2006 Utah Code - 63-38f-1218 — Certificates and contingent tax credits.

     63-38f-1218.   Certificates and contingent tax credits.
     (1) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the board, in consultation with the State Tax Commission, shall make rules governing the form, issuance, transfer, and redemption of certificates.
     (2) The board's issuance of certificates and related contingent tax credits to designated investors shall be subject to the following:
     (a) the aggregate outstanding certificates may not exceed a total of $100,000,000 of contingent tax credits;
     (b) the certificates shall be issued contemporaneously with an investment in the Utah fund of funds by a designated investor;
     (c) contingent tax credits shall be issued in a manner that not more than $20,000,000 of contingent tax credits may be initially redeemable in any fiscal year; and
     (d) the credits are certifiable if there are insufficient funds in the redemption reserve to make a cash redemption and the board does not exercise its other options under Subsection 63-38f-1220(3)(b).
     (3) In determining the $100,000,000 maximum limit in Subsection (2)(a) and the $20,000,000 limitation in Subsection (2)(c):
     (a) the board shall use the cumulative amount of scheduled aggregate returns on certificates issued by the board to designated investors;
     (b) certificates and related contingent tax credits which have expired may not be included; and
     (c) certificates and related contingent tax credits which have been redeemed shall be included only to the extent of tax credits actually allowed.
     (4) Contingent tax credits are subject to the following:
     (a) a contingent tax credit may not be redeemed except by a designated investor in accordance with the terms of a certificate from the board;
     (b) a contingent tax credit may not be redeemed prior to the time the Utah fund of funds receives full payment from the designated investor for the certificate;
     (c) a contingent tax credit shall be claimed for a tax year that begins during the calendar year maturity date stated on the certificate;
     (d) an investor who redeems a certificate and the related contingent tax credit shall allocate the amount of the contingent tax credit to the taxpayers of the investor based on the taxpayer's pro rata share of the investor's earnings; and
     (e) a contingent tax credit shall be claimed as a refundable credit.
     (5) In calculating the amount of a contingent tax credit:
     (a) a contingent tax credit shall be certified by the board only if the actual return to the designated investor is less than the return that was targeted at the issuance of the certificate;
     (b) the amount of the contingent tax credit may not exceed the difference between:
     (i) the sum of:
     (A) the initial equity investment of the designated investor in the Utah fund of funds; and
     (B) the scheduled aggregate return to the designated investor at rates of return authorized by the board at the issuance of the certificate; and
     (ii) the aggregate actual return received by the designated investor and any predecessor in interest of the initial equity investment and interest on the initial equity investment; and
     (c) the rates, whether fixed rates or variable rates, shall be determined by a formula

stipulated in the certificate.
     (6) The board shall clearly indicate on the certificate:
     (a) the targeted return on the invested capital;
     (b) the amount of the initial equity investment;
     (c) the calculation formula for determining the scheduled aggregate return on the initial equity investment; and
     (d) the calculation formula for determining the amount of the contingent tax credit that may be claimed.
     (7) Once moneys are invested by a designated investor, the certificate:
     (a) shall be binding on the board; and
     (b) may not be modified, terminated, or rescinded.
     (8) Funds invested by a designated investor for a certificate shall be paid to the corporation for placement in the Utah fund of funds.
     (9) The State Tax Commission may, in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, and in consultation with the board, make rules to help implement this section.

Amended by Chapter 14, 2005 General Session
Renumbered and Amended by Chapter 148, 2005 General Session