SENATE/HOUSE FILE _____

BY  (PROPOSED DEPARTMENT OF ECONOMIC DEVELOPMENT BILL)

A BILL FOR

An Act providing for the establishment of an Iowa innovation council foundation and making appropriations.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

IOWA INNOVATION COUNCIL FOUNDATION
   Section 1.  Section 15.117A, subsection 6, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  f.  Establish the Iowa innovation council foundation pursuant to section 15.117B and provide an annual report on the foundation’s activities to the economic development board, the governor, and the general assembly.
   Sec. 2.  NEW SECTION.  15.117B  Iowa innovation council foundation.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Board” means the board of directors of the foundation as provided in subsection 3.
   b.  “Council” means the Iowa innovation council established pursuant to section 15.117A.
   c.  “Foundation” means the Iowa innovation council foundation established pursuant to subsection 2.
   d.  “Partner” means the same as defined in section 488.102.
   e.  “Targeted industries” means the same as defined in section 15.411.
   2.
  a.  The council shall establish the Iowa innovation council foundation as a nonprofit corporation organized under chapter 504 and qualifying under section 501(c)(3) of the Internal Revenue Code as an organization exempt from taxation. Unless otherwise provided in this section, the foundation is subject to the provisions of chapter 504.
   b.  The foundation shall be established so that donations and bequests to it qualify as tax deductible under the federal and state income tax laws.
   c.  The foundation shall be established for the purpose of lessening the burdens of government in connection with the public purpose of economic development in Iowa by fostering the creation, growth, and expansion of innovative Iowa enterprises engaged in a diversified range of primary industry sectors that develop unique technologies, products, services, and supply chains.
   d.  The foundation may receive and expend funds from public and private sources and may use its property, money, or other resources for the purpose of the foundation and for the activities specified in subsections 4 and 5.
   e.  The foundation shall not be considered a state agency and shall not be required to comply with any requirements that apply to a state agency. The foundation shall not exercise any sovereign power of the state.
   f.  The foundation does not have authority to pledge the credit of the state, and the state shall not be liable for the debts or obligations of the foundation. All debts and obligations of the foundation shall be payable solely from the foundation’s funds.
   3.
  a.  The board of directors of the foundation shall be comprised of the members of the council, and the board shall serve without compensation.
   b.  The chairperson of the board shall be the chief technology officer appointed pursuant to section 15.117.
   c.  The board shall appoint a chief executive officer to manage the foundation.
   4.  The board shall direct and oversee the foundation’s activities and shall act to ensure all of the following:
   a.  That the foundation creates a strategic plan designed to foster entrepreneurship across the state by identifying the preconditions of innovation and aligning those preconditions in ways that provide advantages to Iowa businesses.
   b.  That the foundation focuses its efforts on increasing business innovation that creates permanent economic opportunities and results in long-term economic growth.
   c.  That the foundation serves as a financing resource for Iowa entrepreneurial enterprises by providing financial assistance to such enterprises and by referring such enterprises to private lenders, venture capital investors, government agencies, and other entities providing financial assistance.
   d.  That the foundation develops a process for evaluating with due diligence the viability of the enterprises receiving financial assistance pursuant to paragraph“c” in order to maximize the return on investment in such enterprises.
   e.  That the foundation creates a mentoring system designed to assist emerging entrepreneurs and accelerate the successful commercialization of marketable technologies and intellectual property.
   f.  That the foundation makes every effort to secure and leverage all available public and private sources of funding for expanding research, innovation, commercialization, and entrepreneurship in the state.
   g.  That the foundation proposes an annual budget that includes funding levels for each of the foundation’s major activities and that shows sufficient moneys are available to support those activities.
   h.  That the foundation provides an annual report on its activities to the council no later than June 30 of each year and that the report does the following:
   (1)  Includes a financial audit conducted in accordance with generally accepted accounting principles.
   (2)  Reviews the innovation and commercialization programs and funding levels in other states and makes recommendations for appropriate funding levels of similar programs in Iowa.
   (3)  Is readily available to the public.
   5.  The foundation may become a partner in a limited partnership if the limited partnership is organized under chapter 488 for the purpose of making investments in targeted industries.

DIVISION II

APPROPRIATIONS
   Sec. 3.  Section 15.412, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  4.  Of the moneys in the fund, the department shall allocate not more than five million dollars for purposes of providing financial assistance to one or more nonprofit organizations organized under chapter 504 and qualifying under section 501(c)(3) of the Internal Revenue Code as organizations exempt from taxation if such organizations have been established for the purpose of lessening the burdens of government in connection with the public purpose of economic development in Iowa by fostering the creation, growth, and expansion of innovative Iowa enterprises engaged in a diversified range of primary industry sectors that develop unique technologies, products, services, and supply chains.
   Sec. 4.  FINANCIAL ASSISTANCE FOR TARGETED INDUSTRIES.  There is appropriated from the general fund of the state to the department of economic development for the fiscal year beginning July 1, 2011, and ending June 30, 2012, the following amount, or so much thereof as is necessary, to be used for the purposes designated:
   For providing financial assistance to one or more enterprises investing in targeted industries:
.................................................. $ 25,000,000
   To be eligible for financial assistance pursuant to this section, an enterprise shall meet the following criteria:
   1.  The enterprise must be organized as a limited partnership under chapter 488.
   2.  The enterprise must be organized for the following purposes:
   a.  Securing public and private funding sources in order to make investments in Iowa businesses competing in the targeted industries. 
   b.  Identifying and recruiting people with the ability to serve as managers and executives of businesses in the targeted industries.
   c.  Generating profits by investing in promising targeted industry business ventures and using such profits to fund further investments.
   3.  The enterprise must have as a partner a nonprofit corporation organized under chapter 504, and qualifying under section 501(c)(3) of the Internal Revenue Code as an organization exempt from taxation, for the purpose of lessening the burdens of government in connection with the public purpose of economic development in Iowa by fostering the creation, growth, and expansion of innovative Iowa enterprises engaged in a diversified range of primary industry sectors that develop unique technologies, products, services, and supply chains. 
   4.  For purposes of this section, “targeted industries” means the same as defined in section 15.411.
EXPLANATION
   This bill provides for the establishment of an Iowa innovation council foundation and makes appropriations to the department of economic development.
   The bill directs the Iowa innovation council, an agency of state government, to establish a nonprofit organization called the Iowa innovation council foundation. The foundation must be established such that it is exempt from federal income taxation and donations to it are tax deductible. The foundation must be established for the purpose of lessening the burdens of government in connection with the public purpose of economic development in Iowa by fostering the creation, growth, and expansion of innovative Iowa enterprises engaged in a diversified range of primary industry sectors that develop unique technologies, products, services, and supply chains. The foundation is not a state agency, does not have to comply with the requirements of a state agency, and cannot exercise any of the sovereign powers of the state. The foundation does not have authority to pledge the credit of the state, and the state is not liable for the debts or obligations of the foundation which are payable solely from the foundation’s funds.
   The bill provides that the foundation is governed by a board of directors comprised of the members of the Iowa innovation council. The chief technology officer of the state is the chairperson of the board. The board must appoint a chief executive officer to manage the foundation.
   The bill provides that the board must oversee the foundation’s activities and act to ensure that certain activities specified in statute are conducted by the foundation. The foundation must provide an annual report on its activities to the council. The report must be provided no later than June 30 of each year and must include a financial audit, a review of other states’ programs, and recommendations for funding levels in Iowa. The report must be available to the public.
   The bill provides that the foundation is authorized to become a partner in a limited partnership that is organized for purposes of making investments in targeted industries.
   The bill directs the department of economic development to allocate up to $5 million for purposes of providing financial assistance to nonprofit organizations that have been established for the purpose of lessening the burdens of government in connection with the public purpose of economic development in Iowa by fostering the creation, growth, and expansion of innovative Iowa enterprises engaged in a diversified range of primary industry sectors that develop unique technologies, products, services, and supply chains.
   The bill appropriates $25 million from the general fund of the state to the department of economic development for purposes of providing financial assistance to enterprises investing in targeted industries. To be eligible for such assistance, an enterprise must be a limited partnership, be organized for certain investment purposes, and include among its partners a nonprofit organization established for the purpose of lessening the burdens of government in connection with the public purpose of economic development in Iowa by fostering the creation, growth, and expansion of innovative Iowa enterprises engaged in a diversified range of primary industry sectors that develop unique technologies, products, services, and supply chains.