Introduced Version






HOUSE BILL No. 1241

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 6-3.1-24-9; IC 6-3.5-7; IC 36-7-37.

Synopsis: Rural entrepreneurship areas. Permits a venture capital investment tax credit that has been certified by the economic development corporation to be applied against tax liability when the qualified investment capital is provided regardless of whether the total amount of tax credits applied by all taxpayers in a particular calendar year exceeds $12,500,000. Permits a rural county, with the approval of the economic development corporation, to designate the county as a rural entrepreneurship tax incentive financing area. Provides for the transfer of adjusted gross income taxes annually paid by employees working in an area for a new business to the rural county for the development of new business opportunities in the rural county. Limits the amount that may be transferred in any year to $500,000.

Effective: Upon passage; January 1, 2012 (retroactive).





Ellspermann




    January 9, 2012, read first time and referred to Committee on Commerce, Small Business and Economic Development.







Introduced

Second Regular Session 117th General Assembly (2012)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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HOUSE BILL No. 1241



    A BILL FOR AN ACT to amend the Indiana Code concerning state and local administration and to make an appropriation.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 6-3.1-24-9; (12)IN1241.1.1. -->     SECTION 1. IC 6-3.1-24-9, AS AMENDED BY P.L.172-2011, SECTION 68, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2012 (RETROACTIVE)]: Sec. 9. (a) The total amount of tax credits that may be allowed under this chapter in a particular calendar year for qualified investment capital provided during that calendar year may not exceed twelve million five hundred thousand dollars ($12,500,000). The Indiana economic development corporation may not certify a proposed investment plan under section 12.5 of this chapter if the proposed investment would result in the total amount of the tax credits certified for in the calendar year exceeding twelve million five hundred thousand dollars ($12,500,000). An amount of an unused credit carried over by a taxpayer from a previous calendar year may not be considered in determining the amount of proposed investments that the Indiana economic development corporation may certify under this chapter.
    (b) Notwithstanding the other provisions of this chapter, a taxpayer is not entitled to a credit for providing qualified investment capital to

a qualified Indiana business after December 31, 2014. However, this subsection may not be construed to prevent a taxpayer from carrying over to a taxable year beginning after December 31, 2014, an unused tax credit attributable to an investment occurring before January 1, 2015.

SOURCE: IC 6-3.5-7-13.5; (12)IN1241.1.2. -->     SECTION 2. IC 6-3.5-7-13.5, AS ADDED BY P.L.137-2006, SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 13.5. (a) The general assembly finds that counties and municipalities in Indiana have a need to foster economic development, the development of new technology, and industrial and commercial growth. The general assembly finds that it is necessary and proper to provide an alternative method for counties and municipalities to foster the following:
        (1) Economic development.
        (2) The development of new technology.
        (3) Industrial and commercial growth.
        (4) Employment opportunities.
        (5) The diversification of industry and commerce.
The fostering of economic development and the development of new technology under this section or section 13.6 of this chapter for the benefit of the general public, including industrial and commercial enterprises, is a public purpose.
    (b) The fiscal bodies of two (2) or more counties or municipalities may, by resolution, do the following:
        (1) Determine that part or all the taxes received by the units under this chapter should be combined to foster:
            (A) economic development;
            (B) the development of new technology; and
            (C) industrial and commercial growth.
        (2) Establish a regional venture capital fund.
    (c) Each unit participating in a regional venture capital fund established under subsection (b) may deposit the following in the fund:
        (1) Taxes distributed to the unit under this chapter.
        (2) The proceeds of public or private grants.
         (3) Revenues received by a county under IC 36-7-37.
    (d) A regional venture capital fund shall be administered by a governing board. The expenses of administering the fund shall be paid from money in the fund. The governing board shall invest the money in the fund not currently needed to meet the obligations of the fund in the same manner as other public money may be invested. Interest that accrues from these investments shall be deposited into the fund. The fund is subject to an annual audit by the state board of accounts. The

fund shall bear the full costs of the audit.
    (e) The fiscal body of each participating unit shall approve an interlocal agreement created under IC 36-1-7 establishing the terms for the administration of the regional venture capital fund. The terms must include the following:
        (1) The membership of the governing board.
        (2) The amount of each unit's contribution to the fund.
        (3) The procedures and criteria under which the governing board may loan or grant money from the fund.
        (4) The procedures for the dissolution of the fund and for the distribution of money remaining in the fund at the time of the dissolution.
    (f) An interlocal agreement made by the participating units under subsection (e) must provide that:
        (1) each of the participating units is represented by at least one (1) member of the governing board; and
        (2) the membership of the governing board is established on a bipartisan basis so that the number of the members of the governing board who are members of one (1) political party may not exceed the number of members of the governing board required to establish a quorum.
    (g) A majority of the governing board constitutes a quorum, and the concurrence of a majority of the governing board is necessary to authorize any action.
    (h) An interlocal agreement made by the participating units under subsection (e) must be submitted to the Indiana economic development corporation for approval before the participating units may contribute to the fund.
    (i) A majority of members of a governing board of a regional venture capital fund established under this section must have at least five (5) years of experience in business, finance, or venture capital.
    (j) The governing board of the fund may loan or grant money from the fund to a private or public entity if the governing board finds that the loan or grant will be used by the borrower or grantee for at least one (1) of the following economic development purposes:
        (1) To promote significant employment opportunities for the residents of the units participating in the regional venture capital fund.
        (2) To attract a major new business enterprise to a participating unit.
        (3) To develop, retain, or expand a significant business enterprise in a participating unit.


    (k) The expenditures of a borrower or grantee of money from a regional venture capital fund that are considered to be for an economic development purpose include expenditures for any of the following:
        (1) Research and development of technology.
        (2) Job training and education.
        (3) Acquisition of property interests.
        (4) Infrastructure improvements.
        (5) New buildings or structures.
        (6) Rehabilitation, renovation, or enlargement of buildings or structures.
        (7) Machinery, equipment, and furnishings.
        (8) Funding small business development with respect to:
            (A) prototype products or processes;
            (B) marketing studies to determine the feasibility of new products or processes; or
            (C) business plans for the development and production of new products or processes.
SOURCE: IC 6-3.5-7-13.6; (12)IN1241.1.3. -->     SECTION 3. IC 6-3.5-7-13.6, AS ADDED BY P.L.137-2006, SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 13.6. (a) The fiscal body of a county or municipality may, by resolution, establish a local venture capital fund.
    (b) A unit establishing a local venture capital fund under subsection (a) may deposit the following in the fund:
        (1) Taxes distributed to the unit under this chapter.
        (2) The proceeds of public or private grants.
         (3) Revenues received by a county under IC 36-7-37.
    (c) A local venture capital fund shall be administered by a governing board. The expenses of administering the fund shall be paid from money in the fund. The governing board shall invest the money in the fund not currently needed to meet the obligations of the fund in the same manner as other public money may be invested. Interest that accrues from these investments shall be deposited into the fund. The fund is subject to an annual audit by the state board of accounts. The fund shall bear the full costs of the audit.
    (d) The fiscal body of a unit establishing a local venture capital fund under subsection (a) shall establish the terms for the administration of the local venture capital fund. The terms must include the following:
        (1) The membership of the governing board.
        (2) The amount of the unit's contribution to the fund.
        (3) The procedures and criteria under which the governing board may loan or grant money from the fund.
        (4) The procedures for the dissolution of the fund and for the

distribution of money remaining in the fund at the time of the dissolution.
    (e) A unit establishing a local venture capital fund under subsection (a) must be represented by at least one (1) member of the governing board.
    (f) The membership of the governing board must be established on a bipartisan basis so that the number of the members of the governing board who are members of one (1) political party may not exceed the number of members of the governing board required to establish a quorum.
    (g) A majority of the governing board constitutes a quorum, and the concurrence of a majority of the governing board is necessary to authorize any action.
    (h) The terms established under subsection (d) for the administration of the local venture capital fund must be submitted to the Indiana economic development corporation for approval before a unit may contribute to the fund.
    (i) A majority of members of a governing board of a local venture capital fund established under this section must have at least five (5) years of experience in business, finance, or venture capital.
    (j) The governing board of the fund may loan or grant money from the fund to a private or public entity if the governing board finds that the loan or grant will be used by the borrower or grantee for at least one (1) of the following economic development purposes:
        (1) To promote significant employment opportunities for the residents of the unit establishing the local venture capital fund.
        (2) To attract a major new business enterprise to the unit.
        (3) To develop, retain, or expand a significant business enterprise in the unit.
    (k) The expenditures of a borrower or grantee of money from a local venture capital fund that are considered to be for an economic development purpose include expenditures for any of the following:
        (1) Research and development of technology.
        (2) Job training and education.
        (3) Acquisition of property interests.
        (4) Infrastructure improvements.
        (5) New buildings or structures.
        (6) Rehabilitation, renovation, or enlargement of buildings or structures.
        (7) Machinery, equipment, and furnishings.
        (8) Funding small business development with respect to:
            (A) prototype products or processes;


            (B) marketing studies to determine the feasibility of new products or processes; or
            (C) business plans for the development and production of new products or processes.
SOURCE: IC 36-7-37; (12)IN1241.1.4. -->     SECTION 4. IC 36-7-37 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]:
     Chapter 37. Rural Entrepreneurship Tax Incentive Financing
    Sec. 1. This chapter applies to a county with a population of less than fifty thousand (50,000).
    Sec. 2. The purpose of this chapter is to:
        (1) establish and fund programs to identify entrepreneurs with marketable ideas; and
        (2) support the organization and development of new businesses in rural counties.
    Sec. 3. The general assembly finds that establishment and support of new businesses in rural counties serve a public purpose and are of benefit to the general welfare of a rural county by encouraging investment, job creation and retention, and economic growth and diversity.
    Sec. 4. For purposes of this chapter, a business in a rural county shall be treated as a new business if the business meets all the following criteria:
        (1) The business is established or organized to do business in Indiana less than one (1) year before the business locates business operations in an area.
        (2) The business initially locates business operations in an area after the date the area is designated as an area by the corporation.
        (3) The business conducts business operations in the area to provide goods or services for profit.
        (4) The business meets any other criteria specified by the corporation.
    Sec. 5. As used in this chapter, "agreement" refers to an agreement between the corporation and a county under this chapter.
    Sec. 6. As used in this chapter, "area" refers to a rural entrepreneurship tax incentive financing area established under this chapter.
    Sec. 7. As used in this chapter, "corporation" refers to the Indiana economic development corporation.
    Sec. 8. As used in this chapter, "fund":
        (1) for purposes of section 20 of this chapter, refers to the rural entrepreneurship tax incentive financing fund established by the treasurer of state for a county; and
        (2) for purposes of this chapter other than section 20 of this chapter, refers to a rural entrepreneurship tax incentive financing fund established by a rural county.
    Sec. 9. As used in this chapter, "income tax incremental revenue" means the remainder of:
        (1) the total amount of state adjusted gross income taxes paid by employees of new businesses employed in any part of the territory comprising an area (other than a tax incentive zone) with respect to wages and salary earned for work in the area (other than in a tax incentive zone) for a particular state fiscal year; minus
        (2) the tax credits awarded by the economic development for a growing economy board under IC 6-3.1-13 to new businesses operating in the territory in an area (other than a tax incentive zone) that is not part of a tax incentive zone as the result of wages earned for work in any part of the territory comprising an area (other than in a tax incentive zone) for the state fiscal year;
as determined by the department of state revenue.
    Sec. 10. As used in this chapter, "incubator" means a facility in which space may be leased by a tenant and in which management provides access to business development services for use by tenants.
    Sec. 11. As used in this chapter, "new business" refers to a business entity described in section 4 of this chapter.
    Sec. 12. As used in this chapter, "rural county" refers to a county described in section 1 of this chapter.
    Sec. 13. As used in this chapter, "tax incentive zone" refers to any of the following:
        (1) A community revitalization enhancement district established under IC 36-7-13.
        (2) A professional sports and convention development area established under IC 36-7-31.3.
        (3) A certified technology park established under IC 36-7-32.
        (4) Any other area in which a law permits adjusted gross income taxes imposed on a taxable event in the area to be distributed to an employer located in the area or a political subdivision in the area for a local business, economic development, or governmental purpose.
    Sec. 14. A rural county may apply to the corporation for designation of the county as a rural entrepreneurship tax incentive financing area. The application must:
        (1) be in a form specified by the corporation; and
        (2) include information that the corporation determines necessary to make the determinations required under section 15 of this chapter.
    Sec. 15. The corporation may grant an application from a rural county and designate the county as an area if the county:
        (1) submits a written plan for supporting entrepreneurship and the establishment of new businesses in the area that meets the requirements of the corporation; and
        (2) agrees to the terms and conditions specified by the corporation.
    Sec. 16. The corporation shall send a copy of the designation to the department of state revenue.
    Sec. 17. The corporation may terminate an area for a violation of the terms and conditions established for designating the county as an area, only after giving the county an opportunity for a hearing.
    Sec. 18. An area is established when the corporation grants a county's application to designate the county as an area. An area continues in existence until the occurrence of the earliest of the following:
        (1) January 1, 2023.
        (2) The date specified in an ordinance adopted by the legislative body for the county designating the county as an area.
        (3) The date that the corporation terminates the area, if the corporation determines after a hearing that the area has violated the terms and conditions specified for the area by the corporation.
    Sec. 19. Before the first business day in October of each year, the department of state revenue shall calculate the income tax incremental revenue for the preceding state fiscal year for each area designated under this chapter. The department of state revenue shall direct the treasurer of state to transfer the sum of the amounts determined under this section for each area in a county to the fund established for that county.
    Sec. 20. (a) The treasurer of state shall establish a fund for each county that establishes an area. The fund shall be administered by the treasurer of state. Money in the fund does not revert to the

state general fund at the end of a state fiscal year.
    (b) Subject to subsection (c), the:
        (1) aggregate amount of the adjusted gross income taxes paid by employees employed in an area in the county by a new business with respect to wages earned for work in the area; and
        (2) aggregate amount of adjusted gross income taxes paid by each new business operating in the area in the county with respect to work that is sourced to the area, as determined by the department of state revenue;
shall be deposited during each state fiscal year in the fund established for the county under subsection (a) until the amount deposited equals the maximum amount specified in subsection (c).
    (c) Not more than a total of five hundred thousand dollars ($500,000) may be deposited in a fund for a county in any one (1) state fiscal year.
    (d) On or before the twentieth day of each month, all amounts held in the fund established for an area shall be distributed to the county establishing the area for deposit in the county's rural entrepreneurship tax incentive financing fund established under section 21 of this chapter.
    (e) A sufficient amount is annually appropriated to make the transfers required by this section.
    Sec. 21. (a) Each county that establishes an area under this chapter shall establish a rural entrepreneurship tax incentive financing fund for the county to receive money distributed to the county under this chapter.
    (b) Money deposited in the fund may be used by the county only for one (1) or more of the following purposes:
        (1) Transfer money to a revolving fund established under section 22 of this chapter for purposes of the revolving fund.
        (2) Transfer money to a regional venture capital fund established under IC 6-3.5-7-13.5 or a local venture capital fund established under IC 6-3.5-7-13.6 for purposes of the funds.
        (3) Incubator development and operation.
        (4) Small business support services.
        (5) Direct incentives and cost reimbursement to assist with the start-up of new businesses approved by the county legislative body.
    (c) The fund may not be used for the administrative expenses of the fund.


    Sec. 22. (a) A county that designates the county as an area may establish a revolving fund to provide loans to new businesses in the county's area.
    (b) The county may loan money in the revolving fund established under this section to a new business if the county fiscal body finds that the loan will be used by the new business for one (1) or more of the following economic development purposes:
        (1) Promoting significant opportunities for the gainful employment of Indiana residents in the county's area.
        (2) Attracting a new business to the county's area.
        (3) Retaining or expanding the operations of a new business in the county's area.
    (c) The county may make the loan from a revolving fund established under this section on the terms approved by the county fiscal body.
    (d) Amounts paid on a loan made from a revolving fund established under this section shall be deposited in the revolving fund.
    Sec. 23. A county may not issue bonds that:
        (1) pledge money deposited in the county's fund to repayment of interest or principal on the bonds; or
        (2) guarantee repayment of any public or private obligation from money in the fund.
    Sec. 24. Two (2) or more counties may enter into a written agreement under this section to jointly carry out the purposes of this chapter in the counties that are parties to the agreement.
    Sec. 25. A county that establishes an area shall send to the department of state revenue:
        (1) a certified copy of the designation of the county as an area;
        (2) a certified copy of any agreement entered into with the corporation for the area; and        
        (3) a complete list of the new business employers in the area (excluding any part of the area that is in a tax incentive zone), including any other identifying information required by the department of state revenue.
The county shall update the list provided under subdivision (3) at least annually before July 1 of each year.
    Sec. 26. The state board of accounts shall audit a fund at least one (1) time between before July 1, 2018, and one (1) time after June 20, 2018, and before January 1, 2023, to determine whether:
        (1) the appropriate amount of revenue was transferred from the state to the county; and
        (2) money in the fund was used for purposes permitted under this chapter.
    Sec. 27. Upon termination of an area, the balance of any fund established under section 21 or 22 of this chapter and any amounts due to either fund shall be transferred to the county general fund.
    Sec. 28. Notwithstanding any other law, a tax incentive zone may not be established or expanded in a county:
        (1) after the date an area is established in the county; and
        (2) before the date the area terminates;
without the approval of the county legislative body.
    Sec. 29. This chapter expires January 1, 2023.

SOURCE: ; (12)IN1241.1.5. -->     SECTION 5. An emergency is declared for this act.