H. B. 4461
(By Delegates Martin, Boggs and McGraw)
[Introduced February 9, 2000; referred to the
Committee on Government Organization then Finance.]
A BILL to amend and reenact sections two, four, five, six 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; modifying
board composition; specifying the board is a public employer
for state insurance and retirement purposes; allowing the
board's executive director to act on its behalf under certain
circumstances; expanding the board's corporate powers;
establishing a new venture capital funding pool; creating
nonincentive tax credits and addressing guarantees; and prohibiting the granting and pledging of the credit of the
state.
Be it enacted by the Legislature of West Virginia:
That sections two, four, five, six 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.
(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 availability of funds through 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.
(b) The Legislature further finds that:
(1) That 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;
(2) that A variety of means and measures for the financing of
projects, including the insuring of loans or other forms of
financing or credit to be made available for working capital,
innovative investment plans and options, equity financing or the
refinancing of existing debt of an enterprise, will, as a matter of
public policy, serve the public purposes of the state; and
(3) that 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 the end
that funds obtained thereby may be used to furnish money and credit
to approved businesses or enterprises or to promote the
establishment of new and innovative projects or to upgrade, expand
and retain existing projects; and
(4) Fundamental changes have occurred and will continue to
occur in national and international markets that enhance the need
to increase the availability of debt financing, equity capital and
near-equity capital for emerging, expanding and restructuring
business opportunities in the state.
(c) The Legislature further finds:
(1) That due to the creation of the jobs investment trust,
moneys will be available for venture capital in this state;
(2) That the implementation of this innovative program may
supplant the need for the state to otherwise assist private venture
capital concerns through tax credits;
(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;
(4) That due to this reduction in the certification of tax
credits, additional general revenue may become available for new
economic development programs;
(5) These economic development programs may be funded from
general revenue in an amount appropriate to effectuate the purposes
of these programs; and
(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.
§12-7-4. Jobs investment trust board; composition; appointment,
term of private members; chairman; quorum.
(a) There is hereby created The jobs investment trust board is
continued. The board is created as a public body corporate and
established to improve and otherwise promote economic development
in this state.
(b) The board shall consist consists of thirteen members, five
of whom shall 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 secretary of
commerce, labor and environmental resources 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.
(c) In case of any vacancy on the board, such the vacancy
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 shall serve 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 shall constitute 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.
(g) The members of the board, including the chairman, shall may receive no compensation for their services as members of the
board but shall be are entitled to their reasonable and necessary
expenses actually incurred in discharging their duties under this
article.
(h) The board shall meet on a quarterly basis beginning the
first day of July, one thousand nine hundred ninety-two, or more
often if necessary.
(i) The terms of the board members appointed by the governor
first taking office on or after the effective date of this
legislation shall expire 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, after the first day of July, one thousand
nine hundred ninety-two. As these the original appointments of the
board members expire, each subsequent appointment shall be for a
full four-year term. Any member whose term has expired shall serve
until his or her successor has been duly appointed and qualified.
Any member shall be is eligible for reappointment.
§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.
(a) It shall be 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 shall
serve at the will and pleasure of the board. The board is: (i) A
participating public employer for purposes of the provisions of
article ten, chapter five of this code; and (ii) an employer for
purposes of the provisions of article sixteen, chapter five of this
code.
(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.
(c) The members and officers of the board shall not be are not
liable personally, either jointly or severally, for any debt or obligation created by the board.
(d) The acts of the board shall be are solely the acts of its
corporation and shall not be deemed to be are not those of an agent
of the state. nor shall Any debt or obligation of the board be
deemed to be is not a debt or obligation of the state.
(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, in its discretion, approve any action to be taken
and authorize the executive director for and on behalf of the board
to execute and deliver any instruments, agreements or other
documents that are required or are reasonably necessary to
effectuate the decisions or acts of the board.
(e) (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.
(f) (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 such 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 any other ways as
the board and the executive director may, in their discretion, find
appropriate.
§12-7-6. Corporate powers.
The board shall have has the power:
(1) To make loans, with or without interest, but with such
security for repayment as the jobs investment trust board
determines reasonably necessary and practicable, from the board's
fund, for investment in eligible businesses that stimulate economic
growth and provide or retain jobs in this state; such the loans
shall may be made only upon determination by the board that the
loans are prudent and meet the criteria established by the board;
(2) To accept appropriations, gifts, grants, bequests and
devises and to utilize or dispose of the same them to carry out its corporate purposes;
(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;
(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;
(5) To sue and be sued;
(6) To have a seal and alter the same it at will;
(7) To make, and from time to time, amend and repeal bylaws
and rules and regulations not inconsistent with the provisions of
this article;
(8) To hire its own employees, whom are employees of the state
for purposes of articles ten and sixteen, chapter five of this
code, and appoint such officers and consultants as it deems
considers advisable and to fix their compensation and prescribe
their duties;
(9) To acquire, hold and dispose of real and personal property
for its corporate purposes;
(10) 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;
(11) To acquire real property, or an interest therein in real
property, in its own name, by purchase or foreclosure, where
acquisition is necessary or appropriate to protect any loan in
which the board has an interest and to sell, transfer and convey
any 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 property to a tenant;
(12) To purchase or sell, at public or private sale, and to
hold, negotiate, transfer, sell or assign, any mortgage,
instrument, note, credit, debenture, guarantee, bond or other
negotiable instrument or obligation securing a loan or any part or
portion of a loan, or any security or other instrument evidencing
indebtedness or an equity or other ownership interest. Any
offering of any instrument, note, credit, debenture, guarantee,
bond, evidence of indebtedness, security or evidence of equity
ownership shall include the representation and qualification that
the jobs investment trust 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;
(13) To procure insurance against any loss in connection with
its property in such amounts, and from such insurers, as may be
necessary or desirable;
(14) To consent, whenever it considers it necessary or
desirable in the fulfillment of its corporate purpose, to the
modification of the rate of interest, time of payment or any
installment of principal or interest, or any other terms, of
investment, loan, contract or agreement of any kind to which the
board is a party;
(15) To establish training and educational programs to further
the purposes of this article;
(16) To file its own travel rules; and regulations
(17) To borrow money to carry out its corporate purpose in
such principal amounts and upon such terms as shall be are
necessary to provide sufficient funds for achieving its corporate
purpose;
(18) To take options in or warrants for, subscribe for, acquire, by purchase or otherwise, and to hold, transfer, sell,
vote, employ, mortgage, pledge, assign, pool or syndicate or
participate in the syndication of, any loans, notes, mortgages,
securities or debt instruments or other instruments evidencing
loans or equity or other ownership interests of or in other
domestic or foreign corporations, associations, partnerships,
limited partnerships, limited liability partnerships, limited
liability companies, joint ventures or other private enterprise in
or for the fostering of economic growth, jobs preservation and
creation in the state of West Virginia, and all other acts which
carry out the board's purpose;
(19) 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;
(20) To enter into collaborative arrangements or contracts
with private venture capital companies when deemed considered
advisable by the board;
(21) 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 or debt instruments or other instruments evidencing
loans or equity interest if in furtherance of the board's corporate
purposes;
(22) 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
(23) 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; rulemaking.
(a) There is hereby established a new fund entitled the new
millennium fund that will allow the board to better fulfill its
mission as a mobilizer of financing and capital for emerging,
expanding and restructuring business opportunities in the state.
New millennium fund moneys shall be borrowed funds obtained by the
board from private or institutional lenders through issuance by the
board of its promissory notes and may be held in a separate account
or accounts at or by the West Virginia housing development fund for the board until a disbursement of the funds, or portions of the
funds, is directed by the board. All moneys which become a part
of the new millennium fund, and which are not set aside or
otherwise designated for the payment of interest on the promissory
notes, may be used by the board to effect 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, same to be paid in money, warrants, or
equity interests or in any combination of money, warrants or equity
interests.
(b) Without limiting the powers otherwise enumerated in this
article and with regard to the new millennium fund, the board has
the additional power to: (i) Issue or provide its promissory
notes, on a zero-coupon basis or otherwise, having a term of up to
but not longer than ten years, evidencing loans made to the board
pursuant to this section; (ii) enter into put options or similar
contracts with taxpayers which would be for a term of ten years,
committing, at the board's option, at the end of the term and as
soon thereafter as is reasonable under the circumstances to sell
and transfer portions of the nonincentive tax credits created,
issued and transferred to the board pursuant to the provisions of this section to the contracting taxpayers or their assigns, or
both, in return for the payments to the board of amounts equal to
the dollar amounts of the nonincentive tax credits sold and
transferred; (iii) grant, transfer and assign the benefits of the
put options or similar contracts as collateral to secure the
board's obligations pursuant to its promissory notes; and (iv)
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 contracts, and when so doing to effect a
corresponding cancellation of the board's related nonincentive tax
credit commitment. The promissory notes and the put options or
similar contracts shall be upon terms and conditions as are
consistent with this section and as are negotiated and approved by
board resolutions adopted from time to time, 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 or convenient to effect 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 twenty-five million dollars as provided in this section.
(d) The board may issue its promissory notes pursuant to this
section in amounts totaling no more than five 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 commitments in amounts totaling no more than five
million dollars in each of the fiscal years two thousand one, two
thousand two, two thousand three, two thousand four and two
thousand five, agreeing to sell and transfer, at the board's
option, nonincentive tax credits to taxpayers ten years after the
date of the commitment and as soon thereafter as is reasonable
under the circumstances.
(e) Prior to the commitment by the board to the sale and
transfer of any of the nonincentive tax credits, the board shall
first determine that: (i) The new millennium fund moneys to be
received in relationship to the commitment are to be and shall be
used for the development, promotion and expansion of West
Virginia's economy; and (ii) the existence and pledge of a put
option or similar contract as authorized in this section, supported
by the availability of the nonincentive tax credits which are
committed by the board in relationship to the moneys, 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 shall sell and transfer nonincentive tax credits
only in conjunction with the satisfaction of its obligations under
its promissory notes issued pursuant to this section, and only in
the dollar amount obtained by the board for the satisfaction from
funds provided by purchasers of the nonincentive tax credits
pursuant to the related put option or similar contract. 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. If the amount of the nonincentive
tax credit exceeds the taxpayer's tax liability for the taxable
year, the amount of the credit which exceeds the tax liability for
the initial taxable year may be carried to succeeding taxable years
until used in full or until forfeited. However, the nonincentive
tax credits may not be carried forward for more than two years
subsequent to the initial year and the nonincentive tax credits
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 the transfer is forfeited.
(g) The state hereby creates, issues and transfers to the
board for its further transfers, as contemplated by this section,
nonincentive tax credits that may be used by taxpayers, including
persons, firms, corporations and all other business entities,
against and to reduce the tax liabilities imposed 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 in this
subsection, issued and transferred to the board is twenty-five
million dollars, which nonincentive tax credits shall be 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
pursuant to this section.
(h) The board shall, in conjunction with the department of tax
and revenue, develop a system for registration of any nonincentive
tax credits committed or sold and transferred by the board pursuant
to this section and a system of certificates that permits
verification that any nonincentive tax credit claimed upon a tax return is validly issued by the board, properly taken in the year
of claim and that any sales and transfers of commitments and of
nonincentive tax credits to taxpayers and assignments of the
credits are made in accordance with the requirements, if any, of
this section.
(i) The board may promulgate and may from time to time repeal,
amend and change rules, not inconsistent 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.
§12-7-16. Credit of state not pledged.
No provisions provision of this article shall be construed to
authorize authorizes the jobs investment trust board at any time or
in any manner to grant or pledge the credit or taxing power of the
state. nor shall any of The obligations or debts created by the
jobs investment trust board under the authority herein granted be
deemed to be in this article are not obligations of the state.
NOTE: The purpose of this bill is to update and modify
provisions including legislative findings, membership, management
and powers all relating to the Jobs Investment Trust Fund. The bill also establishes the New Millennium Fund for purposes of
empowering the Jobs Investment Trust Fund Board to act as a
mobilizer of financing and capital for emerging, expanding and
restructuring business opportunities in the state. The new
millennium fund shall be funded through loans from private
entities. The repayment of loans to the new millennium fund are
obligations of the board and supported by the issuance of
prospective nonincentive tax credits which may offset certain taxes
imposed by the state of interested entities that purchase the
prospective credits. The credit of the state may not be pledged in
furtherance of the new millennium fund.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§12-7-8a is new; therefore, strike-throughs and underscoring
have been omitted.