To amend sections 5733.98 and 5747.98 and to enact sections 122.65, 122.651, 122.652, 122.653, 122.654, 122.655, 122.656, 122.657, 122.658, 122.659, and 122.6510 of the Revised Code to create the Ohio Venture Capital Program to provide for the direction of moneys of a private investment fund into loans and investments that are consistent with a general policy adopted by the new Ohio Venture Capital Authority and that are secured up to a specified maximum loss, first through program revenues or, if insufficient, through proceeds from the sale of transferable tax credits that may be claimed against the corporation franchise tax or the personal income tax.

Section 1.  That sections 5733.98 and 5747.98 be amended and sections 122.65, 122.651, 122.652, 122.653, 122.654, 122.655, 122.656, 122.657, 122.658, 122.659, and 122.6510 of the Revised Code be enacted to read as follows:

Sec. 122.65. For the purposes of mobilizing capital for loans and investments that provide significant potential to propel the advancement of technology and build the entrepreneurial economy of this state and promoting a strong, professional venture capital industry in this state, there is hereby created the Ohio venture capital program. The program, pursuant to sections 122.65 to 122.6510 of the Revised Code, shall consist of the following general components:

(A) The lending to and investment of private moneys in seed and venture capital partnerships pursuant to a general lending and investment policy prescribed by the Ohio venture capital authority and implemented through a single, designated, private, for-profit investment fund;

(B) The one-time issuance of state tax credits that are to be transferred to the authority, which credits, through the proceeds received from their sale, are available to provide security against losses incurred by the program fund up to the amount of outstanding contracts to purchase those tax credits, if program revenues of the authority are insufficient for that purpose.

Sec. 122.651. (A) There is hereby created the Ohio venture capital authority, which shall have the powers enumerated in sections 122.65 to 122.6510 of the Revised Code. The exercise by the authority of its powers is hereby declared and shall be an essential state governmental function. The authority is subject to all laws generally applicable to state agencies and public officials, to the extent those laws do not conflict with the provisions of sections 122.65 to 122.6510 of the Revised Code.

(B) The authority shall consist of seven members, not more than five of whom shall be of the same political party. Three of the members shall be appointed by the governor with the advice and consent of the senate from among the general public and shall have experience in the field of banking, investments, commercial law, or industry that is relevant to the purposes of the Ohio venture capital program as stated in section 122.65 of the Revised Code. Another member shall be appointed by the speaker of the house of representatives. Another member shall be appointed by the president of the senate. The auditor of state and the attorney general, or their designees, shall be ex officio voting members.

Initial gubernatorial appointees to the authority shall serve staggered terms, one term expiring on January 31, 2002, another term expiring on January 31, 2003, and another term expiring on January 31, 2004. Thereafter, terms of office for gubernatorial appointees shall be for four years. The initial terms of the members appointed by the speaker of the house of representatives and the president of the senate shall expire on January 31, 2002. Thereafter, the members appointed by the speaker of the house of representatives and the president of the senate shall serve two-year terms. A vacancy on the authority shall be filled in the same manner as the original appointment, except that a person appointed to fill a vacancy shall be appointed to the remainder of the unexpired term. Any member of the authority is eligible for reappointment.

A member of the authority may be removed by the member's appointing authority for misfeasance, malfeasance, or willful neglect of duty or for other cause, after notice and a public hearing, unless the notice and hearing are waived in writing by the member.

(C) Members of the authority shall serve without compensation but shall receive their reasonable and necessary expenses incurred in the conduct of authority business. The speaker of the house of representatives and the president of the senate shall each designate a member of the authority to serve as co-chairpersons. A majority of the authority shall constitute a quorum, and the affirmative vote of a majority of the members present shall be necessary for any action taken by the authority. No vacancy in the membership of the authority impairs the rights of a quorum to exercise all rights and perform all duties of the authority.

(D) The department of development shall provide the authority with office space and such technical assistance as the authority requires.

Sec. 122.652. Within ninety days after the effective date of this section, the Ohio venture capital authority shall establish, and subsequently may modify as it considers necessary, a written, general lending and investment policy for the Ohio venture capital program. The authority is not subject to Chapter 119. of the Revised Code with respect to the establishment or modification of the policy. The policy shall meet all of the following requirements:

(A) It is consistent with the purposes of the program stated in section 122.65 of the Revised Code.

(B) It permits the direction of only private moneys into private, for-profit seed and venture capital partnerships that commit to maintaining a significant focus in this state, demonstrate high historical levels of successful lending and investment performance, and, in the aggregate, reflect portfolios diversified by sector, stage of business development, management style, and geographic location.

(C) It specifies the general conditions a private, for-profit investment fund must meet to be designated the program fund under section 122.654 of the Revised Code.

(D) It includes lending and investment standards and general limitations on allowable loans and investments that the authority considers reasonable and necessary to achieve the purposes of the program stated in section 122.65 of the Revised Code, minimize the need for the authority to sell tax credits under section 122.656 of the Revised Code, ensure compliance of the program fund with all applicable laws of this state and the United States, and ensure the safety and soundness of loans and investments made under the program.

Sec. 122.653. (A) The lending and investment policy established under section 122.652 of the Revised Code shall specify the terms and conditions under which the Ohio venture capital authority will use the proceeds received from the sale of tax credits under section 122.656 of the Revised Code, subject to divisions (B) and (C) of this section, to provide security against losses under the Ohio venture capital program by the program fund designated under section 122.654 of the Revised Code. These terms and conditions shall be consistent with the purposes of the program stated in section 122.65 of the Revised Code, shall reflect the objective of achieving the maximum impact of transfers of tax credits authorized under sections 122.65 to 122.6510 of the Revised Code relative to those purposes, and shall prohibit any otherwise authorized use of the proceeds received from the sale of tax credits to provide security against a loss on a loan or investment determined by the authority to be inconsistent with the policy adopted under section 122.652 of the Revised Code and this section.

(B)(1) A transfer of tax credits to or use of the proceeds received from the sale of tax credits by the authority under sections 122.65 to 122.6510 of the Revised Code does not constitute an obligation of this state.

(2) Nothing in sections 122.65 to 122.6510 of the Revised Code authorizes the providing of security against losses to the program fund under the program:

(a) In an aggregate amount exceeding the proceeds received by the authority from the sale of tax credits under section 122.656 of the Revised Code;

(b) On any bases other than the following:

(i) The application first of moneys of the Ohio venture capital fund created under section 122.658 of the Revised Code, which the authority determines may be expended without adversely affecting the program's continued viability; and then

(ii) Only to the extent moneys under division (B)(2)(b)(i)of this section are insufficient due to a determination under that division of an adverse effect or effects, the application of moneys in the Ohio venture capital security against losses fund created under section 122.658 of the Revised Code.

(c) The authority shall not provide security against losses under sections 122.65 to 122.6510 of the Revised Code unless it is assured that, at the time the security against losses is provided, sufficient contracts under division (B) of section 122.656 of the Revised Code exist to fully provide the security against losses. The authority shall not sell tax credits under section 122.656 of the Revised Code in an aggregate amount exceeding the amount necessary to fully provide the requisite security against losses under the program.

Sec. 122.654.  (A) The Ohio venture capital authority may designate, as the program fund of the authority, one private, for-profit investment fund to carry out the lending and investment component of the Ohio venture capital program stated in division (A) of section 122.65 of the Revised Code and further prescribed in the lending and investment policy established by the authority in accordance with sections 122.652 and 122.653 of the Revised Code, provided the investment fund is incorporated or organized under Chapter 1701., 1705., 1775., 1782., or 1783. of the Revised Code and is capitalized in accordance with any state or federal laws applicable to the issuance or sale of securities. The authority shall so designate the program fund by entering into a written program fund agreement, in accordance with division (B) of this section, with the investment fund.

(B) The written program fund agreement under division (A) of this section shall include all of the following:

(1) A requirement that lending and investment by the program fund will be in compliance with the lending and investment policy established in accordance with sections 122.652 and 122.653 of the Revised Code that is in effect at the time the loan or investment is made, and a prohibition against the program fund engaging in any lending or investment activities other than activities to carry out exclusively the lending and investment component of the program;

(2) A requirement of periodic financial reporting by the program fund to the authority, which reporting shall include an annual audit by an independent auditor and such other financial reporting as is specified in the agreement or otherwise required by the authority for the purpose of ensuring that the program fund is carrying out the lending and investment component of the program;

(3) Specification of any like standards or general limitations that are in addition to or furtherance of standards or limitations that apply pursuant to division (D) of section 122.652 of the Revised Code;

(4) A requirement of payment to the authority by the program fund of fees prescribed in the agreement, pursuant to a schedule or terms and conditions specified in the agreement;

(5) Specification of the procedures under which the program fund shall certify immediately to the authority the necessity for a sale of tax credits under a contract entered into pursuant to section 122.656 of the Revised Code, and of the consequences to the program fund of failing to so certify;

(6) Requirements that any amount paid by the authority to the program fund under sections 122.65 to 122.6510 of the Revised Code to provide security against losses be fully applied by the program fund to provide that security and that, if that amount cannot be so applied for any reason, the program fund will return in a specified timely manner to the authority any of that amount not so applied;

(7) Specification of any general limitations regarding the employment of a fund manager by the program fund, in addition to an express limitation that the fund manager be a person with demonstrated, substantial, successful experience in the design and management of state-sponsored seed and venture capital investment programs and in capital formation;

(8) Specification that no transfer of tax credits to or use of the proceeds received from the sale of tax credits by the authority under sections 122.65 to 122.6510 of the Revised Code constitutes an obligation of the state and that the program fund shall not represent or permit the representation of any such transfer or use as such an obligation;

(9) Specification of any other terms and conditions of the program fund's designation and operation that the authority and program fund consider consistent with the purposes of the program as stated in section 122.65 of the Revised Code and necessary to achieve those purposes;

(10) Specification of the terms and conditions under which the authority or the program fund may terminate the agreement or under which the authority may cease the use of the proceeds received from the sale of tax credits to provide security against losses incurred by the program fund under sections 122.65 to 122.6510 of the Revised Code.

Sec. 122.655.  (A) The Ohio venture capital authority is not an agency as defined in section 101.82 of the Revised Code for purposes of divisions (A) and (B) of section 101.84 of the Revised Code.

(B) The designation of a program fund and the entering into a program fund agreement under section 122.654 of the Revised Code do not constitute a purchase of services under Chapter 125. of the Revised Code.

(C) Information with respect to the marketing plans, financial statements, trade secrets, research concepts, production methods, or products, or any other proprietary information concerning any person, which is submitted to or compiled by the Ohio venture capital authority for the purpose of developing the policy required by sections 122.652 and 122.653 of the Revised Code, is confidential and not subject to section 149.43 of the Revised Code, except to the extent that the person that provides the information or that is the subject of the information consents in writing to disclosure.

(D) Notwithstanding section 121.22 of the Revised Code, the authority may hold an executive session for either of the following purposes, but only after a majority of a quorum of the authority determines, by a roll call vote, to hold the session and only at a regular or special meeting:

(1) Presenting, reviewing, or discussing information described in division (C) of this section, but only if consent to disclosure has not been given as provided in that division;

(2) Preparing for, conducting, or reviewing negotiating sessions with the program fund for the purpose of designating the program fund and entering into the agreement under section 122.654 of the Revised Code.

Sec. 122.656.  (A) For the purpose of the providing-of-security-against-losses component of the Ohio venture capital program stated in division (B) of section 122.65 of the Revised Code, there hereby shall be issued by this state and transferred to the Ohio venture capital authority credits against the taxes imposed under Chapters 5733. and 5747. of the Revised Code, in the combined aggregate amount of one hundred million dollars, subject to a cap, as to either type of tax credit, equal to the respective aggregate amount at the time of the transfer that otherwise would be credited under division (A) of section 5733.12 or under section 5747.03 of the Revised Code.

(B) Upon the transfer of credits to the authority under division (A) of this section, the authority may enter into written contracts for the sale of tax credits, with any purchaser, which may include the program fund designated under section 122.654 of the Revised Code. Such a contract shall be consistent with sections 122.65 to 122.6510 of the Revised Code and contain the terms and conditions for the authority to sell, and the purchaser to purchase, at a specified future time such tax credits issued to the authority under division (A) of this section as the contract shall specify. The authority shall seek to enter into contracts that are expected to result in maximum effectiveness in achieving the purposes of the program stated in section 122.65 of the Revised Code.

Nothing in this division precludes or prohibits a tax credit sold by the authority under this section from being applied as authorized under section 122.657 of the Revised Code, and no contract shall be entered into under this division that, by its terms and conditions, would preclude or prohibit that use.

(C) The authority may sell any tax credit transferred to it under division (A) of this section, subject to all of the following limitations:

(1) The authority sells the credit solely pursuant to a contract entered into under division (B) of this section.

(2) The authority sells the credit as a result of a loss on a loan or investment made under the Ohio venture capital program, as that loss is certified to the authority pursuant to division (B)(5) of section 122.654 of the Revised Code.

(3) The authority does not sell any credit that may be claimed after July 1, 2026.

(4) The authority does not sell more than a total of twenty million dollars in credits that may be claimed and used to reduce the taxes otherwise imposed by Chapters 5733. and 5747. of the Revised Code for any one fiscal year. The authority shall cause the face of the certificate or other document selling the credit to state the principal amount of the credit and the taxable year or years for which the credit may be claimed.

(5) The authority sells the tax credit for at least its full face value except under the conditions the authority shall specify in the lending and investment policy it establishes in accordance with sections 122.652 and 122.653 of the Revised Code, which conditions shall provide at least that the authority shall seek terms most favorable to the program.

(D) The authority, in conjunction with the tax commissioner, shall develop a system of registration and a system of certificates for any credits transferred to the authority under division (A) of this section for the purpose of permitting verification that any credit claimed upon a tax return is a credit sold under division (C) of this section and is properly taken in the year of claim and in compliance with divisions (C)(3) and (4) of this section.

(E) Nothing in sections 122.65 to 122.6510 of the Revised Code limits the subsequent sale or other transfer of a tax credit that the authority sells under division (C) of this section.

Sec. 122.657. A taxpayer subject to a tax imposed under Chapter 5733. or 5747. of the Revised Code shall be allowed a credit against such respective tax equal to the amount of any credit properly taken under this section as verified under division (D) of section 122.656 of the Revised Code. The taxpayer shall claim the credit in the order required under section 5733.98 or 5747.98 of the Revised Code, respectively. If the amount of the credit for a tax year exceeds the tax otherwise due after allowing for any other credit that precedes it in the order required under such respective section, the taxpayer shall be entitled to a refund of the excess.

Sec. 122.658.  (A) There is hereby created in the state treasury the Ohio venture capital fund, to which shall be credited all moneys received by the Ohio venture capital authority pursuant to divisions (B)(4) and (6) of section 122.654 of the Revised Code, and all interest earned on moneys of the fund.

(B) There is hereby created in the state treasury the Ohio venture capital security against losses fund, to which shall be credited all moneys received by the authority pursuant to a sale of tax credits under section 122.656 of the Revised Code, and all interest earned on moneys of the fund.

(C) Money in the Ohio venture capital fund and in the Ohio venture capital security against losses fund shall be used exclusively to provide security against losses as authorized under sections 122.65 to 122.6510 of the Revised code.

Sec. 122.659.  Neither the state nor an appointing authority under section 122.651 of the Revised Code or a member of the Ohio venture capital authority is liable in damages to any person in a civil action for any loss incurred by the program fund as a result of any loan or investment made by the program fund.

Sec. 122.6510.  (A) On the first day of January of the second year after the date of entering into a program fund agreement under section 122.654 Of the Revised Code, and every other first day of January thereafter, the Ohio venture capital authority shall file with the clerk of the house of representatives, the clerk of the senate, and the chairpersons of the house and senate standing committees predominantly concerned with economic development a written report on the Ohio venture capital program, including all of the following:

(1) A description of the details of the lending and investment policy established in accordance with sections 122.652 and 122.654 of the Revised Code;

(2) The authority's assessment of the program's achievement of its purposes stated in section 122.65 of the Revised Code;

(3) The use of the proceeds received from the sale of tax credits under section 122.656 of the Revised Code by the authority to provide security against losses incurred by the program fund under sections 122.65 to 122.6510 of the Revised Code;

(4) The amount of tax credits sold by the authority under section 122.656 of the Revised Code;

(5) The amounts of tax credits claimed pursuant to section 122.657 of the Revised Code, as to the respective taxes involved;

(6) The financial status of the Ohio venture capital fund;

(7) Any recommendations for modifying the program to better achieve the purposes stated in section 122.65 of the Revised Code.

(B) During each year that a report is issued under division (A) of this section, the co-chairpersons of the Ohio venture capital authority, or another member of the authority designated by the co-chairpersons as the authority's representative, shall be required to appear in person before the standing committees of the house and senate predominantly concerned with economic development to give testimony concerning the status of the Ohio venture capital programs.

Sec. 5733.98.  (A) To provide a uniform procedure for calculating the amount of tax imposed by section 5733.06 of the Revised Code that is due under this chapter, a taxpayer shall claim any credits to which it is entitled in the following order, except as otherwise provided in section 5733.058 of the Revised Code:

(1) The credit for taxes paid by a qualifying pass-through entity allowed under section 5733.0611 of the Revised Code;

(2) The credit for qualifying affiliated groups under section 5733.068 of the Revised Code;

(3) The subsidiary corporation credit under section 5733.067 of the Revised Code;

(4) The savings and loan assessment credit under section 5733.063 of the Revised Code;

(5) The credit for recycling and litter prevention donations under section 5733.064 of the Revised Code;

(6) The credit for employers that enter into agreements with child day-care centers under section 5733.36 of the Revised Code;

(7) The credit for employers that reimburse employee child day-care expenses under section 5733.38 of the Revised Code;

(8) The credit for maintaining railroad active grade crossing warning devices under section 5733.43 of the Revised Code;

(9) The credit for purchases of lights and reflectors under section 5733.44 of the Revised Code;

(10) The credit for manufacturing investments under section 5733.061 of the Revised Code;

(11) The credit for purchases of new manufacturing machinery and equipment under section 5733.31 or section 5733.311 of the Revised Code;

(12) The second credit for purchases of new manufacturing machinery and equipment under section 5733.33 of the Revised Code;

(13) The job training credit under section 5733.42 of the Revised Code;

(14) The credit for qualified research expenses under section 5733.351 of the Revised Code;

(15) The enterprise zone credit under section 5709.66 of the Revised Code;

(16) The credit for the eligible costs associated with a voluntary action under section 5733.34 of the Revised Code;

(17) The credit for employers that establish on-site child day-care under section 5733.37 of the Revised Code;

(18) The credit for purchases of qualifying grape production property under section 5733.32 of the Revised Code;

(19) The export sales credit under section 5733.069 of the Revised Code;

(20) The credit for research and development and technology transfer investors under section 5733.35 of the Revised Code;

(21) The enterprise zone credits under section 5709.65 of the Revised Code;

(22) The credit for using Ohio coal under section 5733.39 of the Revised Code;

(23) The refundable jobs creation credit under section 5733.0610 of the Revised Code;

(24) The refundable Ohio venture capital program credit under section 122.657 of the Revised Code.

(B) For any credit except the refundable jobs creation credit and the refundable Ohio venture capital program credit, the amount of the credit for a tax year shall not exceed the tax due after allowing for any other credit that precedes it in the order required under this section. Any excess amount of a particular credit may be carried forward if authorized under the section creating that credit.

Sec. 5747.98.  (A) To provide a uniform procedure for calculating the amount of tax due under section 5747.02 of the Revised Code, a taxpayer shall claim any credits to which the taxpayer is entitled in the following order:

(1) The retirement income credit under division (B) of section 5747.055 of the Revised Code;

(2) The senior citizen credit under division (C) of section 5747.05 of the Revised Code;

(3) The lump sum distribution credit under division (D) of section 5747.05 of the Revised Code;

(4) The dependent care credit under section 5747.054 of the Revised Code;

(5) The lump sum retirement income credit under division (C) of section 5747.055 of the Revised Code;

(6) The lump sum retirement income credit under division (D) of section 5747.055 of the Revised Code;

(7) The lump sum retirement income credit under division (E) of section 5747.055 of the Revised Code;

(8) The credit for displaced workers who pay for job training under section 5747.27 of the Revised Code;

(9) The campaign contribution credit under section 5747.29 of the Revised Code;

(10) The twenty-dollar personal exemption credit under section 5747.022 of the Revised Code;

(11) The joint filing credit under division (G) of section 5747.05 of the Revised Code;

(12) The nonresident credit under division (A) of section 5747.05 of the Revised Code;

(13) The credit for a resident's out-of-state income under division (B) of section 5747.05 of the Revised Code;

(14) The credit for employers that enter into agreements with child day-care centers under section 5747.34 of the Revised Code;

(15) The credit for employers that reimburse employee child day-care expenses under section 5747.36 of the Revised Code;

(16) The credit for adoption of a minor child under section 5747.37 of the Revised Code;

(17) The credit for purchases of lights and reflectors under section 5747.38 of the Revised Code;

(18) The credit for manufacturing investments under section 5747.051 of the Revised Code;

(19) The credit for purchases of new manufacturing machinery and equipment under section 5747.26 or section 5747.261 of the Revised Code;

(20) The second credit for purchases of new manufacturing machinery and equipment and the credit for using Ohio coal under section 5747.31 of the Revised Code;

(21) The job training credit under section 5747.39 of the Revised Code;

(22) The enterprise zone credit under section 5709.66 of the Revised Code;

(23) The credit for the eligible costs associated with a voluntary action under section 5747.32 of the Revised Code;

(24) The credit for employers that establish on-site child day-care centers under section 5747.35 of the Revised Code;

(25) The credit for purchases of qualifying grape production property under section 5747.28 of the Revised Code;

(26) The export sales credit under section 5747.057 of the Revised Code;

(27) The credit for research and development and technology transfer investors under section 5747.33 of the Revised Code;

(28) The enterprise zone credits under section 5709.65 of the Revised Code;

(29) The refundable jobs creation credit under section 5747.058 of the Revised Code;

(30) The refundable credit for taxes paid by a qualifying entity granted under section 5747.059 of the Revised Code;

(31) The refundable credits for taxes paid by a qualifying pass-through entity granted under division (J) of section 5747.08 of the Revised Code;

(32) The refundable Ohio venture capital program credit under section 122.657 of the Revised Code.

(B) For any credit, except the refundable credits enumerated in divisions (A)(29), (30), and (31), and (32) of this section and the credit granted under division (I) of section 5747.08 of the Revised Code, the amount of the credit for a taxable year shall not exceed the tax due after allowing for any other credit that precedes it in the order required under this section. Any excess amount of a particular credit may be carried forward if authorized under the section creating that credit. Nothing in this chapter shall be construed to allow a taxpayer to claim, directly or indirectly, a credit more than once for a taxable year.

Section 2.  That existing sections 5733.98 and 5747.98 of the Revised Code are hereby repealed.