Date: 03/09/2010

Final
BILL SUMMARY for HB10-1111

HOUSE COMMITTEE ON STATE, VETERANS, & MILITARY AFFAIRS

Votes: View--> Action Taken:
Moved prepared amendment L.001 (Attachment C), as
Moved prepared amendment L.002 (Attachment D). Th
Moved prepared amendment L.003 (Attachment E). Th
Moved to lay over House Bill 10-1111, as amended,
Moved to Postpone Indefinitely House Bill 10-1111.
Moved to refer House Bill 10-1111 to the Committee		Pass Without Objection
Pass Without Objection
Pass Without Objection
TIE
PASS
FAIL
BILL:HB10-1111
TIME: 02:58:25 PM
MOVED:Casso
MOTION:Moved to lay over House Bill 10-1111, as amended, to March 11, 2010. The second to the motion was withdrawn, and the motion was withdrawn.
SECONDED:
VOTE
Casso
Court
DelGrosso
Hullinghorst
McCann
Miklosi
Murray
Nikkel
Waller
Labuda
Todd
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: TIE




01:37 PM -- House Bill 10-1111

Representative Miklosi, prime sponsor, presented House Bill 10-1111, concerning the creation of low-profit limited liability companies (L3Cs). Committee members received a packet of background information on L3Cs from Representative Miklosi (Attachment A), and a collection of letters in support of the bill (Attachment B). Testimony was taken on the bill at the committee's March 4th meeting, and testimony resumed with the following persons testifying on the bill:

10HseState0309AttachA.pdf 10HseState0309AttachB.pdf

01:39 PM -- Ms. Caryn Capriccioso, representing herself, testified in favor of the bill. Ms. Capriccioso addressed some reservations raised about the bill during previous testimony. Ms. Capriccioso discussed the rise of the social enterprise business sector, and explained the work performed by social enterprise businesses. Ms. Capriccioso explained how creation of the L3C business entity would aid this business sector. Ms. Capriccioso responded to questions regarding the levying of property and income taxes on L3Cs under the legislation, and the attachment of such taxes to individuals joined in the L3C.

01:47 PM -- Ms. Martha Vail, representing herself, testified in favor of House Bill 10-1111. Ms. Vail discussed the attraction of working in an L3C for young entrepreneurs, and the "branding" aspects of creating the L3C entity. Ms. Vail also addressed reservations expressed with the bill during previous testimony.

01:50 PM -- Mr. Dallas Petersen, representing The Apotheosis Group, testified in favor of the bill. Mr. Petersen discussed the need for a business entity that is a hybrid between for-profit companies and nonprofit organizations, and explained how such an entity would be equipped to survive economic downturns. Mr. Petersen also discussed the economic benefits of creating the L3C entity to the state, and commented on the branding aspects of the L3C.

01:54 PM -- Mr. Geoff Blue, representing the Colorado Attorney General, testified in opposition to House Bill 10-1111. Mr. Blue explained that all the functions of an L3C can be performed under the Limited Liability Company entity, and discussed the potential for fraud under the L3C entity. Mr. Blue responded to questions regarding how the potential for L3C fraud based on the inability to determine a proper level of profit, and the ability of a medical marijuana dispensary to be registered as an L3C under the bill. Discussion ensued regarding the policing of fraud by L3Cs in states where the type of entity is allowed.


02:05 PM

Discussion ensued regarding the applicability of certain taxes to L3Cs. Discussion followed regarding the operation of early childhood centers as L3Cs in states where the entity is allowed.

02:08 PM -- Mr. Pete Gingrass, representing Futurepoint L3C, based in Wyoming, testified in favor of the bill. Mr. Gingrass discussed the work performed by his company, and explained how the company has benefitted from the L3C entity. Mr. Gingrass responded to questions regarding the ability of his company to operate as a limited liability company, and taxes applicable to the company. Discussion ensued regarding the sites worked on by his company.

02:16 PM -- Mr. Bill Callison, representing the Colorado Bar Association, testified in opposition to House Bill 10-1111. Mr. Callison discussed the origins of the L3C concept, and the inability of foundations to make program-related investments under current federal law. Mr. Callison discussed potential down sides to creating the L3C entity, and explained how current limited liability companies would be classified as L3Cs under the bill. Mr. Callison also discussed the branding aspect of creating the L3C entity, and the lack of ability to ensure those labelling their entities as L3Cs are engaged in social endeavors. Mr. Callison responded to questions regarding income and property tax ramifications for L3Cs.


02:27 PM

Mr. Callison explained the term tranched investment, and responded to questions regarding the making of program-related investments by nonprofit foundations. Mr. Callison responded to further questions regarding the willingness of the Colorado Bar Association to work on L3C issues in the future, and the ability to perform charitable work and make program-related investments while organized as a limited liability company.

02:37 PM -- Mr. Rick Zwetsch, representing himself, returned to respond to issues raised during previous testimony. Mr. Zwetsch discussed a forthcoming amendment that would require L3Cs to incorporate "low-profit limited liability company" in their names, and addressed concerns raised about the potential for fraud to be perpetrated by L3Cs. Mr. Zwetsch discussed the tax liabilities of L3Cs.


02:41 PM

Representative Miklosi explained the effect of prepared amendment L.001 (Attachment C).

10HseState0309AttachC.pdf
BILL:HB10-1111
TIME: 02:41:21 PM
MOVED:Miklosi
MOTION:Moved prepared amendment L.001 (Attachment C), as amended by prepared amendment L.003. The motion passed without objection.
SECONDED:Casso
VOTE
Casso
Court
DelGrosso
Hullinghorst
McCann
Miklosi
Murray
Nikkel
Waller
Labuda
Todd
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

BILL:HB10-1111
TIME: 02:42:22 PM
MOVED:Miklosi
MOTION:Moved prepared amendment L.002 (Attachment D). The motion passed without objection.

10HseState0309AttachD.pdf
SECONDED:Casso
VOTE
Casso
Court
DelGrosso
Hullinghorst
McCann
Miklosi
Murray
Nikkel
Waller
Labuda
Todd
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


02:43 PM


Representative Miklosi explained the effect of prepared amendment L.003 (Attachment E). Representative Miklosi responded to questions regarding the applicability of the amendment to so-called 527 political organizations.

10HseState0309AttachE.pdf
BILL:HB10-1111
TIME: 02:43:05 PM
MOVED:Miklosi
MOTION:Moved prepared amendment L.003 (Attachment E). The motion passed without objection.
SECONDED:Casso
VOTE
Casso
Court
DelGrosso
Hullinghorst
McCann
Miklosi
Murray
Nikkel
Waller
Labuda
Todd
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection



02:45 PM

Representative Miklosi provided closing remarks in favor of House Bill 10-1111. Committee members explained their forthcoming votes.
BILL:HB10-1111
TIME: 02:48:46 PM
MOVED:Miklosi
MOTION:Moved to refer House Bill 10-1111 to the Committee of the Whole, as amended, with favorable recommendation. The motion failed on a 4-7 roll call vote.
SECONDED:Casso
VOTE
Casso
Yes
Court
No
DelGrosso
No
Hullinghorst
Yes
McCann
No
Miklosi
Yes
Murray
No
Nikkel
No
Waller
No
Labuda
No
Todd
Yes
Not Final YES: 4 NO: 7 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:HB10-1111
TIME: 02:58:13 PM
MOVED:Murray
MOTION:Moved to Postpone Indefinitely House Bill 10-1111. The motion passed on a 6-5 roll call vote.
SECONDED:Labuda
VOTE
Casso
No
Court
No
DelGrosso
Yes
Hullinghorst
No
McCann
Yes
Miklosi
No
Murray
Yes
Nikkel
Yes
Waller
Yes
Labuda
Yes
Todd
No
Final YES: 6 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:HB10-1111
TIME: 02:58:25 PM
MOVED:Casso
MOTION:Moved to lay over House Bill 10-1111, as amended, to March 11, 2010. The second to the motion was withdrawn, and the motion was withdrawn.
SECONDED:
VOTE
Casso
Court
DelGrosso
Hullinghorst
McCann
Miklosi
Murray
Nikkel
Waller
Labuda
Todd
Not Final YES: 1 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: FAIL