As Introduced
135th General Assembly
Regular Session S. B. No. 276
2023-2024
Senators Cirino, Chavez
A BILL
To amend sections 122.15, 122.151, 122.153, 1
122.154, and 122.155 of the Revised Code to 2
modify the availability of and eligibility for 3
tax credits awarded under the rural business 4
growth program. 5
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 122.15, 122.151, 122.153, 6
122.154, and 122.155 of the Revised Code be amended to read as 7
follows: 8
Sec. 122.15. As used in this section and sections 122.151 9
to 122.156 of the Revised Code: 10
(A) "Affiliate" means a person that directly, or 11
indirectly through one or more intermediaries, controls, is 12
controlled by, or is under common control with another person. 13
For the purposes of this division, a person is "controlled by" 14
another person if the controlling person holds, directly or 15
indirectly, the majority voting or ownership interest in the 16
controlled person or has control over the day-to-day operations 17
of the controlled person by contract or by law. 18
(B) "Border county" means a county in this state that 19
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As Introduced
borders another state. 20
(C) "Closing date" means the date on which a rural 21
business growth fund has collected all of the amounts specified 22
by divisions (G)(1) and (2) of section 122.151 of the Revised 23
Code. 24
(D) "Credit-eligible capital contribution" means an 25
investment of cash by a person subject to the tax imposed by 26
section 3901.86, 5725.18, 5729.03, or 5729.06 of the Revised 27
Code in a rural business growth fund that equals the amount 28
specified on a notice of tax credit allocation issued by the 29
department of development under division (I)(1) of section 30
122.151 of the Revised Code. The investment shall purchase an 31
equity interest in the fund or purchase, at par value or 32
premium, a debt instrument issued by the fund that meets all of 33
the following criteria: 34
(1) The debt instrument has an original maturity date of 35
at least five years after the date of issuance. 36
(2) The debt instrument has a repayment schedule that is 37
not faster than a level principal amortization over five years. 38
(3) The debt instrument has no interest, distribution, or 39
payment features dependent on the fund's profitability or the 40
success of the fund's growth investments. 41
(E) "Eligible investment authority" means the amount 42
stated on the notice issued under division (F) of section 43
122.151 of the Revised Code certifying the rural business growth 44
fund. Sixty per cent of a fund's eligible investment authority 45
shall be comprised of credit-eligible capital contributions. 46
(F) "Full-time equivalent employee" means the quotient 47
obtained by dividing the total number of hours for which 48
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As Introduced
employees were compensated for employment over the preceding 49
twelve-month period by two thousand eighty. 50
(G) "Growth investment" means any capital or equity 51
investment in a rural business concern or any loan to a rural 52
business concern with a stated maturity of at least one year, 53
excluding any investment used by a rural business concern or its 54
affiliates to refinance or buy out a prior growth investment. A 55
secured loan or the provision of a revolving line of credit to a 56
rural business concern is a growth investment only if the rural 57
business growth fund obtains an affidavit from the president or 58
chief executive officer of the rural business concern attesting 59
that the rural business concern sought and was denied similar 60
financing from a commercial bank. 61
(H) "Operating company" means any business that has its 62
principal business operations in this state, for program one and 63
program two has fewer than two hundred fifty employees and or 64
for program three has fewer than two hundred ninety-nine 65
employees, has not more than fifteen million dollars in net 66
income for the preceding taxable year, and that is none of the 67
following: 68
(1) A country club; 69
(2) A racetrack or other facility used for gambling; 70
(3) A store the principal purpose of which is the sale of 71
alcoholic beverages for consumption off premises; 72
(4) A massage parlor; 73
(5) A hot tub facility; 74
(6) A suntan facility; 75
(7) A business engaged in the development or holding of 76
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As Introduced
intangibles for sale; 77
(8) A private or commercial golf course; 78
(9) A business that derives or projects to derive fifteen 79
per cent or more of its net income from the rental or sale of 80
real property, except any business that is a special purpose 81
entity principally owned by a principal user of that property 82
formed solely for the purpose of renting, either directly or 83
indirectly, or selling real property back to such principal user 84
if such principal user does not derive fifteen per cent or more 85
of its gross annual revenue from the rental or sale of real 86
property; 87
(10) A publicly traded business. 88
For the purposes of this division, "net income" means 89
federal gross income as required to be reported under the 90
Internal Revenue Code less federal and state taxes imposed on or 91
measured by income. 92
(I) "Population" means that shown by the most recent 93
decennial census or the most recent annual population estimate 94
published or released by the United States census bureau, 95
whichever is more recent. 96
(J) A business's "principal business operations" are in 97
this state if at least eighty per cent of the business's 98
employees reside in this state, the individuals who receive 99
eighty per cent of the business's payroll reside in this state, 100
or the business has agreed to use the proceeds of a growth 101
investment to relocate at least eighty per cent of its employees 102
to this state or pay at least eighty per cent of its payroll to 103
individuals residing in this state. For the purpose of growth 104
investments by a program two or program three rural business 105
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As Introduced
growth fund, a business's "principal business operations" are 106
also in this state if it is headquartered in a border county and 107
at least sixty-five per cent of the business's employees reside 108
in this state, the individuals who receive sixty-five per cent 109
of the business's payroll reside in this state, or the business 110
has agreed to use the proceeds of a growth investment to 111
relocate at least sixty-five per cent of its employees to this 112
state or pay at least sixty-five per cent of its payroll to 113
individuals residing in this state. 114
(K) "Program one" refers to rural business growth funds 115
certified by the department of development under section 122.151 116
of the Revised Code before the effective date of this amendment 117
September 30, 2021. 118
(L) "Program two" refers to rural business growth funds 119
certified by the department of development under section 122.151 120
of the Revised Code on or after the effective date of this 121
amendment September 30, 2021, but before the effective date of 122
this amendment. 123
(M) "Program three" refers to rural business growth funds 124
certified by the department of development under section 122.151 125
of the Revised Code on or after the effective date of this 126
amendment. 127
(N) "Rural area" means any county in this state having a 128
population less than two hundred thousand. 129
(N) (O) "Rural business concern" means an operating 130
company that has its principal business operations located in a 131
rural area. 132
(O) (P) "Rural business growth fund" and "fund" mean an 133
entity certified by the department of development under section 134
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As Introduced
122.151 of the Revised Code. 135
(P) (Q) "Taxable year" means the calendar year ending on 136
the thirty-first day of December next preceding the day the 137
annual statement is required to be returned under section 138
5725.18 or 5729.02 of the Revised Code. 139
(Q) (R) "Tier one rural area" means any county in this 140
state having a population less than two hundred thousand and 141
more than one hundred fifty thousand. 142
(R) (S) "Tier two rural area" means any county in this 143
state having a population of more than seventy-five thousand but 144
not more than one hundred fifty thousand. 145
(S) (T) "Tier three rural area" means any county in this 146
state having a population of not more than seventy-five 147
thousand. 148
(U) "Tier four rural area" means any county in the 149
Appalachian region, as that term is defined in section 107.21 of 150
the Revised Code. 151
Sec. 122.151. (A) A person that has developed a business 152
plan to invest in rural business concerns in this state and has 153
successfully solicited private investors to make credit-eligible 154
capital contributions in support of the plan may apply to the 155
department of development for certification as a rural business 156
growth fund. The application shall include all of the following: 157
(1) The total eligible investment authority sought by the 158
applicant under the business plan; 159
(2) Documents and other evidence sufficient to prove, to 160
the satisfaction of the agency, that the applicant meets all of 161
the following criteria: 162
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(a) The applicant or an affiliate of the applicant is 163
licensed as a rural business investment company under 7 U.S.C. 164
2009cc, or as a small business investment company under 15 165
U.S.C. 681. 166
(b) As of the date the application is submitted, the 167
applicant has invested more than one hundred million dollars in 168
operating companies, including at least fifty million dollars in 169
operating companies located in rural areas. In computing 170
investments under this division, the applicant may include 171
investments made by affiliates of the applicant and investments 172
made in businesses that are not operating companies but would 173
qualify as operating companies if the principal business 174
operations were located in this state. 175
(3) The industries in which the applicant proposes to make 176
growth investments and the percentage of the growth investments 177
that will be made in each industry. The applicant shall identify 178
each industry by using the codes utilized by the north American 179
industry classification system. 180
(4) An estimate of the number of new full-time equivalent 181
employees and retained full-time equivalent employees that will 182
result from the applicant's growth investments; 183
(5) A revenue impact assessment for the applicant's 184
proposed growth investments prepared by a nationally recognized 185
third-party independent economic forecasting firm using a 186
dynamic economic forecasting model. The revenue impact 187
assessment shall analyze the applicant's business plan over the 188
ten years following the date the application is submitted to the 189
agency. 190
(6) A signed affidavit from each investor successfully 191
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solicited by the applicant to make a credit eligible capital 192
contribution in support of the business plan. Each affidavit 193
shall include information sufficient for the agency and the 194
superintendent of insurance to identify the investor and shall 195
state the amount of the investor's credit-eligible capital 196
contribution. 197
(7) A nonrefundable application fee of five thousand 198
dollars. 199
(B)(1) Except as provided in division (B)(2) of this 200
section, the agency shall review and make a determination with 201
respect to each application submitted under division (A) of this 202
section within sixty days of receipt. The agency shall review 203
and make determinations on the applications in the order in 204
which the applications are received by the agency. Applications 205
received by the agency on the same day shall be deemed to have 206
been received simultaneously. The agency shall approve not more 207
than seventy-five million dollars in eligible investment 208
authority and not more than forty-five million dollars in 209
credit-eligible capital contributions under this section for 210
program one rural business growth funds. The agency shall 211
approve not more than seventy-five million dollars in eligible 212
investment authority and not more than forty-five million 213
dollars in credit-eligible contributions under this section for 214
program two rural business growth funds. The agency shall 215
approve not more than one hundred fifty million dollars in 216
eligible investment authority and not more than ninety million 217
dollars in credit-eligible contributions under this section for 218
program three rural business growth funds. 219
(2) If the agency denies an application for certification 220
as a fund, and approving a subs