Senate Bill No. 109

(By Senators Tomblin (Mr. President) and Sprouse
By Request of the Executive)
____________

[Introduced January 10, 2002; referred to the Committee

on Economic Development; and then to the Committee on Finance.]

____________



A BILL to amend and reenact section nine-e, article six, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating generally to the investment of moneys from the consolidated fund in the West Virginia enterprise capital fund, LLC, as managed by the West Virginia enterprise advancement corporation, a subsidiary of the West Virginia economic development authority.

Be it enacted by the Legislature of West Virginia:
That section nine-e, article six, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:
ARTICLE 6. WEST VIRGINIA INVESTMENT MANAGEMENT BOARD.
§12-6-9e. Legislative findings; loans for industrial development; availability of funds and interest rates; investment in West Virginia Enterprise Capital Fund, LLC.

(a) The Legislature hereby finds and declares that the citizens of the state benefit from the creation of jobs and businesses within the state; that a business and industrial development loan program provides for economic growth and stimulation within the state; that loans from pools established in the consolidated fund will assist in providing the needed capital to assist business and industrial development; and that time constraints relating to business and industrial development projects prohibit duplicative review by both the board and the West Virginia economic development authority board. The Legislature further finds and declares that an investment in the West Virginia Enterprise Capital Fund, LLC of moneys in the consolidated fund as hereinafter provided will assist in creating jobs and businesses within the state and providing the needed risk capital to assist business and industrial development. This section is enacted in view of these findings.
(b) The board shall make available, subject to cash availability, in the form of a revolving loan, up to one hundred fifty million dollars from the consolidated fund to loan the West Virginia economic development authority for business or industrial development projects authorized by section seven, article fifteen, chapter thirty-one of this code and to consolidate existing loans authorized to be made to the West Virginia economic development authority pursuant to this section and pursuant to section twenty, article fifteen, chapter thirty- one of this code which authorizes a one hundred fifty million dollar revolving loan and article eighteen-b, chapter thirty-one of this code which authorizes a fifty million dollar investment pool: Provided, That the West Virginia economic development authority may not loan more than fifteen million dollars for any one business or industrial development project. The revolving loan authorized by this subsection shall be secured by one note at a variable interest rate equal to the twelve-month average of the board's yield on its cash liquidity pool. The rate shall be set on the first day of July and the rate shall be adjusted annually on the same date. The maximum annual adjustment may not exceed one percent. Monthly payments made by the West Virginia economic development authority to the board shall be calculated on a one hundred twenty-month amortization. The revolving loan shall be secured by a security interest that pledges and assigns the cash proceeds of collateral from all loans under this revolving loan pool. The West Virginia economic development authority may also pledge as collateral certain revenue streams from other revolving loan pools which source of funds does not originate from federal sources or from the board.
The outstanding principal balance of the revolving loan from the board to the West Virginia economic development authority may at no time exceed one hundred three percent of the aggregate outstanding principal balance of the business and industrial loans from the West Virginia economic development authority to economic development projects funded from this revolving loan pool. This provision shall be certified annually by an independent audit of the West Virginia economic development authority financial records.
(c)The interest rates and maturity dates on the loans made by the West Virginia economic development authority for business and industrial development projects authorized by section seven, article fifteen, chapter thirty-one of this code shall be at competitive rates and maturities as determined by the West Virginia economic development authority board.
(d) Any and all outstanding loans made by the board, or any predecessor entity, to the West Virginia economic development authority shall be refunded by proceeds of the revolving loan contained in this section and no loans may be made hereafter by the board to the West Virginia economic development authority pursuant to section twenty, article fifteen, chapter thirty-one of this code or article eighteen-b of said chapter.
(e)The trustees of the board shall bear no fiduciary responsibility as provided in section eleven [§ 12-6-11] of this article with specific regard to the revolving loan contemplated in this section.
(f) The board is hereby authorized and directed to invest moneys from the consolidated fund in the West Virginia Enterprise Capital Fund, LLC, the manager of which is the West Virginia Enterprise Advancement Corporation, a subsidiary of the West Virginia economic development authority: Provided, That at no time shall the aggregate amount of consolidated fund moneys so invested exceed twenty-five million dollars. The board shall make such investment from time to time on or after passage of the amendments of this section enacted during the regular session of the West Virginia Legislature in two thousand two, in such amounts and at such times as directed by the West Virginia economic development authority and the aggregate amount of consolidated fund moneys so invested shall not exceed ten million dollars through the fiscal year ending the thirtieth day of June, two thousand three, and five million dollars during any fiscal year thereafter. Any amount of consolidated fund moneys invested in the West Virginia Enterprise Capital Fund, LLC pursuant to this subsection (f) shall reduce by an equal amount the amount available to the West Virginia economic development authority pursuant to the revolving loan described in subsection (b) of this section. As amounts or returns are received by the board in respect of any and all such investments, whether in the form of interest, dividends, realized capital gains, return of capital or otherwise, such amounts and returns shall be deposited and maintained by the board in a segregated account entitled "West Virginia Enterprise Capital Fund, LLC Account," in accordance with the laws, rules, regulations and policies of the board regarding same. In the discretion of the West Virginia economic development authority, moneys in said account may be returned to the consolidated fund, in which case a corresponding amount of the aggregate and fiscal year caps set forth herein shall become available anew, or may be invested as directed by the West Virginia economic development authority in the West Virginia Enterprise Capital Fund, LLC without reducing the amount available to the West Virginia economic development authority pursuant to the revolving loan described in subsection (b) of this section. Any and all moneys and amounts invested from the West Virginia Enterprise Fund, LLC account in the West Virginia Capital Fund, LLC shall be in addition to and not subject to the aggregate and fiscal year limitations provided for above.


NOTE:
The purpose of this bill is to allow the investment of up to $25 million in the West Virginia Enterprise Capital Fund, LLC, as managed by the West Virginia Enterprise Advancement Corporation, a subsidiary of the West Virginia economic development authority, for the purpose of providing venture capital to certain selected companies.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added to present law.