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Bills and Amendments: General Index     Bill History: General Index



House File 2078

Partial Bill History

Bill Text

PAG LIN
  1  1                                       HOUSE FILE 2078
  1  2 
  1  3                             AN ACT
  1  4 RELATING TO ECONOMIC STIMULUS MEASURES FOR BUSINESSES BY
  1  5    CREATING AN IOWA CAPITAL INVESTMENT BOARD, AUTHORIZING THE 
  1  6    ORGANIZATION OF AN IOWA CAPITAL INVESTMENT CORPORATION AND
  1  7    AN IOWA FUND OF FUNDS, AND AUTHORIZING THE ISSUANCE OF
  1  8    CONTINGENT TAX CREDITS TO INVESTORS IN THE IOWA FUND OF FUNDS;
  1  9    ESTABLISHING A SMALL BUSINESS GROWTH INITIATIVE BY ADJUSTING
  1 10    THE ALLOCATION TO IOWA OF INCOME EARNED BY AN S CORPORATION
  1 11    FOR PURPOSES OF THE STATE INDIVIDUAL INCOME TAX; AND INCLUDING
  1 12    A RETROACTIVE APPLICABILITY DATE PROVISION.  
  1 13 
  1 14 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1 15 
  1 16    Section 1.  NEW SECTION.  15E.221  FINDINGS – PURPOSE.
  1 17    The general assembly finds the following:  Fundamental
  1 18 changes have occurred in national and international financial
  1 19 markets and in the financial markets of this state.  A
  1 20 critical shortage of seed and venture capital resources exists
  1 21 in the state, and such shortage is impairing the growth of
  1 22 commerce in the state.  A need exists to increase the
  1 23 availability of venture equity capital for emerging,
  1 24 expanding, and restructuring enterprises in Iowa, including,
  1 25 without limitation, enterprises in the life sciences, advanced
  1 26 manufacturing, information technology, and value-added
  1 27 agriculture areas.  Such investments will create jobs for
  1 28 Iowans and will help to diversify the state's economic base.
  1 29    This division is enacted to fulfill the following purposes:
  1 30    1.  To mobilize private investment in a broad variety of
  1 31 venture capital partnerships in diversified industries and
  1 32 locales.
  1 33    2.  To retain the private-sector culture of focusing on
  1 34 rate of return in the investing process.
  1 35    3.  To secure the services of the best managers in the
  2  1 venture capital industry, regardless of location.
  2  2    4.  To facilitate the organization of the Iowa fund of
  2  3 funds in which to seek such private investment and to create
  2  4 interest in such investments by offering state incentives for
  2  5 private persons to make investments in the Iowa fund of funds.
  2  6    5.  To enhance the venture capital culture and
  2  7 infrastructure in the state of Iowa so as to increase venture
  2  8 capital investment within the state and to promote venture
  2  9 capital investing within Iowa.
  2 10    6.  To accomplish these purposes in such a manner as to
  2 11 minimize any appropriations by the state of Iowa.
  2 12    7.  To effectuate specific, measurable results, including
  2 13 all of the following:
  2 14    a.  The creation of three new venture capital fund offices
  2 15 in Iowa within three years of the effective date of this Act.
  2 16    b.  The investment of resources from the Iowa fund of funds
  2 17 in Iowa businesses within three years of the effective date of
  2 18 this Act.
  2 19    c.  A cumulative rate of return on venture investments of
  2 20 the Iowa fund of funds equal to a minimum of one and one-half
  2 21 percentage points above the ten-year treasury bill rate in
  2 22 effect at the end of five years following the effective date
  2 23 of this Act.
  2 24    Sec. 2.  NEW SECTION.  15E.222  DEFINITIONS.
  2 25    As used in this division, unless the context otherwise
  2 26 requires:
  2 27    1.  "Board" means the Iowa capital investment board created
  2 28 in section 15E.223.
  2 29    2.  "Certificate" means a contract between the board and a
  2 30 designated investor pursuant to which a tax credit is
  2 31 available and issued to the designated investor.
  2 32    3.  "Designated investor" means a person, other than the
  2 33 Iowa capital investment corporation, who purchases an equity
  2 34 interest in the Iowa fund of funds or a transferee of a
  2 35 certificate or tax credit.
  3  1    4.  "Iowa capital investment corporation" means a private,
  3  2 nonprofit corporation created pursuant to section 15E.224.
  3  3    5.  "Iowa fund of funds" means a private, for-profit
  3  4 limited partnership or limited liability company established
  3  5 by the Iowa capital investment corporation pursuant to section
  3  6 15E.225 in which a designated investor purchases an equity
  3  7 interest.
  3  8    6.  "Tax credit" means a contingent tax credit issued
  3  9 pursuant to section 15E.226 that is available against tax
  3 10 liabilities imposed by chapter 422, divisions II, III, and V,
  3 11 and by chapter 432 and against the moneys and credits tax
  3 12 imposed by section 533.24.
  3 13    Sec. 3.  NEW SECTION.  15E.223  IOWA CAPITAL INVESTMENT
  3 14 BOARD.
  3 15    1.  The Iowa capital investment board is created as a state
  3 16 governmental board and the exercise by the board of powers
  3 17 conferred by this division shall be deemed and held to be the
  3 18 performance of essential public purposes.  The purpose of the
  3 19 board shall be to mobilize venture equity capital for
  3 20 investment in such a manner that will result in a significant
  3 21 potential to create jobs and to diversify and stabilize the
  3 22 economy of the state.
  3 23    2.  The board shall consist of five voting members and two
  3 24 nonvoting advisory members.  The five voting members shall be
  3 25 appointed by the governor and confirmed by the senate pursuant
  3 26 to section 2.32.  The five voting members shall be appointed
  3 27 to five-year staggered terms that shall be structured to allow
  3 28 the term of one member to expire each year.  One nonvoting
  3 29 member shall be appointed by the majority leader of the senate
  3 30 after consultation with the president of the senate and the
  3 31 minority leader of the senate.  One nonvoting member shall be
  3 32 appointed by the speaker of the house of representatives after
  3 33 consultation with the majority and minority leaders of the
  3 34 house of representatives.  The nonvoting members shall be
  3 35 appointed for two-year terms which shall expire upon the
  4  1 convening of a new general assembly.  Vacancies shall be
  4  2 filled in the same manner as the appointment of the original
  4  3 members.  Members shall be compensated by the board for direct
  4  4 expenses and mileage but members shall not receive a
  4  5 director's fee, per diem, or salary for service on the board.
  4  6 Members shall be selected based upon demonstrated expertise
  4  7 and competence in the supervision of investment managers, in
  4  8 the fiduciary management of investment funds, or in the
  4  9 management and administration of tax credit allocation
  4 10 programs.  Members shall not have an interest in any person to
  4 11 whom a tax credit is allocated and issued by the board.
  4 12    3.  The board shall have the power to engage consultants,
  4 13 expend funds, invest funds, contract, bond or insure against
  4 14 loss, or perform any other act necessary to carry out its
  4 15 purpose, provided, however, that the board shall not hire
  4 16 employees.
  4 17    4.  Members of the board shall be indemnified against loss
  4 18 to the broadest extent permissible under chapter 669.
  4 19    5.  Meetings of the board shall, except to the extent
  4 20 necessary to protect confidential information with respect to
  4 21 investments in the Iowa fund of funds, be subject to chapter
  4 22 21.
  4 23    6.  The board shall, in cooperation with the department of
  4 24 revenue and finance, establish criteria and procedures for the
  4 25 allocation and issuance of tax credits to designated investors
  4 26 by means of certificates issued by the board.  The criteria
  4 27 shall include the contingencies that must be met for a
  4 28 certificate to be redeemable by a designated investor or
  4 29 transferee in order to receive a tax credit.  The
  4 30 contingencies to redemption shall be tied to the scheduled
  4 31 rates of return and scheduled redemptions of equity interests
  4 32 purchased by designated investors in the Iowa fund of funds.
  4 33 The procedures established by the board, in cooperation with
  4 34 the department of revenue and finance, shall relate to the
  4 35 procedures for the issuance of the certificates and the
  5  1 related tax credits, for the transfer of a certificate and
  5  2 related tax credit by a designated investor, and for the
  5  3 redemption of a certificate and related tax credit by a
  5  4 designated investor or transferee.  The board shall also
  5  5 establish criteria and procedures for assessing the likelihood
  5  6 of future certificate redemptions by designated investors and
  5  7 transferees, including, without limitation, criteria and
  5  8 procedures for evaluating the value of investments made by the
  5  9 Iowa fund of funds and the returns from the Iowa fund of
  5 10 funds.
  5 11    7.  Pursuant to section 15E.226, the board shall issue
  5 12 certificates which may be redeemable for tax credits to
  5 13 provide incentives to designated investors to make equity
  5 14 investments in the Iowa fund of funds.  The board shall issue
  5 15 the certificates so that not more than twenty million dollars
  5 16 of tax credits may be initially redeemable in any fiscal year.
  5 17 The board shall indicate on the tax certificate the principal
  5 18 amount of the tax credit and the taxable year or years for
  5 19 which the credit may be claimed.
  5 20    8.  The board may charge a placement fee to the Iowa fund
  5 21 of funds with respect to the issuance of a certificate and
  5 22 related tax credit to a designated investor, but the fee shall
  5 23 be charged only to pay for reasonable and necessary costs of
  5 24 the board and shall not exceed one-half of one percent of the
  5 25 equity investment of the designated investor.
  5 26    9.  The board shall, in consultation with the Iowa capital
  5 27 investment corporation, publish an annual report of the
  5 28 activities conducted by the Iowa fund of funds, and present
  5 29 the report to the governor and the general assembly.  The
  5 30 annual report shall include a copy of the audit of the Iowa
  5 31 fund of funds and a valuation of the assets of the Iowa fund
  5 32 of funds, review the progress of the investment fund
  5 33 allocation manager in implementing its investment plan, and
  5 34 describe any redemption or transfer of a certificate issued
  5 35 pursuant to this division, provided, however, that the annual
  6  1 report shall not identify any specific designated investor who
  6  2 has redeemed or transferred a certificate.  Every five years,
  6  3 the board shall publish a progress report which shall evaluate
  6  4 the progress of the state of Iowa in accomplishing the
  6  5 purposes stated in section 15E.221.
  6  6    10.  The board shall redeem a certificate submitted to the
  6  7 board by a designated investor and shall calculate the amount
  6  8 of the allowable tax credit based upon the investment returns
  6  9 received by the designated investor and its predecessors in
  6 10 interest and the provisions of the certificate.  Upon
  6 11 submission of a certificate for redemption, the board shall
  6 12 issue a verification to the department of revenue and finance
  6 13 setting forth the maximum tax credit which may be claimed by
  6 14 the designated investor with respect to the redemption of the
  6 15 certificate.
  6 16    11.  The board shall adopt rules pursuant to chapter 17A
  6 17 necessary to administer the duties of the board.
  6 18    Sec. 4.  NEW SECTION.  15E.224  IOWA CAPITAL INVESTMENT
  6 19 CORPORATION.
  6 20    1.  An Iowa capital investment corporation may be organized
  6 21 as a private, not-for-profit corporation under chapter 504A.
  6 22 The Iowa capital investment corporation is not a public
  6 23 corporation or instrumentality of the state and shall not
  6 24 enjoy any of the privileges and shall not be required to
  6 25 comply with the requirements of a state agency.  Except as
  6 26 otherwise provided in this division, this division does not
  6 27 exempt the corporation from the requirements under state law
  6 28 which apply to other corporations organized under chapter
  6 29 504A.  The purposes of an Iowa capital investment corporation
  6 30 shall be to organize the Iowa fund of funds, to select a
  6 31 venture capital investment fund allocation manager to select
  6 32 venture capital fund investments by the Iowa fund of funds, to
  6 33 negotiate the terms of a contract with the venture capital
  6 34 investment fund allocation manager, to execute the contract
  6 35 with the selected venture capital investment fund manager on
  7  1 behalf of the Iowa fund of funds, to receive investment
  7  2 returns from the Iowa fund of funds, and to reinvest the
  7  3 investment returns in additional venture capital investments
  7  4 designed to result in a significant potential to create jobs
  7  5 and to diversify and stabilize the economy of the state.  The
  7  6 corporation shall not exercise governmental functions and
  7  7 shall not have members.  The obligations of the corporation
  7  8 are not obligations of this state or any political subdivision
  7  9 of this state within the meaning of any constitutional or
  7 10 statutory debt limitations, but are obligations of the
  7 11 corporation payable solely and only from the corporation's
  7 12 funds.  The corporation shall not and cannot pledge the credit
  7 13 or taxing power of this state or any political subdivision of
  7 14 this state or make its debts payable out of any moneys except
  7 15 those of the corporation.
  7 16    2.  To facilitate the organization of an Iowa capital
  7 17 investment corporation, both of the following persons shall
  7 18 serve as incorporators as provided in section 504A.28:
  7 19    a.  The chairperson of the Iowa economic development board
  7 20 or a designee of the chairperson.
  7 21    b.  The director of the department of economic development
  7 22 or a designee of the director.
  7 23    3.  After incorporation, the initial board of directors
  7 24 shall be elected by the members of an appointment committee.
  7 25 The members of the appointment committee shall be appointed by
  7 26 the Iowa economic development board.  The initial board of
  7 27 directors shall consist of five members.  The persons elected
  7 28 to the initial board of directors by the appointment committee
  7 29 shall include persons who have an expertise in the areas of
  7 30 the selection and supervision of investment managers or in the
  7 31 fiduciary management of investment funds, and other areas of
  7 32 expertise as deemed appropriate by the appointment committee.
  7 33 After the election of the initial board of directors,
  7 34 vacancies in the board of directors of the corporation shall
  7 35 be elected by the remaining directors of the corporation.
  8  1 Members of the board of directors shall be subject to any
  8  2 restrictions on conflicts of interest specified in the
  8  3 organizational documents and shall have no interest in any
  8  4 venture capital investment fund allocation manager selected by
  8  5 the corporation pursuant to the provisions of this division or
  8  6 in any investments made by the Iowa fund of funds.
  8  7    4.  The members of the appointment committee shall exercise
  8  8 due care to assure that persons elected to the initial board
  8  9 of directors have the requisite financial experience necessary
  8 10 in order to carry out the duties of the corporation as
  8 11 established in this division, including in areas related to
  8 12 venture capital investment, investment management, and
  8 13 supervision of investment managers and investment funds.
  8 14    5.  Upon the election of the initial board of directors,
  8 15 the terms of the members of the appointment committee shall
  8 16 expire.
  8 17    6.  The department of economic development shall assist the
  8 18 incorporators and the appointment committee in any manner
  8 19 determined necessary and appropriate by the incorporators and
  8 20 appointment committee in order to administer this section.
  8 21    7.  After incorporation, the Iowa capital investment
  8 22 corporation shall conduct a national solicitation for
  8 23 investment plan proposals from qualified venture capital
  8 24 investment fund allocation managers for the raising and
  8 25 investing of capital by the Iowa fund of funds in accordance
  8 26 with the requirements of this division.  Any proposed
  8 27 investment plan shall address the applicant's level of
  8 28 experience, quality of management, investment philosophy and
  8 29 process, probability of success in fund-raising, prior
  8 30 investment fund results, and plan for achieving the purposes
  8 31 of this division.  The selected venture capital investment
  8 32 fund allocation manager shall be a person with substantial,
  8 33 successful experience in the design, implementation, and
  8 34 management of seed and venture capital investment programs and
  8 35 in capital formation.  The corporation shall only select a
  9  1 venture capital investment fund allocation manager with
  9  2 demonstrated expertise in the management and fund allocation
  9  3 of investments in venture capital funds.  The corporation
  9  4 shall select the venture capital investment fund allocation
  9  5 manager deemed best qualified to generate the amount of
  9  6 capital required by this division and to invest the capital of
  9  7 the Iowa fund of funds.
  9  8    8.  The Iowa capital investment corporation may charge a
  9  9 management fee on assets under management in the Iowa fund of
  9 10 funds.  The fee shall be in addition to any fee charged to the
  9 11 Iowa fund of funds by the venture capital investment fund
  9 12 allocation manager selected by the corporation, but the fee
  9 13 shall be charged only to pay for reasonable and necessary
  9 14 costs of the Iowa capital investment corporation and shall not
  9 15 exceed one-half of one percent per year of the value of assets
  9 16 under management.
  9 17    9.  Directors of the Iowa capital investment corporation
  9 18 shall be compensated for direct expenses and mileage but shall
  9 19 not receive a director's fee or salary for service as
  9 20 directors.
  9 21    10.  The Iowa capital investment corporation shall have the
  9 22 power to engage consultants, expend funds, invest funds,
  9 23 contract, bond or insure against loss, or perform any other
  9 24 act necessary to carry out its purpose.  However, the
  9 25 corporation shall not hire staff as employees except to
  9 26 administer the rural and small business loan guarantee program
  9 27 of the Iowa fund of funds.
  9 28    11.  Upon the dissolution of the Iowa fund of funds, the
  9 29 Iowa capital investment corporation shall be liquidated and
  9 30 dissolved, and any assets owned by the corporation shall be
  9 31 distributed to the state of Iowa and deposited in the general
  9 32 fund.
  9 33    Sec. 5.  NEW SECTION.  15E.225  IOWA FUND OF FUNDS.
  9 34    1.  The Iowa capital investment corporation shall organize
  9 35 the Iowa fund of funds.  The Iowa fund of funds shall be
 10  1 authorized to make investments in private seed and venture
 10  2 capital partnerships or entities in a manner which will
 10  3 encourage the availability of a wide variety of venture
 10  4 capital in the state, strengthen the economy of the state,
 10  5 help business in Iowa gain access to sources of capital, help
 10  6 build a significant, permanent source of capital available to
 10  7 serve the needs of Iowa businesses, and accomplish all these
 10  8 benefits in a way that minimizes the use of tax credits.
 10  9    2.  The Iowa capital investment corporation shall organize
 10 10 the Iowa fund of funds in the following manner:
 10 11    a.  The Iowa fund of funds shall be organized as a private,
 10 12 for-profit, limited partnership or limited liability company
 10 13 under Iowa law pursuant to which the Iowa capital investment
 10 14 corporation shall be the general partner or manager.  The
 10 15 entity shall be organized so as to provide for equity
 10 16 interests for designated investors which provide for a
 10 17 designated scheduled rate of return and a scheduled redemption
 10 18 which shall occur not less than five years following the
 10 19 issuance of such equity interests.  The interest of the Iowa
 10 20 capital investment corporation in the Iowa fund of funds shall
 10 21 be to serve as general partner or manager and to be paid a
 10 22 management fee for the service as provided in section 15E.224,
 10 23 subsection 8, and to receive investment returns of the Iowa
 10 24 fund of funds in excess of those payable to designated
 10 25 investors.  Any returns in excess of those payable to
 10 26 designated investors shall be reinvested by the Iowa capital
 10 27 investment corporation by being held in the Iowa fund of funds
 10 28 as a revolving fund for reinvestment in venture capital funds
 10 29 or investments until the termination of the Iowa fund of
 10 30 funds.  Any returns received from these reinvestments shall be
 10 31 deposited in the revolving fund.
 10 32    b.  The Iowa fund of funds shall principally make
 10 33 investments in high-quality venture capital funds managed by
 10 34 investment managers who have made a commitment to consider
 10 35 equity investments in businesses located within the state of
 11  1 Iowa and which have committed to maintain a physical presence
 11  2 within the state of Iowa.  The investments by the Iowa fund of
 11  3 funds shall be focused principally on partnership interests in
 11  4 private venture capital funds and not in direct investments in
 11  5 individual businesses.  The Iowa fund of funds shall invest in
 11  6 venture capital funds with experienced managers or management
 11  7 teams with demonstrated expertise and a successful history in
 11  8 the investment of venture capital funds.  The Iowa fund of
 11  9 funds may invest in newly created venture capital funds as
 11 10 long as the managers or management teams of the funds have the
 11 11 experience, expertise, and a successful history in the
 11 12 investment of venture capital funds described in this
 11 13 paragraph.
 11 14    c.  The Iowa fund of funds shall establish and administer a
 11 15 program to provide loan guarantees and other related credit
 11 16 enhancements on loans to rural and small business borrowers
 11 17 within the state of Iowa.  The Iowa fund of funds shall invest
 11 18 five percent of its assets in investments for this program.
 11 19    d.  The Iowa fund of funds shall have the power to engage
 11 20 consultants, expend funds, invest funds, contract, bond or
 11 21 insure against loss, or perform any other act necessary to
 11 22 carry out its purpose, including, without limitation, engaging
 11 23 and agreeing to compensate a venture capital investment fund
 11 24 allocation manager.  Such compensation shall be in addition to
 11 25 the management fee paid to the Iowa capital investment
 11 26 corporation.  However, the Iowa fund of funds shall not hire
 11 27 employees except to administer its rural and small business
 11 28 loan guarantee and credit enhancement program.
 11 29    e.  The Iowa fund of funds may issue debt and borrow such
 11 30 funds as may be needed to accomplish its goals.  However, such
 11 31 debt shall not be secured by tax credits issued by the board.
 11 32 The Iowa fund of funds may open and manage bank and short-term
 11 33 investment accounts as deemed necessary by the venture capital
 11 34 investment fund allocation manager.
 11 35    f.  The Iowa fund of funds may expend moneys to secure
 12  1 investment ratings for investments by designated investors in
 12  2 the Iowa fund of funds.
 12  3    g.  Each calendar year, the auditor of state shall conduct
 12  4 an annual audit of the activities of the Iowa fund of funds or
 12  5 shall engage an independent auditor to conduct the audit
 12  6 provided that the independent auditor has no business,
 12  7 contractual, or other connection to the Iowa capital
 12  8 investment corporation or the Iowa fund of funds.  The
 12  9 corporation shall reimburse the auditor of state for costs
 12 10 associated with the annual audit.  The audit shall be
 12 11 delivered to the Iowa capital investment corporation and the
 12 12 board each year and shall include a valuation of the assets
 12 13 owned by the Iowa fund of funds as of the end of each year.
 12 14    h.  Fifty years after the organization of the Iowa fund of
 12 15 funds, the Iowa capital investment corporation shall cause the
 12 16 Iowa fund of funds to be liquidated with all of its assets
 12 17 distributed to its owners in accordance with the provisions of
 12 18 its organizational documents.
 12 19    i.  Upon the liquidation of the Iowa fund of funds, the
 12 20 Iowa capital investment corporation shall file a report with
 12 21 the general assembly stating how many jobs in this state were
 12 22 created through investments made by the Iowa fund of funds.
 12 23    Sec. 6.  NEW SECTION.  15E.226  CERTIFICATES AND TAX
 12 24 CREDITS.
 12 25    1.  The board may issue certificates and related tax
 12 26 credits to designated investors which, if redeemed for the
 12 27 maximum possible amount, shall not exceed a total aggregate of
 12 28 one hundred million dollars of tax credits.  The certificates
 12 29 shall be issued contemporaneously with an investment in the
 12 30 Iowa fund of funds by a designated investor.  A certificate
 12 31 issued by the board shall have a specific calendar year
 12 32 maturity date designated by the board of not less than five
 12 33 years after the date of issuance and shall be redeemable on a
 12 34 schedule similar to the scheduled redemption of investments by
 12 35 designated investors.  A certificate and the related tax
 13  1 credit shall be transferable by the designated investor.  A
 13  2 tax credit shall not be claimed or redeemed except by a
 13  3 designated investor or transferee in accordance with the terms
 13  4 of a certificate from the board.  A tax credit shall be
 13  5 claimed for a tax year that begins during the calendar year
 13  6 maturity date stated on the certificate.  An individual may
 13  7 claim the credit of a partnership, limited liability company,
 13  8 S corporation, estate, or trust electing to have the income
 13  9 taxed directly to the individual.  The amount claimed by the
 13 10 individual shall be based upon the pro rata share of the
 13 11 individual's earnings from the partnership, limited liability
 13 12 company, S corporation, estate, or trust.  Any tax credit in
 13 13 excess of the taxpayer's tax liability for the tax year may be
 13 14 credited to the tax liability for the following seven years,
 13 15 or until depleted, whichever is earlier.
 13 16    2.  The board shall certify the maximum amount of a tax
 13 17 credit which could be issued to a designated investor and
 13 18 identify the specific calendar year the certificate may be
 13 19 redeemed pursuant to this division.  The amount of the tax
 13 20 credit shall be limited to an amount equivalent to any
 13 21 difference between the scheduled aggregate return to the
 13 22 designated investor at rates of return authorized by the board
 13 23 and aggregate actual return received by the designated
 13 24 investor and any predecessor in interest of capital and
 13 25 interest on the capital.  The rates, whether fixed rates or
 13 26 variable rates, shall be determined pursuant to a formula
 13 27 stipulated in the certificate.  The board shall clearly
 13 28 indicate on the certificate the schedule, the amount of equity
 13 29 investment, the calculation formula for determining the
 13 30 scheduled aggregate return on invested capital, and the
 13 31 calculation formula for determining the amount of the tax
 13 32 credit that may be claimed.  Once moneys are invested by a
 13 33 designated investor, the certificate shall be binding on the
 13 34 board and the department of revenue and finance and shall not
 13 35 be modified, terminated, or rescinded.
 14  1    3.  If a designated investor elects to redeem a
 14  2 certificate, the certificate shall be redeemed on June 30 of
 14  3 the calendar year maturity date stated on the certificate.  At
 14  4 the time of redemption, the board shall determine the amount
 14  5 of the tax credit that may be claimed by the designated
 14  6 investor based upon the returns received by the designated
 14  7 investor and its predecessors in interest and the provisions
 14  8 of the certificate.  The board shall issue a verification to
 14  9 the department of revenue and finance setting forth the
 14 10 maximum tax credit which can be claimed by the designated
 14 11 investor with respect to the redemption of the certificate.
 14 12    4.  The board shall, in conjunction with the department of
 14 13 revenue and finance, develop a system for registration of any
 14 14 certificate and related tax credit issued or transferred
 14 15 pursuant to this section and a system that permits
 14 16 verification that any tax credit claimed upon a tax return is
 14 17 valid and that any transfers of the certificate and related
 14 18 tax credit are made in accordance with the requirements of
 14 19 this division.
 14 20    5.  The board shall issue the tax credits in such a manner
 14 21 that not more than twenty million dollars of tax credits may
 14 22 be initially redeemable in any fiscal year.  The board shall
 14 23 indicate on the tax certificate the principal amount of the
 14 24 tax credit and the taxable year or years for which the credit
 14 25 may be claimed.
 14 26    6.  A certificate or tax credit issued or transferred
 14 27 pursuant to this division shall not be considered a security
 14 28 pursuant to chapter 502.
 14 29    7.  In determining the one hundred million dollar maximum
 14 30 limit in subsection 1 and the twenty million dollar limitation
 14 31 in subsection 5, the board shall use the cumulative amount of
 14 32 scheduled aggregate returns on certificates issued by the
 14 33 board to designated investors.  However, certificates and
 14 34 related tax credits which have expired shall not be included
 14 35 and certificates and related tax credits which have been
 15  1 redeemed shall be included only to the extent of tax credits
 15  2 actually allowed.
 15  3    Sec. 7.  NEW SECTION.  15E.227  POWERS AND EFFECTIVENESS.
 15  4    This division shall not be construed as a restriction or
 15  5 limitation upon any power which the board might otherwise have
 15  6 under any other law of this state and the provisions of this
 15  7 division are cumulative to such powers.  This division shall
 15  8 be construed to provide a complete, additional, and
 15  9 alternative method for performing the duties authorized and
 15 10 shall be regarded as supplemental and additional powers
 15 11 conferred by any other laws.  The level, timing, or degree of
 15 12 success of the Iowa fund of funds or the investment funds in
 15 13 which the Iowa fund of funds invests in, or the extent to
 15 14 which the investment funds are invested in Iowa venture
 15 15 capital projects, or are successful in accomplishing any
 15 16 economic development objectives, shall not compromise,
 15 17 diminish, invalidate, or affect the provisions of any contract
 15 18 entered into by the board or the Iowa fund of funds.
 15 19    Sec. 8.  NEW SECTION.  15E.228  PERMISSIBLE INVESTMENTS.
 15 20    Investments by designated investors in the Iowa fund of
 15 21 funds shall be deemed permissible investments for state-
 15 22 chartered banks, for credit unions, and for domestic insurance
 15 23 companies under applicable state laws.
 15 24    Sec. 9.  NEW SECTION.  15E.229  ENFORCEMENT.
 15 25    The attorney general may enforce the provisions of this
 15 26 division and conduct any investigations necessary for such
 15 27 enforcement.
 15 28    Sec. 10.  Section 422.8, subsection 2, paragraph b,
 15 29 subparagraph (2), Code 2001, is amended to read as follows:
 15 30    (2)  Any cash or the value of property distributions which
 15 31 are made only to the extent that they are paid from income
 15 32 upon which Iowa income tax has not been paid, as determined
 15 33 under rules of the director, reduced by fifty percent of the
 15 34 amount of any of these distributions that are made to enable
 15 35 the shareholder to pay federal income tax on items of income,
 16  1 loss, and expenses from the corporation.
 16  2    Sec. 11.  APPLICABILITY PROVISION.  Section 10 of this Act
 16  3 applies retroactively to January 1, 2002, for tax years
 16  4 beginning on or after that date.  
 16  5 
 16  6 
 16  7                                                             
 16  8                               BRENT SIEGRIST
 16  9                               Speaker of the House
 16 10 
 16 11 
 16 12                                                             
 16 13                               MARY E. KRAMER
 16 14                               President of the Senate
 16 15 
 16 16    I hereby certify that this bill originated in the House and
 16 17 is known as House File 2078, Seventy-ninth General Assembly.
 16 18 
 16 19 
 16 20                                                             
 16 21                               MARGARET THOMSON
 16 22                               Chief Clerk of the House
 16 23 Approved                , 2002
 16 24 
 16 25 
 16 26                            
 16 27 THOMAS J. VILSACK
 16 28 Governor
     

Text: HF02077                           Text: HF02079
Text: HF02000 - HF02099                 Text: HF Index
Bills and Amendments: General Index     Bill History: General Index

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