Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 411 Second Substitute (2015GS)

Sponsor

Rep. Wilson, B.

Final action

Governor Signed 3/31/2015

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• modifies the criteria and procedures for allocating and issuing contingent tax credits to an investor in the Utah fund of funds;
• modifies the criteria and qualifications for redeeming contingent tax credits for an investor in the Utah fund of funds;
• amends reporting requirements of the Utah Capital Investment Board and the Utah Capital Investment Corporation;
• modifies conflict of interest provisions of the Utah Capital Investment Corporation's board of directors;
• modifies the organization of the Utah Capital Investment Corporation;
• increases the aggregate amount of outstanding contingent tax credits that may be issued by the Utah Capital Investment Board related to investments entered into by the Utah fund of funds on or after July 1, 2014;
• decreases the aggregate amount of outstanding contingent tax credits that may be issued by the Utah Capital Investment Board related to investments entered into by the Utah fund of funds before July 1, 2014; and
• makes technical changes.

Every vote on this bill

Bill text

VENTURE CAPITAL ENHANCEMENT AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Brad R. Wilson
Senate Sponsor: 
Curtis S. Bramble
Cosponsors:
Jacob L. Anderegg
Stewart Barlow
Sophia M. DiCaro
Eric K. Hutchings
Don L. Ipson
Bradley G. Last
LONG TITLE
General Description:
This bill modifies provisions of the Utah Venture Capital Enhancement Act.
Highlighted Provisions:
This bill:
▸ modifies the criteria and procedures for allocating and issuing contingent tax credits
to an investor in the Utah fund of funds;
▸ modifies the criteria and qualifications for redeeming contingent tax credits for an
investor in the Utah fund of funds;
▸ amends reporting requirements of the Utah Capital Investment Board and the Utah
Capital Investment Corporation;
▸ modifies conflict of interest provisions of the Utah Capital Investment Corporation's
board of directors;
▸ modifies the organization of the Utah Capital Investment Corporation;
▸ increases the aggregate amount of outstanding contingent tax credits that may be
issued by the Utah Capital Investment Board related to investments entered into by
the Utah fund of funds on or after July 1, 2014;
▸ decreases the aggregate amount of outstanding contingent tax credits that may be
issued by the Utah Capital Investment Board related to investments entered into by
the Utah fund of funds before July 1, 2014; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
63M-1-1202
, as renumbered and amended by Laws of Utah 2008, Chapter 382
63M-1-1203
, as last amended by Laws of Utah 2014, Chapter 334
63M-1-1206
, as last amended by Laws of Utah 2014, Chapters 334, 371 and last
amended by Coordination Clause, Laws of Utah 2014, Chapter 334
63M-1-1207
, as last amended by Laws of Utah 2011, Chapter 342
63M-1-1209
, as renumbered and amended by Laws of Utah 2008, Chapter 382
63M-1-1213
, as last amended by Laws of Utah 2008, Chapter 18 and renumbered and
amended by Laws of Utah 2008, Chapter 382
63M-1-1217
, as last amended by Laws of Utah 2014, Chapter 334
63M-1-1218
, as last amended by Laws of Utah 2014, Chapter 334
63M-1-1222
, as renumbered and amended by Laws of Utah 2008, Chapter 382
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
63M-1-1202
 is amended to read:
63M-1-1202.
Findings -- Purpose.
(1) The Legislature finds that:
(a) fundamental changes have occurred in national and international financial markets
and in the state's financial markets;
(b) a critical shortage of seed [
and
]
,
 venture capital
, and private equity
 resources exists
in the state, and that shortage is impairing the growth of commerce in the state;
(c) a need exists to increase the availability of venture [
equity
] capital 
and private
equity
 for emerging, expanding, and restructuring enterprises in Utah, including enterprises in
the life sciences, advanced manufacturing, and information technology;
(d) increased venture 
and private
 equity capital investments in emerging, expanding,
and restructuring enterprises in Utah will:
(i) create new jobs in the state; and
(ii) help to diversify the state's economic base; and
(e) a well-trained work force is critical for the maintenance and development of Utah's
economy.
(2) This part is enacted to:
(a) mobilize private investment in a broad variety of venture capital 
and private equity
partnerships in diversified industries and locales;
(b) retain the private-sector culture of focusing on rate of return in the investing
process;
(c) secure the services of the best managers in the venture capital [
industry
] 
and private
equity industries
, regardless of location;
(d) facilitate the organization of the Utah fund of funds to seek private investments and
to serve as a catalyst in those investments by offering state incentives for private persons to
make investments in the Utah fund of funds;
(e) enhance the [
venture capital
] culture and infrastructure in the state [
so as
] to
increase venture capital 
and private equity
 investment within the state [
and to promote venture
capital investing within the state
];
(f) accomplish the purposes referred to in Subsections (2)(a) through (e) in a manner
that would maximize the direct economic impact for the state; and
(g) authorize the issuance and use of contingent tax credits to accomplish the purposes
referred to in Subsections (2)(a) through (e) while protecting the interests of the state by
limiting the manner in which contingent tax credits are issued, registered, transferred, claimed
as an offset to the payment of state income tax, and redeemed.
Section 2. Section 
63M-1-1203
 is amended to read:
63M-1-1203.
Definitions.
As used in this part:
(1) "Board" means the Utah Capital Investment Board.
(2) "Certificate" means a contract between the board and a designated investor under
which a contingent tax credit is available and issued to the designated investor.
(3) (a) Except as provided in Subsection (3)(b), "claimant" means a resident or
nonresident person.
(b) "Claimant" does not include an estate or trust.
(4) "Commitment" means a written commitment by a designated purchaser to purchase
from the board certificates presented to the board for redemption by a designated investor. 
Each commitment shall state the dollar amount of contingent tax credits that the designated
purchaser has committed to purchase from the board.
(5) "Contingent tax credit" means a contingent tax credit issued under this part that is
available against tax liabilities imposed by Title 59, Chapter 7, Corporate Franchise and
Income Taxes, or Title 59, Chapter 10, Individual Income Tax Act, if there are insufficient
funds in the redemption reserve and the board has not exercised other options for redemption
under Subsection 
63M-1-1220
(3)(b).
(6) "Corporation" means the Utah Capital Investment Corporation created under
Section 
63M-1-1207
.
(7) "Designated investor" means:
(a) a person who makes a private investment; or
(b) a transferee of a certificate or contingent tax credit.
(8) "Designated purchaser" means:
(a) a person who enters into a written undertaking with the board to purchase a
commitment; or
(b) a transferee who assumes the obligations to make the purchase described in the
commitment.
(9) "Estate" means a nonresident estate or a resident estate.
(10) "Person" means an individual, partnership, limited liability company, corporation,
association, organization, business trust, estate, trust, or any other legal or commercial entity.
(11) "Private investment" means:
(a) an equity interest in the Utah fund of funds; or
(b) a loan to the Utah fund of funds initiated before July 1, 2014, including a loan
[
refinanced on or after July 1, 2014,
] that was originated before July 1, 2014
, and that is
refinanced on or after July 1, 2014
.
(12) "Redemption reserve" means the reserve established by the corporation to
facilitate the cash redemption of certificates.
(13) "Taxpayer" means a taxpayer:
(a) of an investor; and
(b) if that taxpayer is a:
(i) claimant;
(ii) estate; or
(iii) trust.
(14) "Trust" means a nonresident trust or a resident trust.
(15) "Utah fund of funds" means a limited partnership or limited liability company
established under Section 
63M-1-1213
 in which a designated investor purchases an equity
interest.
Section 3. Section 
63M-1-1206
 is amended to read:
63M-1-1206.
Board duties and powers.
(1) The board shall
, by rule
:
(a) establish criteria and procedures for the allocation and issuance of contingent tax
credits to designated investors by means of certificates issued by the board[
, provided that a
contingent tax credit may not be issued unless the Utah fund of funds:
]
;
[
(i) first agrees to treat the amount of the tax credit redeemed by the state as a loan
from the state to the Utah fund of funds; and
]
[
(ii) agrees to repay the loan upon terms and conditions established by the board;
]
(b) establish criteria and procedures for assessing the likelihood of future certificate
redemptions by designated investors, including:
(i) criteria and procedures for evaluating the value of investments made by the Utah
fund of funds; and
(ii) the returns from the Utah fund of funds;
(c) establish criteria and procedures for 
issuing, calculating,
 registering
,
 and redeeming
contingent tax credits by designated investors holding certificates issued by the board;
(d) establish a target rate of return or range of returns for the investment portfolio of
the Utah fund of funds;
(e) establish criteria and procedures governing commitments obtained by the board
from designated purchasers including:
(i) entering into commitments with designated purchasers; and
(ii) drawing on commitments to redeem certificates from designated investors;
(f) have power to:
(i) expend funds;
(ii) invest funds;
(iii) issue debt and borrow funds;
(iv) enter into contracts;
(v) insure against loss; and
(vi) perform any other act necessary to carry out its purpose; and
(g) make, amend, and repeal rules for the conduct of its affairs, consistent with this part
and in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
(2) (a) All rules made by the board under Subsection (1)(g) are subject to review by the
Legislative Management Committee:
(i) whenever made, modified, or repealed; and
(ii) in each even-numbered year.
(b) Subsection (2)(a) does not preclude the legislative Administrative Rules Review
Committee from reviewing and taking appropriate action on any rule made, amended, or
repealed by the board.
(3) (a) The criteria and procedures established by the board for the allocation and
issuance of contingent tax credits shall[
: (i)
] include the contingencies that must be met for a
certificate and its related tax credits to be:
[
(A)
] 
(i)
 issued by the board;
[
(B)
] 
(ii)
 transferred by a designated investor; and
[
(C)
] 
(iii)
 redeemed by a designated investor in order to receive a contingent tax
credit[
; and
]
.
[
(ii)
] 
(b) The board shall
 tie the contingencies for redemption of certificates to:
(i) for a private investment initiated before July 1, 2015:
(A) the targeted rates of return and scheduled redemptions of equity interests purchased
by designated investors in the Utah fund of funds; and
(B) the scheduled principal and interest payments payable to designated investors that
have made loans initiated before July 1, 2014, including a loan refinanced on or after July 1,
2014, that was originated before July 1, 2014, to the Utah fund of funds[
.
]
; or
[
(b) The board may not issue contingent tax credits under this part before July 1, 2004.
]
(ii) for an equity-based private investment initiated on or after July 1, 2015, the
positive impact on economic development in the state that is related to the fund's investments
or the success of the corporation's economic development plan in the state, including:
(A) encouraging the availability of a wide variety of venture capital in the state;
(B) strengthening the state's economy;
(C) helping business in the state gain access to sources of capital;
(D) helping build a significant, permanent source of capital available for businesses in
the state; and
(E) creating benefits for the state while minimizing the use of contingent tax credits.
(4) (a) The board may charge a placement fee to the Utah fund of funds for the
issuance of a certificate and related contingent tax credit to a designated investor.
(b) The fee shall:
(i) be charged only to pay for reasonable and necessary costs of the board; and
(ii) not exceed .5% of the private investment of the designated investor.
(5) The board's criteria and procedures for redeeming certificates:
(a) shall give priority to the redemption amount from the available funds in the
redemption reserve; and
(b) to the extent there are insufficient funds in the redemption reserve to redeem
certificates, shall grant the board the option to redeem certificates:
(i) by certifying a contingent tax credit to the designated investor; or
(ii) by making demand on designated purchasers consistent with the requirements of
Section 
63M-1-1221
.
[
(6) (a) The board shall, in consultation with the corporation, publish on or before
September 1 an annual report of the activities conducted by the Utah fund of funds, and submit
the report to the governor; the Business, Economic Development, and Labor Appropriations
Subcommittee; the Business and Labor Interim Committee; and the Retirement and
Independent Entities Committee.
]
[
(b) The annual report shall:
]
[
(i) be designed to provide clear, accurate, and accessible information to the public, the
governor, and the Legislature;
]
[
(ii) include a copy of the audit of the Utah fund of funds described in Section
63M-1-1217
;
]
[
(iii) include a detailed balance sheet, revenue and expenses statement, and cash flow
statement;
]
[
(iv) include detailed information regarding new fund commitments made during the
year, including the amount of money committed;
]
[
(v) include the net annual rate of return of the Utah fund of funds for the reported
year, and the net rate of return from the inception of the Utah fund of funds, after accounting
for all expenses, including administrative and financing costs;
]
[
(vi) include detailed information regarding:
]
[
(A) realized gains from investments and any realized losses; and
]
[
(B) unrealized gains and any unrealized losses based on the net present value of
ongoing investments;
]
[
(vii) include detailed information regarding all yearly expenditures, including:
]
[
(A) administrative, operating, and financing costs;
]
[
(B) aggregate compensation information separated by full- and part-time employees,
including benefit and travel expenses; and
]
[
(C) expenses related to the allocation manager;
]
[
(viii) include detailed information regarding all funding sources for administrative,
operations, and financing expenses, including expenses charged by or to the Utah fund of
funds, including management and placement fees;
]
[
(ix) review the progress of the investment fund allocation manager in implementing
its investment plan and provide a general description of the investment plan;
]
[
(x) for each individual fund that the Utah fund of funds is invested in that represents at
least 5% of the net assets of the Utah fund of funds, include the name of the fund, the total
value of the fund, the fair market value of the Utah fund of funds' investment in the fund, and
the percentage of the total value of the fund held by the Utah fund of funds;
]
[
(xi) include the number of companies in Utah where an investment was made from a
fund that the Utah fund of funds is invested in, and provide an aggregate count of new full-time
employees in the state added by all companies where investments were made by funds that the
Utah fund of funds is invested in;
]
[
(xii) include an aggregate total value for all funds the Utah fund of funds is invested
in, and an aggregate total amount of money invested in the state by the funds the Utah fund of
funds is invested in;
]
[
(xiii) describe any redemption or transfer of a certificate issued under this part;
]
[
(xiv) include actual and estimated potential appropriations the Legislature will be
required to provide as a result of redeemed certificates or tax credits during the following five
years;
]
[
(xv) include an evaluation of the state's progress in accomplishing the purposes stated
in Section 
63M-1-1202
; and
]
[
(xvi) be directly accessible to the public via a link from the main page of the Utah
fund of fund's website.
]
[
(c) The annual report may not identify a specific designated investor who has
redeemed or transferred a certificate.
]
Section 4. Section 
63M-1-1207
 is amended to read:
63M-1-1207.
Utah Capital Investment Corporation -- Powers and purposes.
(1) (a) There is created an independent quasi-public nonprofit corporation known as the
Utah Capital Investment Corporation.
(b) The corporation:
(i) may exercise all powers conferred on independent corporations under Section
63E-2-106
;
(ii) is subject to the prohibited participation provisions of Section 
63E-2-107
; and
(iii) is subject to the other provisions of Title 63E, Chapter 2, Independent
Corporations Act, except as otherwise provided in this part.
(c) The corporation shall file with the Division of Corporations and Commercial Code:
(i) articles of incorporation; and
(ii) any amendment to its articles of incorporation.
(d) In addition to the articles of incorporation, the corporation may adopt bylaws and
operational policies that are consistent with this chapter.
(e) Except as otherwise provided in this part, this part does not exempt the corporation
from the requirements under state law which apply to other corporations organized under Title
63E, Chapter 2, Independent Corporations Act.
(2) The purposes of the corporation are to:
(a) organize the Utah fund of funds;
(b) select [
a venture capital
] 
an
 investment fund allocation manager to make venture
capital 
and private equity
 fund investments by the Utah fund of funds;
(c) negotiate the terms of a contract with the [
venture capital
] investment fund
allocation manager;
(d) execute the contract with the selected [
venture capital
] investment fund manager on
behalf of the Utah fund of funds;
(e) receive funds paid by designated investors for the issuance of certificates by the
board for private investment in the Utah fund of funds;
(f) receive investment returns from the Utah fund of funds; and
(g) establish the redemption reserve to be used by the corporation to redeem
certificates.
(3) The corporation may not:
(a) exercise governmental functions;
(b) have members;
(c) pledge the credit or taxing power of the state or any political subdivision of the
state; or
(d) make its debts payable out of any money except money of the corporation.
(4) The obligations of the corporation are not obligations of the state or any political
subdivision of the state within the meaning of any constitutional or statutory debt limitations,
but are obligations of the corporation payable solely and only from the corporation's funds.
(5) The corporation may:
(a) engage consultants and legal counsel;
(b) expend funds;
(c) invest funds;
(d) issue debt 
and equity,
 and borrow funds;
(e) enter into contracts;
(f) insure against loss;
(g) hire employees; and
(h) perform any other act necessary to carry out its purposes.
(6) (a) The corporation shall, in consultation with the board, publish on or before
September 1 an annual report of the activities conducted by the Utah fund of funds and submit
the report to the governor; the Business, Economic Development, and Labor Appropriations
Subcommittee; the Business and Labor Interim Committee; and the Retirement and
Independent Entities Interim Committee.
(b) The annual report shall:
(i) be designed to provide clear, accurate, and accessible information to the public, the
governor, and the Legislature;
(ii) include a copy of the audit of the Utah fund of funds described in Section
63M-1-1217
;
(iii) include a detailed balance sheet, revenue and expenses statement, and cash flow
statement;
(iv) include detailed information regarding new fund commitments made during the
year, including the amount of money committed;
(v) include the net rate of return of the Utah fund of funds from the inception of the
Utah fund of funds, after accounting for all expenses, including administrative and financing
costs;
(vi) include detailed information regarding:
(A) realized gains from investments and any realized losses; and
(B) unrealized gains and any unrealized losses based on the net present value of
ongoing investments;
(vii) include detailed information regarding all yearly expenditures, including:
(A) administrative, operating, and financing costs;
(B) aggregate compensation information for full- and part-time employees, including
benefit and travel expenses; and
(C) expenses related to the allocation manager;
(viii) include detailed information regarding all funding sources for administrative,
operations, and financing expenses, including expenses charged by or to the Utah fund of
funds, including management and placement fees;
(ix) review the progress of the investment fund allocation manager in implementing its
investment plan and provide a general description of the investment plan;
(x) for each individual fund that the Utah fund of funds is invested in that represents at
least 5% of the net assets of the Utah fund of funds, include the name of the fund, the total
value of the fund, the fair market value of the Utah fund of funds' investment in the fund, and
the percentage of the total value of the fund held by the Utah fund of funds;
(xi) include the number of companies in Utah where an investment was made from a
fund that the Utah fund of funds is invested in, and provide an aggregate count of new full-time
employees in the state added by all companies where investments were made by funds that the
Utah fund of funds is invested in;
(xii) include an aggregate total value for all funds the Utah fund of funds is invested in,
and an aggregate total amount of money invested in the state by the funds the Utah fund of
funds is invested in;
(xiii) describe any redemption or transfer of a certificate issued under this part;
(xiv) include actual and estimated potential appropriations the Legislature will be
required to provide as a result of redeemed certificates or tax credits during the following five
years;
(xv) include an evaluation of the state's progress in accomplishing the purposes stated
in Section 
63M-1-1202
; and
(xvi) be directly accessible to the public via a link from the main page of the Utah fund
of fund's website.
(c) The annual report may not identify a specific designated investor who has redeemed
or transferred a certificate.
Section 5. Section 
63M-1-1209
 is amended to read:
63M-1-1209.
Board of directors.
(1) The initial board of directors of the corporation shall consist of five members.
(2) The persons elected to the initial board of directors by the appointment committee
shall include persons who have an expertise, as considered appropriate by the appointment
committee, in the areas of:
(a) the selection and supervision of investment managers;
(b) fiduciary management of investment funds; and
(c) other areas of expertise as considered appropriate by the appointment committee.
(3) After the election of the initial board of directors, vacancies in the board of
directors of the corporation shall be filled by election by the remaining directors of the
corporation.
(4) (a) Board members shall serve four-year terms, except that of the five initial
members:
(i) two shall serve four-year terms;
(ii) two shall serve three-year terms; and
(iii) one shall serve a two-year term.
(b) Board members shall serve until their successors are elected and qualified and may
serve successive terms.
(c) A majority of the board members may remove a board member for cause.
(d) (i) The board shall select a chair by majority vote.
(ii) The chair's term is for one year
, which may be extended annually by a majority vote
of the members of the board of directors
.
(5) Three members of the board are a quorum for the transaction of business.
(6) Members of the board of directors:
(a) are subject to any restrictions on conflicts of interest specified in the organizational
documents of the corporation; [
and
]
[
(b) may have no interest in any:
]
[
(i) venture capital investment fund allocation manager selected by the corporation
under this part; or
]
[
(ii) investments made by the Utah fund of funds.
]
(b) shall annually disclose any venture capital and private equity interests to the
corporation; and
(c) may not participate in a vote by the board of directors related to an investment by
the Utah fund of funds, if the member has an interest in the investment.
(7) Directors of the corporation:
(a) shall be compensated for direct expenses and mileage; and
(b) may not receive a director's fee or salary for service as directors.
Section 6. Section 
63M-1-1213
 is amended to read:
63M-1-1213.
Organization of Utah fund of funds.
(1) The corporation shall organize the Utah fund of funds.
(2) The Utah fund of funds shall make investments in [
private seed and
] venture capital
and private equity
 partnerships or entities in a manner and for the following purposes:
(a) to encourage the availability of a wide variety of venture capital in the state;
(b) to strengthen the economy of the state;
(c) to help business in the state gain access to sources of capital;
(d) to help build a significant, permanent source of capital available to serve the needs
of businesses in the state; and
(e) to accomplish all these benefits in a way that minimizes the use of contingent tax
credits.
(3) The Utah fund of funds shall be organized:
(a) as a limited partnership or limited liability company under Utah law having the
corporation 
and qualified investment professionals
 as the general partner or manager;
(b) to provide for equity interests for designated investors
,
 which provide for a
designated scheduled [
rate of
] return and a scheduled redemption in accordance with rules
made by the board pursuant to Title 63G, Chapter 3, Utah Administrative Rulemaking Act; and
(c) to provide for loans by or the issuance of debt obligations to designated investors
[
which
] 
that
 provide for designated payments of principal, interest, or interest equivalent in
accordance with rules made by the board pursuant to Title 63G, Chapter 3, Utah
Administrative Rulemaking Act.
(4) Public money may not be invested in the Utah fund of funds.
Section 7. Section 
63M-1-1217
 is amended to read:
63M-1-1217.
Annual audits.
(1) Each calendar year, an audit of the activities of the Utah fund of funds shall be
made as described in this section.
(2) (a) The audit shall be conducted by:
(i) the state auditor; or
(ii) an independent auditor engaged by the state auditor.
(b) An independent auditor used under Subsection (2)(a)(ii) must have no business,
contractual, or other connection to:
(i) the corporation; or
(ii) the Utah fund of funds.
(3) The corporation shall pay the costs associated with the annual audit.
(4) The annual audit report shall:
(a) be delivered to:
(i) the corporation; and
(ii) the board;
(b) include a valuation of the assets owned by the Utah fund of funds as of the end of
the reporting year;
(c) include an opinion regarding the accuracy of the information provided in the annual
report described in Subsection [
63M-1-1206
] 
63M-1-1207
(6); [
and
]
(d) include an opinion regarding the accuracy of the information that supports the
economic development impact in the state of the Utah fund of funds as described in
Subsections 
63M-1-1206
(3)(b)(ii) and 
63M-1-1218
(3); and
[
(d)
] 
(e)
 be completed on or before September 1 for the previous calendar year so that
it may be included in the annual report described in [
Section 
63M-1-1206
] 
Subsection
63M-1-1207
(6)
.
Section 8. Section 
63M-1-1218
 is amended to read:
63M-1-1218.
Certificates and contingent tax credits.
(1) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
board, in consultation with the State Tax Commission, shall make rules governing the
application for,
 form, issuance, transfer, and redemption of certificates.
(2) The board's issuance of certificates and related contingent tax credits to designated
investors is subject to the following:
(a) the aggregate outstanding certificates may not exceed a total of:
(i) [
$150,000,000
] 
$130,000,000
 of contingent tax credits used as collateral or a
guarantee on loans for the debt-based financing of investments in the Utah fund of funds[
,
including
] 
initiated before July 1, 2014, or $120,000,000 of contingent tax credits for
 a loan
refinanced using debt- or equity-based financing as described in Subsection (2)(e); and
(ii) [
$75,000,000
] 
$100,000,000
 used as [
a guarantee on
] 
an incentive for
 equity
investments in the Utah fund of funds;
(b) the board shall issue a certificate contemporaneously with [
an
] 
a debt-based
investment in the Utah fund of funds by a designated investor
, including a refinanced loan as
described in Subsection (2)(e)
;
(c) the board shall issue contingent tax credits in a manner that not more than
$20,000,000 of contingent tax credits for each $100,000,000 increment of contingent tax
credits may be redeemable in a fiscal year;
(d) the credits are certifiable if there are insufficient funds in the redemption reserve to
make a cash redemption and the board does not exercise its other options under Subsection
63M-1-1220
(3)(b);
(e) the board may not issue additional certificates as collateral or a guarantee on a loan
for the debt-based financing of investments in the Utah fund of funds that is initiated after July
1, 2014, except for a loan refinanced using debt- or equity-based financing on or after July 1,
2014, that was originated before July 1, 2014; 
and
(f) after July 1, 2014, [
and on or before December 31, 2017,
] the board may issue
certificates that represent [
a guarantee of 
]no more than 100% of the principal of each equity
investment in the Utah fund of funds[
; and
]
.
[
(g) the board may not issue certificates after December 31, 2017.
]
(3) For an equity-based private investment initiated on or after July 1, 2015, the
applicable designated investor may apply for a tax credit if the following criteria are met:
(a) the Utah fund of funds has received payment from the designated investor as set
forth in the investor's agreement with the Utah fund of funds;
(b) the designated investor has not received a return of the initial equity investment in
the time established in the investor's agreement with the Utah fund of funds;
(c) there are insufficient funds in the redemption reserve to make a cash redemption
and the board does not exercise its other options under Subsection 
63M-1-1220
(3)(b); and
(d) there is a demonstrated positive impact on economic development in the state
related to the Utah fund of funds' investments or the success of the corporation's economic
development plan in the state, which shall be measured by:
(i) a method to calculate the impact on economic development in the state, established
by rule; and
(ii) the corporation, with approval of the board, engaging an independent third party to
evaluate the Utah fund of funds and determine the economic impact of the Utah fund of funds
and the activities of the corporation as further described in Section 
63M-1-1206
 and board
rules.
[
(3)
] 
(4)
 In determining the maximum limits in Subsections (2)(a)(i) and (ii) and the
$20,000,000 limitation for each $100,000,000 increment of contingent tax credits in Subsection
(2)[
(c)
]
(b)
:
(a) the board shall use the cumulative amount of scheduled aggregate returns on
certificates issued by the board to designated investors;
(b) certificates and related contingent tax credits that have expired may not be
included; and
(c) certificates and related contingent tax credits that have been redeemed shall be
included only to the extent of tax credits actually allowed.
[
(4)
] 
(5)
 Contingent tax credits are subject to the following:
(a) a contingent tax credit may not be redeemed except by a designated investor in
accordance with the terms of a certificate from the board;
(b) a contingent tax credit may not be redeemed prior to the time the Utah fund of
funds receives full payment from the designated investor for the certificate 
as established in the
agreement with the Utah fund of funds
;
(c) a contingent tax credit shall be claimed for a tax year that begins during the
calendar year maturity date stated on the certificate;
(d) an investor who redeems a certificate and the related contingent tax credit shall
allocate the amount of the contingent tax credit to the taxpayers of the investor based on the
taxpayer's pro rata share of the investor's earnings; and
(e) a contingent tax credit shall be claimed as a refundable credit.
[
(5)
] 
(6)
 In calculating the amount of a contingent tax credit:
(a) the board shall certify a contingent tax credit only if the actual return, or payment of
principal and interest for a loan initiated before July 1, 2014, including a loan refinanced on or
after July 1, 2014, that was originated before July 1, 2014, to the designated investor is less
than that targeted at the issuance of the certificate;
(b) the amount of the contingent tax credit for a designated investor with an equity
interest may not exceed the difference between the actual principal investment of the
designated investor in the Utah fund of funds and the aggregate actual return received by the
designated investor and any predecessor in interest of the initial equity investment and interest
on the initial equity investment;
(c) the rates, whether fixed rates or variable rates, shall be determined by a formula
stipulated in the certificate; and
(d) the amount of the contingent tax credit for a designated investor with an
outstanding loan to the Utah fund of funds initiated before July 1, 2014, including a loan
refinanced on or after July 1, 2014, that was originated before July 1, 2014, [
shall
] 
may
 be
equal to 
no more than
 the amount of any principal, interest, or interest equivalent unpaid at the
redemption of the loan or other obligation, as stipulated in the certificate.
[
(6)
] 
(7)
 The board shall clearly indicate on the certificate:
(a) the targeted return on the invested capital, if the private investment is an equity
interest;
(b) the payment schedule of principal, interest, or interest equivalent, if the private
investment is a loan initiated before July 1, 2014, including a loan refinanced on or after July 1,
2014, that was originated before July 1, 2014;
(c) the amount of the initial private investment;
(d) the calculation formula for determining the scheduled aggregate return on the initial
equity investment, if applicable; and
(e) the calculation formula for determining the amount of the contingent tax credit that
may be claimed.
[
(7)
] 
(8)
 Once [
money is invested by a designated investor,
] a certificate 
is issued, a
certificate
:
(a) is binding on the board; and
(b) may not be modified, terminated, or rescinded.
[
(8)
] 
(9)
 Funds invested by a designated investor for a certificate shall be paid to the
corporation for placement in the Utah fund of funds.
[
(9)
] 
(10)
 The State Tax Commission may, in accordance with Title 63G, Chapter 3,
Utah Administrative Rulemaking Act, and in consultation with the board, make rules to help
implement this section.
Section 9. Section 
63M-1-1222
 is amended to read:
63M-1-1222.
Powers and effectiveness.
(1) This part may not be construed as a restriction or limitation upon any power which
the board might otherwise have under any other law of this state and the provisions of this part
are cumulative to those powers.
(2) This part shall be construed to provide a complete, additional, and alternative
method for performing the duties authorized and shall be regarded as supplemental and
additional powers to those conferred by any other laws.
(3) [
The
] 
With respect to a debt-based private investment only, the
 provisions of any
contract entered into by the board or the Utah fund of funds may not be compromised,
diminished, invalidated, or affected by the:
(a) level, timing, or degree of success of the Utah fund of funds or the investment funds
in which the Utah fund of funds invests; or
(b) extent to which the investment funds are:
(i) invested in Utah venture capital projects; or
(ii) successful in accomplishing any economic development objectives.