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Sub. H. B. No. 511 As Passed by the HouseAs Passed by the House
129th General Assembly | Regular Session | 2011-2012 |
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Representatives Beck, Gonzales
Cosponsors:
Representatives Amstutz, Antonio, Baker, Barnes, Blair, Brenner, Bubp, Buchy, Carney, Celebrezze, Celeste, Clyde, Combs, Dovilla, Driehaus, Duffey, Fedor, Garland, Goyal, Grossman, Hackett, Hall, Henne, Huffman, Luckie, Mallory, Martin, McClain, Newbold, O'Brien, Phillips, Ruhl, Sears, Sprague, Stautberg, Stinziano, Szollosi, Terhar Speaker Batchelder
A BILL
To amend sections 121.22, 122.15, 122.151, 122.152,
122.153, 122.154, 122.28, 122.30 to 122.36,
150.03, 150.05, 150.07, 150.10, and 184.02 and to
repeal section 122.29 of the Revised Code to make
various changes to the administration of the
investment tax credit and the venture capital loan
loss tax credit, including the increase of the
maximum amount of the investment tax credit and
the venture capital loan loss tax credit and the
elimination of the Industrial Technology and
Enterprise Advisory Councils.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 121.22, 122.15, 122.151, 122.152,
122.153, 122.154, 122.28, 122.30, 122.31, 122.32, 122.33, 122.34,
122.35, 122.36, 150.03, 150.05, 150.07, 150.10, and 184.02 of the
Revised Code be amended to read as follows:
Sec. 121.22. (A) This section shall be liberally construed
to require public officials to take official action and to conduct
all deliberations upon official business only in open meetings
unless the subject matter is specifically excepted by law.
(B) As used in this section:
(1) "Public body" means any of the following:
(a) Any board, commission, committee, council, or similar
decision-making body of a state agency, institution, or authority,
and any legislative authority or board, commission, committee,
council, agency, authority, or similar decision-making body of any
county, township, municipal corporation, school district, or other
political subdivision or local public institution;
(b) Any committee or subcommittee of a body described in
division (B)(1)(a) of this section;
(c) A court of jurisdiction of a sanitary district organized
wholly for the purpose of providing a water supply for domestic,
municipal, and public use when meeting for the purpose of the
appointment, removal, or reappointment of a member of the board of
directors of such a district pursuant to section 6115.10 of the
Revised Code, if applicable, or for any other matter related to
such a district other than litigation involving the district. As
used in division (B)(1)(c) of this section, "court of
jurisdiction" has the same meaning as "court" in section 6115.01
of the Revised Code.
(2) "Meeting" means any prearranged discussion of the public
business of the public body by a majority of its members.
(3) "Regulated individual" means either of the following:
(a) A student in a state or local public educational
institution;
(b) A person who is, voluntarily or involuntarily, an inmate,
patient, or resident of a state or local institution because of
criminal behavior, mental illness or retardation, disease,
disability, age, or other condition requiring custodial care.
(4) "Public office" has the same meaning as in section
149.011 of the Revised Code.
(C) All meetings of any public body are declared to be public
meetings open to the public at all times. A member of a public
body shall be present in person at a meeting open to the public to
be considered present or to vote at the meeting and for purposes
of determining whether a quorum is present at the meeting.
The minutes of a regular or special meeting of any public
body shall be promptly prepared, filed, and maintained and shall
be open to public inspection. The minutes need only reflect the
general subject matter of discussions in executive sessions
authorized under division (G) or (J) of this section.
(D) This section does not apply to any of the following:
(2) An audit conference conducted by the auditor of state or
independent certified public accountants with officials of the
public office that is the subject of the audit;
(3) The adult parole authority when its hearings are
conducted at a correctional institution for the sole purpose of
interviewing inmates to determine parole or pardon;
(4) The organized crime investigations commission established
under section 177.01 of the Revised Code;
(5) Meetings of a child fatality review board established
under section 307.621 of the Revised Code and meetings conducted
pursuant to sections 5153.171 to 5153.173 of the Revised Code;
(6) The state medical board when determining whether to
suspend a certificate without a prior hearing pursuant to division
(G) of either section 4730.25 or 4731.22 of the Revised Code;
(7) The board of nursing when determining whether to suspend
a license or certificate without a prior hearing pursuant to
division (B) of section 4723.281 of the Revised Code;
(8) The state board of pharmacy when determining whether to
suspend a license without a prior hearing pursuant to division (D)
of section 4729.16 of the Revised Code;
(9) The state chiropractic board when determining whether to
suspend a license without a hearing pursuant to section 4734.37 of
the Revised Code;
(10) The executive committee of the emergency response
commission when determining whether to issue an enforcement order
or request that a civil action, civil penalty action, or criminal
action be brought to enforce Chapter 3750. of the Revised Code;
(11) The board of directors of the nonprofit corporation
formed under section 187.01 of the Revised Code or any committee
thereof, and the board of directors of any subsidiary of that
corporation or a committee thereof;
(12) An audit conference conducted by the audit staff of the
department of job and family services with officials of the public
office that is the subject of that audit under section 5101.37 of
the Revised Code.
(E) The controlling board, the development financing advisory
council, the industrial technology and enterprise advisory council
third frontier commission, the tax credit authority, or the
minority development financing advisory board, when meeting to
consider granting assistance pursuant to Chapter 122. or 166. of
the Revised Code, in order to protect the interest of the
applicant or the possible investment of public funds, by unanimous
vote of all board, council, commission, or authority members
present, may close the meeting during consideration of the
following information confidentially received by the authority,
council, commission, or board from the applicant:
(2) Specific business strategy;
(3) Production techniques and trade secrets;
(4) Financial projections;
(5) Personal financial statements of the applicant or members
of the applicant's immediate family, including, but not limited
to, tax records or other similar information not open to public
inspection.
The vote by the authority, council, commission, or board to
accept or reject the application, as well as all proceedings of
the authority, council, commission, or board not subject to this
division, shall be open to the public and governed by this
section.
(F) Every public body, by rule, shall establish a reasonable
method whereby any person may determine the time and place of all
regularly scheduled meetings and the time, place, and purpose of
all special meetings. A public body shall not hold a special
meeting unless it gives at least twenty-four hours' advance notice
to the news media that have requested notification, except in the
event of an emergency requiring immediate official action. In the
event of an emergency, the member or members calling the meeting
shall notify the news media that have requested notification
immediately of the time, place, and purpose of the meeting.
The rule shall provide that any person, upon request and
payment of a reasonable fee, may obtain reasonable advance
notification of all meetings at which any specific type of public
business is to be discussed. Provisions for advance notification
may include, but are not limited to, mailing the agenda of
meetings to all subscribers on a mailing list or mailing notices
in self-addressed, stamped envelopes provided by the person.
(G) Except as provided in division (J) of this section, the
members of a public body may hold an executive session only after
a majority of a quorum of the public body determines, by a roll
call vote, to hold an executive session and only at a regular or
special meeting for the sole purpose of the consideration of any
of the following matters:
(1) To consider the appointment, employment, dismissal,
discipline, promotion, demotion, or compensation of a public
employee or official, or the investigation of charges or
complaints against a public employee, official, licensee, or
regulated individual, unless the public employee, official,
licensee, or regulated individual requests a public hearing.
Except as otherwise provided by law, no public body shall hold an
executive session for the discipline of an elected official for
conduct related to the performance of the elected official's
official duties or for the elected official's removal from office.
If a public body holds an executive session pursuant to division
(G)(1) of this section, the motion and vote to hold that executive
session shall state which one or more of the approved purposes
listed in division (G)(1) of this section are the purposes for
which the executive session is to be held, but need not include
the name of any person to be considered at the meeting.
(2) To consider the purchase of property for public purposes,
or for the sale of property at competitive bidding, if premature
disclosure of information would give an unfair competitive or
bargaining advantage to a person whose personal, private interest
is adverse to the general public interest. No member of a public
body shall use division (G)(2) of this section as a subterfuge for
providing covert information to prospective buyers or sellers. A
purchase or sale of public property is void if the seller or buyer
of the public property has received covert information from a
member of a public body that has not been disclosed to the general
public in sufficient time for other prospective buyers and sellers
to prepare and submit offers.
If the minutes of the public body show that all meetings and
deliberations of the public body have been conducted in compliance
with this section, any instrument executed by the public body
purporting to convey, lease, or otherwise dispose of any right,
title, or interest in any public property shall be conclusively
presumed to have been executed in compliance with this section
insofar as title or other interest of any bona fide purchasers,
lessees, or transferees of the property is concerned.
(3) Conferences with an attorney for the public body
concerning disputes involving the public body that are the subject
of pending or imminent court action;
(4) Preparing for, conducting, or reviewing negotiations or
bargaining sessions with public employees concerning their
compensation or other terms and conditions of their employment;
(5) Matters required to be kept confidential by federal law
or regulations or state statutes;
(6) Details relative to the security arrangements and
emergency response protocols for a public body or a public office,
if disclosure of the matters discussed could reasonably be
expected to jeopardize the security of the public body or public
office;
(7) In the case of a county hospital operated pursuant to
Chapter 339. of the Revised Code, a joint township hospital
operated pursuant to Chapter 513. of the Revised Code, or a
municipal hospital operated pursuant to Chapter 749. of the
Revised Code, to consider trade secrets, as defined in section
1333.61 of the Revised Code.
If a public body holds an executive session to consider any
of the matters listed in divisions (G)(2) to (7) of this section,
the motion and vote to hold that executive session shall state
which one or more of the approved matters listed in those
divisions are to be considered at the executive session.
A public body specified in division (B)(1)(c) of this section
shall not hold an executive session when meeting for the purposes
specified in that division.
(H) A resolution, rule, or formal action of any kind is
invalid unless adopted in an open meeting of the public body. A
resolution, rule, or formal action adopted in an open meeting that
results from deliberations in a meeting not open to the public is
invalid unless the deliberations were for a purpose specifically
authorized in division (G) or (J) of this section and conducted at
an executive session held in compliance with this section. A
resolution, rule, or formal action adopted in an open meeting is
invalid if the public body that adopted the resolution, rule, or
formal action violated division (F) of this section.
(I)(1) Any person may bring an action to enforce this
section. An action under division (I)(1) of this section shall be
brought within two years after the date of the alleged violation
or threatened violation. Upon proof of a violation or threatened
violation of this section in an action brought by any person, the
court of common pleas shall issue an injunction to compel the
members of the public body to comply with its provisions.
(2)(a) If the court of common pleas issues an injunction
pursuant to division (I)(1) of this section, the court shall order
the public body that it enjoins to pay a civil forfeiture of five
hundred dollars to the party that sought the injunction and shall
award to that party all court costs and, subject to reduction as
described in division (I)(2) of this section, reasonable
attorney's fees. The court, in its discretion, may reduce an award
of attorney's fees to the party that sought the injunction or not
award attorney's fees to that party if the court determines both
of the following:
(i) That, based on the ordinary application of statutory law
and case law as it existed at the time of violation or threatened
violation that was the basis of the injunction, a well-informed
public body reasonably would believe that the public body was not
violating or threatening to violate this section;
(ii) That a well-informed public body reasonably would
believe that the conduct or threatened conduct that was the basis
of the injunction would serve the public policy that underlies the
authority that is asserted as permitting that conduct or
threatened conduct.
(b) If the court of common pleas does not issue an injunction
pursuant to division (I)(1) of this section and the court
determines at that time that the bringing of the action was
frivolous conduct, as defined in division (A) of section 2323.51
of the Revised Code, the court shall award to the public body all
court costs and reasonable attorney's fees, as determined by the
court.
(3) Irreparable harm and prejudice to the party that sought
the injunction shall be conclusively and irrebuttably presumed
upon proof of a violation or threatened violation of this section.
(4) A member of a public body who knowingly violates an
injunction issued pursuant to division (I)(1) of this section may
be removed from office by an action brought in the court of common
pleas for that purpose by the prosecuting attorney or the attorney
general.
(J)(1) Pursuant to division (C) of section 5901.09 of the
Revised Code, a veterans service commission shall hold an
executive session for one or more of the following purposes unless
an applicant requests a public hearing:
(a) Interviewing an applicant for financial assistance under
sections 5901.01 to 5901.15 of the Revised Code;
(b) Discussing applications, statements, and other documents
described in division (B) of section 5901.09 of the Revised Code;
(c) Reviewing matters relating to an applicant's request for
financial assistance under sections 5901.01 to 5901.15 of the
Revised Code.
(2) A veterans service commission shall not exclude an
applicant for, recipient of, or former recipient of financial
assistance under sections 5901.01 to 5901.15 of the Revised Code,
and shall not exclude representatives selected by the applicant,
recipient, or former recipient, from a meeting that the commission
conducts as an executive session that pertains to the applicant's,
recipient's, or former recipient's application for financial
assistance.
(3) A veterans service commission shall vote on the grant or
denial of financial assistance under sections 5901.01 to 5901.15
of the Revised Code only in an open meeting of the commission. The
minutes of the meeting shall indicate the name, address, and
occupation of the applicant, whether the assistance was granted or
denied, the amount of the assistance if assistance is granted, and
the votes for and against the granting of assistance.
Sec. 122.15. As used in sections 122.15 to 122.154 of the
Revised Code:
(A) "Edison center Director" means a cooperative research and
development facility that receives funding through the Thomas Alva
Edison grant program under division (C) of section 122.33 director
of the Revised Code development.
(B) "Ohio entity" means any corporation, limited liability
company, or unincorporated business organization, including a
general or limited partnership, that has its principal place of
business located in this state and has at least fifty per cent of
its gross assets and fifty per cent of its employees located in
this state. If a corporation, limited liability company, or
unincorporated business organization is a member of an affiliated
group, the gross assets and the number of employees of all of the
members of that affiliated group, wherever those assets and
employees are located, shall be included for the purpose of
determining the percentage of the corporation's, company's, or
organization's gross assets and employees that are located in this
state.
(C) "Qualified trade or business" means any trade or business
that primarily involves research and development, technology
transfer, bio-technology, information technology, or the
application of new technology developed through research and
development or acquired through technology transfer. "Qualified
trade or business" does not include any of the following:
(1) Any trade or business involving the performance of
services in the field of law, engineering, architecture,
accounting, actuarial science, performing arts, consulting,
athletics, financial services, or brokerage services, or any trade
or business where the principal asset of the trade or business is
the reputation or skill of one or more of its employees;
(2) Any banking, insurance, financing, leasing, rental,
investing, or similar business;
(3) Any farming business, including the business of raising
or harvesting trees;
(4) Any business involving the production or extraction of
products of a character with respect to which a deduction is
allowable under section 611, 613, or 613A of the "Internal Revenue
Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 611, 613, or 613A;
(5) Any business of operating a hotel, motel, restaurant, or
similar business;
(6) Any trade or business involving a hospital, a private
office of a licensed health care professional, a group practice of
licensed health care professionals, or a nursing home. As used in
division (C)(6) of this section:
(a) "Nursing home" has the same meaning as in section 3721.50
of the Revised Code.
(b) "Hospital" has the same meaning as in section 3727.01 of
the Revised Code.
(D) "Information technology" means the branch of technology
devoted to the study and application of data and the processing
thereof; the automatic acquisition, storage, manipulation or
transformation, management, movement, control, display, switching,
interchange, transmission or reception of data, and the
development or use of hardware, software, firmware, and procedures
associated with this processing. Information technology includes
matters concerned with the furtherance of computer science and
technology, design, development, installation and implementation
of information systems and applications that in turn will be
licensed or sold to a specific target market. Information
technology does not include the creation of a distribution method
for existing products and services.
(E) "Insider" means an individual who owns, controls, or
holds power to vote five per cent or more of the outstanding
securities of a business. For purposes of determining whether an
investor is an insider, the percentage of voting power in the Ohio
entity held by a person related to the investor shall be added to
the investor's percentage of voting power in the same Ohio entity,
if the investor claimed the person related to the investor as a
dependent or a spouse on the investor's federal income tax return
for the previous tax year.
(F) "Related to" means being the spouse, parent, child, or
sibling of an individual.
(G) "Research and development" means designing, creating, or
formulating new or enhanced products, equipment, or processes, and
conducting scientific or technological inquiry and experimentation
in the physical sciences with the goal of increasing scientific
knowledge that may reveal the bases for new or enhanced products,
equipment, or processes.
(H) "State tax liability" means any tax liability incurred
under division (D) of section 5707.03, section 5727.24, 5727.38,
or 5747.02, or Chapter 5733. of the Revised Code.
(I) "Technology transfer" means the transfer of technology
from one sector of the economy to another, including the transfer
of military technology to civilian applications, civilian
technology to military applications, or technology from public or
private research laboratories to military or civilian
applications.
(J) "Affiliated group" means two or more persons related in
such a way that one of the persons owns or controls the business
operations of another of those persons. In the case of a
corporation issuing capital stock, one corporation owns or
controls the business operations of another corporation if it owns
more than fifty per cent of the other corporation's capital stock
with voting rights. In the case of a limited liability company,
one person owns or controls the business operations of the company
if that person's membership interest, as defined in section
1705.01 of the Revised Code, is greater than fifty per cent of
combined membership interest of all persons owning such interests
in the company. In the case of an unincorporated business
organization, one person owns or controls the business operations
of the organization if, under the articles of organization or
other instrument governing the affairs of the organization, that
person has a beneficial interest in the organization's profits,
surpluses, losses, or other distributions greater than fifty per
cent of the combined beneficial interests of all persons having
such an interest in the organization.
(K) "Money" means United States currency, or a check, draft,
or cashier's check for United States currency, payable on demand
and drawn on a bank.
(L) "EDGE business enterprise" means an Ohio entity certified
by the director of administrative services as a participant in the
encouraging diversity, growth, and equity program established by
the governor's executive order 2002-17T.
(M) "Distressed area" has the same meaning as in section
122.23 of the Revised Code.
Sec. 122.151. (A) An investor who proposes to make an
investment of money in an Ohio entity may apply to an Edison
center the director for a tax credit under this section. The
Edison center director shall prescribe the form of the application
and any information that the investor must submit with the
application. The investor shall include with the application a fee
of two hundred dollars. The center director, within three four
weeks after receiving the application, shall review it, determine
whether the investor should be recommended for the tax credit, and
send written notice of its the director's initial determination to
the industrial technology and enterprise advisory council third
frontier commission established under section 184.01 of the
Revised Code and to the investor. If the center director
determines the investor should not be recommended for the tax
credit, it the director shall include in the notice the reasons
for the determination. Subject to divisions (C) and (D) of this
section, an investor is eligible for a tax credit if all of the
following requirements are met:
(1) The investor's investment of money is in an Ohio entity
engaged in a qualified trade or business.
(2) The Ohio entity had less than two million five hundred
thousand dollars of gross revenue during its most recently
completed fiscal year or had a net book value of less than two
million five hundred thousand dollars at the end of that fiscal
year.
(3) The investment takes the form of the purchase of common
or preferred stock, a membership interest, a partnership interest,
or any other ownership interest.
(4) The amount of the investment for which the credit is
being claimed does not exceed three hundred thousand dollars in
the case of an investment in an EDGE business enterprise or in an
Ohio entity located in a distressed area, or two hundred fifty
thousand dollars in the case of an investment in any other Ohio
entity.
(5) The money invested is entirely at risk of loss, where
repayment depends upon the success of the business operations of
the Ohio entity.
(6) No repayment of principal invested will be made for at
least three years from the date the investment is made.
(7) The annual combined amount of any dividend and interest
payments to be made to the investor will not exceed ten per cent
of the amount of the investment for at least three years from the
date the investment is made.
(8) The investor is not an employee with proprietary
decision-making authority of the Ohio entity in which the
investment of money is proposed, or related to such an individual.
The Ohio entity is not an individual related to the investor. For
purposes of this division, the industrial technology and
enterprise advisory council director shall define "an employee
with proprietary decision-making authority."
(9) The investor is not an insider.
For the purposes of determining the net book value of an Ohio
entity under division (A)(1) or (2) of this section, if the entity
is a member of an affiliated group, the combined net book values
of all of the members of that affiliated group shall be used.
Nothing in division (A)(6) or (7) of this section limits or
disallows the distribution to an investor in a pass-through entity
of a portion of the entity's profits equal to the investor's
federal, state, and local income tax obligations attributable to
the investor's allocable share of the entity's profits. Nothing in
division (A)(6) or (7) of this section limits or disallows the
sale by an investor of part or all of the investor's interests in
an Ohio entity by way of a public offering of shares in the Ohio
entity.
(B) A group of two but not more than twenty investors, each
of whom proposes to make an investment of money in the same Ohio
entity, may submit an application for tax credits under division
(A) of this section. The group shall include with the application
a fee of eight hundred dollars. The application shall identify
each investor in the group and the amount of money each investor
proposes to invest in the Ohio entity, and shall name a contact
person for the group. The Edison center director, within three
four weeks after receiving the application, shall review it,
determine whether each investor of the group should be recommended
for a tax credit under the conditions set forth in division (A) of
this section, and send written notice of its the director's
determination to the
industrial technology and enterprise
advisory council commission and to the contact person. The center
director shall not recommend that a group of investors receive a
tax credit unless each investor is eligible under those
conditions. The center director may disqualify from a group any
investor who is not eligible under the conditions and recommend
that the remaining group of investors receive the tax credit. If
the center director determines the group should not be recommended
for the tax credit, it the director shall include in the notice
the reasons for the determination.
(C) The industrial technology and enterprise advisory council
shall establish from among its members a three-person committee.
Within four weeks after the council commission receives a notice
of recommendation from an Edison center the director, the
committee commission shall review the recommendation and issue a
final determination of whether the investor or group is eligible
for a tax credit under the conditions set forth in division (A) of
this section. The
committee commission may require the investor
or group to submit additional information to support the
application.
The vote of at least two members of the committee is
necessary for the issuance of a final determination or any other
action of the committee. Upon making the final determination, the
committee
commission shall send written notice of approval or
disapproval of the tax credit to the investor or group contact
person, and the director of development, and the Edison center. If
the committee
commission disapproves the tax credit, it shall
include in the notice the reasons for the disapproval.
(D)(1) The industrial technology and enterprise advisory
council committee commission shall not approve more than one
million five hundred thousand dollars of investments in any one
Ohio entity. However, if a proposed investment of money in an Ohio
entity has been approved but the investor does not actually make
the investment, the committee commission may reassign the amount
of that investment to another investor, as long as the total
amount invested in the entity under this section does not exceed
one million five hundred thousand dollars.
If the one-million-five-hundred-thousand-dollar limit for an
Ohio entity has not yet been reached and an application proposes
an investment of money that would exceed the limit for that
entity, the committee commission shall send written notice to the
investor, or for a group, the contact person, that the investment
cannot be approved as requested. Upon receipt of the notice, the
investor or group may amend the application to propose an
investment of money that does not exceed the limit.
(2) Not more than forty-five fifty-one million dollars of tax
credits shall be issued under sections 122.15 to 122.154 of the
Revised Code.
(E) If an investor makes an approved investment of less than
two hundred fifty thousand dollars in any Ohio entity other than
an EDGE business enterprise or in an Ohio entity located in a
distressed area, the investor may apply for approval of another
investment of money in that entity, as long as the total amount
invested in that entity by the investor under this section does
not exceed two hundred fifty thousand dollars. If an investor
makes an approved investment of less than three hundred thousand
dollars in an EDGE business enterprise or in an Ohio entity
located in a distressed area, the investor may apply for approval
of another investment of money in that entity, as long as the
total amount invested in that entity by the investor under this
section does not exceed three hundred thousand dollars. An
investor who receives approval of an investment of money as part
of a group may subsequently apply on an individual basis for
approval of an additional investment of money in the Ohio entity.
(F) The industrial technology and enterprise advisory council
committee commission shall approve or disapprove tax credit
applications under this section in the order in which they are
received by the
council commission.
(G) The director of development may disapprove any
application recommended by an Edison center and approved by the
industrial technology and enterprise advisory council committee,
or may disapprove a credit for which a tax credit certificate has
been issued under section 122.152 of the Revised Code, if the
director determines that the entity in which the applicant
proposes to invest or has invested is not an Ohio entity eligible
to receive investments that qualify for the credit. If the
director disapproves an application, the director shall certify
the action to the investor, the Edison center that recommended the
application, the industrial technology and enterprise advisory
council, and the tax commissioner, together with a written
explanation of the reasons for the disapproval. If the director
disapproves a tax credit after a tax credit certificate is issued,
the investor shall not claim the credit for the taxable year that
includes the day the director disapproves the credit, or for any
subsequent taxable year.
The director of development, in accordance with section
111.15 of the Revised Code and with the advice of the industrial
technology and enterprise advisory council commission, may adopt,
amend, and rescind rules necessary to implement sections 122.15 to
122.154 of the Revised Code.
(H) An Edison center The director shall use application fees
received under this section only for the costs of administering
sections 122.15 to 122.154 of the Revised Code.
Sec. 122.152. (A) After receiving notice of approval for an
investment of money from the industrial technology and enterprise
advisory council committee third frontier commission under section
122.151 of the Revised Code, an investor, within a period of time
determined by the committee commission, may make the investment
and apply to the
council commission for a tax credit certificate.
If the committee
commission is satisfied the investor has made
the investment in the proper form, it shall issue to the investor
a tax credit certificate signed by the chairperson of the
committee commission and the director of development indicating
that the investor is allowed a tax credit equal to one of the
following amounts:
(1) Thirty per cent of the investment if the investment was
made in an EDGE business enterprise or in an Ohio entity located
in a distressed area;
(2) Twenty-five per cent of the investment if the investment
was made in an Ohio entity other than an EDGE business enterprise.
An investor who receives approval of a proposed investment of
money through a group application, after making the investment,
shall apply for a tax credit certificate on an individual basis.
(B) An investor who is issued a tax credit certificate under
this section may claim a nonrefundable credit equal to the amount
indicated on the certificate against any state tax liability. The
investor shall claim the credit for the taxable year in which the
certificate is issued.
(1) If the credit to which a taxpayer otherwise would be
entitled under this section for any taxable year is greater than
the tax otherwise due under division (D) of section 5707.03 or
section 5727.24 or 5727.38 of the Revised Code, the excess shall
be allowed as a credit in each of the ensuing fifteen taxable
years, but the amount of any excess credit allowed in an ensuing
taxable year shall be deducted from the balance carried forward to
the next taxable year.
(2) If the credit to which a taxpayer otherwise would be
entitled under this section for any taxable year is greater than
the tax otherwise due under section 5747.02 or Chapter 5733. of
the Revised Code, after allowing for any other credits that
precede the credit allowed under this section in the order
required under section 5733.98 or 5747.98 of the Revised Code, the
excess shall be allowed as a credit in each of the ensuing fifteen
taxable years, but the amount of any excess credit allowed in an
ensuing taxable year shall be deducted from the balance carried
forward to the next taxable year.
(C) Any portion of a credit allowed under this section that
is utilized by an investor to reduce the investor's state tax
liability shall not be utilized by any other person.
(D) To claim a tax credit allowed under this section, an
investor shall attach to the appropriate return a copy of the
certificate issued to the investor under this section.
(E) Nothing in this section shall limit or disallow
pass-through treatment of a pass-through entity's income,
deductions, or credits, or other amounts necessary to compute a
state tax liability.
(F) A tax credit certificate issued to an investor under this
section may not be transferred by that investor to any other
person.
(G)(1) The director of development shall develop the form of
the tax credit certificate and the industrial technology and
enterprise advisory council committee commission shall use that
form when issuing a tax credit certificate under this section.
(2) The director of development shall report to the tax
commissioner any information requested by the commissioner
concerning tax credit certificates issued under this section.
(H) An investment made by an investor or group of investors
who enter into a contractual agreement with an Ohio entity to
invest money in the Ohio entity is an acceptable investment if all
of the following conditions are met:
(1) The investment is made pursuant to a subscription
agreement providing that the investor or group of investors is
entitled to receive a refund of funds if the investment is not
approved by the industrial technology and enterprise advisory
council committee commission.
(2) The investment is placed in escrow until the investment
is approved by the industrial technology and enterprise advisory
council committee commission.
(3) The investor or group of investors shows proof of the
withdrawal of the funds by the Ohio entity after the investment is
approved by the industrial technology and enterprise advisory
council committee commission.
Sec. 122.153. If the industrial technology and enterprise
advisory council committee third frontier commission receives
information alleging that an investor that was issued a tax credit
certificate presented false information to an Edison center the
director or the
committee
commission in connection with obtaining
the certificate, it shall send written notice to the investor that
if the allegation is found to be true the investor may be
penalized as provided in this section. After giving the investor
an opportunity to be heard on the allegation, the committee
commission shall determine if the investor presented false
information in connection with obtaining a tax credit certificate.
If the committee commission determines the investor submitted
false information, it may revoke any remaining tax credit
available to the investor. The committee commission shall send
written notice of the revocation to the investor and the tax
commissioner. The tax commissioner may make an assessment against
the investor to recapture any amount of tax credit that the
investor already has claimed. The time limitations on assessments
under the laws of the particular tax against which the investor
claimed the credit do not apply to an assessment under this
section.
Sec. 122.154. (A) A business may apply to
an Edison center
the director for a determination as to whether the business is an
Ohio entity eligible to receive investments of money under section
122.151 of the Revised Code that qualify the investor for a tax
credit under section 122.152 of the Revised Code. The business
shall include with the application a fee of one hundred fifty
dollars and a business plan. The Edison center director shall
prescribe any other information the business must submit with the
application and the form of the application. The center director,
within three four weeks after receiving the application, shall
review it, determine whether the business is an Ohio entity
eligible to receive investments of money that qualify for the tax
credit, and send written notice to the industrial technology and
enterprise advisory council third frontier commission and the
business of its the director's initial determination. If the
center
director determines that the business is not an Ohio
entity eligible to receive investments of money that qualify for
the tax credit, it the director shall include in the notice the
reasons for the determination.
Within four weeks after the council commission receives a
notice of recommendation from an Edison center the director, the
industrial technology and enterprise advisory council committee
established under section 122.152 of the Revised Code commission
shall review the recommendation and issue a final determination of
whether the business is an Ohio entity eligible to receive
investments of money under section 122.151 of the Revised Code
that qualify an investor for a tax credit under section 122.152 of
the Revised Code. The committee commission may require the
business to submit additional information to support the
application. The vote of at least two members of the committee is
necessary for the issuance of a final determination. On making the
final determination, the committee
commission shall send written
notice of approval or disapproval to the business, and the
director of development, and the Edison center. If the committee
commission determines that the business is not an Ohio entity
eligible to receive investments of money that qualify for the tax
credit, it shall include in the notice the reasons for the
determination.
(B) The department of development shall maintain a list of
the businesses that have been determined to be Ohio entities
eligible to receive investments of money that qualify for the tax
credit. The department shall furnish copies of the list to the
public upon request.
(C) The department of development may prescribe a schedule
under which businesses periodically must submit information to
enable the
center department to maintain the accuracy of the list.
At the times required in the schedule, each business on the list
shall submit any information the center department requires to
determine if the business continues to be an Ohio entity eligible
to receive investments of money that qualify for the tax credit.
(D) An Edison center The director shall use fees received
under this section only for the costs of administering sections
122.15 to 122.154 of the Revised Code.
(E) The Edison centers director and the industrial technology
and enterprise advisory council and its committee commission do
not assume any responsibility for the accuracy or truthfulness of
information furnished by an Ohio entity or its agents.
An investor in an Ohio entity is solely responsible for due
diligence in verifying information submitted by an Ohio entity. An
Edison center The department is not liable for any action
resulting from its provision of such information to investors in
accordance with sections 122.15 to 122.154 of the Revised Code.
Sec. 122.28. As used in sections 122.28 and 122.30 to 122.36
of the Revised Code:
(A) "New technology" means the development through science or
research of methods, processes, and procedures, including but not
limited to those involving the processing and utilization of coal,
for practical application in industrial or agribusiness
situations.
(B) "Industrial research" means study and investigation in
giving new shapes, new qualities or new combinations to matter or
material products by the application of labor thereto or the
rehabilitation of an existing matter or material product.
(C) "Enterprise" means a business with its principal place of
business in this state or which proposes to be engaged in this
state in research and development or in the provision of products
or services involving a significant amount of new technology.
(D) "Educational institutions" means nonprofit public and
private colleges and universities, incorporated or unincorporated,
in the state.
(E) "Small business" means an enterprise with less than four
hundred employees, including corporations, partnerships,
unincorporated entities, proprietorships, and joint enterprises.
(F) "Applied research" means the application of basic
research for the development of new technology.
Sec. 122.30. The industrial technology and enterprise
advisory council third frontier commission established in section
184.01 of the Revised Code and the director of development are
vested with the powers and duties provided in sections 122.28 and
122.30 to 122.36 of the Revised Code, to promote the welfare of
the people of the state through the interaction of the business
and industrial community and educational institutions in the
development of new technology and enterprise.
(A) It is necessary for the state to establish the
industrial
technology and enterprise advisory council and the programs
created pursuant to sections 122.28 and 122.30 to 122.36 of the
Revised Code to accomplish the following purposes which are
determined to be essential:
(1) Improve the existing industrial and agricultural base of
the state;
(2) Improve the economy of the state by providing employment,
increasing productivity, and slowing the rate of inflation;
(3) Develop markets worldwide for the products of the state's
natural resources and agricultural and manufacturing industries;
(4) Maintain a high standard of living for the people of the
state.
(B) The industrial technology and enterprise advisory council
commission shall do all both of the following:
(1) Make recommendations to the director of development as to
applications for assistance pursuant to sections 122.28 and 122.30
to 122.36 of the Revised Code. The council commission may revise
its recommendations to reflect any changes in the proposed
assistance made by the director.
(2) Advise the director in the administration of sections
122.28 and 122.30 to 122.36 of the Revised Code;
(3) Adopt bylaws to govern the conduct of the council's
business.
(C) The director of development shall do all of the
following:
(1) Receive applications for assistance under sections 122.28
and 122.30 to 122.36 of the Revised Code and, after processing,
forward them to the council commission together with necessary
supporting information;
(2) Receive the recommendations of the council commission and
make a final determination whether to approve the application for
assistance;
(3) Transmit determinations to approve assistance exceeding
forty thousand dollars to the controlling board, together with any
information the controlling board requires, for the board's review
and decision as to whether to approve the assistance;
(4) Gather and disseminate information and conduct hearings,
conferences, seminars, investigations, and special studies on
problems and programs concerning industrial research and new
technology and their commercial applications in the state;
(5) Establish an annual program to recognize the
accomplishments and contributions of individuals and organizations
in the development of industrial research and new technology in
the state;
(6) Stimulate both public and industrial awareness and
interest in industrial research and development of new technology
primarily in the areas of industrial processes, implementation,
energy, agribusiness, medical technology, avionics, and food
processing;
(7) Develop and implement comprehensive and coordinated
policies, programs, and procedures promoting industrial research
and new technology;
(8) Propose appropriate legislation or executive actions to
stimulate the development of industrial research and new
technology by enterprises and individuals;
(9) Encourage and facilitate contracts between industry,
agriculture, educational institutions, federal agencies, and state
agencies, with special emphasis on industrial research and new
technology by small businesses and agribusiness;
(10) Participate with any state agency in developing specific
programs and goals to assist in the development of industrial
research and new technology and monitor performance;
(11) Assist enterprises in obtaining alternative forms of
governmental or commercial financing for industrial research and
new technology;
(12) Assist enterprises or individuals in the implementation
of new programs and policies and the expansion of existing
programs to provide an atmosphere conducive to increased
cooperation among and participation by individuals, enterprises,
and educational institutions engaged in industrial research and
the development of new technology;
(13) Advertise, prepare, print, and distribute books, maps,
pamphlets, and other information which in the judgment of the
director will further its purposes;
(14) Include in the director's annual report to the governor
and the general assembly a report on the activities for the
preceding calendar year under sections 122.28 and 122.30 to 122.36
of the Revised Code;
(15) Approve the expenditure of money appropriated by the
general assembly for the purpose of sections 122.28 and 122.30 to
122.36 of the Revised Code;
(16) Identify and implement federal research and development
programs which would link Ohio's industrial base, research
facilities, and natural resources;
(17) Employ and fix the compensation of technical and
professional personnel, who shall be in the unclassified civil
service, and employ other personnel, who shall be in the
classified civil service, as necessary to carry out the provisions
of sections 122.28 and 122.30 to 122.36 of the Revised Code.
Sec. 122.31. All expenses and obligations incurred by the
director of development and the industrial technology and
enterprise advisory council third frontier commission in carrying
out their powers and in exercising their duties under sections
122.28 and 122.30 to 122.36 of the Revised Code, are payable from
revenues or other receipts or income from grants, gifts,
contributions, compensation, reimbursement, and funds established
in accordance with those sections or general revenue funds
appropriated by the general assembly for operating expenses of the
director or council commission.
Sec. 122.32. The director of development, on behalf of the
programs authorized pursuant to sections 122.28 and 122.30 to
122.36 of the Revised Code, may receive and accept grants, gifts,
and contributions of money, property, labor, and other things of
value to be held, used, and applied only for the purpose for which
the grants, gifts, and contributions are made, from individuals,
private and public corporations, from the United States or any
agency of the United States, and from any political subdivision of
the state. The director may agree to repay any contribution of
money or to return any property contributed or its value at times,
in amounts, and on terms and conditions excluding the payment of
interest as the director determines at the time the contribution
is made. The director may evidence the obligation by written
contracts, subject to section 122.31 of the Revised Code, provided
that the director shall not thereby incur indebtedness of or
impose liability upon the state or any political subdivision.
Sec. 122.33. The director of development shall administer
the following programs:
(A) The industrial technology and enterprise development
grant program, to provide capital to acquire, construct, enlarge,
improve, or equip and to sell, lease, exchange, and otherwise
dispose of property, structures, equipment, and facilities within
the state.
Such funding may be made to enterprises that propose to
develop new products or technologies when the director finds all
of the following factors to be present:
(1) The undertaking will benefit the people of the state by
creating or preserving jobs and employment opportunities or
improving the economic welfare of the people of the state, and
promoting the development of new technology.
(2) There is reasonable assurance that the potential
royalties to be derived from the sale of the product or process
described in the proposal will be sufficient to repay the funding
pursuant to sections 122.28 and 122.30 to 122.36 of the Revised
Code and that, in making the agreement, as it relates to patents,
copyrights, and other ownership rights, there is reasonable
assurance that the resulting new technology will be utilized to
the maximum extent possible in facilities located in Ohio.
(3) The technology and research to be undertaken will allow
enterprises to compete more effectively in the marketplace. Grants
of capital may be in such form and conditioned upon such terms as
the board director deems appropriate.
(B) The industrial technology and enterprise resources
program to provide for the collection, dissemination, and exchange
of information regarding equipment, facilities, and business
planning consultation resources available in business, industry,
and educational institutions and to establish methods by which
small businesses may use available facilities and resources. The
methods may include, but need not be limited to, leases
reimbursing the educational institutions for their actual costs
incurred in maintaining the facilities and agreements assigning
royalties from development of successful products or processes
through the use of the facilities and resources. The director
shall operate this program in conjunction with the board of
regents.
(C) The Thomas Alva Edison grant program to provide grants to
foster research, development, or technology transfer efforts
involving enterprises and educational institutions that will lead
to the creation of jobs.
(1) Grants may be made to a nonprofit organization or a
public or private educational institution, department, college,
institute, faculty member, or other administrative subdivision or
related entity of an educational institution when the director
finds that the undertaking will benefit the people of the state by
supporting research in advanced technology areas likely to improve
the economic welfare of the people of the state through promoting
the development of new commercial technology.
(2) Grants may be made in a form and conditioned upon terms
as the director considers appropriate.
(3) Grants made under this program shall in all instances be
in conjunction with a contribution to the project by a cooperating
enterprise which maintains or proposes to maintain a relevant
research, development, or manufacturing facility in the state, by
a nonprofit organization, or by an educational institution or
related entity; however, funding provided by an educational
institution or related entity shall not be from general revenue
funds appropriated by the Ohio general assembly. No grant made
under this program shall exceed the contribution made by the
cooperating enterprise, nonprofit organization, or educational
institution or related entity. The director may consider
cooperating contributions in the form of state of the art new
equipment or in other forms provided the director determines that
the contribution is essential to the successful implementation of
the project. The director may adopt rules or guidelines for the
valuation of contributions of equipment or other property.
(4) The director may determine fields of research from which
grant applications will be accepted under this program.
Sec. 122.34. The exercise of the powers granted by sections
122.28 and 122.30 to 122.36 of the Revised Code will be in all
respects for the benefit of the people of the state, for the
improvement of commerce and prosperity, improvement of employment
conditions, and will constitute the performance of essential
governmental functions.
Sec. 122.35. All moneys received under sections 122.28 and
122.30 to 122.36 of the Revised Code are trust funds to be held
and applied solely as provided in those sections and section
166.03 of the Revised Code. All moneys, except when deposited with
the treasurer of the state, shall be kept and secured in
depositories as selected by the director of development in the
manner provided in sections 135.01 to 135.21 of the Revised Code,
insofar as those sections are applicable. All moneys held by the
director in trust to carry out the purposes of sections 122.28 and
122.30 to 122.36 of the Revised Code shall be used as provided in
sections 122.28 and 122.30 to 122.36 of the Revised Code and at no
time be part of other public funds.
Sec. 122.36. Any materials or data submitted to, made
available to, or received by the director of development, the
industrial technology and enterprise advisory council third
frontier commission, or the controlling board, to the extent that
the material or data consist of trade secrets, as defined in
section 1333.61 of the Revised Code, or commercial or financial
information, regarding projects are not public records for the
purposes of section 149.43 of the Revised Code.
Sec. 150.03. Within ninety days after April 9, 2003, the
authority shall establish, and subsequently may modify as it
considers necessary, a written investment policy governing the
investment of money from the program fund, which is hereby
created. The program fund shall consist of the proceeds of loans
acquired by a program administrator. The authority is subject to
Chapter 119. of the Revised Code with respect to the establishment
or modification of the policy. The policy shall meet all the
following requirements:
(A) It is consistent with the purpose of the program stated
in section 150.01 of the Revised Code.
(B) Subject to divisions (C), (D), and (E) of this section,
it permits the investment of money from the program fund in
private, for-profit venture capital funds, including funds of
funds, that invest in enterprises in the seed or early stage of
business development or established business enterprises
developing new methods or technologies, and that demonstrate
potential to generate high levels of successful investment
performance.
(C) It specifies that a program administrator or fund manager
employed by the program administrator shall invest not less than
seventy-five per cent of program fund money under its investment
authority in Ohio-based venture capital funds.
(D) It specifies both of the following:
(1) That not less than an amount equal to fifty per cent of
program fund money invested in any venture capital fund be
invested by the venture capital fund in Ohio-based business
enterprises;
(2) That, commencing with the first program fund commitment
to each venture capital fund, the aggregate amount funded into
Ohio-based business enterprises by all venture capital funds to
which the program fund has committed be not less than the
aggregate amount of all program fund money funded into those
venture capital funds.
(E) It specifies that a program administrator or fund manager
employed by the program administrator shall not invest money from
the program fund in a venture capital fund to the extent that the
total amount of program fund money invested in the venture capital
fund, when combined with any program fund money invested in a
venture capital fund under the same management as, and formed
within two years before or after the formation of, that venture
capital fund, exceeds the lesser of the following:
(2)(a) In the case of an Ohio-based venture capital fund,
fifty per cent of the total amount of capital committed to the
fund from all sources, after accounting for capital committed from
the program fund;
(b) In the case of any other venture capital fund, twenty per
cent of the total amount of capital committed to the fund from all
sources, after accounting for capital committed from the program
fund.
(F) It specifies that a program administrator or fund manager
employed by the program administrator shall not commit capital
from the program fund to a venture capital fund until the venture
capital fund receives commitment of at least the same amount from
other investors in the fund.
(G) It specifies the general conditions a private, for-profit
investment fund must meet to be selected as a program
administrator under section 150.05 of the Revised Code, including,
as a significant selection standard, direct experience managing
external or nonproprietary capital in private equity fund of funds
formats.
(H) It specifies the criteria the authority must consider
when making a determination under division (B)(1) of section
150.04 of the Revised Code.
(I) It includes investment standards and general limitations
on allowable investments that the authority considers reasonable
and necessary to achieve the purposes of this chapter as stated in
division (B) of section 150.01 of the Revised Code, minimize the
need for the authority to grant tax credits under section 150.07
of the Revised Code, ensure compliance of the program
administrators with all applicable laws of this state and the
United States, and ensure the safety and soundness of investments
of money from the program fund.
(J) It prohibits the investment of money from the program
fund directly in persons other than venture capital funds, except
for temporary investment in investment grade debt securities or
temporary deposit in interest-bearing accounts or funds pending
permanent investment in venture capital funds.
Sec. 150.05. (A) The authority shall select, as program
administrators, not more than two private, for-profit investment
funds to acquire loans for the program fund and to invest money in
the program fund as prescribed in the investment policy
established or modified by the authority in accordance with
sections 150.03 and 150.04 of the Revised Code. The authority
shall give equal consideration, in selecting these program
administrators, to minority owned and controlled investment funds,
to funds owned and controlled by women, to ventures involving
minority owned and controlled funds, and to ventures involving
funds owned and controlled by women that otherwise meet the
policies and criteria established by the authority. To be eligible
for selection, an investment fund must be incorporated or
organized under Chapter 1701., 1705., 1775., 1776., 1782., or
1783. of the Revised Code, must have an established business
presence in this state, and must be capitalized in accordance with
any state and federal laws applicable to the issuance or sale of
securities.
The authority shall select program administrators only after
soliciting and evaluating requests for proposals as prescribed in
this section. The authority shall publish a notice of a request
for proposals in newspapers of general circulation in this state
once each week for two consecutive weeks before a date specified
by the authority as the date on which it will begin accepting
proposals. The notices shall contain a general description of the
subject of the proposed agreement and the location where the
request for proposals may be obtained. The request for proposals
shall include all the following:
(1) Instructions and information to respondents concerning
the submission of proposals, including the name and address of the
office where proposals are to be submitted;
(2) Instructions regarding the manner in which respondents
may communicate with the authority, including the names, titles,
and telephone numbers of the individuals to whom such
communications shall be directed;
(3) Description of the performance criteria that will be used
to evaluate whether a respondent selected by the authority is
satisfying the authority's investment policy;
(4) Description of the factors and criteria to be considered
in evaluating respondents' proposals, which shall include the past
performance of the respondent in successfully administering
similar programs and achieving positive investment returns, the
relative importance of each factor or criterion, and description
of the authority's evaluation procedure;
(5) Description of any documents that may be incorporated by
reference into the request for proposals, provided that the
request specifies where such documents may be obtained and such
documents are readily available to all interested parties.
After the date specified for receiving proposals, the
authority shall evaluate submitted proposals. The authority may
discuss a respondent's proposal with that respondent to clarify or
revise a proposal or the terms of the agreement.
The authority shall choose for review proposals from at least
three respondents the authority considers qualified to operate the
program in the best interests of the investment policy adopted by
the authority. If three or fewer proposals are submitted, the
authority shall review each proposal. The authority may cancel a
request for proposals at any time before entering into an
agreement with a respondent. The authority shall provide
respondents fair and equal opportunity for such discussions. The
authority may terminate discussions with any respondent upon
written notice to the respondent.
(B) After reviewing the chosen proposals, the authority may
select not more than two such respondents and enter into a written
agreement with each of the selected respondents, provided that at
no time shall there be agreements with more than two persons.
The agreement shall do all of the following:
(1) Specify 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, and will be structured to ensure that payments of
principal, interest, or interest equivalent due in any fiscal
year, when added to such payments due from any other program
administrator, does not exceed twenty twenty-six million five
hundred thousand dollars;
(2) Require investment by the program administrator or the
fund manager employed by the program administrator to be in
compliance with the 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 investment is made, and prohibit
the program administrator or fund manager from engaging in any
investment activities other than activities to carry out that
policy;
(3) Require 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 investment policy;
(4) Specify any like standards or general limitations in
addition to or in furtherance of investment standards or
limitations that apply pursuant to division (H) of section 150.03
of the Revised Code;
(5) Require the program administrator to apply program fund
revenue first to the payment of principal borrowed by the program
administrator for investment under the program, then to interest
related to that principal, and then to amounts necessary to cover
the program administrator's pro rata share required under division
(B)(9) of this section; and require the program administrator to
pay the authority not less than ninety per cent of the amount by
which program fund revenue attributable to investments under the
program administrator's investment authority exceeds amounts so
applied;
(6) Specify the procedures by which the program administrator
shall certify immediately to the authority the necessity for the
authority to issue tax credit certificates pursuant to contracts
entered into under section 150.07 of the Revised Code;
(7) Specify 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. The fund manager may be, but need not be, an
equity owner or affiliate of the program administrator.
(8) Specify the terms and conditions under which the
authority or the program administrator may terminate the
agreement, including in the circumstance that the program
administrator or fund manager violates the investment policy;
(9) Require the program administrator or fund manager
employed by the program administrator to provide capital in the
form of a loan equal to one per cent of the amount of outstanding
loans by lenders to the program fund. The loan from the program
administrator or fund manager shall be on the same terms and
conditions as loans from other lenders, except that the loan from
the program administrator or fund manager shall not be secured by
the Ohio venture capital fund or tax credits available to other
lenders under division (B) of section 150.04 of the Revised Code.
Such capital shall be placed at the same risk as the proceeds from
such loans. The program administrator shall receive a pro rata
share of the net income, including net loss, from the investment
of money from the program fund, but is not entitled to the
security against losses provided under section 150.04 of the
Revised Code.
(10) Specify that the program administrator and the fund
manager employed by the program administrator must have a
significant presence in this state, and define how a significant
presence in this state shall be determined.
Sec. 150.07. (A) For the purpose stated in section 150.01 of
the Revised Code, the authority may authorize a lender to claim
one of the refundable tax credits allowed under section 5707.031,
5725.19, 5727.241, 5729.08, 5733.49, or 5747.80 of the Revised
Code. The credits shall be authorized by a written contract with
the lender. The contract shall specify the terms under which the
lender may claim the credit, including the amount of loss, if any,
the lender must incur before the lender may claim the credit;
specify that the credit shall not exceed the amount of the loss;
and specify that the lender may claim the credit only for a loss
certified by a program administrator to the authority under the
procedures prescribed under division (B)(6) of section 150.05 of
the Revised Code. The program administrator shall provide to the
authority an estimate of the amount of tax credits, if any, that
are likely, in the administrator's reasonable judgment, to be
claimed by a lender during the current and next succeeding state
fiscal years. The estimate shall be provided at the same time each
year that the administrator is required to report the annual audit
to the authority under section 150.05 of the Revised Code.
(B) Tax credits may be authorized at any time after the
authority establishes the investment policy under section 150.03
of the Revised Code, but a tax credit so authorized may not be
claimed before July 1, 2007, or after June 30, 2026, except, with
respect to loans made from the proceeds of obligations issued
under section 4582.71 of the Revised Code, a tax credit may not be
claimed before July 1, 2012, or after June 30, 2036.
(C)(1) Upon receiving certification of a lender's loss from a
program administrator pursuant to the procedures in the investment
policy, the authority shall issue a tax credit certificate to the
lender, except as otherwise provided in division (D) of this
section.
(2) If the lender is a pass-through entity, as defined in
section 5733.04 of the Revised Code, then each equity investor in
the lender pass-through entity shall be entitled to claim one of
the tax credits allowed under division (A) of this section for
that equity investor's taxable year in which or with which ends
the taxable year of the lender pass-through entity in an amount
based on the equity investor's distributive or proportionate share
of the credit amount set forth in the certificate issued by the
authority. If all equity investors of the lender pass-through
entity are not eligible to claim a credit against the same tax set
forth in division (A) of this section, then each equity investor
may elect to claim a credit against the tax to which the equity
investor is subject to in an amount based on the equity investor's
distributive or proportionate share of the credit amount set forth
in the certificate issued by the authority.
(3) The certificate shall state the amount of the credit and
the calendar year under section 5707.031, 5725.19, 5727.241, or
5729.08, the tax year under section 5733.49, or the taxable year
under section 5747.80 of the Revised Code for which the credit may
be claimed. The authority, in conjunction with the tax
commissioner, shall develop a system for issuing tax credit
certificates 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 division
(B) of this section.
(D) The authority shall not, in any fiscal year, issue tax
credit certificates under this section in a total amount exceeding
twenty twenty-six million five hundred thousand dollars. The
authority shall not issue tax credit certificates under this
section in a total amount exceeding three five hundred eighty
fifty million dollars.
(E) Notwithstanding any other section of this chapter or any
provision of Chapter 5707., 5725., 5727., 5729., 5733., or 5747.
of the Revised Code, if provided by the terms of an agreement
entered into by the issuer and the authority under division (E) of
section 150.02 of the Revised Code, and subject to the limitations
of divisions (B) and (D) of this section, a trustee shall have the
right, for the benefit of the issuer, to receive and claim the
credits authorized under division (A) of this section solely for
the purpose provided for in section 150.04 of the Revised Code,
and the trustee shall be entitled to file a tax return, an amended
tax return, or an estimated tax return at such times as are
permitted or required under the applicable provisions of Chapter
5707., 5725., 5727., 5729., 5733., or 5747. of the Revised Code
for the purpose of claiming credits issued to the trustee. The
trustee shall receive the proceeds of such a tax credit for the
benefit of the issuer, and shall apply the proceeds solely to
satisfy a loss or restore a reserve as provided in section 150.04
of the Revised Code. Nothing in this section shall require a
trustee to file a tax return under any chapter for any purpose
other than claiming such credits if the trustee is not otherwise
required to make such a filing.
The general assembly may from time to time modify or repeal
any of the taxes against which the credits authorized under
division (A) of this section may be claimed, and may authorize
those credits to be claimed for the purposes provided for in
section 150.04 of the Revised Code with respect to any other tax
imposed by this state; provided, that if any obligations issued
under section 4582.71 of the Revised Code are then outstanding and
such modification or repeal would have the effect of impairing any
covenant made in or pursuant to an agreement under division (E) of
section 150.02 of the Revised Code regarding the maintenance or
restoration of reserves established and maintained with a trustee
consistent with division (B)(2) of section 150.04 of the Revised
Code and such agreement, the state shall provide other security to
the extent necessary to avoid or offset the impairment of such
covenant.
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 of each ensuing year, 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, and the chairpersons of the house and senate standing
committees predominantly concerned with taxation a written report
on the Ohio venture capital program. The report shall include all
the following:
(1) A description of the details of the 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 purpose stated in section 150.01 of the Revised Code;
(3) The value of tax credit certificates issued by the
authority under section 150.07 of the Revised Code in each fiscal
year ending on or before the preceding thirtieth day of June;
(4) The amount of tax credits claimed pursuant to section
5707.031, 5725.19, 5727.241, 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) The names of venture capital funds in which money from
the program fund has been invested and the locations of their
principal offices, and the names of the enterprises in which each
of those venture capital funds has invested such money and the
locations of those enterprises' principal offices, and the amount
of investment by those funds in Ohio-based business enterprises.
For such Ohio-based business enterprises, the report shall
indicate the development stage, as that term is defined by the
authority, of each enterprise on the date a venture capital fund
first invests money from the program fund in the enterprise, the
aggregate amount of program funds invested in such enterprises
from every investment round, and the sources of any funding
secured by such enterprises after a venture capital fund first
invests money from the program fund in the enterprise;
(7) Any recommendations for modifying the program to better
achieve the purpose stated in section 150.01 of the Revised Code;
(8) The geographic distribution of investments from venture
capital funds of money distributed to the funds under the program;
(9) The number of jobs created at Ohio-based enterprises in
which a venture capital fund or funds have invested program fund
money since the date program fund money was first invested in the
enterprise.
(B) During each year that a report is issued under division
(A) of this section, the chairperson of the authority, or another
member of the authority designated by the chairperson 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 and the standing
committees of the house and senate predominantly concerned with
taxation to give testimony concerning the status of the Ohio
venture capital program.
Sec. 184.02. (A) In addition to the powers and duties under
sections 121.22, 122.15 to 122.154, 122.28, 122.30 to 122.36,
184.10 to 184.20, and 184.37 of the Revised Code, the third
frontier commission may perform any act to ensure the performance
of any function necessary or appropriate to carry out the purposes
of, and exercise the powers granted under, sections 184.01 and
184.02 of the Revised Code. In addition, the commission may do any
of the following:
(1) Adopt, amend, and rescind rules under section 111.15 of
the Revised Code for the administration of any aspect of its
operations;
(2) Adopt bylaws governing its operations, including bylaws
that establish procedures and set policies as may be necessary to
assist with the furtherance of its purposes;
(3) Appoint and set the compensation of employees needed to
carry out its duties;
(4) Contract with, retain the services of, or designate, and
fix the compensation of, such financial consultants, accountants,
other consultants and advisors, and other independent contractors
as may be necessary or desirable to carry out its duties;
(5) Solicit input and comments from the third frontier
advisory board, and specialized industry, professional, and other
relevant interest groups concerning its purposes;
(6) Facilitate alignment of the state's science and
technology programs and activities;
(7) Make grants and loans to individuals, public agencies,
private companies or organizations, or joint ventures for any of
the broad range of activities related to its purposes.
(B) In addition to the powers and duties under sections
184.10 to 184.20 and 184.37 of the Revised Code, the commission
shall do all of the following:
(1) Establish a competitive process for the award of grants
and loans that is designed to fund the most meritorious proposals
and, when appropriate, provide for peer review of proposals;
(2) Within ninety days after the end of each fiscal year,
submit to the governor and the general assembly a report of the
activities of the commission during the preceding fiscal year;
(3) With specific application to the biomedical research and
technology transfer trust fund, periodically make strategic
assessments of the types of state investments in biomedical
research and biotechnology in the state that would likely create
jobs and business opportunities in the state and produce the most
beneficial long-term improvements to the public health of Ohioans,
including, but not limited to, biomedical research and
biotechnology initiatives that address tobacco-related illnesses
as may be outlined in any master agreement. The commission shall
award grants and loans from the fund pursuant to a process
established under division (B)(1) of this section.
Section 2. That existing sections 121.22, 122.15, 122.151,
122.152, 122.153, 122.154, 122.28, 122.30, 122.31, 122.32, 122.33,
122.34, 122.35, 122.36, 150.03, 150.05, 150.07, 150.10, and 184.02
and section 122.29 of the Revised Code are hereby repealed.
Section 3. Section 122.33 of the Revised Code is presented in
this act as a composite of the section as amended by both Am. Sub.
H.B. 117 and Am. Sub. H.B. 356 of the 121st General Assembly. The
General Assembly, applying the principle stated in division (B) of
section 1.52 of the Revised Code that amendments are to be
harmonized if reasonably capable of simultaneous operation, finds
that the composite is the resulting version of the section in
effect prior to the effective date of the section as presented in
this act.
Section 4. The amendment by this act of sections 121.22,
122.15, 122.151, 122.152, 122.153, 122.154, 122.28, 122.30,
122.31, 122.32, 122.33, 122.34, 122.35, 122.36, and 184.02 of the
Revised Code, and the repeal by this act of section 122.29 of the
Revised Code, take effect on October 1, 2012.
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