in section 15E.224,
10 3 subsection 8, and to receive investment returns of the Iowa
10 4 fund of funds in excess of those payable to designated
10 5 investors. Any returns in excess of those payable to
10 6 designated investors shall be reinvested by the Iowa capital
10 7 investment corporation by being held in the Iowa fund of funds
10 8 as a revolving fund for reinvestment in venture capital funds
10 9 or investments until the termination of the Iowa fund of
10 10 funds. Any returns received from these reinvestments shall be
10 11 deposited in the revolving fund.
10 12 b. The Iowa fund of funds shall principally make
10 13 investments in high-quality venture capital funds managed by
10 14 investment managers who have made a commitment to consider
10 15 equity investments in businesses located within the state of
10 16 Iowa and which have committed to maintain a physical presence
10 17 within the state of Iowa. The investments by the Iowa fund of
10 18 funds shall be focused principally on partnership interests in
10 19 private venture capital funds and not in direct investments in
10 20 individual businesses. The Iowa fund of funds shall invest in
10 21 venture capital funds with experienced managers or management
10 22 teams with demonstrated expertise and a successful history in
10 23 the investment of venture capital funds. The Iowa fund of
10 24 funds may invest in newly created venture capital funds as
10 25 long as the managers or management teams of the funds have the
10 26 experience, expertise, and a successful history in the
10 27 investment of venture capital funds described in this
10 28 paragraph.
10 29 c. The Iowa fund of funds shall establish and administer a
10 30 program to provide loan guarantees and other related credit
10 31 enhancements on loans to rural and small business borrowers
10 32 within the state of Iowa. The Iowa fund of funds shall not
10 33 invest more than five percent of its assets in investments for
10 34 this program.
10 35 d. The Iowa fund of funds shall have the power to engage
11 1 consultants, expend funds, invest funds, contract, bond or
11 2 insure against loss, or perform any other act necessary to
11 3 carry out its purpose, including, without limitation, engaging
11 4 and agreeing to compensate a venture capital investment fund
11 5 allocation manager. Such compensation shall be in addition to
11 6 the management fee paid to the Iowa capital investment
11 7 corporation. However, the Iowa fund of funds shall not hire
11 8 employees except to administer its rural and small business
11 9 loan guarantee and credit enhancement program.
11 10 e. The Iowa fund of funds may issue debt and borrow such
11 11 funds as may be needed to accomplish its goals. However, such
11 12 debt shall not be secured by tax credits issued by the board.
11 13 The Iowa fund of funds may open and manage bank and short-term
11 14 investment accounts as deemed necessary by the venture capital
11 15 investment fund allocation manager.
11 16 f. The Iowa fund of funds may expend moneys to secure
11 17 investment ratings for investments by designated investors in
11 18 the Iowa fund of funds.
11 19 g. The Iowa fund of funds shall engage a certified public
11 20 accountant to conduct an annual audit of the activities of the
11 21 Iowa fund of funds. The audit shall be delivered to the Iowa
11 22 capital investment corporation and the board each year and
11 23 shall include a valuation of the assets owned by the Iowa fund
11 24 of funds as of the end of each year.
11 25 h. Fifty years after the organization of the Iowa fund of
11 26 funds, the Iowa capital investment corporation shall cause the
11 27 Iowa fund of funds to be liquidated with all of its assets
11 28 distributed to its owners in accordance with the provisions of
11 29 its organizational documents.
11 30 Sec. 6. NEW SECTION. 15E.226 CERTIFICATES AND TAX
11 31 CREDITS.
11 32 1. The board may issue certificates and related tax
11 33 credits to designated investors which, if redeemed for the
11 34 maximum possible amount, shall not exceed a total aggregate of
11 35 one hundred million dollars of tax credits. The certificates
12 1 shall be issued contemporaneously with an investment in the
12 2 Iowa fund of funds by a designated investor. A certificate
12 3 issued by the board shall have a specific calendar year
12 4 maturity date designated by the board of not less than five
12 5 years after the date of issuance and shall be redeemable on a
12 6 schedule similar to the scheduled redemption of investments by
12 7 designated investors. A certificate and the related tax
12 8 credit shall be transferable by the designated investor. A
12 9 tax credit shall not be claimed or redeemed except by a
12 10 designated investor or transferee in accordance with the terms
12 11 of a certificate from the board. A tax credit shall be
12 12 claimed for a tax year that begins during the calendar year
12 13 maturity date stated on the certificate. An individual may
12 14 claim the credit of a partnership, limited liability company,
12 15 S corporation, estate, or trust electing to have the income
12 16 taxed directly to the individual. The amount claimed by the
12 17 individual shall be based upon the pro rata share of the
12 18 individual's earnings from the partnership, limited liability
12 19 company, S corporation, estate, or trust. Any tax credit in
12 20 excess of the taxpayer's tax liability for the tax year may be
12 21 credited to the tax liability for the following seven years,
12 22 or until depleted, whichever is earlier.
12 23 2. The board shall certify the maximum amount of a tax
12 24 credit which could be issued to a designated investor and
12 25 identify the specific calendar year the certificate may be
12 26 redeemed pursuant to this division. The amount of the tax
12 27 credit shall be limited to an amount equivalent to any
12 28 difference between the scheduled aggregate return to the
12 29 designated investor at rates of return authorized by the board
12 30 and aggregate actual return received by the designated
12 31 investor and any predecessor in interest of capital and
12 32 interest on the capital. The rates, whether fixed rates or
12 33 variable rates, shall be determined pursuant to a formula
12 34 stipulated in the certificate. The board shall clearly
12 35 indicate on the certificate the schedule, the amount of equity
13 1 investment, the calculation formula for determining the
13 2 scheduled aggregate return on invested capital, and the
13 3 calculation formula for determining the amount of the tax
13 4 credit that may be claimed. Once moneys are invested by a
13 5 designated investor, the certificate shall be binding on the
13 6 board and the department of revenue and finance and shall not
13 7 be modified, terminated, or rescinded.
13 8 3. If a designated investor elects to redeem a
13 9 certificate, the certificate shall be redeemed on June 30 of
13 10 the calendar year maturity date stated on the certificate. At
13 11 the time of redemption, the board shall determine the amount
13 12 of the tax credit that may be claimed by the designated
13 13 investor based upon the returns received by the designated
13 14 investor and its predecessors in interest and the provisions
13 15 of the certificate. The board shall issue a verification to
13 16 the department of revenue and finance setting forth the
13 17 maximum tax credit which can be claimed by the designated
13 18 investor with respect to the redemption of the certificate.
13 19 4. The board shall, in conjunction with the department of
13 20 revenue and finance, develop a system for registration of any
13 21 certificate and related tax credit issued or transferred
13 22 pursuant to this section and a system that permits
13 23 verification that any tax credit claimed upon a tax return is
13 24 valid and that any transfers of the certificate and related
13 25 tax credit are made in accordance with the requirements of
13 26 this division.
13 27 5. The board shall issue the tax credits in such a manner
13 28 that not more than twenty million dollars of tax credits may
13 29 be initially redeemable in any fiscal year.
13 30 6. A certificate or tax credit issued or transferred
13 31 pursuant to this division shall not be considered a security
13 32 pursuant to chapter 502.
13 33 7. In determining the one hundred million dollar maximum
13 34 limit in subsection 1 and the twenty million dollar limitation
13 35 in subsection 5, the board shall use the cumulative amount of
14 1 scheduled aggregate returns on certificates issued by the
14 2 board to designated investors. However, certificates and
14 3 related tax credits which have expired shall not be included
14 4 and certificates and related tax credits which have been
14 5 redeemed shall be included only to the extent of tax credits
14 6 actually allowed.
14 7 Sec. 7. NEW SECTION. 15E.227 POWERS AND EFFECTIVENESS.
14 8 This division shall not be construed as a restriction or
14 9 limitation upon any power which the board might otherwise have
14 10 under any other law of this state and the provisions of this
14 11 division are cumulative to such powers. This division shall
14 12 be construed to provide a complete, additional, and
14 13 alternative method for performing the duties authorized and
14 14 shall be regarded as supplemental and additional powers
14 15 conferred by any other laws. The level, timing, or degree of
14 16 success of the Iowa fund of funds or the investment funds in
14 17 which the Iowa fund of funds invests in, or the extent to
14 18 which the investment funds are invested in Iowa venture
14 19 capital projects, or are successful in accomplishing any
14 20 economic development objectives, shall not compromise,
14 21 diminish, invalidate, or affect the provisions of any contract
14 22 entered into by the board or the Iowa fund of funds.
14 23 Sec. 8. NEW SECTION. 15E.228 PERMISSIBLE INVESTMENTS.
14 24 Investments by designated investors in the Iowa fund of
14 25 funds shall be deemed permissible investments for state-
14 26 chartered banks and for domestic insurance companies under
14 27 applicable state laws.
14 28 EXPLANATION
14 29 This bill creates a state governmental entity, the Iowa
14 30 capital investment board, and authorizes the organization of a
14 31 private, not-for-profit corporation, the Iowa capital
14 32 investment corporation, and the organization of a for-profit,
14 33 limited partnership or limited liability company, the Iowa
14 34 fund of funds. The bill also authorizes the issuance of tax
14 35 credits to investors in the Iowa fund of funds.
15 1 The bill creates the Iowa capital investment board as a
15 2 governmental entity. The bill provides that the board shall
15 3 consist of five voting members and two nonvoting members. The
15 4 bill provides the board with powers to carry out its purpose
15 5 and prohibits the board from hiring employees. The bill
15 6 provides that board members are indemnified against loss under
15 7 Code chapter 669. The bill provides that board meetings shall
15 8 comply with open meetings laws, except to the extent necessary
15 9 to protect confidential information with respect to
15 10 investments in and investments made by the Iowa fund of funds.
15 11 The bill provides that the board, in cooperation with the
15 12 department of revenue and finance, shall establish criteria
15 13 and procedures for the allocation and issuance of tax credits
15 14 to designated investors by means of certificates issued by the
15 15 board. The bill provides that the board shall issue
15 16 certificates which may be redeemable for tax credits as
15 17 incentives to designated investors to make equity investments.
15 18 The bill provides that the board shall issue the certificates
15 19 so that not more than $20 million of tax credits may be
15 20 initially redeemable in any fiscal year. The bill provides
15 21 that the board may charge a placement fee to the Iowa fund of
15 22 funds with respect to the issuance of a certificate and
15 23 related tax credit. The bill provides that the board, in
15 24 consultation with the Iowa capital investment corporation,
15 25 shall publish an annual report of the activities conducted by
15 26 the Iowa fund of funds. The bill provides that the board
15 27 shall redeem a certificate submitted by a designated investor,
15 28 shall calculate the amount of the allowable tax credit, and
15 29 issue a verification to the department of revenue and finance
15 30 setting forth the maximum tax credit which may be claimed.
15 31 The bill requires the board to adopt administrative rules
15 32 necessary to administer the duties of the board.
15 33 The bill authorizes the organization of an Iowa capital
15 34 investment corporation as a private, not-for-profit
15 35 corporation. The bill provides a method for incorporation,
16 1 including providing for incorporators, an appointment
16 2 committee, and an initial board of directors. The bill
16 3 provides that the department of economic development shall
16 4 assist the incorporators and the appointment committee in any
16 5 manner determined necessary and appropriate. The bill
16 6 provides that the corporation shall conduct a national
16 7 solicitation for an investment plan proposal. The bill
16 8 provides that the corporation may charge a management fee on
16 9 assets under management in the Iowa fund of funds which shall
16 10 not exceed one-half of 1 percent per year of the value of the
16 11 assets under management. The bill provides that the directors
16 12 of the corporation shall be compensated for direct expenses
16 13 and mileage, but shall not receive a director's fee or salary
16 14 for their service. The bill provides the corporation with
16 15 various business-related powers. The bill provides that, upon
16 16 the dissolution of the Iowa fund of funds, the corporation
16 17 shall be liquidated and dissolved, and any assets owned by it
16 18 shall be distributed to the state of Iowa.
16 19 The bill provides for the organization of the Iowa fund of
16 20 funds by the Iowa capital investment corporation. The bill
16 21 provides that the Iowa fund of funds shall be organized as a
16 22 for-profit limited partnership or limited liability company to
16 23 which the Iowa capital investment corporation shall be the
16 24 general partner or manager. The bill provides that the Iowa
16 25 fund of funds shall be organized so as to provide for equity
16 26 interests for designated investors which provide for a
16 27 designated scheduled rate of return and a scheduled redemption
16 28 which shall occur not less than five years following the
16 29 issuance of such equity interests.
16 30 The bill provides that the Iowa fund of funds shall
16 31 principally make investments in high-quality venture capital
16 32 funds managed by investment managers who have made a
16 33 commitment to consider equity investments in businesses
16 34 located within the state of Iowa and which have committed to
16 35 maintain a physical presence within the state of Iowa. The
17 1 bill provides that the Iowa fund of funds shall not invest
17 2 more than 5 percent of its assets in investments in the form
17 3 of loan guarantees and other related credit enhancements on
17 4 loans to rural and small business borrowers within the state
17 5 of Iowa. The bill provides the Iowa fund of funds with
17 6 certain business-related powers. The bill provides that the
17 7 Iowa fund of funds may issue debt and borrow and may open and
17 8 manage bank and short-term investment accounts. The bill
17 9 provides that the Iowa fund of funds may expend moneys to
17 10 secure investment ratings for investments by designated
17 11 investors. The bill provides that the Iowa fund of funds
17 12 shall engage a certified public accountant to conduct an
17 13 annual audit. The bill provides that the Iowa fund of funds
17 14 shall be liquidated 50 years following the organization of the
17 15 Iowa fund of funds.
17 16 The bill provides that the Iowa capital investment board
17 17 may issue to designated investors certificates and related tax
17 18 credits which shall not exceed a total aggregate of $100
17 19 million of tax credits. The bill provides the certificates
17 20 shall be issued contemporaneously with an investment in the
17 21 Iowa fund of funds by a designated investor. The bill
17 22 provides that the certificates and tax credits are
17 23 transferable. The bill provides that a tax credit shall be
17 24 claimed for a tax year that begins during the calendar year
17 25 maturity date stated on the certificate. The bill provides
17 26 that the amount of the tax credit shall be limited to the
17 27 equivalent of any difference between the scheduled aggregate
17 28 return to the designated investor and the aggregate return on
17 29 invested capital at rates of return authorized by the board.
17 30 The bill provides that any tax credit in excess of the
17 31 designated investor's tax liability for the tax year may be
17 32 credited to the tax liability for the following seven years,
17 33 or until depleted, whichever is earlier. The bill provides
17 34 that the board, in conjunction with the department of revenue
17 35 and finance, develop a system for registration of any
18 1 certificate and related tax credit issued or transferred and a
18 2 verification system. The bill provides that the board shall
18 3 issue tax credits in such a manner that not more than $20
18 4 million of tax credits may be initially redeemable in any
18 5 fiscal year. The bill provides that a certificate or tax
18 6 credit issued pursuant to the bill is not considered a
18 7 security.
18 8 The bill provides provisions relating to statutory
18 9 construction and the powers of the Iowa capital investment
18 10 board.
18 11 The bill provides that investments by designated investors
18 12 in the Iowa fund of funds shall be deemed permissible
18 13 investments for state-chartered banks and for domestic
18 14 insurance companies under applicable state laws.
18 15 LSB 5269HH 79
18 16 tm/sh/8
Text: HF02048 Text: HF02050 Text: HF02000 - HF02099 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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