Date: 02/27/2014

Final
BILL SUMMARY for HB14-1012

HOUSE COMMITTEE ON FINANCE

Votes: View--> Action Taken:
Adopt amendment L.003 (Attachment C). The motion p
Adopt amendment L.005 (Attachment D). The motion
Refer House Bill 14-1012, as amended, to the Commi		Pass Without Objection

PASS



10:14 AM -- HB14-1012

Representatives Gerou and Tyler came to the table to present House Bill 14-1012. The representatives explained that the bill repeals the Colorado Innovation Investment Income Tax Credit (CIITC) and replaces it with the Advanced Industry Investment Income Tax Credit. The income tax credit is available in tax years 2014 through 2017. The credit is equal to 25 percent of the qualified investment, or 30 percent if the investment is to a business located in a rural or economically distressed area. The maximum credit amount per tax year is $50,000 for each investment in a qualified business. Taxpayers may claim multiple credits if they invest in more than one qualified business. The bill allows the Office of Economic Development to authorize $1 million in tax credits for tax year 2014, and $2 million each year for tax years 2015, 2016, and 2017. The credits are approved on a first-come, first-serve basis. The credit is non-refundable but may be carried forward for five years. In order to qualify for the credit, an investor must invest a minimum of $25,000 in a business that qualifies as a Colorado advanced industry. Representative Gerou responded to questions on a related bill she had introduced in a past session.


10:25 AM

The sponsors responded to a request for a definition of "angel investor," and addressed questions on the intent of the bill and the types of businesses the new tax credit will benefit in Colorado.


10:40 AM

Committee discussion of the merits of the bill ensued. The bill sponsors responded to questions on the industries that qualify for the tax credit and the fiscal impact of the bill.

10:53 AM -- Ali Mickelson, representing the Colorado Fiscal Institute, spoke against the bill. Ms. Mickelson stated that CFI believes the credit will create a special advantage for a certain type of industry, that there was no evidence the tax credit would affect investment habits, and that it could have a negative net fiscal impact for the state.

10:56 AM -- Erik Metisek, representing the Colorado Technology Association, and Tim Reeser and Chris Votoupal, representing the Colorado Cleantech Industry Association, came to the table to speak in support of the bill. Mr. Metisek stated that the tax credit will help entrepreneurs in Colorado to get their business ideas off the ground and spur private dollars investment. He added that advanced industries are high-growth industries. Mr. Metisek responded to questions on the difference between angel investors and accredited investors, and how he has helped businesses in Colorado raise funding in the past. Mr. Reeser summarized his involvement in investment in different technology industries. He responded to questions on whether the tax credit is something that a company that was invested in would be willing to repay once it had become financially solvent, the taxes paid by companies created with the assistance of outside investment, and investment in Colorado in advanced industries. Mr. Votoupal stated that the bill has the endorsement of the Denver Chamber of Commerce. He addressed previous committee statements on the credit only applying to advanced industries, and told the committee that other states with similar programs have seen a lot of success. Mr. Votoupal responded to questions on the leftover funds from the CIITC pilot program, job creation from the CIITC, and how the tax credit compares to other programs in the state that aim to promote business growth.

11:30 AM -- April Giles, Duane Knight, and Kevin Smith, representing the Colorado Bioscience Association (CBSA), spoke in support of the bill. Ms. Giles described how angel investment has increased in the U.S. in recent years, and that the bill has a lot of potential to incentivize investment in Colorado. Mr. Smith stated that people in the bioscience industry cannot spend time developing their products and technologies when they are having to seek out investment, and that the bill would help alleviate this. Mr. Knight provided an overview of his personal involvement in advanced industries, and how a company he was the Chief Financial Officer for benefited from the CIITC in 2009. A document on angel investors and letters of support for the bill were distributed to the committee (Attachment B).

14HseFin0227AttachB.pdf14HseFin0227AttachB.pdf

11:42 AM -- Patrick Boyle, representing the Colorado Competitive Council (CCC), Jennifer Cassell, representing the Economic Development Council of Colorado (EDCC), and Sandra Solin, representing the Northern Colorado Legislative Alliance (NCLA), spoke in support of the bill. Ms. Cassell stated that the EDCC board voted unanimously to support the bill, which they thought would stimulate investment and the Colorado economy as a whole. Mr. Boyle stated that the CCC considered the tax credit a modest and effective investment for the state. Ms. Solin told the committee that the NCLA believed the tax credit would provide new energy and investment for advanced industries in the state.

11:47 AM -- Heather Callender-Potters, representing Pharmajet, spoke in favor of the bill. Ms. Callender-Potters provided the committee with a summary of her experiences in the investment world, and described how she saw the Advanced Industry Investment Income Tax Credit benefiting businesses in the state. She responded to questions on the definition of an angel investor, and committee discussion of this type of investor ensued.


12:00 PM

Representative Tyler and Gerou responded to a question on why corporations were not included as qualified investors in the bill.
BILL:HB14-1012
TIME: 12:02:40 PM
MOVED:Pabon
MOTION:Adopt amendment L.003 (Attachment C). The motion passed without objection

14HseFin0227AttachC.pdf14HseFin0227AttachC.pdf
SECONDED:Melton
VOTE
Becker
DelGrosso
Foote
Joshi
Kagan
Melton
Pabon
Priola
Saine
Excused
Swalm
Wilson
Labuda
Court
YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection


12:02 PM

Representative DelGrosso explained Amendment L.005 (Attachment D) to the committee, which broadens the list of businesses qualified for the Advanced Industry Income Investment Tax Credit. Committee questioning of the sponsors and discussion of the merits of the amendment ensued.

14HseFin0227AttachD.pdf14HseFin0227AttachD.pdf
BILL:HB14-1012
TIME: 12:16:59 PM
MOVED:DelGrosso
MOTION:Adopt amendment L.005 (Attachment D) The motion was ruled out of order by the Chair, because it did not fit under the bill title.
SECONDED:Pabon
VOTE
Becker
DelGrosso
Foote
Joshi
Kagan
Melton
Pabon
Priola
Saine
Swalm
Wilson
Labuda
Court
YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Ruled Out of Order


12:16 PM

The sponsors made their closing comments and the committee discussed the merits of the bill.
BILL:HB14-1012
TIME: 12:27:52 PM
MOVED:Pabon
MOTION:Refer House Bill 14-1012, as amended, to the Committee on Appropriations. The motion passed on a vote of 7-5, with 1 member excused.
SECONDED:Kagan
VOTE
Becker
Excused
DelGrosso
Yes
Foote
Yes
Joshi
No
Kagan
Yes
Melton
Yes
Pabon
Yes
Priola
Yes
Saine
No
Swalm
Yes
Wilson
No
Labuda
No
Court
No
YES: 7 NO: 5 EXC: 1 ABS: 0 FINAL ACTION: PASS


12:37 PM

The committee was adjourned.