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ENROLLED
COMMITTEE SUBSTITUTE
FOR
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 630
(Senators Helmick, Ross, Craigo, Fanning, Plymale, Dawson and Unger,
original sponsors)
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[Originating in the Committee on Finance;
reported March 1, 2000.]
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AN ACT to amend and reenact sections two, three, four, five, six,
nine and sixteen, article seven, chapter twelve of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended; and to further amend said article by adding thereto
a new section, designated section eight-a, all relating to the
jobs investment trust fund; adding legislative findings;
changing definitions and board composition; addressing the
management and control of the trust; expanding the jobs
investment trust board's corporate powers; establishing a new
venture capital funding pool, nonincentive tax credits and guarantees; and prohibiting the granting and pledging of the
credit of the state.
Be it enacted by the Legislature of West Virginia:
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That sections two, three, four, five, six, nine and sixteen,
article seven, chapter twelve of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended and
reenacted; and that said article be further amended by adding
thereto a new section, designated section eight-a, all to read as
follows:
ARTICLE 7. JOBS INVESTMENT TRUST FUND.
§12-7-2. Legislative findings.
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(a) The Legislature finds that the creation of a public body
corporate to make investment funds available to eligible businesses
would stimulate economic growth and provide or retain jobs within
the state. Accordingly, it is declared to be the public policy of
the state to create an investment program to inject needed capital
into the business community, sustain or improve business
profitability and provide jobs to the citizens of the state.
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(b) The Legislature further finds that:
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(1) The availability of financial assistance through the
creation of the jobs investment trust will promote economic
development in the state and will serve the public purposes of the state;
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(2) The public policy of the state will be served through
financing projects, extending loans, providing financing or credit
for working capital, creating innovative investment plans and
options, and providing equity financing or the refinancing of
existing debt of an enterprise;
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(3) It is in the public interest, in order to address the
needs of the business community and the citizens of the state, that
a public body corporate be created with full power to accept
grants, gifts and appropriations; to generate revenues to furnish
money and credit to approved businesses or enterprises; to promote
the establishment of new and innovative projects; and to upgrade,
expand and retain existing projects; and
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(4) Fundamental changes are occurring in national and
international markets that increase the need for debt financing,
equity capital and near-equity capital for emerging, expanding and
restructuring business opportunities in the state.
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(c) The Legislature further finds:
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(1) That due to the creation of the jobs investment trust,
moneys will be available for venture capital in this state;
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(2) That the implementation of this innovative program may
supplant the need for the state to otherwise assist private venture capital concerns through other tax credits;
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(3) That due to the availability of venture capital funds
through this program the granting of venture capital company
credits under the capital company act should be reduced for three
fiscal years pending the full implementation of the jobs investment
trust program;
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(4) That due to this reduction in the certification of tax
credits, additional general revenue may become available for new
economic development programs;
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(5) These economic development programs may be funded from
general revenue in an amount appropriate to effectuate the purposes
of these programs; and
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(6) Due to the foregoing findings there shall be an annual
line item appropriation, in an amount determined by the
Legislature, to the West Virginia development office for a matching
grant program for regional economic development corporations or
authorities.
§12-7-3. Definitions.
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For purposes of this article:
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(a) "Board" means the jobs investment trust board established
pursuant to section four of this article.
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(b) "Eligible business" means any business, including, but not limited to, a business licensed or seeking licensure by the small
business administration as a small business investment company
under the small business investment act, which is qualified to do
business in West Virginia and is in good standing with all
applicable laws affecting the conduct of such business.
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(c) "Non-Incentive Tax Credits" means the non-incentive tax
credits issued by the state to the jobs investment trust board and
authorized for sale and transfer by the jobs investment trust board
pursuant to section eight-a of this article.
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(d) "Securities" means all bonds, notes, stocks, units of
ownership, debentures or any other form of negotiable or
nonnegotiable evidence of indebtedness or ownership.
§12-7-4. Jobs investment trust board; composition; appointment,
term of private members; chairman; quorum.
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(a) The jobs investment trust board is continued. The board
is a public body corporate and established to improve and otherwise
promote economic development in this state.
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(b) The board consists of thirteen members, five of whom serve
by virtue of their respective positions. These five are the
president of West Virginia university or his or her designee; the
president of Marshall university or his or her designee; the
chancellor of the board of directors of the state college system or his or her designee; the executive director of the West Virginia
housing development fund; and the executive director of the West
Virginia development office. Two members shall be appointed by the
governor from a list of four names submitted by the board of
directors of the housing development fund. The other six members
shall be appointed from the general public by the governor. Of the
members of the general public appointed by the governor, one shall
be an attorney with experience in finance and investment matters,
one shall be a certified public accountant, one shall be a
representative of labor, one shall be experienced or involved in
innovative business development, two shall be present or past
executive officers of companies listed on a major stock exchange or
large privately held companies.
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(c) A vacancy on the board shall be filled by appointment by
the governor for the unexpired term in the same manner as the
original appointment. Any person appointed to fill a vacancy
serves only for the unexpired term.
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(d) The governor may remove any appointed member in case of
incompetency, neglect of duty, moral turpitude or malfeasance in
office and the governor may declare the office vacant and fill the
vacancy as provided in other cases of vacancy.
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(e) The chairman of the board shall be elected by the board from among the members of the board.
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(f) Seven members of the board is a quorum. No action may be
taken by the board except upon the affirmative vote of at least a
majority of those members present, but in no event fewer than six
of the members serving on the board.
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(g) The members of the board, including the chairman, may
receive no compensation for their services as members of the board
but are entitled to their reasonable and necessary expenses
actually incurred in discharging their duties under this article.
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(h) The board shall meet on a quarterly basis or more often if
necessary.
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(i) The terms of the board members appointed by the governor
first taking office on or after the one thousand nine hundred
ninety-two effective date of the jobs investment trust act expired
as designated by the governor at the time of the nomination, two at
the end of the first year, two at the end of the second year, two
at the end of the third year and two at the end of the fourth year.
These original appointments were for and each subsequent
appointment was and shall be for a full four-year term. Any member
whose term has expired serves until his or her successor has been
duly appointed and qualified. Any member is eligible for
reappointment.
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(j) Additionally, one member of the West Virginia House of
Delegates and one member of the West Virginia Senate shall serve as
advisory members of the jobs investment trust board and, as
advisory members, shall be ex officio, nonvoting advisory members.
The governor shall appoint the two legislative ex officio advisory
members who shall serve for four years or such shorter time as he
or she continues to be a West Virginia legislator.
§12-7-5. Management and control of jobs investment trust vested in
board; officers; liability; authority of executive
director to act on behalf of board; relationship to
higher education institutions.
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(a) It is the duty of the board to manage and control the jobs
investment trust. In order to carry out the day-to-day management
and control of the trust and effectuate the purposes of this
article, the board shall appoint an executive director who is or
has been a senior executive of a major financial institution,
brokerage firm, investment firm or similar institution, with
extensive experience in capital market development. The board
shall fix the executive director's duties. The board shall fix the
compensation of the executive director and the compensation shall,
at least in part, be incentive based. The executive director
serves at the will and pleasure of the board.
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(b) The board shall elect a secretary annually, who need not
be a member of the board, to keep a record of the proceedings of
the board.
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(c) The members and officers of the board are not liable
personally, either jointly or severally, for any debt or obligation
created by the board.
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(d) The acts of the board are solely the acts of its
corporation and are not those of an agent of the state. No debt or
obligation of the board is a debt or obligation of the state.
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(e) Upon the affirmative vote of at least a majority of those
members in attendance or participating in a meeting of the board,
but in no event fewer than six of the members serving on the board,
the board may approve any action to be taken and authorize the
executive director for and on behalf of the board to execute and
deliver all instruments, agreements or other documents that are
required or are reasonably necessary to effectuate the decisions or
acts of the board.
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(f) The West Virginia housing development fund shall provide
office space and staff support services for the director and the
board shall act as fiscal agent for the board and, as such, shall
provide accounting services for the board, invest all funds as
directed by the board, service all investment activities of the board and shall make the disbursements of all funds as directed by
the board, for which the West Virginia housing development fund
shall be reasonably compensated, as determined by the board.
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(g) The board and the executive director shall involve
students and faculty members of state institutions of higher
education in the board's activities, in order to enhance the
opportunities at the institutions for learning, and for
participation in the board's investment activities and in the
economic development of the state, whether in research, financial
analysis, management participation, or in such other ways as the
board and the executive director may, in their discretion, find
appropriate.
§12-7-6. Corporate powers.
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The board has the power:
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(1) (a) To make loans to eligible businesses with or without
interest secured if and as required by the board; and (b) to
acquire ownership interests in eligible businesses. These
investments may be made in eligible businesses that stimulate
economic growth and provide or retain jobs in this state, and shall
be made only upon the determination by the board that the
investments are prudent and meet the criteria established by the
board;
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(2) To accept appropriations, gifts, grants, bequests and
devises and to use or dispose of them to carry out its corporate
purposes;
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(3) To make and execute contracts, releases, compromises,
agreements and other instruments necessary or convenient for the
exercise of its powers or to carry out its corporate purposes;
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(4) To collect reasonable fees and charges in connection with
making and servicing loans, notes, bonds, obligations, commitments
and other evidences of indebtedness, in connection with making
equity investments and in connection with providing technical,
consultative and project assistance services;
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(5) To sue and be sued;
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(6) To make, amend and repeal bylaws and rules consistent with
the provisions of this article;
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(7) To hire its own employees, whom shall be employees of the
state of West Virginia for purposes of articles ten and sixteen,
chapter five of this code, and to appoint officers and consultants
, and to fix their compensation and prescribe their duties;
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(8) To acquire, hold and dispose of real and personal property
for its corporate purposes;
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(9) To enter into agreements or other transactions with any
federal or state agency, college or university, any person and any domestic or foreign partnership, corporation, association or
organization;
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(10) To acquire real property, or an interest in real or
personal property, in its own name, by purchase or foreclosure when
acquisition is necessary or appropriate to protect any loan in
which the board has an interest; to sell, transfer and convey any
real or personal property to a buyer; and, in the event a sale,
transfer or conveyance cannot be effected with reasonable
promptness or at a reasonable price, to lease real or personal
property to a tenant;
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(11) To purchase, sell, own, hold, negotiate, transfer or
assign: (i) Any mortgage, instrument, note, credit, debenture,
guarantee, bond or other negotiable instrument or obligation
securing a loan, or any part of a loan; (ii) any security or other
instrument evidencing ownership or indebtedness; or (iii) equity or
other ownership interest. An offering of one of the above
instruments shall include the representation and qualification that
the board is a public body corporate managing a venture capital
fund that includes high-risk investments and, that in any transfer,
sale or assignment of any interest, the transferee, purchaser or
assignee accepts any risk without recourse to the jobs investment
trust or to the state;
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(12) To procure insurance against losses to its property in
amounts, and from insurers, as is prudent;
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(13) To consent, when prudent, to the modification of the rate
of interest, time of maturity, time of payment of installments of
principal or interest, or any other terms of the investment, loan,
contract or agreement in which the board is a party;
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(14) To establish training and educational programs to further
the purposes of this article;
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(15) To file its own travel rules;
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(16) To borrow money to carry out its corporate purpose in
principal amounts and upon terms as are necessary to provide
sufficient funds for achieving its corporate purpose;
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(17) To take options in or warrants for, subscribe to,
acquire, purchase, own, hold, transfer, sell, vote, employ,
mortgage, pledge, assign, pool or syndicate: (i) Any loans, notes,
mortgages or securities; (ii) debt instruments, ownership
certificates or other instruments evidencing loans or equity; or
(iii) securities or other ownership interests of or in domestic or
foreign corporations, associations, partnerships, limited
partnerships, limited liability partnerships, limited liability
companies, joint ventures or other private enterprise to foster
economic growth, jobs preservation and creation in the state of West Virginia, and all other acts that carry out the board's
purpose;
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(18) To contract with either Marshall university or West
Virginia university, or both, for the purpose of retaining the
services of, and paying the reasonable cost of, services performed
by the institution for the board in order to effectuate the
purposes of this article;
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(19) To enter into collaborative arrangements or contracts
with private venture capital companies when considered advisable by
the board;
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(20) To provide equity financing for any eligible business
that will stimulate economic growth and provide or retain jobs in
this state, and to hold, transfer, sell, assign, pool or syndicate,
or participate in the syndication of, any loans, notes, mortgages,
securities, debt instruments or other instruments evidencing loans
or equity interest in furtherance of the board's corporate
purposes;
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(21) To form partnerships, create subsidiaries or take all
other actions necessary to qualify as a small business investment
company under the United States Public Law (85-699) Small Business
Investment Act, as amended; and
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(22) To provide for staff payroll and make purchases in the same manner as the housing development fund.
§12-7-8a. New millennium fund; new millennium fund promissory
notes; nonincentive tax credits; rule making.
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(a) The new millennium fund is established to permit the board
to better fulfill its mission to mobilize financing and capital for
emerging, expanding and restructuring businesses in the state. New
millennium fund moneys are to consist of all appropriations for use
by the jobs investment trust board made by the Legislature
subsequent to the thirty-first day of December, one thousand nine
hundred ninety-nine, and funds borrowed from private or
institutional lenders by the board through the issuance of
promissory notes. Fund moneys may be held in a separate account or
accounts by or at the West Virginia housing development fund for
the board until the board disburses any portion of the funds. Fund
moneys that are not set aside or otherwise designated for paying
interest on the promissory notes may be used by the board in
accordance with and to effectuate the purposes of this article.
The board may impose reasonable fees and charges associated with
its investment of funds from the new millennium fund in eligible
businesses to be paid in any combination of money, warrants or
equity interests.
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(b) Without limiting the powers otherwise enumerated in this article, the board has the power to: (1) Sell and transfer
portions of the nonincentive tax credits created, issued and
transferred to the board pursuant to the provisions of this section
to contracting taxpayers and/or their assigns in return for the
payments described in subsection (f) of this section; (2) issue or
provide promissory notes on loans made to the board having terms of
up to ten years on a zero-coupon basis or otherwise; (3) enter into
put options or similar commitment contracts with taxpayers that
would be for terms of up to ten years committing, at the board's
option, to sell and transfer to the contracting taxpayers or their
assigns at the end of the term and as soon after the term as is
reasonable under the circumstances portions of the nonincentive tax
credits created, issued and transferred to the board pursuant to
this section; (4) grant, transfer and assign the benefits of the
put options or similar commitment contracts as collateral to secure
the board's obligations pursuant to its promissory notes; and (5)
satisfy the board's payment obligations under its promissory notes
from assets of the board, other than the benefits of the put
options or similar commitment contracts, then to effect a
corresponding cancellation of the board's related nonincentive tax
credit commitment. The terms and conditions of the promissory
notes, put options or similar commitment contracts shall be consistent with the purposes of this section, and approved by board
resolution, and may be different for separate transactions.
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(c) Without limiting the powers otherwise enumerated in this
article and with regard to the new millennium fund, the board has
and may exercise all powers necessary to further the purposes of
this section, including, but not limited to, the power to commit,
sell and transfer nonincentive tax credits up to the total amount
of thirty million dollars.
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(d) The board may issue its promissory notes pursuant to this
section in amounts totaling no more than six million dollars in
each of the fiscal years ending in two thousand one, two thousand
two, two thousand three, two thousand four and two thousand five,
and may issue its nonincentive tax credit commitments in amounts
totaling no more than six million dollars in each of the fiscal
years ending in two thousand one, two thousand two, two thousand
three, two thousand four and two thousand five. The board may
agree to sell and transfer at its option, nonincentive tax credits
to taxpayers ten years after the date of its commitments, and as
soon thereafter as it is reasonable under the circumstances.
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(e) Prior to committing to the sale and transfer of any
nonincentive tax credits, the board shall first determine that:
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(1) The new millennium fund moneys to be received in relationship to the commitment shall be used for the development,
promotion and expansion of the economy of the state; and
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(2) The existence and pledge of a put option or similar
commitment contract that is supported by the nonincentive tax
credits that are committed by the board is a material inducement to
the private or institutional lender transferring moneys to the
board to be placed in the new millennium fund.
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(f) The board may sell and transfer nonincentive tax credits
only in conjunction with the satisfaction of its obligations under
its promissory notes issued pursuant to this section. Each
original sale and transfer of nonincentive tax credits by the board
shall be consummated upon payment to the board, or for its
benefits, of an amount equal to the dollar amount of the
nonincentive tax credits sold and transferred minus the amount of
any federal tax deduction lost by the purchasing taxpayer, if any,
resulting from the purchase and projected use of the nonincentive
tax credit in satisfying state tax obligations. The nonincentive
tax credits sold and transferred by the board pursuant to this
section shall be claimed as a credit on the tax returns for the
year or years in which the nonincentive tax credits are sold and
transferred by the board. The amount of the nonincentive tax
credit that exceeds the taxpayer's tax liability for the taxable year in the year of the purchase may be carried to succeeding
taxable years until used in full up to two years after the year of
purchase, and may not be carried back to prior taxable years. Any
nonincentive tax credit sold and transferred by the board that
remains outstanding after the third taxable year subsequent to and
including the year of the transfer is forfeited.
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(g) Nonincentive tax credits are created, issued and
transferred by the state to the board in a total amount of thirty
million dollars to be used by taxpayers, including persons, firms,
corporations and all other business entities, to reduce the tax
liabilities imposed upon them pursuant to articles twelve-a,
thirteen, thirteen-a, thirteen-b, twenty-one, twenty-three and
twenty-four, chapter eleven of this code. The total amount of
nonincentive tax credits that are created, issued and transferred
to the board is thirty million dollars. The nonincentive tax
credits are freely transferable to subsequent transferees. The
board shall immediately notify the president of the Senate, the
speaker of the House of Delegates and the governor in writing if
and when any nonincentive tax credits are sold and transferred by
the board.
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(h) In conjunction with the department of tax and revenue, the
board shall develop a system for: (i) Registering nonincentive tax credits, commitments for the sale and transfer of nonincentive tax
credits, the assignments of the commitments and the assignments of
the nonincentive tax credits; and (ii) certifying nonincentive tax
credits so that when nonincentive tax credits are claimed on a tax
return, they may be verified as validly issued by the board,
properly taken in the year of claim and in accordance with the
requirements of this section.
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(i) The board may promulgate, repeal, amend and change rules
consistent with the provisions of this article to carry out the
purposes of this section. These rules are not subject to the
provisions of chapter twenty-nine-a of this code, but shall be
filed with the secretary of state.
§12-7-9. Applications for investment priority; investment package.
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(a) The board shall accept and review applications from
eligible businesses and shall determine the investment worthiness,
the benefits to the West Virginia economy, the leverage potential
for investments in a small business investment companies, the jobs
creation potential and the economic circumstances of the region or
regions of the state that would benefit from each proposal. The
board shall attempt to balance its investments, as nearly as is
practicable, among the geographic regions of the state.
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(b) Any faculty or students of a public or private institution of higher education in the state may present for the board's
consideration proposals relating to innovative projects or
investment opportunities.
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(c) An annual audit shall be conducted by an independent firm
of certified public accountants and shall be made available to the
Legislature annually.
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(d) The board shall forward to the West Virginia housing
development fund for its review and information approved investment
packages containing information as is necessary to permit the West
Virginia housing development fund to carry out its duties under
this article. The board shall determine whether each applicant is
an eligible business.
§12-7-16. Credit of state not pledged.
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The provisions of this article do not and shall not be
construed to authorize the jobs investment trust board at any time
or in any manner to grant or pledge the credit or taxing power of
the state. None of the obligations or debts created by the jobs
investment trust board under the authority granted in this article
are or are to be construed to be obligations of the state.