SB0464sam001 96TH GENERAL ASSEMBLY

Sen. Iris Y. Martinez

Filed: 3/25/2009

09600SB0464sam001 LRB096 06569 HLH 24593 a

AMENDMENT TO SENATE BILL 464

AMENDMENT NO. ______. Amend Senate Bill 464 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Illinois Economic Leadership Initiative Act.

Section 5. Definitions. For the purpose of this Act, unless the context otherwise requires:

"Advisory Committee" means the Illinois Economic Leadership Advisory Committee, which will be replaced by the Board.

"Board" means the Illinois Economic Leadership Board.

"Corporation" or "ICIC" means the Illinois Capital Investment Corporation.

"Certified Illinois business" means any qualified Illinois company, as defined in this Section, that is certified as defined in subsection (b) of Section 15 for capital investment under this Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Illinois Accelerator company" means a private-sector subsidiary organized in the State of Illinois, owned by the Illinois Capital Investment Corporation, that is responsible for assisting businesses to qualify for capital investment under this Economic Leadership Initiative.

"Initiative" means the Illinois Economic Leadership Initiative.

"Qualified Illinois company" means businesses licensed and registered with the Illinois Department of Financial and Professional Regulation, in good standing with the Illinois Secretary of State, and current with all Illinois tax liabilities.

"Qualified Illinois taxpayer" means any person or entity that pays taxes in the State of Illinois and is current with all Illinois tax liabilities.

"State" means the State of Illinois.

"Qualified fund managers" means persons or entities selected by the Corporation in collaboration with its lead investors in this Initiative, and under contract with the Corporation to manage investment funds established by the Corporation.

"Claimant" means a person or entity investor that files a claim under this Initiative.

Section 10. Illinois Incentive Tax Credits.

(a) Subject to appropriation, this Act creates incentive income and franchise tax credits for investors in the fund sectors described in this Act, but only if the investments are in qualified Illinois companies certified by the Board in connection with the Department and the Corporation.

(b) In order to maximize the effectiveness of the tax credits, the tax credits must include the following components authorized by this Act:

(1) applies only to claimants that are investors in the Corporation's related investment funds in sectors defined herein for investment by selected fund managers in certified Illinois established businesses that are entitled to the tax credited investment;

(2) the private capital investment tax credit equates to 9.5% tax credit per year for 6 years and authorizes the Corporation to negotiate and achieve the optimum tax credit allocation per investment sector in a manner that aligns capital investment with market demand and that maximizes job creation and retention in the State of Illinois with approval by the Department;

(3) the Illinois Pension System lead investor is authorized to gain the tax credit benefit through the sale of the transferable tax credits to one or more qualified Illinois taxpayer;

(4) transferable to any qualified Illinois taxpayer, i.e., claimant may sell tax credits under this Act to another person or entity that is subject to taxes imposed in Illinois, if the claimant notifies the Board, the Department, and the Department of Revenue of the sale and includes with the notification a copy of the transfer documents;

(5) applicable to all forms of Illinois taxes;

(6) non-recapturable; and

(7) irrevocable.

(c) The Department shall be authorized to approve one-time broker tax credits of 10% made available per offering per certified business for funding raised for Illinois businesses.

(d) The one-time broker tax credit is limited up to $50,000 per offering per certified Illinois business with approval by the Department.

Section 15. Illinois Economic Leadership Board.

(a) Subject to appropriation, the Illinois Economic Leadership Board (IELB) is created to assist with legislation, organization, and promotion of the private-sector, market-driven Initiative to incentivize major private capital resources to be immediately available to Illinois businesses for substantial economic growth.

(b) The Board shall:

(1) promulgate rules establishing a procedure for the Board to certify businesses eligible for tax-credited investments as made available by this Act. The Board shall promulgate such rules in connection with the Department and the Illinois Capital Investment Corporation (ICIC). The rules shall require a business that desires to obtain certification to file an application with the Board. The rules shall require an applicant for certification to provide the Board with any information the Board determines is necessary to ensure eligibility for certification and compliance with this Act and the rules promulgated under this Section. The Board shall consult with the Corporation and the Department in determining whether to certify any applicant;

(2) review and approve performance data related to the tax credits made available by this Act as reported by the ICIC in conjunction with the Department;

(3) certify businesses eligible for tax-credited investments as made available by this Act, in connection with the Department and the ICIC;

(4) serve as media spokespersons for the Initiative;

(5) promote the Initiative;

(6) solicit institutional investors;

(7) recruit Illinois companies that are capital investment candidates; and

(8) select the ICIC no later than the first day of the second month beginning after the effective date of this Act.

(c) The Board shall consist of 11 voting members to be appointed as follows in consultation with the chairperson of the Advisory Committee and with the chairperson of the ICIC serving as chairperson of the Board:

(1) two members appointed by the Governor;

(2) one member appointed by the President of the Senate;

(3) one member appointed by the Minority Leader of the Senate;

(4) one member appointed by the Speaker of the House;

(5) one member appointed by the Minority Leader of the House;

(6) one member appointed by the Mayor of the City of Chicago;

(7) the Director of Commerce and Economic Opportunity or his or her designee;

(8) the Director of Revenue or his or her designee;

(9) the Executive Director of lead Illinois Pension System Fund or his or her designee; and

(10) Chairperson of the Illinois Capital Investment Corporation or his or her designee.

The members of the Board shall serve without compensation for a term of 2 years, but may be reimbursed for their expenses.

(d) The Department of Commerce and Economic Opportunity shall:

(1) Staff and administer, in collaboration with the Illinois Capital Investment Corporation, the Illinois Economic Leadership Board.

(2) Recommend job creation standards, in collaboration with the Illinois Capital Investment Corporation.

(3) Advise the Board in relation to portfolio company certification for tax-credited capital investment by the Illinois Capital Investment Corporation.

(4) In conjunction with the recommendations of the Illinois Capital Investment Corporation, analyze and recommend to the Board for approval the appropriate tax credit allocations per capital investment category based on market analysis of candidate businesses within the State of Illinois and include analysis of the market of businesses outside the State that may relocate to Illinois in connection with capital investment under this Initiative after certification.

(5) In conjunction with recommendations of the Board and the Corporation, engage in internal strategic planning process from time-to-time to enable the Department to most effectively align its current programs with the Initiative as necessary.

(6) Assess and collect from applicant businesses that apply for certification up to $500 per application submitted to the Board and disseminated to the Department and the Corporation under this Initiative, and assess and collect up to $1,500 per million dollars invested in qualified businesses certified for and that receive capital investment under this Initiative, which are intended to cover the Department's program related expenses incurred in connection with this Initiative including its expenses, if any, related to staffing the Board.

(7) Upon approval of an application under this Initiative, issue a written notice of certification to the applicable business and provide a copy of the notice to the Corporation, the Department of Commerce and Economic Opportunity, and the Illinois Department of Revenue. Each notice shall include the following statement: "The Illinois Economic Leadership Board has not recommended or approved an investment in this entity or assessed the merits of risks of such an investment. Investors should rely solely on their own investigation and analysis and seek investment, financial, legal, and tax advice before making their own decisions regarding investment in this entity." The Board shall provide any person a copy of the notice upon request.

(8) In conjunction with the recommendations of the Board and the Corporation, enter into certification agreements between the State and businesses qualified to receive tax-credited investments from this Initiative.

(9) Submit a report annually no later than September 15 to the Clerk of the House and the Secretary of the Senate for distribution to the members of the General Assembly describing the performance of investments made by fund managers, the total amount of tax credits claimed with regard to those investments, and economic impact on the State of Illinois. The Department of Revenue shall provide the Board with any information the Board requests for preparation of the report under this paragraph.

(10) Engage in promotional activities in consultation with the Corporation and the Department, but not recommend that any person or entity under this Initiative make a particular investment. The Board shall solicit institutional investors to invest in this Initiative, shall encourage fund managers to invest in qualified businesses, and shall solicit businesses that may benefit from investments made by fund managers.

(11) Recommend to the General Assembly any statutory changes that the Board considers necessary or proper to carry out the purposes of this Section.

(12) Upon the discontinuance of a certification by the Board, in consultation with the Corporation and the Department, the Board shall issue a written notice of decertification to the applicable business and shall provide a copy of the notice to the Corporation, the Department of Commerce and Economic Opportunity, and the Department of Revenue. Discontinuance of a certification does not effect any current offering of ownership interests in the decertified business.

Section 20. Illinois Capital Investment Corporation.

(a) Subject to appropriation, the Illinois Capital Investment Corporation (ICIC) is created as a private sector proactive entity to oversee and facilitate the raising and development of private-sector institutional investment aligned with and in connection with the Initiative's state income and franchise tax credit incentives.

(b) The Corporation shall:

(1) Deploy private capital investment in a manner that provides a continuum of capital in support of Illinois companies.

(2) Organize an Illinois Accelerator Company within the Corporation to aggressively and proactively seek out and prepare Illinois companies and out-of-state companies that will relocate and become Illinois companies for capital investment opportunities under the Initiative.

(3) Be authorized, in conjunction with the Department with approval by the Board, to monitor, analyze, and report measurable and sustainable economic and fiscal impact results related to the State's tax credit investments, and similarly monitor and report on the performance and accountability of each fund manager and the Initiative's workforce investment components.

(4) Establish investment funds that are managed by qualified fund managers selected by the Corporation in collaboration with its lead investors.

(5) Be authorized to establish parameters for specific private capital investment sectors and related tax credits defined in this Act and in consultation with the Department.

(6) Select 2 to 6 qualified fund managers in each sector to invest incentivized private capital. The fund sectors include:

(A) Private Equity Funds, Growth Funds, and Venture Growth Funds for private capital investment in certified Illinois businesses to create and retain jobs for the State's workforce and to invest in businesses that relocate into the State of Illinois.

(B) Seed and Early Stage Funds for investment in newly formed or emerging businesses with market demand to help grow qualified Illinois companies.

(C) Angel Investment Funds for investment in qualified early stage businesses certified eligible for tax credits.

(D) Women and Minority Owned Business Funds for investment into certified businesses that are at least 51% owned and controlled by woman and minorities. Nothing in this Act shall limit any other investment fund or vehicle from also investing in woman and minority-owned businesses as defined in this Section.

(E) Community Development Funds for investment in businesses certified as eligible for incentive tax credit investment.

(F) Low-to-Moderate Income (LMI) Financial Access Funds for investment in businesses that deliver low-cost financial services that help facilitate low-to-moderate income consumer-worker economic mobility, including voluntary micro-banking programs in participating elementary and high schools.

(G) Low-to-Moderate Income (LMI) Affordable Housing and Homeownership Funds for investment in businesses that facilitate housing and homeownership via quality mortgage finance for LMI consumer workers in connection with State and municipal housing authorities and their HUD Section 8 and 8y programs.

(H) Low-to-Moderate Income (LMI) Transportation Funds for private investment in businesses that deliver quality low-cost marketplace solutions that enable workforce participants to acquire new vehicles that lower their transportation expenses, reduce emissions, preserve employment, and achieve job advancement with greater income due to an expanded geographic area from residence where work can be found.

(I) LMI Workforce Health and Fitness Funds that invest in companies with low-cost marketplace solutions that enable workers, including younger workforce entrants with various levels of education, to remain engaged as active, productive participants in the Illinois workforce despite challenges related to involuntary loss of employment or stress related to the risk of job loss; includes private investment in non-profit voluntary fitness programs in elementary and high schools that choose to participate.

(7) Authorize the State of Illinois Pension System funds to serve as lead investors to help establish the Corporation as the private-sector entity that administers the accountable, private-sector, market-driven continuum of access-to-capital via qualified fund managers.

(8) Determine a structure for the Corporation to further enhance the value of State tax credits.

(9) Solicit, interview, and select Fund Managers in collaboration with lead investors.

(10) Recommend businesses for certification by the Board in connection with the Department.

(11) Manage and oversee via direct fund management of the highly specialized workforce-related LMI Financial Access Funds, LMI Affordable Housing and Homeownership Funds, the LMI Transportation Funds, and LMI Workforce Health and Fitness Funds.

(12) Establish, oversee, and direct the Illinois Accelerator Corporation to seek, identify, prepare, and assist established and early stage companies as they become qualified recipients of the Initiative's capital investments.

(13) Work with portfolio companies and fund managers to assist in growing the Initiative's portfolio companies and facilitating follow-on funding from the appropriate sources that may include the next level of funds from within the Initiative.

(14) Monitor, analyze, and report to the Board and the General Assembly measurable and sustainable economic and fiscal impact results related to tax credit investments.

(15) Establish measurable standards in relation to tax credited investments and hold the selected fund managers accountable for meeting the standards.

(16) Coordinate and oversee an Economic Advisory Board, Fund Manager Advisory Board, Illinois CEO Leadership Advisory Board, and Institutional Investor Advisory Board.

(17) Coordinate a Management Information System that tracks investments, related economic impact, and financial results.

(18) Coordinate and disseminate a proactive multi-media communications program and related televised economic news media message.

(19) Except where designated in this Act in relation to the highly specialized LMI Fund activities, no owner of the Corporation has made a certified capital investment or is a fund manager in any of the Funds to be established by the Corporation.

(c) The Department of Commerce and Economic Opportunity shall:

(1) identify candidate businesses for capital investment for the Initiative and provide support, in connection with existing and future capital investment programs and services of the Department, once an investment is made; and

(2) be authorized under this Act to obtain and preserve confidential company data not already available to the Department.

(d) Funding for the Corporation shall be provided by:

(1) an organizational advance from the Illinois Pension System lead investor;

(2) a combined annual operating management fee and expense reimbursement of 1% advanced by private or Pension System investors and repaid to investors from the gain related to this Initiative's investments, which will be negotiated and finalized by the Corporation with its investors; and

(3) performance incentive fees of a 6% carry of the gain after returns of 100% of private sector principal investments and reimbursement of management fees and related expense funding advanced by investors.

(e) Fund manager compensation shall be determined and negotiated by the ICIC in collaboration with its investors and provided by:

(1) an annual management fee as described in item (3), which will be negotiated by the ICIC in collaboration with selected qualified fund managers, and funded by advances paid to the Corporation by investors for distribution by the Corporation to qualified fund managers selected by the Corporation in collaboration with its investors, 50% of which will be paid on commitment and 100% will be paid upon investment;

(2) an incentive fee of a 14% carry of the profit after returning to investors 100% of their private and Pension System investment funding, i.e., the principal investment, and related management fees and other expenses; and

(3) a percentage determined and negotiated by the ICIC with investors based upon the type of fund as follows: up to 3% for Angel Investment Funds, Early Stage Seed Funds, Women and Minority Owned Funds, Community Funds, Financial Access Funds; up to 3% for Venture Funds; and up to 2% for Private Equity Funds.

(f) The Corporation shall consist of members as follows:

(1) Illinois Pension System lead investor;

(2) Insurance companies;

(3) Financial institutions;

(4) Corporations;

(5) Native American Tribes;

(6) Utility companies;

(7) Other institutional investors; and

(8) High net worth individuals.

(g) The Corporation shall have a Board of Directors that shall consist of:

(1) the Chairperson of the Corporation;

(2) major institutional investors; and

(3) appointment by the Illinois Economic Leadership Board.

Section 99. Effective date. This Act takes effect upon becoming law.".