II 

109TH CONGRESS 

1ST SESSION S. 1581 

To facilitate the development of science parks, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 29, 2005 

Mr. BINGAMAN (for himself and Mr. BUNNING) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL

To facilitate the development of science parks, and for other 

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Science Park Adminis5 tration Act of 2005’’. 

6 SEC. 2. DEVELOPMENT OF SCIENCE PARKS. 

7 (a) FINDING.—Section 2 of the Stevenson-Wydler 

8 Technology Innovation Act of 1980 (15 U.S.C. 3701) is 

9 amended by adding at the end the following new para10 graph: 
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1 ‘‘(12) It is in the best interests of the Nation 

2 to encourage the formation of science parks to pro3 mote the clustering of innovation through high tech4 nology activities.’’. 

5 (b) DEFINITION.—Section 4 of such Act (15 U.S.C. 

6 3703) is amended by adding at the end the following new 

7 paragraphs: 

8 ‘‘(14) ‘Science park’ means a group of inter9 related companies and institutions, including sup10 pliers, service providers, institutions of higher edu11 cation, start-up incubators, and trade associations 

12 that cooperate and compete and are located in a spe13 cific area whose administration promotes real estate 

14 development, technology transfer, and partnerships 

15 between such companies and institutions, and does 

16 not mean a business or industrial park. 

17 ‘‘(15) ‘Business or industrial park’ means pri18 marily a for-profit real estate venture of businesses 

19 or industries which do not necessarily reinforce each 

20 other through supply chain or technology transfer 

21 mechanisms. 

22 ‘‘(16) ‘Science park infrastructure’ means facili23 ties that support the daily economic activity of a 

24 science park.’’. 
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1 (c) PROMOTION OF DEVELOPMENT OF SCIENCE

2 PARKS.—Section 5(c) of such Act (15 U.S.C. 3704(c)) is 

3 amended— 

4 (1) in paragraph (14), by striking ‘‘and’’ at the 

5 end; 

6 (2) in paragraph (15), by striking the period at 

7 the end and inserting ‘‘; and’’; and 

8 (3) by adding at the end the following new 

9 paragraph: 

10 ‘‘(16) promote the formation of science parks.’’. 

11 (d) SCIENCE PARKS.—Such Act is further amended 

12 by adding at the end the following new section: 

13 ‘‘SEC. 24. SCIENCE PARKS. 

14 ‘‘(a) DEVELOPMENT OF PLANS FOR CONSTRUCTION

15 OF SCIENCE PARKS.— 

16 ‘‘(1) IN GENERAL.—The Secretary shall award 

17 grants for the development of feasibility studies and 

18 plans for the construction of new or expansion of ex19 isting science parks. 

20 ‘‘(2) LIMITATION ON AMOUNT OF GRANTS.—

21 The amount of a grant awarded under this sub22 section may not exceed $750,000. 

23 ‘‘(3) AWARD.— 
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1 ‘‘(A) COMPETITION REQUIRED.—The Sec2 retary shall award any grant under this sub3 section pursuant to a full and open competition. 

4 ‘‘(B) ADVERTISING.—The Secretary shall 

5 advertise any competition under this paragraph 

6 in the Commerce Business Daily. 

7 ‘‘(C) SELECTION CRITERIA.—The Sec8 retary shall publish the criteria to be utilized in 

9 any competition under this paragraph for the 

10 selection of recipients of grants under this sub11 section. Such criteria shall include requirements 

12 relating to— 

13 ‘‘(i) the number of jobs to be created 

14 at the science park each year for a period 

15 of 5 years; 

16 ‘‘(ii) the funding to be required to 

17 construct or expand the science park over 

18 the first 5 years; 

19 ‘‘(iii) the amount and type of cost 

20 matching by the applicant; 

21 ‘‘(iv) the types of businesses and re22 search entities expected in the science park 

23 and surrounding community; 
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1 ‘‘(v) letters of intent by businesses 

2 and research entities to locate in the 

3 science park; 

4 ‘‘(vi) the capacity of the science park 

5 for expansion over a period of 25 years; 

6 ‘‘(vii) the quality of life at the science 

7 park for employees at the science park; 

8 ‘‘(viii) the capability to attract a well 

9 trained workforce to the science park; 

10 ‘‘(ix) the management of the science 

11 park; 

12 ‘‘(x) expected risks in the construction 

13 and operation of the science park; 

14 ‘‘(xi) risk mitigation; 

15 ‘‘(xii) transportation and logistics; 

16 ‘‘(xiii) physical infrastructure, includ17 ing telecommunications; and 

18 ‘‘(xiv) ability to collaborate with other 

19 science parks throughout the world. 

20 ‘‘(4) AUTHORIZATION OF APPROPRIATIONS.— 

21 There is authorized to be appropriated for each of 

22 fiscal years 2006 through 2011, $7,500,000 to carry 

23 out this subsection. 

24 ‘‘(b) REVOLVING LOAN PROGRAM FOR DEVELOP25 MENT OF SCIENCE PARK INFRASTRUCTURE.— 
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1 ‘‘(1) IN GENERAL.—The Secretary shall make 

2 grants to six regional centers for the development of 

3 existing science park infrastructure through the op4 eration of revolving loan funds by such centers. 

5 ‘‘(2) SELECTION OF CENTERS.— 

6 ‘‘(A) IN GENERAL.—The Secretary shall 

7 select the regional centers to be awarded grants 

8 under this subsection utilizing such criteria as 

9 the Secretary shall prescribe. 

10 ‘‘(B) CRITERIA.—The criteria prescribed 

11 by the Secretary under this paragraph shall in12 clude criteria relating to revolving loan funds 

13 and revolving loan fund operators under para14 graph (4), including— 

15 ‘‘(i) the qualifications of principal offi16 cers; 

17 ‘‘(ii) non-Federal cost matching re18 quirements; and 

19 ‘‘(iii) conditions for the termination of 

20 loan funds. 

21 ‘‘(3) LIMITATION ON LOAN AMOUNT.—The 

22 amount of any loan for the development of existing 

23 science park infrastructure that is funded under this 

24 subsection may not exceed $3,000,000. 

25 ‘‘(4) REVOLVING LOAN FUNDS.— 
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1 ‘‘(A) IN GENERAL.—A regional center re2 ceiving a grant under this subsection shall fund 

3 the development of existing science park infra4 structure through the utilization of a revolving 

5 loan fund. 

6 ‘‘(B) OPERATION AND INTEGRITY.—The 

7 Secretary shall prescribe regulations to main8 tain the proper operation and financial integrity 

9 of revolving loan funds under this paragraph. 

10 ‘‘(C) EFFICIENT ADMINISTRATION.—The 

11 Secretary may— 

12 ‘‘(i) at the request of a grantee, 

13 amend and consolidate grant agreements 

14 governing revolving loan funds to provide 

15 flexibility with respect to lending areas and 

16 borrower criteria; 

17 ‘‘(ii) assign or transfer assets of a re18 volving loan fund to a third party for the 

19 purpose of liquidation, and a third party 

20 may retain assets of the fund to defray 

21 costs related to liquidation; and 

22 ‘‘(iii) take such actions as are appro23 priate to enable revolving loan fund opera24 tors to sell or securitize loans (except that 
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1 the actions may not include issuance of a 

2 Federal guaranty by the Secretary). 

3 ‘‘(D) TREATMENT OF ACTIONS.—An action 

4 taken by the Secretary under this paragraph 

5 with respect to a revolving loan fund shall not 

6 constitute a new obligation if all grant funds 

7 associated with the original grant award have 

8 been disbursed to the recipient. 

9 ‘‘(E) PRESERVATION OF SECURITIES

10 LAWS.— 

11 ‘‘(i) NOT TREATED AS EXEMPTED SE12 CURITIES.—No securities issued pursuant 

13 to subparagraph (C)(iii) shall be treated as 

14 exempted securities for purposes of the Se15 curities Act of 1933 or the Securities Ex16 change Act of 1934, unless exempted by 

17 rule or regulation of the Securities and Ex18 change Commission. 

19 ‘‘(ii) PRESERVATION.—Except as pro20 vided in clause (i), no provision of this 

21 paragraph or any regulation issued by the 

22 Secretary under this paragraph shall su23 persede or otherwise affect the application 

24 of the securities laws (as such term is de25 fined in section 2(a)(47) of the Securities 
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1 Exchange Act of 1934) or the rules, regu2 lations, or orders of the Securities and Ex3 change Commission or a self-regulatory or4 ganization thereunder. 

5 ‘‘(5) AUTHORIZATION OF APPROPRIATIONS.—

6 There is authorized to be appropriated for each of 

7 fiscal years 2006 through 2011, $60,000,000 to 

8 carry out this subsection. 

9 ‘‘(c) LOAN GUARANTEES FOR SCIENCE PARK INFRA10 STRUCTURE.— 

11 ‘‘(1) IN GENERAL.—The Secretary shall guar12 antee up to 80 percent of the loan amount for loans 

13 exceeding $10,000,000 for projects for the construc14 tion of science park infrastructure. 

15 ‘‘(2) LIMITATIONS ON GUARANTEE AMOUNTS.—

16 The maximum amount of loan principal guaranteed 

17 under this subsection may not exceed— 

18 ‘‘(A) $50,000,000 with respect to any sin19 gle project; and 

20 ‘‘(B) $500,000,000 with respect to all 

21 projects. 

22 ‘‘(3) SELECTION OF GUARANTEE RECIPI23 ENTS.—The Secretary shall select recipients of loan 

24 guarantees under this subsection based upon the 

25 ability of the recipient to collateralize the loan 
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1 amount through bonds, equity, property, and other 

2 such criteria as the Secretary shall prescribe. 

3 ‘‘(4) TERMS AND CONDITIONS FOR LOAN GUAR4 ANTEES.—For purposes of this section, the loans 

5 guaranteed shall be subject to such terms and condi6 tions as the Secretary may prescribe, except that— 

7 ‘‘(A) the final maturity of such loans made 

8 or guaranteed shall not exceed (as determined 

9 by the Secretary) the lesser of— 

10 ‘‘(i) 30 years and 32 days, or 

11 ‘‘(ii) 90 percent of the useful life of 

12 any physical asset to be financed by such 

13 loan; 

14 ‘‘(B) no loan made or guaranteed may be 

15 subordinated to another debt contracted by the 

16 borrower or to any other claims against the bor17 rowers in the case of default; 

18 ‘‘(C) no loan may be guaranteed unless the 

19 Secretary determines that the lender is respon20 sible and that adequate provision is made for 

21 servicing the loan on reasonable terms and pro22 tecting the financial interest of the United 

23 States; 

24 ‘‘(D) no loan may be guaranteed if the in25 come from such loan is excluded from gross in-
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1 come for purposes of chapter 1 of the Internal 

2 Revenue Code of 1986, or if the guarantee pro3 vides significant collateral or security, as deter4 mined by the Secretary, for other obligations 

5 the income from which is so excluded; 

6 ‘‘(E) any guarantee shall be conclusive evi7 dence that said guarantee has been properly ob8 tained, that the underlying loan qualified for 

9 such guarantee, and that, but for fraud or ma10 terial misrepresentation by the holder, such 

11 guarantee shall be presumed to be valid, legal, 

12 and enforceable; 

13 ‘‘(F) the Secretary shall prescribe explicit 

14 standards for use in periodically assessing the 

15 credit risk of new and existing direct loans or 

16 guaranteed loans; 

17 ‘‘(G) the Secretary must find that there is 

18 a reasonable assurance of repayment before ex19 tending credit assistance; and 

20 ‘‘(H) new loan guarantees may not be com21 mitted except to the extent that appropriations 

22 of budget authority to cover their costs are 

23 made in advance, as required in section 504 of 

24 the Federal Credit Reform Act of 1990. 
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1 ‘‘(5) PAYMENT OF LOSSES.—For purposes of 

2 this section— 

3 ‘‘(A) IN GENERAL.—If, as a result of a de4 fault by a borrower under a guaranteed loan, 

5 after the holder thereof has made such further 

6 collection efforts and instituted such enforce7 ment proceedings as the Secretary may require, 

8 the Secretary determines that the holder has 

9 suffered a loss, the Secretary shall pay to such 

10 holder the percentage of such loss (not more 

11 than 80 percent) specified in the guarantee con12 tract. Upon making any such payment, the Sec13 retary shall be subrogated to all the rights of 

14 the recipient of the payment. The Secretary 

15 shall be entitled to recover from the borrower 

16 the amount of any payments made pursuant to 

17 any guarantee entered into under this section. 

18 ‘‘(B) ENFORCEMENT OF RIGHTS.—The At19 torney General shall take such action as may be 

20 appropriate to enforce any right accruing to the 

21 United States as a result of the issuance of any 

22 guarantee under this section. 

23 ‘‘(C) FORBEARANCE.—Nothing in this sec24 tion may be construed to preclude any forbear25 ance for the benefit of the borrower which may 
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1 be agreed upon by the parties to the guaranteed 

2 loan and approved by the Secretary, if budget 

3 authority for any resulting subsidy costs (as de4 fined under the Federal Credit Reform Act of 

5 1990) is available. 

6 ‘‘(D) MANAGEMENT OF PROPERTY.—Not7 withstanding any other provision of law relating 

8 to the acquisition, handling, or disposal of prop9 erty by the United States, the Secretary shall 

10 have the right in the Secretary’s discretion to 

11 complete, recondition, reconstruct, renovate, re12 pair, maintain, operate, or sell any property ac13 quired by the Secretary pursuant to the provi14 sions of this section. 

15 ‘‘(6) REVIEW.—The Comptroller General of the 

16 United States shall, within 2 years of the date of en17 actment of this section, conduct a review of the sub18 sidy estimates for the loan guarantees under this 

19 subsection, and shall submit to Congress a report on 

20 the review conducted under this paragraph. 

21 ‘‘(7) TERMINATION.—No loan may be guaran22 teed under this subsection after September 30, 

23 2011. 

24 ‘‘(8) AUTHORIZATION OF APPROPRIATIONS.—

25 There is authorized to be appropriated— 
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1 ‘‘(A) such sums as may be necessary for 

2 the cost, as defined in section 502(5) of the 

3 Federal Credit Reform Act of 1990, of guaran4 teeing $500,000,000 of loans under this sub5 section, and 

6 ‘‘(B) $6,000,000 for administrative ex7 penses for fiscal year 2006 and such sums as 

8 necessary thereafter for administrative expenses 

9 in subsequent years. 

10 ‘‘(d) NATIONAL ACADEMY OF SCIENCES EVALUA11 TION.— 

12 ‘‘(1) IN GENERAL.—The Secretary shall enter 

13 into an agreement with the National Academy of 

14 Sciences under which the Academy shall evaluate, on 

15 a tri-annual basis, the activities under this section. 

16 ‘‘(2) TRI-ANNUAL REPORT.—Under the agree17 ment under paragraph (1), the Academy shall sub18 mit to the Secretary a report on its evaluation of 

19 science park development under that paragraph. 

20 Each report may include such recommendations as 

21 the Academy considers appropriate for additional ac22 tivities to promote and facilitate the development of 

23 science parks in the United States. 

24 ‘‘(e) TRI-ANNUAL REPORT.—Not later than March 

25 31 of every third year, the Secretary shall submit to Con-
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1 gress a report on the activities under this section during 

2 the preceding 3 years, including any recommendations 

3 made by the National Academy of Sciences under sub4 section (d)(2) during such period. Each report may in5 clude such recommendations for legislative or administra6 tive action as the Secretary considers appropriate to fur7 ther promote and facilitate the development of science 

8 parks in the United States. 

9 ‘‘(f) REGULATIONS.— 

10 ‘‘(1) REGULATIONS.—Consistent with Office of 

11 Management and Budget Circular A–129, ‘Policies 

12 for Federal Credit Programs and Non-Tax Receiv13 ables’, the Secretary shall prescribe regulations to 

14 carry out this section. 

15 ‘‘(2) DEADLINE.—The Secretary shall prescribe 

16 such regulations not later than one year after the 

17 date of enactment of this section.’’. 

18 SEC. 3. SCIENCE PARK VENTURE CAPITAL FUND PILOT 

19 PROGRAM. 

20 Title III of the Small Business Investment Act of 

21 1958 (15 U.S.C. 681 et seq.) is amended by adding at 

22 the end the following: 
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1 ‘‘PART C—SCIENCE PARK VENTURE CAPITAL 

2 FUND PILOT PROGRAM 

3 ‘‘SEC. 1. DEFINITIONS. 

4 ‘‘As used in this part, the following definitions shall 

5 apply: 

6 ‘‘(1) BUSINESS OR INDUSTRIAL PARK.—The 

7 term ‘Business or industrial park’ means primarily 

8 a for-profit real estate venture of businesses or in9 dustries which do not necessarily reinforce each 

10 other through supply chain or technology transfer 

11 mechanisms. 

12 ‘‘(2) EQUITY CAPITAL.—The term ‘equity cap13 ital’ means common or preferred stock or a similar 

14 instrument, including subordinated debt with equity 

15 features. 

16 ‘‘(3) HIGH-TECHNOLOGY.—The term ‘high17 technology’ means any of the high technology indus18 tries in the North American Industrial Classification 

19 System, as listed in table 8–25 of the National 

20 Science Board publication entitled ‘Science and En21 gineering Indicators 2004’, or as listed in any suc22 ceeding editions of such publication. 

23 ‘‘(4) LEVERAGE.—The term ‘leverage’ in24 cludes— 

25 ‘‘(A) debentures purchased or guaranteed 

26 by the Administrator; 
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1 ‘‘(B) participating securities purchased or 

2 guaranteed by the Administrator; and 

3 ‘‘(C) preferred securities outstanding as of 

4 the date of enactment of this part. 

5 ‘‘(5) MEZZANINE FINANCING.—The term ‘mez6 zanine financing’ means late-stage venture capital 

7 usually associated with the final round of financing 

8 prior to an initial public offering. 

9 ‘‘(6) OPERATIONAL ASSISTANCE.—The term 

10 ‘operational assistance’ means management, mar11 keting, and other technical assistance that assists 

12 high-technology start-up companies with business 

13 development. 

14 ‘‘(7) PARTICIPATION AGREEMENT.—The term 

15 ‘participation agreement’ means an agreement, be16 tween the Administrator and a company granted 

17 final approval by the Administrator under section 

18 374(e), that— 

19 ‘‘(A) details the operating plan and invest20 ment criteria of the company; and 

21 ‘‘(B) requires the company to make invest22 ments in high-technology start-up companies 

23 within a science park. 

24 ‘‘(8) PRIVATE CAPITAL.—The term ‘private 

25 capital’— 
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1 ‘‘(A) means the total of— 

2 ‘‘(i)(I) the paid-in capital and paid-in 

3 surplus of a corporate science park venture 

4 capital company; 

5 ‘‘(II) the contributed capital of the 

6 partners of a partnership science park ven7 ture capital company; or 

8 ‘‘(III) the equity investment of the 

9 members of a limited liability company 

10 science park venture capital company; and 

11 ‘‘(ii) unfunded binding commitments 

12 from investors that meet criteria estab13 lished by the Administrator to contribute 

14 capital to the science park venture capital 

15 company, except that— 

16 ‘‘(I) unfunded commitments may 

17 be counted as private capital for pur18 poses of approval by the Adminis19 trator of any request for leverage; and 

20 ‘‘(II) leverage shall not be funded 

21 based on the commitments; and 

22 ‘‘(B) does not include— 

23 ‘‘(i) any funds borrowed by a science 

24 park venture capital company from any 

25 source; 
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1 ‘‘(ii) any funds obtained through the 

2 issuance of leverage; or 

3 ‘‘(iii) any funds obtained directly or 

4 indirectly from Federal, State, or local gov5 ernment, except for— 

6 ‘‘(I) funds obtained from the 

7 business revenues of any federally 

8 chartered or government-sponsored 

9 enterprise established before the date 

10 of enactment of this part; 

11 ‘‘(II) funds invested by an em12 ployee welfare benefit plan or pension 

13 plan; and 

14 ‘‘(III) any qualified nonprivate 

15 funds, if the investors of such funds 

16 do not directly or indirectly control 

17 the management, board of directors, 

18 general partners, or members of the 

19 science park venture capital company. 

20 ‘‘(9) PROGRAM.—The term ‘Program’ means 

21 the Science Park Venture Capital Program estab22 lished under section 372. 

23 ‘‘(10) QUALIFIED NONPRIVATE FUNDS.—The 

24 term ‘qualified nonprivate funds’ means— 
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1 ‘‘(A) any funds directly or indirectly in2 vested in any applicant or science park venture 

3 capital company on or before the date of enact4 ment of this part, by any Federal agency other 

5 than the Administration, under a law explicitly 

6 mandating the inclusion of those funds in the 

7 definition of the term private capital; and 

8 ‘‘(B) any funds invested in any applicant 

9 or science park venture capital company by 1 or 

10 more entities of any State, including any guar11 antee extended by any such entity, in an aggre12 gate amount not to exceed 33 percent of the 

13 private capital of the applicant or science park 

14 venture capital company. 

15 ‘‘(11) SCIENCE PARK.—The term ‘science park’ 

16 means a group of interrelated companies and institu17 tions, including suppliers, service providers, institu18 tions of higher education, start-up incubators, and 

19 trade associations that cooperate and compete and 

20 are located in a specific area whose administration 

21 promotes real estate development, technology trans22 fer, and partnerships between such companies and 

23 institutions, and does not mean a business or indus24 trial park. 
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1 ‘‘(12) SCIENCE PARK VENTURE CAPITAL.—The 

2 term ‘science park venture capital’ means equity 

3 capital investments in high-technology start-up busi4 nesses located in science parks to foster economic 

5 development and technological innovation. 

6 ‘‘(13) SCIENCE PARK VENTURE CAPITAL COM7 PANY.—The term ‘science park venture capital com8 pany’ means a company that— 

9 ‘‘(A) meets the requirements under section 

10 373; 

11 ‘‘(B) has been granted final approval by 

12 the Administrator under section 374(e); and 

13 ‘‘(C) has entered into a participation 

14 agreement with the Administrator. 

15 ‘‘(14) START-UP COMPANY.—The term ‘start-up 

16 company’ means a company that has developed intel17 lectual property protection of research and develop18 ment, but has not reached the stage associated with 

19 equity or securitized investments typical of venture 

20 capital or mezzanine financing. 

21 ‘‘(15) STATE.—The term ‘State’ means each of 

22 the several States of the United States, the District 

23 of Columbia, the Commonwealth of Puerto Rico, the 

24 Virgin Islands, Guam, American Samoa, the Com25 monwealth of the Northern Mariana Islands, and 
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1 any other commonwealth, territory, or possession of 

2 the United States. 

3 ‘‘SEC. 2. ESTABLISHMENT. 

4 ‘‘There is established a Science Park Venture Capital 

5 Program, under which the Administrator may— 

6 ‘‘(1) enter into participation agreements with 

7 companies granted final approval under section 

8 374(e); 

9 ‘‘(2) guarantee the debentures issued by science 

10 park venture capital companies under section 375; 

11 and 

12 ‘‘(3) award grants to science park venture cap13 ital companies under section 377. 

14 ‘‘SEC. 3. REQUIREMENTS FOR SCIENCE PARK VENTURE 

15 CAPITAL COMPANIES. 

16 ‘‘(a) ORGANIZATION.—For purposes of this part, a 

17 science park venture capital company— 

18 ‘‘(1) shall be an incorporated body, a limited li19 ability company, or a limited partnership organized 

20 and chartered, or otherwise existing under State law 

21 solely for the purpose of performing the functions 

22 and conducting the activities authorized by this part; 

23 ‘‘(2) if incorporated, shall have succession for a 

24 period of not less than 30 years unless earlier dis25 solved by the shareholders of the company; 
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1 ‘‘(3) if a limited partnership or a limited liabil2 ity company, shall have succession for a period of 

3 not less than 10 years; and 

4 ‘‘(4) shall possess the powers reasonably nec5 essary to perform the functions and conduct the ac6 tivities. 

7 ‘‘(b) ARTICLES.—The articles of any science park 

8 venture capital company— 

9 ‘‘(1) shall specify in general terms— 

10 ‘‘(A) the purposes for which the company 

11 is formed; 

12 ‘‘(B) the name of the company; 

13 ‘‘(C) the area or areas in which the oper14 ations of the company are to be carried out; 

15 ‘‘(D) the place where the principal office of 

16 the company is to be located; and 

17 ‘‘(E) the amount and classes of the shares 

18 of capital stock of the company; 

19 ‘‘(2) may contain any other provisions con20 sistent with this part that the science park venture 

21 capital company may determine to be appropriate to 

22 adopt for the regulation of the business of the com23 pany and the conduct of the affairs of the company; 

24 and 
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1 ‘‘(3) shall be subject to the approval of the Ad2 ministrator. 

3 ‘‘(c) CAPITAL REQUIREMENTS.— 

4 ‘‘(1) IN GENERAL.—Except as provided in para5 graph (2), the private capital of each science park 

6 venture capital company shall be not less than— 

7 ‘‘(A) $5,000,000; or 

8 ‘‘(B) $10,000,000, with respect to each 

9 science park venture capital company author10 ized or seeking authority to issue participating 

11 securities to be purchased or guaranteed by the 

12 Administrator under this part. 

13 ‘‘(2) EXCEPTION.—The Secretary may, in the 

14 discretion of the Administrator, and based on a 

15 showing of special circumstances and good cause, 

16 permit the private capital of science park venture 

17 capital company described in paragraph (1)(B) to be 

18 less than $10,000,000, but not less than 

19 $5,000,000, if the Administrator determines that the 

20 action would not create or otherwise contribute to an 

21 unreasonable risk of default or loss to the Federal 

22 Government. 

23 ‘‘(3) ADEQUACY.—In addition to the require24 ments under paragraph (1), the Administrator 

25 shall— 
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1 ‘‘(A) determine whether the private capital 

2 of each science park venture capital company is 

3 adequate to ensure a reasonable prospect that 

4 the company will be operated soundly and prof5 itably, and managed actively and prudently in 

6 accordance with the articles of the company; 

7 ‘‘(B) determine that the science park ven8 ture capital company will be able to comply 

9 with the requirements of this part; and 

10 ‘‘(C) ensure that the science park venture 

11 capital company is designed primarily to meet 

12 equity capital needs of the businesses in which 

13 the company invests and not to compete with 

14 traditional financing by commercial lenders of 

15 high-technology startup businesses. 

16 ‘‘(d) DIVERSIFICATION OF OWNERSHIP.—The Ad17 ministrator shall ensure that the management of each 

18 science park venture capital company licensed after the 

19 date of enactment of this part is sufficiently diversified 

20 from, and unaffiliated with, the ownership of the company 

21 so as to ensure independence and objectivity in the finan22 cial management and oversight of the investments and op23 erations of the company. 
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1 ‘‘SEC. 4. SELECTION OF SCIENCE PARK VENTURE CAPITAL 

2 COMPANIES. 

3 ‘‘(a) ELIGIBILITY.—A company is eligible to partici4 pate as a science park venture capital company in the Pro5 gram if the company— 

6 ‘‘(1) is a newly formed for-profit entity or a 

7 newly formed for-profit subsidiary of an existing en8 tity; 

9 ‘‘(2) has a management team in the science 

10 park with experience in development financing or 

11 relevant venture capital financing; 

12 ‘‘(3) has a primary objective of economic devel13 opment of the science park and its surrounding geo14 graphic area; and 

15 ‘‘(4) promotes innovation of science and tech16 nology in the science park. 

17 ‘‘(b) APPLICATION.—Any eligible company that de18 sires to participate as a science park venture capital com19 pany in the Program shall submit an application to the 

20 Administrator, which shall include— 

21 ‘‘(1) a business plan describing how the com22 pany intends to make successful venture capital in23 vestments in start up companies within the science 

24 park; 

25 ‘‘(2) a description of the qualifications and gen26 eral reputation of the management of the company; 
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1 ‘‘(3) an estimate of the ratio of cash to in-kind 

2 contributions of binding commitments to be made to 

3 the company under the Program; 

4 ‘‘(4) a description of the criteria to be used to 

5 evaluate whether, and to what extent, the company 

6 meets the objectives of the Program; 

7 ‘‘(5) information regarding the management 

8 and financial strength of any parent firm, affiliated 

9 firm, or other firm essential to the success of the 

10 business plan of the company; and 

11 ‘‘(6) such other information as the Adminis12 trator may require. 

13 ‘‘(c) STATUS.—Not later than 90 days after the ini14 tial receipt by the Administrator of an application under 

15 this section, the Administrator shall provide to the appli16 cant a written report that describes the status of the appli17 cants and any requirements remaining for completion of 

18 the application. 

19 ‘‘(d) MATTERS CONSIDERED.—In reviewing and 

20 processing any application under this section, the Admin21 istrator— 

22 ‘‘(1) shall determine if— 

23 ‘‘(A) the applicant meets the requirements 

24 under subsection (e); and 
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1 ‘‘(B) the management of the applicant is 

2 qualified and has the knowledge, experience, 

3 and capability necessary to comply with this 

4 part; 

5 ‘‘(2) shall take into consideration— 

6 ‘‘(A) the need for and availability of fi7 nancing for high-technology start-up companies 

8 in the science park in which the applicant is to 

9 commence business; 

10 ‘‘(B) the general business reputation of the 

11 owners and management of the applicant; and 

12 ‘‘(C) the probability of successful oper13 ations of the applicant, including adequate prof14 itability and financial soundness; 

15 ‘‘(3) shall not take into consideration any pro16 jected shortage or unavailability of grant funds or le17 verage; and 

18 ‘‘(4) shall emphasize the promotion of regional 

19 science park venture capital companies to serve mul20 tiple research parks in order to avoid geographic di21 lution of management and capital. 

22 ‘‘(e) APPROVAL; LICENSE.—The Administrator may 

23 approve an applicant to operate as a science park venture 

24 capital company under this part and license the applicant 

25 as a science park venture capital company, if— 
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1 ‘‘(1) the Administrator determines that the ap2 plication satisfies the requirements under subsection 

3 (b); 

4 ‘‘(2) the Administrator approves— 

5 ‘‘(A) the area in which the science park 

6 venture capital company is to conduct its oper7 ations; and 

8 ‘‘(B) the establishment of branch offices or 

9 agencies (if authorized by the articles); and 

10 ‘‘(3) the applicant enters into a participation 

11 agreement with the Administrator. 

12 ‘‘SEC. 5. DEBENTURES. 

13 ‘‘(a) GUARANTEES.—The Administrator may guar14 antee the timely payment of principal and interest, as 

15 scheduled, on debentures issued by any science park ven16 ture capital company. 

17 ‘‘(b) TERMS AND CONDITIONS.—The Administrator 

18 may make guarantees under this section on such terms 

19 and conditions as the Administrator determines to be ap20 propriate, except that the term of any debenture guaran21 teed under this section shall not exceed 15 years. 

22 ‘‘(c) FULL FAITH AND CREDIT OF THE UNITED

23 STATES.—The full faith and credit of the United States 

24 is pledged to pay all amounts that may be required to be 

25 paid under any guarantee under this part. 
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1 ‘‘(d) MAXIMUM GUARANTEE.—The Administrator 

2 may— 

3 ‘‘(1) guarantee the debentures issued by a 

4 science park venture capital company only to the ex5 tent that the total face amount of outstanding guar6 anteed debentures of such company does not exceed 

7 the lesser of— 

8 ‘‘(A) 300 percent of the private capital of 

9 the company, or 

10 ‘‘(B) $100,000,000; and 

11 ‘‘(2) provide for the use of discounted deben12 tures. 

13 ‘‘SEC. 6. ISSUANCE AND GUARANTEE OF TRUST CERTIFI14 CATES. 

15 ‘‘(a) ISSUANCE.—The Administrator may issue trust 

16 certificates representing ownership of all or a part of de17 bentures issued by a science park venture capital company 

18 and guaranteed by the Administrator under this part, if 

19 such certificates are based on and backed by a trust or 

20 pool approved by the Administrator and composed solely 

21 of guaranteed debentures. 

22 ‘‘(b) GUARANTEE.— 

23 ‘‘(1) IN GENERAL.—The Administrator may, 

24 under such terms and conditions as it deems appro25 priate, guarantee the timely payment of the principal 
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•S 1581 IS

1 of and interest on trust certificates issued by the 

2 Administrator or its agents for purposes of this sec3 tion. 

4 ‘‘(2) LIMITATION.—Each guarantee under this 

5 subsection shall be limited to the extent of principal 

6 and interest on the guaranteed debentures that com7 pose the trust or pool. 

8 ‘‘(3) PREPAYMENT OR DEFAULT.— 

9 ‘‘(A) IN GENERAL.—In the event that a 

10 debenture in a trust or pool is prepaid, or in 

11 the event of default of such a debenture, the 

12 guarantee of timely payment of principal and 

13 interest on the trust certificates shall be re14 duced in proportion to the amount of principal 

15 and interest such prepaid debenture represents 

16 in the trust or pool. 

17 ‘‘(B) INTEREST.—Interest on prepaid or 

18 defaulted debentures shall accrue and be guar19 anteed by the Administrator only through the 

20 date of payment of the guarantee. 

21 ‘‘(C) REDEMPTION.—At any time during 

22 its term, a trust certificate may be called for re23 demption due to prepayment or default of all 

24 debentures. 
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•S 1581 IS

1 ‘‘(c) FULL FAITH AND CREDIT.—The full faith and 

2 credit of the United States is pledged to pay all amounts 

3 that may be required to be paid under any guarantee of 

4 a trust certificate issued by the Administrator or its 

5 agents under this section. 

6 ‘‘(d) SUBROGATION AND OWNERSHIP RIGHTS.— 

7 ‘‘(1) SUBROGATION.—If the Administrator pays 

8 a claim under a guarantee issued under this section, 

9 it shall be subrogated fully to the rights satisfied by 

10 such payment. 

11 ‘‘(2) OWNERSHIP RIGHTS.—No provision of 

12 Federal, State, or local law shall preclude or limit 

13 the exercise by the Administrator of its ownership 

14 rights in the debentures residing in a trust or pool 

15 against which 1 or more trust certificates are issued 

16 under this section. 

17 ‘‘(e) MANAGEMENT AND ADMINISTRATION.— 

18 ‘‘(1) REGISTRATION.—The Administrator may 

19 provide for a central registration of all trust certifi20 cates issued under this section. 

21 ‘‘(2) CONTRACTING OF FUNCTIONS.— 

22 ‘‘(A) IN GENERAL.—Notwithstanding any 

23 other provision of law, the Administrator may 

24 contract with an agent or agents to carry out 

25 on behalf of the Administrator the pooling and 
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1 the central registration functions provided for 

2 in this section, including— 

3 ‘‘(i) maintenance, on behalf of and 

4 under the direction of the Administrator, 

5 of such commercial bank accounts or in6 vestments in obligations of the United 

7 States as may be necessary to facilitate the 

8 creation of trusts or pools backed by de9 bentures guaranteed under this part; and 

10 ‘‘(ii) the issuance of trust certificates 

11 to facilitate the creation of such trusts or 

12 pools. 

13 ‘‘(B) FIDELITY BOND OR INSURANCE RE14 QUIREMENT.—Any agent performing functions 

15 on behalf of the Administrator under this para16 graph shall provide a fidelity bond or insurance 

17 in such amounts as the Administrator deter18 mines necessary to fully protect the interests of 

19 the United States. 

20 ‘‘(C) REGULATION OF BROKERS AND

21 DEALERS.—The Administrator may regulate 

22 brokers and dealers in trust certificates issued 

23 under this section. 

24 ‘‘(D) ELECTRONIC REGISTRATION.—Noth25 ing in this subsection may be construed to pro-
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•S 1581 IS

1 hibit the use of a book entry or other electronic 

2 form of registration for trust certificates issued 

3 under this section. 

4 ‘‘SEC. 7. OPERATIONAL ASSISTANCE GRANTS. 

5 ‘‘(a) IN GENERAL.— 

6 ‘‘(1) GRANTS AUTHORIZED.—The Adminis7 trator may award grants to science park venture 

8 capital companies and other entities to provide oper9 ational assistance to high-technology start-up com10 panies financed, or expected to be financed, by such 

11 companies. 

12 ‘‘(2) TERMS.—Grants under this subsection 

13 shall be made over a period not to exceed 10 years, 

14 under such other terms as the Administrator may 

15 require. 

16 ‘‘(3) GRANT AMOUNT.—Each grant awarded 

17 under this subsection shall be equal to the lesser 

18 of— 

19 ‘‘(A) 10 percent of the private capital 

20 raised by the science park venture capital com21 pany; or 

22 ‘‘(B) $1,000,000. 

23 ‘‘(4) OTHER ENTITIES.—The amount of a 

24 grant made under this subsection to any entity other 

25 than a science park venture capital company shall be 
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•S 1581 IS

1 equal to the resources (in cash or in kind) raised by 

2 the entity in accordance with the requirements appli3 cable to science park venture capital companies 

4 under this part. 

5 ‘‘(b) SUPPLEMENTAL GRANTS.— 

6 ‘‘(1) IN GENERAL.—The Administrator may 

7 award supplemental grants to science park venture 

8 capital companies and other entities, under such 

9 terms as the Administrator may require, to provide 

10 additional operational assistance to start-up compa11 nies financed, or expected to be financed, by such 

12 companies or entities. 

13 ‘‘(2) MATCHING REQUIREMENT.—The Adminis14 trator may require, as a condition of any supple15 mental grant made under this subsection, that the 

16 company or entity receiving the grant provide a 

17 matching contribution equal to 50 percent of the 

18 amount of the supplemental grant from non-Federal 

19 cash or in-kind resources. 

20 ‘‘(c) LIMITATION.—None of the assistance made 

21 available under this section may be used for any overhead 

22 or general and administrative expense of a science park 

23 venture capital company or other entity. 
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•S 1581 IS

1 ‘‘SEC. 8. REPORTING REQUIREMENTS. 

2 ‘‘(a) SCIENCE PARK VENTURE CAPITAL COMPA3 NIES.—Each science park venture capital company shall 

4 provide the Administrator with such information as the 

5 Administrator may require, including information relating 

6 to the criteria described in section 374(b)(4). 

7 ‘‘(b) PUBLIC REPORTS.— 

8 ‘‘(1) IN GENERAL.—The Administrator shall 

9 prepare and make available to the public an annual 

10 report on the Program, which shall include detailed 

11 information on— 

12 ‘‘(A) the number of science park venture 

13 capital companies licensed by the Administrator 

14 during the previous fiscal year; 

15 ‘‘(B) the aggregate amount of leverage 

16 that science park venture capital companies 

17 have received from the Federal Government 

18 during the previous fiscal year; 

19 ‘‘(C) the aggregate number of each type of 

20 leveraged instruments used by science park ven21 ture capital companies during the previous fis22 cal year, and how each such number compares 

23 to the number in previous fiscal years; 

24 ‘‘(D) for the previous fiscal year, the num25 ber of— 
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•S 1581 IS

1 ‘‘(i) science park venture capital com2 pany licenses surrendered; and 

3 ‘‘(ii) the number of science park ven4 ture capital companies placed in liquida5 tion; 

6 ‘‘(E) the amount and type of leverage each 

7 such company has received from the Federal 

8 Government; 

9 ‘‘(F) the amount of losses sustained by the 

10 Federal Government as a result of operations 

11 under this part during the previous fiscal year 

12 and an estimate of the total losses that the 

13 Federal Government can reasonably expect to 

14 incur as a result of the operations during the 

15 current fiscal year; 

16 ‘‘(G) actions taken by the Administrator to 

17 maximize recoupment of funds of the Federal 

18 Government expended to implement and admin19 ister the Program during the previous fiscal 

20 year and to ensure compliance with the require21 ments of this part, including implementing reg22 ulations; 

23 ‘‘(H) the amount of Federal Government 

24 leverage that each licensee received in the pre-
38

•S 1581 IS

1 vious fiscal year and the types of leverage in2 struments used by each licensee; 

3 ‘‘(I) for each type of financing instrument, 

4 the sizes, types of geographic locations, and 

5 other characteristics of the small business in6 vestment companies using the instrument dur7 ing the previous fiscal year, including the extent 

8 to which the investment companies have used 

9 the leverage from each instrument to make 

10 loans or equity investments in science parks; 

11 and 

12 ‘‘(J) the actions of the Administrator to 

13 carry out this part. 

14 ‘‘(2) PROHIBITION.—In compiling the report re15 quired under paragraph (1), the Administrator may 

16 not— 

17 ‘‘(A) compile the report in a manner that 

18 permits identification of any particular type of 

19 investment by an individual science park ven20 ture capital company in which a science park 

21 venture capital company invests; or 

22 ‘‘(B) release any information that is pro23 hibited under section 1905 of title 18, United 

24 States Code. 
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•S 1581 IS

1 ‘‘SEC. 9. EXAMINATIONS. 

2 ‘‘(a) IN GENERAL.—Each science park venture cap3 ital company that participates in the Program shall be 

4 subject to examinations made at the direction of the Ad5 ministrator, in accordance with this section. 

6 ‘‘(b) ASSISTANCE OF PRIVATE SECTOR ENTITIES.—

7 An examination under this section may be conducted with 

8 the assistance of a private sector entity that has the quali9 fications and expertise necessary to conduct such an exam10 ination. 

11 ‘‘(c) COSTS.— 

12 ‘‘(1) IN GENERAL.—The Administrator may as13 sess the cost of an examination under this section, 

14 including compensation of the examiners, against the 

15 science park venture capital company examined. 

16 ‘‘(2) PAYMENT.—Any science park venture cap17 ital company against which the Administrator as18 sesses costs under this subsection shall pay the costs 

19 assessed. 

20 ‘‘(d) DEPOSIT OF FUNDS.—Funds collected under 

21 this section— 

22 ‘‘(1) shall be deposited in the account that in23 curred the costs for carrying out this section; 

24 ‘‘(2) shall be made available to the Adminis25 trator to carry out this section, without further ap26 propriation; and 
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•S 1581 IS

1 ‘‘(3) shall remain available until expended. 

2 ‘‘SEC. 10. BANK PARTICIPATION. 

3 ‘‘(a) IN GENERAL.—Except as provided under sub4 section (b), any national bank, any member bank of the 

5 Federal Reserve System, and, to the extent permitted 

6 under applicable State law, any insured bank that is not 

7 a member of such system, may invest in— 

8 ‘‘(1) any science park venture capital company; 

9 or 

10 ‘‘(2) any entity established to invest solely in 

11 science park venture capital companies. 

12 ‘‘(b) LIMITATION.—No bank described in subsection 

13 (a) may make investments described in that subsection 

14 that are greater than 5 percent of the capital and surplus 

15 of the bank. 

16 ‘‘SEC. 11. FEES. 

17 ‘‘(a) IN GENERAL.—Except as provided under sub18 section (b), the Administrator may charge such fees as 

19 it determines to be appropriate with respect to any guar20 antee or grant issued under this part. 

21 ‘‘(b) EXCEPTION.—The Administrator shall not col22 lect a fee for any guarantee of a trust certificate under 

23 this section. Any agent of the Administrator may collect 

24 a fee, upon the approval of the Administrator, for the 

25 functions described in section 376(e)(2). 
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•S 1581 IS

1 ‘‘SEC. 12. APPLICABLE LAW. 

2 ‘‘(a) IN GENERAL.—The provisions relating to New 

3 Market Venture Capital companies under sections 361 

4 through section 366 shall apply to science park venture 

5 capital companies. 

6 ‘‘(b) PURCHASE OF GUARANTEED OBLIGATIONS.—

7 Section 318 shall not apply to any debenture issued by 

8 a science park venture capital company under this part. 

9 ‘‘SEC. 13. REGULATIONS. 

10 ‘‘Not later than 12 months after the date of enact11 ment of this part, the Administrator shall issue such regu12 lations as it determines necessary to carry out this part. 

13 ‘‘SEC. 14. AUTHORIZATIONS OF APPROPRIATIONS. 

14 ‘‘(a) IN GENERAL.—There are authorized to be ap15 propriated to the Administration for each of the fiscal 

16 years 2006 through 2011, to remain available until ex17 pended— 

18 ‘‘(1) such sums as may be necessary for the 

19 cost, as defined in section 502(5) of the Federal 

20 Credit Reform Act of 1990, of guaranteeing 

21 $500,000,000 of debentures under this part; and 

22 ‘‘(2) $50,000,000 to make grants under this 

23 part. 

24 ‘‘(b) FUNDS COLLECTED FOR EXAMINATIONS.—

25 Funds deposited pursuant to section 362(d) may only be 

26 used for— 
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•S 1581 IS

1 ‘‘(1) examinations under section 362; and 

2 ‘‘(2) other oversight activities of the Program.’’. 

3 SEC. 4. TAX INCENTIVES FOR INVESTMENT IN SCIENCE 

4 PARKS. 

5 (a) EXPENSING.— 

6 (1) IN GENERAL.—Section 179(d) of the Inter7 nal Revenue Code of 1986 (relating to definitions 

8 and special rules) is amended by adding at the end 

9 the following new paragraph: 

10 ‘‘(11) APPLICATION OF SECTION TO PROPERTY

11 PLACED IN SERVICE IN SCIENCE PARKS.— 

12 ‘‘(A) IN GENERAL.—In the case of any sec13 tion 179 property placed in service in any 

14 science park, this section shall be applied with15 out regard to paragraphs (1) and (2) of sub16 section (b). 

17 ‘‘(B) SCIENCE PARK.— 

18 ‘‘(i) IN GENERAL.—The term ‘science 

19 park’ means a group of interrelated com20 panies and institutions, including suppliers, 

21 service providers, institutions of higher 

22 education, start-up incubators, and trade 

23 associations that cooperate and compete 

24 and are located in a specific area whose 

25 administration promotes real estate devel-
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•S 1581 IS

1 opment, technology transfer, and partner2 ships between such companies and institu3 tions, and does not mean a business or in4 dustrial park. 

5 ‘‘(ii) BUSINESS OR INDUSTRIAL

6 PARK.—The term ‘business or industrial 

7 park’ means primarily a for-profit real es8 tate venture of businesses or industries 

9 which do not necessarily reinforce each 

10 other through supply chain or technology 

11 transfer mechanisms.’’. 

12 (2) EFFECTIVE DATE.—The amendment made 

13 by this subsection shall apply with respect to prop14 erty placed in service after the date of the enactment 

15 of this Act. 

16 (b) TAX CREDIT FOR RESEARCH ACTIVITIES.— 

17 (1) IN GENERAL.—Section 41(a) of the Internal 

18 Revenue Code of 1986 (relating to credit for increas19 ing research activities) is amended by striking ‘‘and’’ 

20 at the end of paragraph (1)(B), by striking the pe21 riod at the end of paragraph (2) and inserting ‘‘, 

22 and’’, and by adding at the end the following new 

23 paragraph: 

24 ‘‘(3) 20 percent of the qualified research ex25 penses paid or incurred by the taxpayer during the 
44

•S 1581 IS

1 taxable year in carrying on any trade or business lo2 cated in a science park.’’. 

3 (2) SCIENCE PARK.—Section 41(f) of such 

4 Code (relating to special rules) is amended by add5 ing at the end the following new paragraph: 

6 ‘‘(6) SCIENCE PARK.— 

7 ‘‘(A) IN GENERAL.—The term ‘science 

8 park’ means a group of interrelated companies 

9 and institutions, including suppliers, service 

10 providers, institutions of higher education, 

11 start-up incubators, and trade associations that 

12 cooperate and compete and are located in a spe13 cific area whose administration promotes real 

14 estate development, technology transfer, and 

15 partnerships between such companies and insti16 tutions, and does not mean a business or indus17 trial park. 

18 ‘‘(B) BUSINESS OR INDUSTRIAL PARK.—

19 The term ‘business or industrial park’ means 

20 primarily a for-profit real estate venture of 

21 businesses or industries which do not nec22 essarily reinforce each other through supply 

23 chain or technology transfer mechanisms.’’. 
45 

•S 1581 IS

1 (3) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply to taxable years begin3 ning after the date of the enactment of this Act. 

4 (c) PRIVATE BUSINESS USE OF A BOND-FINANCED

5 FACILITY DOES NOT INCLUDE PERFORMANCE OF RE6 SEARCH USING FEDERAL GOVERNMENT FUNDING IN

7 SUCH FACILITY.— 

8 (1) IN GENERAL.—Subparagraph (A) of section 

9 141(b)(6) of the Internal Revenue Code of 1986 (de10 fining private business use) is amended by inserting 

11 ‘‘or use in the performance of research using, in 

12 whole or in part, funds of the United States or any 

13 agency or instrumentality thereof’’ before ‘‘shall not 

14 be taken into account’’. 

15 (2) EFFECTIVE DATE.— 

16 (A) IN GENERAL.—The amendment made 

17 by this subsection shall apply to any use on or 

18 after the date of the enactment of this Act. 

19 (B) NO INFERENCE.—Nothing in the 

20 amendment made by this subsection shall be 

21 construed to create any inference with respect 

22 to the use of tax-exempt bond financed facilities 

23 before the effective date of such amendment. 

Æ