SB94: Bill Text

SB94,39,14 (11) Incur debt.

SB94,39,15 (12) Procure liability insurance.

SB94,39,19 239.04 Liability limited. Neither the state nor any political subdivision of the state, nor any officer, employee, or agent of the state or a political subdivision of the state who is acting within the scope of employment or agency, is liable for any debt, obligation, act, or omission of the authority.

SB94,39,23 239.05 Annual report. Annually, the authority shall submit to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172 (2), and to the governor, a report on the programs administered by the authority that includes all of the following:

SB94,39,25 (1) General reporting requirements. For each program administered by the authority, the report shall include all of the following:

SB94,40,1 (a) An assessment of the program's success to date.

SB94,40,3 (b) An accounting of the financial status of the program, including the opinion of an independent certified public accountant.

SB94,40,4 (c) Any recommendations the authority has for improvement of the program.

SB94,40,7 (2) Badger jobs fund. In addition to the information provided under sub. (1), the authority's annual report shall include all of the following for the badger jobs fund administered by the authority under subch. II:

SB94,40,8 (a) The current investment policy of the badger jobs fund.

SB94,40,10 (b) The badger jobs fund's internal rate of return from its investments in certified investors.

SB94,40,12 (c) An accounting of the revenue received by the authority under s. 73.033 (1) (b).

SB94,40,14 (d) An accounting of any compensation, including a management fee, paid to the fund manager during the preceding year.

SB94,40,18 (e) An accounting of the value of tax credits awarded to creditors of the badger jobs fund under s. 239.14 during the preceding year, including a description of the circumstances leading to the award of the credits and the likelihood that the authority will award additional tax credits to fund creditors in the future.

SB94,40,21 (f) For each certified investor in whom the badger jobs fund invested capital under s. 239.13 (2) during the preceding year, the name and address of the investor and the amount of each investment.

SB94,40,22 (g) The internal rate of return realized by each certified investor.

SB94,40,24 (h) An accounting of any fee each certified investor paid to itself or any principal or manager of the certified investor during the preceding year.

SB94,41,7 (i) For each business in which a certified investor held an investment of capital from the badger jobs fund during the preceding year, the name and address of the business and a description of the nature of the business; the amount of each investment in the business; an identification of the certified investor who made the investment; and a statement of the number of employees the business employed when the certified investor first invested in the business and the number of employees the business employed on December 31 of the preceding year.

SB94,41,10 (3) Certified jobs now fund program. In addition to the information provided under sub. (1), the authority's annual report shall include all of the following for the certified jobs now fund program under subch. III:

SB94,41,11 (a) The information required under s. 239.25 (2).

SB94,41,13 (b) An accounting of the value of each tax credit the authority awarded under s. 239.22 (2) during the preceding year.

SB94,41,15 (c) An accounting of the revenue received by the authority under s. 73.033 (2) (b).

SB94,41,17 (d) An accounting of each profit sharing fee paid to the authority under s. 239.24 (2) during the preceding year.

SB94,41,20 (e) A list of certified jobs now funds that the authority decertified under s. 239.26 (2) during the preceding year and a description of the circumstances leading to each decertification.

SB94,41,21 subchapter II

SB94,41,22 Badger jobs fund

SB94,41,23 239.10 Definitions. In this subchapter:

SB94,41,24 (1) "Certified investor" means a person certified under s. 239.12.

SB94,42,2 (2) "Fund creditor" means any holder of a note or bond of the authority under this subchapter.

SB94,42,5 (3) "Debt service obligation" means the authority's obligation, including any payment schedule, to pay principal and interest or other financing costs to a creditor on a note or bond the authority issues under this subchapter.

SB94,42,6 (4) "Fund" means the badger jobs fund.

SB94,42,12 239.11 Creation of fund; management. (1) Fund purpose. There is created a fund to be known as the "badger jobs fund" for the investment of capital in certified investors. The legislature finds that the fund will provide capital for business growth and job creation in this state that is currently not sufficiently available in private financial markets and that the fund will result in increased tax revenues to the state and serve a public purpose.

SB94,42,14 (2) Bonding; debt service. (a) The authority may issue, by resolution, up to $200,000,000 in negotiable bonds or notes of any kind to finance the fund.

SB94,42,18 (b) The state is not liable for a debt service obligation of the authority. The authority's debt is not a debt of the state, and the authority may not create a debt of the state. Each note or bond of the authority shall contain on its face a statement to that effect.

SB94,42,22 (c) Recognizing its moral obligation to do so, the legislature hereby expresses its expectation and aspiration that, if ever called upon to do so, it shall make an appropriation to pay a fund creditor the amount the authority fails to pay or otherwise satisfy under its debt service obligation to that creditor.

SB94,43,2 (d) Neither the members of the board nor any person executing the notes or bonds is liable personally on the notes or bonds or subject to any personal liability or accountability by reason of the issuance of the notes or bonds, unless the personal liability or accountability is the result of willful misconduct.

SB94,43,18 (3) Notice regarding bond limit; dissolution of the fund. (a) The chairperson of the board shall promptly notify the joint committee on finance in writing when the authority has reached its bond limit under sub. (2) (a) and has satisfied 90 percent of its total debt service obligation to fund creditors. Once the authority satisfies 100 percent of its total debt service obligation to fund creditors, the chairperson of the board shall promptly provide a 2nd notice to the joint committee on finance stating that the authority has satisfied 100 percent of its total debt service obligation to fund creditors and that the authority intends to dissolve the fund. If, within 14 working days after the date of that 2nd notice, the cochairpersons of the committee do not notify the authority that the committee has scheduled a meeting to review dissolution of the fund, the authority shall dissolve the fund and liquidate all of the fund's assets and pay the proceeds of that liquidation to the secretary of administration for deposit in the general fund. If, within 14 working days after the date of that 2nd notice, the cochairpersons of the committee notify the authority that the committee has scheduled a meeting to review dissolution of the fund, the authority may dissolve the fund only upon approval of the committee.

SB94,44,2 (b) The authority may reinvest amounts that it receives as returns from its investments in certified investors only if the authority has reached the bond limit under sub. (2) (a), the authority has satisfied 100 percent of its total debt service obligation to fund creditors, and the joint committee on finance schedules a meeting to consider dissolution of the fund under par. (a) but does not approve dissolution of the fund. Any reinvestment by the authority under this paragraph shall meet the requirements under this subchapter with respect to the authority's investments in certified investors.

SB94,44,5 (c) If the authority dissolves the fund under par. (a), the authority shall pay to the secretary of administration for deposit in the general fund any additional amounts the authority receives from certified investors after the fund is dissolved.

SB94,44,13 (4) Fund manager. (a) The authority shall hire a fund manager who has expertise in the venture capital or private equity asset class to manage the fund's investment of capital in certified investors. In reviewing candidates for fund manager, the authority shall consider a candidate's venture capital or private equity asset class experience, investment philosophy, and the performance of any investments in the venture capital asset class managed by the candidate, as well as any other criteria the authority considers relevant. The fund manager may not be a certified investor.

SB94,44,17 (b) The authority may pay the fund manager an annual management fee. That management fee may not equal more than 0.5 percent of the fund's total assets including amount of capital that the authority has raised, committed to, or invested in, certified investors.

SB94,44,21 239.12 Investor certification. (1) Application. Any person may apply to the authority on a form prescribed by the authority for certification under this section. The application shall include the name, address, and tax identification number of the person and any other information the authority requires.

SB94,44,24 (2) Certification. The authority may certify an applicant who submits an application under sub. (1) to receive fund capital for investment. In determining whether to certify an applicant, the authority shall consider:

SB94,45,2 (a) The applicant's venture capital experience or other experience that qualifies the applicant to receive fund capital.

SB94,45,3 (b) The past performance of investments managed by the applicant.

SB94,45,4 (c) The applicant's commitment to investing in businesses within this state.

SB94,45,6 (d) The applicant's commitment to making seed or early stage business investments.

SB94,45,8 (e) Whether the applicant is located in this state or will locate and maintain an office in this state as a condition of the applicant's certification under this section.

SB94,45,10 (f) Any other factors the authority considers relevant that are consistent with the authorities responsibilities under this subchapter.

SB94,45,12 (3) Application fee. An applicant for certification under sub. (1) shall pay to the authority a fee in the amount determined by the authority.

SB94,45,17 239.13 Investment of capital in certified investors; requirements. (1) Investment policy. The fund manager shall establish, and amend as appropriate, a fund investment policy. The authority shall review and approve the investment policy prior to the policy's implementation and shall review the policy and any amendments at least annually thereafter.

SB94,45,21 (2) Fund investments. The authority may invest capital under this subchapter only in certified investors. The authority may not commit more than 15 percent of the total capital that the authority is authorized to raise under s. 239.11 (2) (a) to a single certified investor.

SB94,45,25 (3) Contracts. Before the authority invests any capital in a certified investor, the authority shall contract with the certified investor, and in addition to any other terms required or negotiated by the authority, that contract shall include the following requirements:

SB94,46,3 (a) The certified investor shall commit to maintaining a significant physical presence in this state, including locating an office in this state that is staffed with at least one full-time employee of the certified investor.

SB94,46,7 (b) The certified investor shall invest at least 50 percent of the amount of capital the certified investor receives from the fund in a business that meets all of the following conditions at the time the certified investor first invests in the business under this section:

SB94,46,8 1. Is headquartered in this state.

SB94,46,10 2. Employs at least 50 percent of its employees, including any subsidiary or other affiliated entity, in this state.

SB94,46,13 3. Agrees to use fund capital only for research and development, the introduction of a new product in the market, the business's entry into a new market, or other activities that are expected to grow the business and create jobs in this state.

SB94,46,16 4. Is not primarily engaged in real estate development or sales, insurance, banking, lending, lobbying, political consulting, professional services, or retail sales, other than direct sales of products the business itself manufactures.

SB94,46,18 (c) The certified investor may not receive capital from the fund that exceeds 25 percent of the total capital the investor has raised from all sources.

SB94,46,21 (d) When a certified investor makes an investment of fund capital in a business, the certified investor shall at least match the fund's capital contribution to that investment with capital the certified investor has raised from other sources.

SB94,46,23 (e) The certified investor may not apply the amount of capital it receives from the fund toward certification under s. 560.205 (1) or (2).

SB94,46,25 (4) Sunset. The authority may not make a commitment to invest capital in a certified investor under this subchapter after December 31, 2015.

SB94,47,5 239.14 Tax credits to fund creditors. (1) In lieu of payment of its debt service obligation to a fund creditor, the authority may contract with a fund creditor to award a tax credit under s. 71.07 (8s), 71.28 (8s), or 71.47 (8s) to the fund creditor up to an amount equal to the amount the authority is unable to pay the creditor under the authority's debt service obligation to the creditor in a taxable year.

SB94,47,11 (2) A contract under sub. (1) shall set forth the terms and conditions under which the fund creditor may claim a tax credit under this section. A fund creditor may not claim a tax credit that exceeds the amount the authority fails to pay under the authority's debt service obligation to the fund creditor. The authority shall certify to the department of revenue the amount of the tax credit a creditor of the fund may claim under this section.

SB94,47,14 (3) The authority may not award a tax credit under this section that may be claimed before January 1, 2016. The authority may not award tax credits under this section that total more than $300,000,000.

SB94,47,15 subchapter iiI

SB94,47,16 certified jobs now funds

SB94,47,17 239.20 Definitions. In this subchapter:

SB94,47,18 (1) "Affiliate" means any of the following:

SB94,47,21 (a) A person who owns, controls, or holds power to vote 15 percent or more of the outstanding voting securities or other voting interests of a certified jobs now fund or an insurance company or other person subject to premium tax liability.

SB94,47,25 (b) A business, 15 percent of whose outstanding voting securities or other voting ownership interests are owned, controlled, or held with power to vote by a certified jobs now fund or an insurance company or other person subject to premium tax liability.

SB94,48,3 (c) A person who controls, is controlled by, or is under common control with a certified jobs now fund or an insurance company or other person subject to premium tax liability.

SB94,48,6 (d) A business in which a certified jobs now fund or an insurance company or other person subject to premium tax liability is a partner, managing member, or other principal.

SB94,48,9 (e) An officer, director, employee, or agent of a certified jobs now fund or an insurance company or other person subject to premium tax liability, or an immediate family member of the officer, director, employee, or agent.

SB94,48,12 (2) "Allocation date" means the date stated in the authority's notice under s. 239.22 (2) (b) that approves a specific amount of designated capital and awards a corresponding premium tax credit to a participating investor.

SB94,48,14 (3) "Certified jobs now fund" or "fund" means an entity that is certified under s. 239.21.

SB94,48,21 (4) "Designated capital" means an investment of cash by a participating investor in a certified jobs now fund that is approved by the authority under s. 239.22 and that fully funds either the participating investor's equity interest in a certified jobs now fund, a qualified debt instrument that a certified jobs now fund issues, or both. In this subsection, "qualified debt instrument" means a bond, note, or other obligation that a certified jobs now fund issues at par value or at a premium or discount from par value that meets all of the following conditions:

SB94,48,23 (a) Has an original maturity date of at least 4 years from the date on which it is issued.

SB94,48,25 (b) Has a repayment schedule that is no faster than a level principal amortization over 4 years.

SB94,49,1 (c) Does not allow the prepayment of interest.

SB94,49,3 (d) Has payment and interest features that are not related to the fund's profitability or the performance of the fund's investment portfolio.

SB94,49,6 (5) "Early stage business" means a qualified business that received, including any affiliate, gross revenue of $2,000,000 or less in the fiscal year immediately preceding that date.

SB94,49,9 (6) "Participating investor" means an insurance company or other person subject to premium tax liability who the authority approves to invest designated capital in a certified jobs now fund under s. 239.22.

SB94,49,10 (7) "Premium tax credit" means a tax credit under s. 76.634.

SB94,49,12 (8) "Premium tax liability" means the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67.

SB94,49,15 (9) "Qualified business" means a business that, as of the time a certified jobs now fund or its affiliate first invests in the business under this subchapter, meets all of the following conditions:

SB94,49,17 (a) Is headquartered in, and has its principal business operations located in, this state.

SB94,49,19 (b) Is in need of venture capital and is unable to obtain conventional financing, as determined by the authority.