Certified Capital Companies (CAPCO's)

[Teresa Lemmons]

I am seeking input from organizations and individuals who have worked with Certified Capital Companies or CAPCO's. It is my understanding that there are eight states which have passed legislation offering tax credit to insurance companies for their investment of funds into these Capital Companies, which in turn make early stage investments (venture, equity, loans) in small business.



In Washington State, we are being presented with such legislation to consider. I would like to know what others have experienced in working with this "program", the pros and cons to existing lending organizations and to what degree this has been successful. Also, any input or insight as to effective legislation to prevent the potential drift of capital from our state, would be appreciated.



Thank you,


Teresa Lemmons, MSCED
Economic Development Director
Metropolitan Development Council
Tacoma, WA
(253) 591-7026 Office
teresa@mdc-tacoma.org


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[George Lipper]

Theresa,

I have extensive information regarding Certified Capital (CAPCO) Companies. *It dates to 1999 when, as an employee of the Iowa Department of Economic Development, I was asked to assess a proposal for the State is adopt a $60-million program. *I recommended strongly against it, but, it was raced through both houses of the legislature in the last moments of the session. *I shared my recommendation with the governor, who, in turn, vetoed the bill.

I have been frequently asked about the materials I gathered then and since regarding this program, including highly critical reports made by the State Auditors of Missouri and Colorado. *Other states, asked for a second serving of CAPCO tax credits have adamantly said "no". *They include Florida and Wisconsin. *Many other states have also rejected the idea when initially presented. *They include, in addition to Iowa, Oklahoma, South Carolina, Nevada, Pennsylvania and more.

I attach a few links to provide access to some of the more significant studies and reports regarding CAPCO's and would be happy to talk to you at greater length should you so desire.

With sharing CAPCO information, it's hard to know where to start. *We have more than 200 studies and stories in our database, dating back more than 6 years. *And in addition, of course, we have lots of documents we've used to help people understand the program. *I'll start by offering you some of the links to stories in the database related to various state interactions with CAPCO programs. Even the best have been questionable. *
http://www.nasvf.org/web/allpress.nsf/pages/9227 *Missouri State Auditor's Report
http://www.nasvf.org/web/allpress.nsf/pages/9151 *Chapter from Daniel Sandler's Book on VC and Tax Incentives
http://www.nasvf.org/web/allpress.nsf/pages/9106 *Fifth Annual Report of the New York CAPCO program
http://www.nasvf.org/web/allpress.nsf/pages/7600 *Fourth Annual Report of the New York CAPCO program
http://www.nasvf.org/web/allpress.nsf/pages/5169 *Third Annual Report of the New York CAPCO program
http://www.nasvf.org/web/allpress.nsf/pages/8679 *Governing Magazine Article
http://www.nasvf.org/web/allpress.nsf/pages/8326 *Colorado Office of Econ Dev responds to Adams"study" on CAPCO effectiveness
http://www.nasvf.org/web/allpress.nsf/pages/7892 *Colorado Audit of CAPCO program
http://www.nasvf.org/web/allpress.nsf/pages/8107 *Milwaukee Journal story on pending CAPCO legislation
http://www.nasvf.org/web/allpress.nsf/pages/7886 *Denver Post story on Audit of Colorado CAPCO
http://www.nasvf.org/web/allpress.nsf/pages/6969 *Palm Beach Post story on Florida CAPCO (among my favorites)
http://www.nasvf.org/web/allpress.nsf/pages/6804 *Rhode Island story on considering CAPCO and
http://www.nasvf.org/web/allpress.nsf/pages/6783 *Julia Rubin public radio interview
http://www.nasvf.org/web/allpress.nsf/pages/3393 *Understanding CAPCO booklet published by NASVF
And even the Louisiana (where it started) a critical audit http://www.nasvf.org/web/allpress.nsf/pages/107 *

I believe I've made all these links live for you. If one fails to function and you get an error message, let me know

Cordially,

George Lipper
National Association of Seed & Venture Funds
Direct 702/254-9229
Fax * * 702/549-3285
glipper@nasvf.org
Web: http://www.nasvf.org



"Teresa Lemons" <teresa@mdc-tacoma.org>
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01/19/2007 12:13 PM Please respond to
"Teresa Lemons" <teresa@mdc-tacoma.org>

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Subject
Certified Capital Companies (CAPCO's)




I am seeking input from organizations and individuals who have worked with Certified Capital Companies or CAPCO's. *It is my understanding that there are eight states which have passed legislation offering tax credit to insurance companies for their investment of funds into these Capital Companies, which in turn make early stage investments (venture, equity, loans) in small business.



In Washington State, we are being presented with such legislation to consider. *I would like to know what others have experienced in working with this "program", the pros and cons to existing lending organizations and to what degree this has been successful. *Also, any input or insight as to effective legislation to prevent the potential drift of capital from our state, would be appreciated.



Thank you,


Teresa Lemmons, MSCED
Economic Development Director
Metropolitan Development Council
Tacoma, WA
(253) 591-7026 Office
teresa@mdc-tacoma.org




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