Senate Study Bill 1191

                                       SENATE FILE       
                                       BY  (PROPOSED COMMITTEE ON
                                            WAYS AND MEANS BILL BY
                                            CHAIRPERSON McKIBBEN)


    Passed Senate, Date               Passed House,  Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to securities and tax credits issued by the Iowa
  2    capital investment corporation and board.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  4 TLSB 3431SC 80
  5 tm/cf/24

PAG LIN

  1  1    Section 1.  Section 15E.64, subsection 1, Code 2003, is
  1  2 amended to read as follows:
  1  3    1.  An Iowa capital investment corporation may be organized
  1  4 as a private, not=for=profit corporation under chapter 504A.
  1  5 The Iowa capital investment corporation is not a public
  1  6 corporation or instrumentality of the state and shall not
  1  7 enjoy any of the privileges and shall not be required to
  1  8 comply with the requirements of a state agency.  Except as
  1  9 otherwise provided in this division, this division does not
  1 10 exempt the corporation from the requirements under state law
  1 11 which apply to other corporations organized under chapter
  1 12 504A.  The purposes of an Iowa capital investment corporation
  1 13 shall be to organize the Iowa fund of funds, to select a
  1 14 venture capital investment fund allocation manager to select
  1 15 venture capital fund investments by the Iowa fund of funds, to
  1 16 negotiate the terms of a contract with the venture capital
  1 17 investment fund allocation manager, to execute the contract
  1 18 with the selected venture capital investment fund allocation
  1 19 manager on behalf of the Iowa fund of funds, to receive
  1 20 investment returns from the Iowa fund of funds, and to
  1 21 reinvest the investment returns in additional venture capital
  1 22 investments designed to result in a significant potential to
  1 23 create jobs and to diversify and stabilize the economy of the
  1 24 state.  The corporation shall not exercise governmental
  1 25 functions and shall not have members.  The obligations of the
  1 26 corporation are not obligations of this state or any political
  1 27 subdivision of this state within the meaning of any
  1 28 constitutional or statutory debt limitations, but are
  1 29 obligations of the corporation payable solely and only from
  1 30 the corporation's funds.  The corporation shall not and cannot
  1 31 pledge the credit or taxing power of this state or any
  1 32 political subdivision of this state or make its debts payable
  1 33 out of any moneys except those of the corporation.  The
  1 34 corporation shall not issue any securities for which the
  1 35 scheduled aggregate return of capital and other returns exceed
  2  1 the maximum amount of tax credits specified in section 15E.66,
  2  2 subsection 1.
  2  3    Sec. 2.  Section 15E.66, subsection 2, Code 2003, is
  2  4 amended to read as follows:
  2  5    2.  The board shall certify the maximum amount of a tax
  2  6 credit which could be issued to a designated investor and
  2  7 identify the specific calendar year the certificate may be
  2  8 redeemed pursuant to this division.  A tax credit certificate
  2  9 shall not be issued for any security or series of securities
  2 10 to which insurance guarantees are attached.  The amount of the
  2 11 tax credit shall be limited equal to an amount equivalent to
  2 12 any difference between the scheduled aggregate return to the
  2 13 designated investor at rates of return authorized by the board
  2 14 and aggregate actual return received by the designated
  2 15 investor and any predecessor in interest of capital and
  2 16 interest on the capital.  The rates, whether fixed rates or
  2 17 variable rates, shall be determined pursuant to a formula
  2 18 stipulated in the certificate.  The board shall clearly
  2 19 indicate on the certificate the schedule, the amount of equity
  2 20 investment, the calculation formula for determining the
  2 21 scheduled aggregate return on invested capital, and the
  2 22 calculation formula for determining the amount of the tax
  2 23 credit that may be claimed.  Once moneys are invested by a
  2 24 designated investor, the certificate shall be binding on the
  2 25 board and the department of revenue and finance and shall not
  2 26 be modified, terminated, or rescinded.
  2 27                           EXPLANATION
  2 28    This bill relates to securities and tax credits issued by
  2 29 the Iowa capital investment corporation and board.
  2 30    The bill provides that the Iowa capital investment
  2 31 corporation shall not issue any securities for which the
  2 32 scheduled aggregate return of capital and other returns exceed
  2 33 the maximum amount of tax credits allowed.
  2 34    The bill prohibits the board from issuing tax credit
  2 35 certificates for any security or series of securities to which
  3  1 insurance guarantees are attached.
  3  2    The bill provides that the amount of a designated
  3  3 investor's tax credit shall be equal to, rather than limited
  3  4 to, an amount equivalent to any difference between the
  3  5 scheduled aggregate return to the designated investor at rates
  3  6 of return authorized by the board and aggregate actual return
  3  7 received by the designated investor and any predecessor in
  3  8 interest of capital and interest on the capital.
  3  9 LSB 3431SC 80
  3 10 tm/cf/24