Senate Bill No. 630
(By Senators Helmick, Ross, Craigo, Fanning, Plymale, Dawson and Unger)
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[Introduced February 21, 2000; referred to the Committee on Small Business; and then to the Committee on Finance.]
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A BILL 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:
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.

(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.

§12-7-3. Definitions.

As used in this article, the following words have the meanings herein ascribed to them in this section, unless the context in which they are used clearly implies a different meaning:
(a) "Board" means the jobs investment trust board established pursuant to section four of this article.
(b) "Eligible business" means any business,

which is qualified to do business in West Virginia and is in good standing with all applicable laws affecting the conduct of such business.
(c) "Securities" means all bonds, notes, stocks, units of ownership, debentures or any other forms form of negotiable and or nonnegotiable evidences evidence of indebtedness or ownership.

§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 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.
(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 original appointments expire, each subsequent appointment shall be for a full four-year term. A member's term of office is four years. Any member whose term has expired shall serve serves 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 serves at the will and pleasure of the board.
(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 are not be 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 No debt or obligation of the board be deemed to be is a debt or obligation of the state.
(e)

(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 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 to eligible businesses, 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 loans shall The investments may be made only upon determination by the board that the loans investments are prudent and meet the criteria established by the board;
(2) To accept appropriations, gifts, grants, bequests and devises and to utilize use 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,

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 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,

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 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,

(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

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; rule making.

(a) There is 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, to be paid 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 after the term 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 thirty 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 six million dollars in each of the fiscal years ending in two thousand one, two thousand

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 after it 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, 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 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, 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 or 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) There are created, issued and transferred 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, and twenty-one, twenty-three and twenty-four, of 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, which 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 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.

§12-7-9. Applications for investment priority; investment package.

(a) The board shall accept and review applications from eligible businesses and shall determine the investment worthiness,

and jobs creation potential of each proposal, and the economic circumstances of the region or regions of the state which 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.
(b) Any public or private institution of higher education in the state, or faculty or students of the institution, may present for the board's consideration proposals relating to innovative projects or investment opportunities.
(c) There shall also be an annual audit conducted by an independent firm of certified public accountants which shall be made available to the Legislature annually.
(d) The board shall forward to the West Virginia housing development fund for its review and information approved investment packages containing such 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.

No The provisions of this article shall be construed to do not 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. nor shall any None 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 obligations of the state.



NOTE: The purpose of this bill is to

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.