HB 83

1
A bill to be entitled
2An act relating to capital formation; creating a new pt. X
3of ch. 288, F.S.; providing a short title; providing
4legislative findings and intent; providing definitions;
5creating the Florida Capital Investment Trust as a state
6beneficiary public trust; providing for administration by
7a board of trustees; providing for appointment of board
8members; providing for terms; providing for serving
9without compensation; providing for travel and other
10direct expenses; providing criteria for trustees;
11providing for powers and duties of trustees; providing for
12hiring employees; providing for meetings of the board;
13authorizing the trust to receive, hold, use, transfer, and
14sell certain tax credits for certain purposes; providing
15requirements and limitations; authorizing the Department
16of Revenue to adopt rules for certain purposes; requiring
17Enterprise Florida, Inc., to facilitate establishment of
18the Florida Opportunity Fund Management Corporation;
19specifying criteria of the corporation; providing for
20appointment of a board of directors selection committee;
21providing for selection of a board of directors of the
22corporation by Enterprise Florida, Inc.; specifying
23criteria; providing for terms and requirements of
24directors; providing purposes of the corporation;
25providing duties and responsibilities of the corporation;
26authorizing the corporation to charge a management fee for
27certain purposes; providing for travel and other direct
28expenses; providing for powers of the corporation;
29creating the Florida Opportunity Fund as a for-profit,
30limited partnership or a limited liability corporation to
31be organized and incorporated by the Florida Opportunity
32Fund Management Corporation; authorizing certain entities
33to contract with Enterprise Florida, Inc., for certain
34purposes; providing investment requirements for the fund;
35requiring the board of trustees to issue annual reports on
36activities of the fund; providing report requirements;
37amending s. 213.053, F.S.; authorizing the Department of
38Revenue to provide certain tax credit information to the
39board of trustees; amending s. 220.02, F.S.; including tax
40credits transferred or sold by the board of trustees
41within the priority list of applied credits against
42certain taxes; amending s. 624.509, F.S.; including tax
43credits transferred or sold by the board of trustees
44within the order of taking credits or deductions against
45the insurance premium tax; providing an appropriation;
46providing an effective date.
47
48Be It Enacted by the Legislature of the State of Florida:
49
50     Section 1.  Parts X and XI of chapter 288, Florida
51Statutes, are redesignated as parts XI and XII, respectively,
52and a new part X of that chapter, consisting of sections
53288.9621, 288.9622, 288.9623, 288.9624, 288.9625, 288.9626,
54288.9627, and 288.9628, is created to read:
55
PART X
56
FLORIDA CAPITAL FORMATION
57     288.9621  Short title.--This part may be cited as the
58"Florida Capital Formation Act."
59     288.9622  Findings and intent.--
60     (1)  The Legislature finds and declares that there is need
61to increase the availability of seed capital and early stage
62venture equity capital for emerging companies in the state,
63including, without limitation, enterprises in life sciences,
64information technology, advanced manufacturing processes,
65aviation and aerospace, and homeland security and defense, as
66well as other strategic technologies.
67     (2)  It is the intent of the Legislature that this part
68serve to mobilize private investment in a broad variety of
69venture capital partnerships in diversified industries and
70geographies; retain private-sector investment criteria focused
71on rate of return; use the services of highly qualified managers
72in the venture capital industry regardless of location;
73facilitate the organization of the Florida Opportunity Fund as a
74fund-of-funds investor in seed and early stage venture capital
75and angel funds; and precipitate capital investment and
76extensions of credit to and in the Florida Opportunity Fund.
77     (3)  It is the intent of the Legislature to mobilize
78venture equity capital for investment in such a manner as to
79result in a significant potential to create new businesses and
80jobs in this state that are based on high growth potential
81technologies, products, or services and that will further
82diversify the economy of this state.
83     288.9623  Definitions.--As used in this part:
84     (1)  "Board" means the board of trustees of the Florida
85Capital Investment Trust.
86     (2)  "Certificate" means a contract between the trust and a
87designated investor evidencing the terms of a guarantee or
88incentive granted to a designated investor.
89     (3)  "Corporation" means the Florida Opportunity Fund
90Management Corporation created under this part.
91     (4)  "Designated investor" means a person, other than the
92board, who purchases an equity interest in the Florida
93Opportunity Fund or is a party to a certificate or who is a
94lender to the Florida Opportunity Fund and is a party to a
95certificate.
96     (5)  "Florida Capital Investment Trust" or "trust" means a
97state beneficiary public trust created under this part.
98     (6)  "Florida Opportunity Fund" or "fund" means the
99private, for-profit limited partnership or limited liability
100company in which a designated investor purchases an equity
101interest or to which a designated investor extends credit.
102     (7)  "Tax credit" means a contingent tax credit issued
103under this part or subsequent legislative action that is
104available to offset tax liabilities imposed by this state,
105provided the proceeds of such tax are payable to the General
106Revenue Fund. A tax credit is not eligible to offset tax
107liabilities imposed by a political subdivision within this
108state.
109     288.9624  Florida Capital Investment Trust.--
110     (1)  The Florida Capital Investment Trust is created as a
111state beneficiary public trust to be administered by the board.
112The exercise by the board of powers conferred by this part is
113deemed and held to be the performance of essential public
114purposes.
115     (2)(a)  The board shall consist of five voting trustees and
116two nonvoting ex officio trustees. A majority of voting trustees
117shall constitute a quorum.
118     (b)  Three voting trustees shall be appointed by the
119Governor, one voting trustee shall be appointed by the President
120of the Senate, and one voting trustee shall be appointed by the
121Speaker of the House of Representatives. The Governor shall
122appoint one trustee to a term ending April 30, 2008, and two
123trustees to terms ending April 30, 2010. The President of the
124Senate and the Speaker of the House of Representatives shall
125each appoint one trustee to a term ending April 30, 2009.
126Thereafter, each voting trustee shall be appointed for a 3-year
127term.
128     (c)  One nonvoting ex officio trustee shall be the designee
129of Enterprise Florida, Inc., and one nonvoting ex officio
130trustee shall be the designee of the Florida Research
131Consortium. Ex officio trustees serve annual terms at the
132pleasure of their appointing organizations and may be
133reappointed. A trustee's term shall end on April 30 of his or
134her term expiration year.
135     (d)  Vacancies shall be filled in the same manner as the
136appointment of the original trustee to whom a successor is
137sought. Trustees whose terms have expired may continue to serve
138until their replacements have been duly appointed.
139     (3)  Trustees shall serve on the board without compensation
140in the form of fees, per diem, or salary. Trustees may receive
141compensation or reimbursement for direct expenses, mileage, and
142other travel expenses related to the performance of their duties
143pursuant to s. 112.061. Trustees shall be selected based upon
144demonstrated expertise and competence in the supervision of
145early stage investment managers, the fiduciary management of
146funds, the administration and management of a publicly listed
147company, or experience and competence in public accounting,
148auditing, and fiduciary responsibilities. Trustees may not have
149an interest in any entity to which a certificate is issued.
150     (4)  The board may engage consultants, expend funds, invest
151funds, contract, bond or insure against loss, provide guarantees
152or other incentives, hold transferable tax credits, sell tax
153credits, or enter into any financial or other transaction or
154perform any other act necessary to carry out its purpose under
155this part. The board, in conjunction with the Department of
156Revenue, shall develop a system for registration of any tax
157credits received by the trust and transferred under this part.
158The board shall also create a system of documentation that
159permits verification that any tax credit claimed upon a tax
160return is validly held by the person claiming such tax credit
161and properly taken in the year of claim and that any transfers
162of the tax credit are made in accordance with the requirements
163of this part.
164     (5)  If the board elects to hire employees, such persons
165shall be selected by the board based upon knowledge and
166leadership in the field for which the person performs services
167for the board. The board shall charge fees for its guarantees to
168designated investors or for other services such that the board's
169operations may be conducted without subsequent legislative
170appropriation.
171     288.9625  Issuance of tax credits.--
172     (1)  The trust shall receive and hold for the purposes of
173this part tax credits under this part that may be used to reduce
174any tax liability imposed by the state under chapter 212,
175chapter 220, s. 624.509, or s. 624.510. The total amount of tax
176credits issued and transferred to the trust is $75 million. The
177tax credits shall be transferable by the board as provided in
178this part, provided no such transferred tax credit shall be
179exercisable before July 1, 2012, or after July 1, 2037.
180     (2)  The board may transfer and sell tax credits solely for
181the purpose of fulfilling, in whole or in part, any certificate
182obligation issued by the board. The board shall immediately
183notify the Governor, the President of the Senate, the Speaker of
184the House of Representatives, and the Department of Revenue, in
185writing, if any tax credit is transferred. The board shall be
186notified immediately of any transfers of tax credits by persons
187or businesses other than the board and shall notify the
188Department of Revenue, in writing, of such transfers.
189     (3)  The board shall ensure that no more than $20 million
190in tax credits is transferred that may be claimed and used to
191reduce taxes payable to the General Revenue Fund for any single
192state fiscal year. The board shall clearly indicate upon the
193face of the document transferring the tax credit the principal
194amount of the tax credit and the state fiscal year or years
195during which the credit may be claimed. Tax credits may be
196transferred in increments of no less than $100,000. A copy of
197the document transferring the tax credit shall be transmitted to
198the executive director of the Department of Revenue, who shall
199allow the credit to be claimed against tax liabilities of the
200person or business consistent with the terms appearing in the
201transfer document.
202     (4)  If the tax liabilities of the taxpayer are
203insufficient to exhaust the tax credit for which the taxpayer is
204eligible, the balance of the tax credit may be refunded by the
205state. If a tax credit granted under this section is not claimed
206in the year designated for claiming the credit on the transfer
207document, any return for the year in which the credit was
208eligible to be claimed may be amended to claim the credit within
209the time specified by ss. 95.091 and 215.26.
210     (5)  Persons or businesses to which tax credits under this
211section are transferred shall retain documentation supporting
212eligibility to claim the tax credits and evidence of the
213transfer of the tax credits, if applicable, until the time
214period provided to audit the tax returns on which the tax
215credits were claimed has passed.
216     (6)  The Department of Revenue, in conjunction with the
217board, may adopt rules governing the manner and form of
218documentation required to claim tax credits granted or
219transferred under this section and may establish guidelines as
220to the requisites for an affirmative showing of qualification
221for tax credits granted or transferred under this section.
222     (7)  An insurance company claiming a credit against premium
223tax liability under this section shall not be required to pay
224any additional retaliatory tax levied pursuant to s. 624.5091 as
225a result of claiming such credit. Because credits under this
226section are available to an insurance company, s. 624.5091 does
227not limit such credit in any manner.
228     (8)  Any original sale of tax credits by the board shall be
229by competitive bidding unless the sale is for the full face
230value of the credits.
231     288.9626  Florida Opportunity Fund Management
232Corporation.--
233     (1)  At the request of the board, Enterprise Florida, Inc.,
234shall facilitate the creation of the Florida Opportunity Fund
235Management Corporation as a private, not-for-profit corporation.
236Enterprise Florida, Inc., shall be the corporation's sole
237member. The corporation is not a public corporation or
238instrumentality of the state.
239     (2)  The vice chair of Enterprise Florida, Inc., shall
240select from among its sitting board of directors a five-person
241appointment committee. The appointment committee shall select
242five initial members of a board of directors for the
243corporation. The persons elected to the initial board of
244directors by the appointment committee shall include persons who
245have expertise in the area of the selection and supervision of
246early stage investment managers or in the fiduciary management
247of investment funds and other areas of expertise as deemed
248appropriate by the appointment committee. After election of the
249initial board of directors, vacancies on the board of directors
250of the corporation shall be elected by the board of directors of
251Enterprise Florida, Inc., and shall serve terms as provided in
252the corporation's organizational documents. Members of the board
253of directors shall be subject to any restrictions on conflicts
254of interest specified in the organizational documents and shall
255have no interest in any venture capital investment fund
256allocation manager selected by the corporation pursuant to the
257provisions of this part or in any investments made by the
258Florida Opportunity Fund.
259     (3)  The purposes of the corporation shall be to organize
260the Florida Opportunity Fund, select an early stage venture
261capital investment fund allocation manager, negotiate the terms
262of a contract with the venture capital investment fund
263allocation manager, execute the contract with the selected
264venture capital investment fund allocation manager on behalf of
265the Florida Opportunity Fund, manage the business affairs of the
266Florida Opportunity Fund, such as accounting, audit, insurance,
267and related requirements, receive investment returns from the
268Florida Opportunity Fund, and reinvest the investment returns in
269the Florida Opportunity Fund in order to provide additional
270venture capital investments designed to result in a significant
271potential to create new businesses and jobs in this state and
272further diversify the economy of this state.
273     (4)  Upon organization, the corporation shall conduct a
274national solicitation for investment plan proposals from
275qualified venture capital investment fund allocation managers
276for the raising and investing of capital by the corporation. Any
277proposed investment plan shall address the applicant's level of
278experience, quality of management, investment philosophy and
279process, provability of success in fundraising, prior investment
280fund results, and plan for achieving the purposes of this part.
281The corporation shall select only a venture capital investment
282fund allocation manager with demonstrated expertise in the
283management and fund allocation of investments in venture capital
284funds.
285     (5)  The corporation may charge a management fee on assets
286under management in the Florida Opportunity Fund. The fee shall
287be in addition to any fee charged to the Florida Opportunity
288Fund by the venture capital investment fund allocation manager,
289but the fee shall be charged only to pay for reasonable and
290necessary costs of the corporation.
291     (6)  Directors of the corporation shall be compensated for
292direct expenses and mileage pursuant to s. 112.061 but shall not
293receive a fee or salary for service as directors.
294     (7)  The corporation shall have all powers granted under
295its organizational documents and shall indemnify directors to
296the broadest extent permissible under the laws of this state.
297     288.9627  Florida Opportunity Fund.--
298     (1)  The Florida Opportunity Fund is created as a
299for-profit limited partnership or limited liability corporation
300that shall be organized and incorporated in this state by the
301Florida Opportunity Fund Management Corporation upon request by
302the board. The board, the corporation, or the fund may contract
303with Enterprise Florida, Inc., for provision of services
304necessary for continuing operations.
305     (2)  The fund shall invest on a fund-of-funds basis and
306emphasize investment in seed capital and early stage venture
307capital funds focusing on opportunities in this state. While not
308precluded from investing in funds with a wider geographic spread
309of portfolio investment, the fund shall require an investment
310fund to have a record of investment in this state, be based in
311this state, or have an office in this state staffed with a full-
312time, professional venture investment executive to be eligible
313for investment. The investments by the fund shall be on
314partnership interests in private venture capital funds and not
315in direct investments in individual businesses. The fund shall
316invest in venture capital funds with experienced managers or
317management teams with demonstrated expertise and a successful
318history in the investment of early stage venture capital funds.
319The fund may invest in newly created early stage venture capital
320funds as long as the manager or management teams of the funds
321have experience, expertise, and a successful history in the
322investment of venture capital funds. The Florida Opportunity
323Fund may not invest in a fund unless that fund has raised
324capital from other sources in an amount greater than the
325investment of the Florida Opportunity Fund such that the amount
326invested in an entity in this state by the receiving venture
327capital fund is at least twice the amount invested by the
328corporation. The corporation and its partners or shareholders
329may negotiate any and all terms and conditions for its
330investments, including draw back of management fees and other
331provisions that maximize investment in seed and early stage
332companies based in this state.
333     (3)  The interest of the corporation in the fund shall be
334to serve as general partner or manager and to be paid a
335management fee to cover its costs.
336     (4)  Investments by designated investors in the fund shall
337be deemed permissible investments for state-chartered banks and
338for domestic insurance companies under applicable state law.
339     (5)  If the fund is liquidated or has returned all capital
340to designated investors in accordance with contractual
341agreements, or if the guarantee capacity of the trust, at the
342sole discretion of the board, is sufficient for additional
343certificates, a new funding of the Florida Opportunity Fund may
344be implemented for subsequent venture capital fund-of-funds
345investments. If the board takes exception to an additional
346funding, such additional funding may only be implemented without
347the benefit of certificates from the board.
348     288.9628  Annual reporting.--The board shall issue an
349annual report on the activities conducted by the Florida
350Opportunity Fund and present the report to the Governor, the
351President of the Senate, and the Speaker of the House of
352Representatives. The annual report shall include a copy of the
353independent audit of the fund and a valuation of the assets of
354the fund and shall review the progress of the investment fund
355allocation manager in implementing the fund's investment plan,
356the benefits to the state resulting from this program, including
357the number of businesses created and their associated industry,
358and the number of jobs created. The annual report shall also
359describe any sale of tax certificates and any sale of tax
360certificates that is reasonably anticipated by the board to meet
361its certificate obligations.
362     Section 2.  Paragraph (z) is added to subsection (8) of
363section 213.053, Florida Statutes, to read:
364     213.053  Confidentiality and information sharing.--
365     (8)  Notwithstanding any other provision of this section,
366the department may provide:
367     (z)  Information relative to tax credits claimed under part
368X of chapter 288 to the board of trustees of the Florida Capital
369Investment Trust in the conduct of the trust's official
370business.
371
372Disclosure of information under this subsection shall be
373pursuant to a written agreement between the executive director
374and the agency. Such agencies, governmental or nongovernmental,
375shall be bound by the same requirements of confidentiality as
376the Department of Revenue. Breach of confidentiality is a
377misdemeanor of the first degree, punishable as provided by s.
378775.082 or s. 775.083.
379     Section 3.  Subsection (8) of section 220.02, Florida
380Statutes, is amended to read:
381     220.02  Legislative intent.--
382     (8)  It is the intent of the Legislature that credits
383against either the corporate income tax or the franchise tax be
384applied in the following order: those enumerated in s. 631.828,
385those enumerated in s. 220.191, those enumerated in s. 220.181,
386those enumerated in s. 220.183, those enumerated in s. 220.182,
387those enumerated in s. 220.1895, those enumerated in s. 221.02,
388those enumerated in s. 220.184, those enumerated in s. 220.186,
389those enumerated in s. 220.1845, those enumerated in s. 220.19,
390those enumerated in s. 220.185, those enumerated in s. 220.187,
391those enumerated in s. 220.192, and those enumerated in s.
392220.193, and those enumerated in part X of chapter 288.
393     Section 4.  Subsection (7) of section 624.509, Florida
394Statutes, is amended to read:
395     624.509  Premium tax; rate and computation.--
396     (7)  Credits and deductions against the tax imposed by this
397section shall be taken in the following order: deductions for
398assessments made pursuant to s. 440.51; credits for taxes paid
399under ss. 175.101 and 185.08; credits for income taxes paid
400under chapter 220, the emergency excise tax paid under chapter
401221 and the credit allowed under subsection (5), as these
402credits are limited by subsection (6); credits allowed under
403part X of chapter 288; and all other available credits and
404deductions.
405     Section 5.  For fiscal year 2007-2008, the sum of $750,000
406is appropriated from the General Revenue Fund to the Florida
407Capital Investment Trust to be used for startup activities
408necessary to implement part X of chapter 288, Florida Statutes,
409as created by this act.
410     Section 6.  This act shall take effect July 1, 2007.


CODING: Words stricken are deletions; words underlined are additions.