COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 513
(By Senators McCabe, Minard and Unger)
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[Originating in the Committee on Finance;
reported February 19, 2004.]
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A BILL to amend and reenact §12-7-4, §12-7-6, §12-7-8a and §12-7-11
of the code of West Virginia, 1931, as amended, all relating
to the jobs investment trust board; removing legislators from
the board; expanding board powers; sale or transfer of
nonincentive tax credits; and providing that certain documents
be available for public inspection.
Be it enacted by the Legislature of West Virginia:
That §12-7-4, §12-7-6, §12-7-8a and §12-7-11 of the code of
West Virginia, 1931, as amended, be amended and reenacted, all to
read as follows:
ARTICLE 7. JOBS INVESTMENT TRUST FUND.
§12-7-4. Jobs investment trust board; composition; appointment,
term of private members; chairman; quorum.
(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.
(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 higher education policy commission 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. One member shall be appointed by the governor
from a list of two names submitted by the board of directors of the
housing development fund. One member shall be appointed by the
governor from a list of two names submitted by the commissioner of
the division of tourism. 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 and two shall be present or past executive officers of
companies listed on a major stock exchange or large privately held
companies:
Provided, That all appointments made pursuant to the
provisions of this article shall be by and with the advice and
consent of the Senate.
(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.
(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.
(e) The chairman of the board shall be elected by the board
from among the members of the board.
(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 or participating by
such any
other means as described in subsection (g) of this section, but in
no event fewer than six of the members serving on the board.
(g) Members of the board may participate in a meeting of the
board by means of conference telephone or similar communication
equipment by means of which all persons participating in the
meeting can hear each other and participation in a board meeting
pursuant to this subsection
shall constitute constitutes presence
in person at
such the meeting.
(h) 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.
(i) The board shall meet on a quarterly basis or more often if
necessary.
(j)
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 The governor shall appoint
a member for a 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.
(k) 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.
§12-7-6. Corporate powers.
The board
has the power may:
(1)(i)
To make Make loans to eligible businesses with or
without interest secured if and as required by the board; and (ii)
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;
(2)
To accept Accept appropriations, gifts, grants, bequests
and devises and to use or dispose of them to carry out its corporate purposes;
(3)
To make 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;
(4)
To collect 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;
(5)
To sue Sue and be sued;
(6)
To make Make, amend and repeal bylaws and rules consistent
with the provisions of this article;
(7)
To hire 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;
(8)
To acquire Acquire, hold and dispose of real and personal
property for its corporate purposes;
(9)
To enter 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;
(10)
To acquire Acquire real
and personal 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;
(11)
To purchase 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 these 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;
(12)
To procure Procure insurance against losses to its
property in amounts, and from insurers, as is prudent;
(13)
To consent 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;
(14)
To establish Establish training and educational programs
to further the purposes of this article;
(15)
To file File its own travel rules;
(16)
To borrow 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;
(17)
To take 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;
(18)
To contract 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;
(19)
To enter Enter into collaborative arrangements or
contracts with private venture capital companies when considered
advisable by the board;
(20)
To provide 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;
(21)
To form 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
(22)
To provide Provide for staff payroll and make purchases
in the same manner as the housing development fund;
(23) Indemnify its members, directors, officers, employees and
agents relative to actions and proceedings to which they have been
made, or threatened to make, make advances for expenses relative
thereto and purchase and maintain liability insurance on behalf of
those persons all to the same extent as authorized for West
Virginia business corporations under present or future laws of the
state applicable to business corporations generally;
(24) Contract for the provision of legal services by private
counsel and, notwithstanding the provisions of article three,
chapter five of this code, counsel may, but is not limited to,
represent the board in court, negotiate contracts and other
agreements on behalf of the board, render advice to the board on
any matter relating thereto, prepare contracts and other agreements
and provide any other legal services requested by the board; and
(25) Authorize the executive director, without prior presentation at a board meeting, but with written consent from the
board's chairperson, to approve supplemental investments (term
loans, line-of-credit loans or ownership interests) in the board's
portfolio entities, or to entities managing board assets, in
amounts provided in a board-authorizing resolution but not greater
than twenty-five thousand dollars for any one investment, not
greater than fifty thousand dollars in the aggregate for two or
more investments in any one entity in any one fiscal year and not
greater than one hundred thousand dollars in the aggregate for all
investments in all entities in any one fiscal year; and to
authorize the executive director on such occasions to negotiate the
terms of the investments and to execute and deliver for and on
behalf of the board all instruments, agreements or other documents
that are required or are reasonably necessary to effectuate these
investments.
§12-7-8a. New millennium fund; new millennium fund promissory
notes; nonincentive tax credits; rulemaking.
(a) The new millennium fund is
established continued 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.
(b) Without limiting the powers otherwise enumerated in this
article, the board
has the power to may: (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;
and (6) satisfy the board's payment obligations
under its promissory notes from the benefits of the put options or
similar commitment contracts, then to effect a corresponding sale
and transfer of nonincentive tax credits. 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.
(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.
(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.
(e) Prior to committing to the sale and transfer of any
nonincentive tax credits, the board shall first determine that:
(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
(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.
(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.
(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.
(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.
(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.
§12-7-11. Documentary materials concerning trade secrets;
commercial, financial, or personal information;
confidentiality.
Any documentary material or data made or received by the board
for the purpose of furnishing assistance, to the extent that
such
the material or data consists of trade secrets, commercial,
financial or personal information regarding the financial position
or activities of such business or person, shall not be considered
public records and shall be exempt from disclosure pursuant to the
provisions of chapter twenty-nine-b of this code. Any discussion
or consideration of
such the trade secrets, commercial, financial
or personal information may be held by the board in executive
session closed to the public, notwithstanding the provisions of
article nine-a, chapter six of this code:
Provided, That the board
shall make public the following information regarding executed investments: (1) The names and addresses of the principals of the
business and its board of directors; (2) the location or locations
of the projects; (3) the amount of the investment or financial
assistance provided by the board; (4) the purpose of the investment
or financial assistance; (5) the maturity, interest rate and other
pertinent terms of the investment; (6) the fixed assets which serve
as security for the investment; and (7) the names and addresses of
all persons holding twenty-five percent or more of the equity of
the entity receiving investment assistance:
Provided, however,
That the board shall keep available in its offices for inspection
by any citizen of this state the annual report prepared pursuant to
the requirements of section twelve of this article and the annual
audit report prepared pursuant to the requirements of sections nine
and fourteen of this article.
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(NOTE: The purpose of this bill is to update and modify
provisions of the jobs investment trust act relating to board
composition, board corporate powers and information disclosure.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.)