130th Ohio General Assembly
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Sub. S. B. No. 180As Passed by the Senate
As Passed by the Senate

124th General Assembly
Regular Session
2001-2002
Sub. S. B. No. 180


SENATORS Armbruster, Harris, Fingerhut, Spada, Ryan, Roberts, Amstutz, Austria, Blessing, Brady, Carnes, Coughlin, DiDonato, Finan, Randy Gardner, Robert Gardner, Goodman, Hagan, Herington, Hottinger, Jacobson, Mead, Mumper, Nein, Oelslager, White, Prentiss, Mallory, Espy, Wachtmann



A BILL
To amend sections 5733.98 and 5747.98 and to enact sections 150.01, 150.02, 150.03, 150.04, 150.05, 150.06, 150.07, 150.08, 150.09, 150.10, 5725.19, 5729.08, 5733.49, and 5747.80 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 policy adopted by the Ohio Venture Capital Authority and are secured by Program revenues or, if insufficient, by tax credits that may be claimed against the premium tax on domestic or foreign insurance companies, or the corporation franchise or personal income tax.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1.  That sections 5733.98 and 5747.98 be amended and sections 150.01, 150.02, 150.03, 150.04, 150.05, 150.06, 150.07, 150.08, 150.09, 150.10, 5725.19, 5729.08, 5733.49, and 5747.80 of the Revised Code be enacted to read as follows:
Sec. 150.01. (A) As used in this chapter:
(1) "Authority" means the Ohio venture capital authority created under section 150.02 of the Revised Code.
(2) "Program administrator" means the private, for-profit investment fund designated by the authority in accordance with section 150.05 of the Revised Code.
(B) 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 throughout this state, and promoting a strong, professional venture capital industry throughout this state, there is hereby created the Ohio venture capital program. The program, pursuant to this chapter, shall consist of the following general components:
(1) 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 created under section 150.02 of the Revised Code, and implemented and administered through a single, private, for-profit investment fund designated as the program administrator pursuant to section 150.05 of the Revised Code;
(2) The granting of tax credits by the authority in order to provide security against losses on loans or investments incurred under the program, up to the amount of outstanding contracts for those tax credits, if program revenues of the authority are insufficient for that purpose.
Sec. 150.02. (A) There is hereby created the Ohio venture capital authority, which shall have the powers enumerated in this chapter. 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 this chapter.
(B) The authority shall consist of nine members, not more than seven 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, one member shall be appointed by the speaker of the house of representatives from among the general public, and one member shall be appointed by the president of the senate from among the general public. All appointed members 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 150.01 of the Revised Code. The auditor of state, attorney general, director of development, and tax commissioner, or their designees, shall be ex officio nonvoting members.
Initial gubernatorial appointees to the authority shall serve staggered terms, one term expiring on January 31, 2004, another term expiring on January 31, 2005, and another term expiring on January 31, 2006. 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, 2004. Thereafter, terms of office for all appointees shall be for four years. 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 appointed 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, willful neglect of duty, or 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 voting members of the authority shall constitute a quorum, and the affirmative vote of a majority of the voting members present shall be necessary for any action taken by the authority. No vacancy in the voting 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. 150.03. Within ninety days after the effective date of this section, the authority shall establish, and subsequently may modify as it considers necessary, a written 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 150.01 of the Revised Code.
(B) It permits the direction of only private moneys into private, for-profit seed and venture capital partnerships, including funds of funds, that commit to maintaining a significant focus in this state, demonstrate the potential to generate high levels of successful lending and investment performance, and, in the aggregate, reflect portfolios diversified by sector, stage of business development with a heavy emphasis on seed and early stage 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 administrator under section 150.05 of the Revised Code.
(D) It specifies the criteria the authority must consider when making a determination under division (B) of section 150.04 of the Revised Code of whether moneys may be expended without adversely affecting the program's continued viability.
(E) 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, minimize the need for the authority to grant tax credits under section 150.07 of the Revised Code, ensure compliance of the program administrator 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. 150.04. (A) The lending and investment policy established or modified under section 150.03 of the Revised Code shall specify the terms and conditions under which the authority may grant tax credits under section 150.07 of the Revised Code, subject to that section and division (B) of this section, to provide security against losses on loans or investments under the Ohio venture capital program.
(B) Nothing in this chapter authorizes the providing of security against losses to lenders or investors under the program on any bases other than the following:
(1) The application first of moneys of the Ohio venture capital fund, created under section 150.08 of the Revised Code, that the authority, under the criteria in its lending and investment policy, determines may be expended without adversely affecting the program's continued viability; and then
(2) The granting of tax credits pursuant to section 150.07 of the Revised Code, but only to the extent moneys under division (B)(1) of this section are insufficient.
Sec. 150.05.  (A) The authority shall designate, as the Ohio venture capital program administrator, one private, for-profit investment fund to carry out the lending and investment component of the program stated in division (B)(1) of section 150.01 of the Revised Code and further prescribed in the lending and investment policy established or modified by the authority in accordance with sections 150.03 and 150.04 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 administrator by entering into a written agreement, in accordance with division (B) of this section, with the investment fund.
(B) The agreement shall include all of the following:
(1) Specification that borrowing and investing by the program administrator will be budgeted to guarantee that no tax credits will be granted during the first four years of the Ohio venture capital program;
(2) A requirement that lending and investment by the program administrator will be in compliance with the lending and investment policy established or modified in accordance with sections 150.03 and 150.04 of the Revised Code that is in effect at the time the loan or investment is made, and a prohibition against the program administrator engaging in any lending or investment activities other than activities to carry out exclusively the lending and investment component of the program stated in division (B)(1) of section 150.01 of the Revised Code;
(3) A requirement of periodic financial reporting by the program administrator 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 administrator is carrying out the lending and investment component of the program;
(4) Specification of any like standards or general limitations that are in addition to or in furtherance of lending and investment standards or limitations that apply pursuant to division (E) of section 150.03 of the Revised Code;
(5) A requirement of payment to the authority by the program administrator of fees prescribed in the agreement, pursuant to a schedule or terms and conditions specified in the agreement;
(6) Specification of the procedures under which the program administrator shall certify immediately to the authority the necessity for the authority to grant tax credits under a contract entered into pursuant to section 150.07 of the Revised Code;
(7) Specification of any general limitations regarding the employment of a fund manager by the program administrator, in addition to an express limitation that the fund manager be a person with demonstrated, substantial, successful experience in the design and management of seed and venture capital investment programs and in capital formation;
(8) Specification of any other terms and conditions of the program administrator's designation and operation that the authority and program administrator consider consistent with and necessary to achieve the purposes of the program;
(9) Specification of the terms and conditions under which the authority or the program administrator may terminate the agreement or under which the authority may cease granting tax credits to provide security against losses under this chapter.
Sec. 150.06.  (A) The authority is not an agency as defined in section 101.82 of the Revised Code for purposes of divisions (A) and (B) of section 101.83 of the Revised Code.
(B) The designation of a program administrator and the entering into an agreement under section 150.05 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, that is submitted to or compiled by the authority for the purpose of developing the policy required by sections 150.03 and 150.04 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 any private, for-profit investment fund for the purpose of designating the program administrator and entering into the agreement under section 150.05 of the Revised Code.
Sec. 150.07.  (A) For the purpose stated in section 150.01 of the Revised Code and subject to division (B) of this section, the authority may grant to a lender or an investor of the Ohio venture capital program a refundable credit allowed against the tax imposed by section 5725.18, 5729.03, 5733.06, or 5747.02 of the Revised Code. The combined aggregate amount of all credits granted under this section shall not exceed one hundred million dollars. The authority shall enter into a written contract to grant the credit at a future time to such lender or investor, which may include the program administrator designated under section 150.05 of the Revised Code, if the lender or investor incurs a loss under the program. The contract shall be consistent with this chapter and contain the terms and conditions under which the authority will grant the credit, including specifying the amount of loss the lender or investor must first incur before the credit is granted. The credit shall be claimed in accordance with section 5725.19, 5729.08, 5733.49, or 5747.80 of the Revised Code.
(B) The authority may grant a tax credit under division (A) of this section, subject to all of the following limitations:
(1) The authority grants the credit solely pursuant to a contract entered into under division (A) of this section.
(2) The authority grants 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 by the program administrator to the authority pursuant to division (B)(6) of section 150.05 of the Revised Code.
(3) The authority does not grant any credit that may be claimed during the first four years of the program or after July 1, 2026.
(4) The authority does not grant more than a total of twenty million dollars in credits for any one fiscal year.
(5) The authority grants the tax credit in an amount that does not exceed the amount of loss incurred and under conditions the authority shall specify in the lending and investment policy it establishes or modifies in accordance with sections 150.03 and 150.04 of the Revised Code.
(C) The authority shall issue a tax certificate for any credit granted under this section. The certificate shall state the principal amount of the credit granted and the calendar year, under section 5725.19 or 5729.08, the tax year, under section 5733.49, or the taxable year under section 5747.80 of the Revised Code, in which the credit may be claimed. The authority, in conjunction with the tax commissioner, shall develop a system for issuing tax certificates for the credits, for the purpose of verifying that any credit claimed is a credit issued under this section and is properly taken in the year specified in the certificate and in compliance with divisions (B)(3) and (4) of this section.
Sec. 150.08.  (A) There is hereby created in the state treasury the Ohio venture capital fund, to which shall be credited all fees received by the authority pursuant to division (B)(5) of section 150.05 of the Revised Code, and all interest earned on moneys of the fund.
(B) Money in the Ohio venture capital fund shall be used exclusively to provide security against losses as authorized under this chapter.
Sec. 150.09.  Neither the state nor an appointing authority under section 150.02 of the Revised Code, or a member of the authority is liable in damages to any person in a civil action for any loss incurred as a result of any loan or investment made by the program administrator.
Sec. 150.10.  (A) On the first day of January of the second year after the date of entering into an agreement under section 150.05 of the Revised Code, and every other first day of January thereafter, the 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, that includes all of the following:
(1) A description of the details of the lending and investment policy established or modified in accordance with sections 150.03 and 150.04 of the Revised Code;
(2) The authority's assessment of the program's achievement of its purposes stated in section 150.01 of the Revised Code;
(3) The amount of tax credits granted by the authority under section 150.07 of the Revised Code;
(4) The amount of tax credits claimed pursuant to section 5725.19, 5729.08, 5733.49, or 5747.80 of the Revised Code, as to the respective taxes involved;
(5) The financial status of the Ohio venture capital fund;
(6) Any recommendations for modifying the program to better achieve the purposes stated in section 150.01 of the Revised Code.
(B) During each year that a report is issued under division (A) of this section, the co-chairpersons of the 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 program.
Sec. 5725.19. A refundable tax credit granted by the Ohio venture capital authority under section 150.07 of the Revised Code may be claimed against the tax imposed on a domestic insurance company under section 5725.18 of the Revised Code. The credit shall be claimed in the calendar year specified in the certificate issued by the authority. If the amount of the credit for a calendar year exceeds the tax otherwise due, the domestic insurance company is entitled to a refund of the excess.
Sec. 5729.08. A refundable tax credit granted by the Ohio venture capital authority under section 150.07 of the Revised Code may be claimed against the tax imposed on a foreign insurance company under section 5729.03 of the Revised Code. The credit shall be claimed in the calendar year specified in the certificate issued by the authority. If the amount of the credit for a calendar year exceeds the tax otherwise due, the foreign insurance company is entitled to a refund of the excess.
Sec. 5733.49. A refundable corporation franchise tax credit granted by the Ohio venture capital authority under section 150.07 of the Revised Code may be claimed against the tax imposed by section 5733.06 of the Revised Code. The credit shall be claimed in the tax year specified in the certificate issued by the authority and in the order required under section 5733.98 of the Revised Code. 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 that section, the taxpayer is entitled to a refund of the excess.
For purposes of making tax payments under this chapter, taxes equal to the amount of the refundable credit shall be considered paid to this state on the first day of the tax year.
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 allowed for financial institutions under section 5733.45 of the Revised Code;
(3) The credit for qualifying affiliated groups under section 5733.068 of the Revised Code;
(4) The subsidiary corporation credit under section 5733.067 of the Revised Code;
(5) The savings and loan assessment credit under section 5733.063 of the Revised Code;
(6) The credit for recycling and litter prevention donations under section 5733.064 of the Revised Code;
(7) The credit for employers that enter into agreements with child day-care centers under section 5733.36 of the Revised Code;
(8) The credit for employers that reimburse employee child day-care expenses under section 5733.38 of the Revised Code;
(9) The credit for maintaining railroad active grade crossing warning devices under section 5733.43 of the Revised Code;
(10) The credit for purchases of lights and reflectors under section 5733.44 of the Revised Code;
(11) The job retention credit under division (B) of section 5733.0610 of the Revised Code;
(12) The credit for manufacturing investments under section 5733.061 of the Revised Code;
(13) The credit for purchases of new manufacturing machinery and equipment under section 5733.31 or section 5733.311 of the Revised Code;
(14) The second credit for purchases of new manufacturing machinery and equipment under section 5733.33 of the Revised Code;
(15) The job training credit under section 5733.42 of the Revised Code;
(16) The credit for qualified research expenses under section 5733.351 of the Revised Code;
(17) The enterprise zone credit under section 5709.66 of the Revised Code;
(18) The credit for the eligible costs associated with a voluntary action under section 5733.34 of the Revised Code;
(19) The credit for employers that establish on-site child day-care under section 5733.37 of the Revised Code;
(20) The credit for purchases of qualifying grape production property under section 5733.32 of the Revised Code;
(21) The export sales credit under section 5733.069 of the Revised Code;
(22) The credit for research and development and technology transfer investors under section 5733.35 of the Revised Code;
(23) The enterprise zone credits under section 5709.65 of the Revised Code;
(24) The credit for using Ohio coal under section 5733.39 of the Revised Code;
(25) The refundable jobs creation credit under division (A) of section 5733.0610 of the Revised Code;
(26) The refundable Ohio venture capital program credit under section 5733.49 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. 5747.80. A refundable income tax credit granted by the Ohio venture capital authority under section 150.07 of the Revised Code may be claimed against the tax imposed by section 5747.02 of the Revised Code. The credit shall be claimed in the taxable year specified in the certificate issued by the authority and in the order required under section 5747.98 of the Revised Code. If the amount of the credit for a taxable year exceeds the tax otherwise due after allowing for any other credit that precedes it in the order required under that section, the taxpayer is entitled to a refund of the excess.
For purposes of making tax payments under this chapter, taxes equal to the amount of the refundable credit shall be considered paid to this state on the first day of the taxable year.
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 job retention credit under division (B) of section 5747.058 of the Revised Code;
(19) The credit for manufacturing investments under section 5747.051 of the Revised Code;
(20) The credit for purchases of new manufacturing machinery and equipment under section 5747.26 or section 5747.261 of the Revised Code;
(21) 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;
(22) The job training credit under section 5747.39 of the Revised Code;
(23) The enterprise zone credit under section 5709.66 of the Revised Code;
(24) The credit for the eligible costs associated with a voluntary action under section 5747.32 of the Revised Code;
(25) The credit for employers that establish on-site child day-care centers under section 5747.35 of the Revised Code;
(26) The credit for purchases of qualifying grape production property under section 5747.28 of the Revised Code;
(27) The export sales credit under section 5747.057 of the Revised Code;
(28) The credit for research and development and technology transfer investors under section 5747.33 of the Revised Code;
(29) The enterprise zone credits under section 5709.65 of the Revised Code;
(30) The refundable jobs creation credit under division (A) of section 5747.058 of the Revised Code;
(31) The refundable credit for taxes paid by a qualifying entity granted under section 5747.059 of the Revised Code;
(32) The refundable credits for taxes paid by a qualifying pass-through entity granted under division (J) of section 5747.08 of the Revised Code;
(33) The refundable Ohio venture capital program credit under section 5747.80 of the Revised Code.
(B) For any credit, except the refundable credits enumerated in divisions (A) (30), (31), and (32), and (33) 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.
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