Florida Senate - 2014                        COMMITTEE AMENDMENT
       Bill No. HB 5601
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: WD            .                                
                  04/09/2014           .                                

    1         Senate Amendment (with title amendment)
    3         Delete lines 798 - 1089
    4  and insert:
    5         Section 14. Effective upon becoming law, section 288.127,
    6  Florida Statutes, is created to read:
    7         288.127 Qualified Television Loan Fund (QTV Fund).—
    8         (1) DEFINITIONS.—As used in this section, the term:
    9         (a) “Fund administrator” means a private sector
   10  organization under contract with the department to manage and
   11  administer the QTV Fund.
   12         (b) “Major broadcaster” means broadcasting organizations
   13  that include, but are not limited to, television broadcasting
   14  networks, cable television, direct broadcast satellite,
   15  telecommunications companies, and internet streaming or other
   16  digital media platforms.
   17         (c) “Private investment capital” means capital from
   18  private, nongovernmental funding sources that will be coinvested
   19  with the QTV Fund in segregated accounts.
   20         (d) “Qualified lending partner” means a financial
   21  institution, as defined in s. 655.005, selected by a fund
   22  administrator with demonstrated capability in providing
   23  financing to television production and specialized expertise in
   24  intellectual property, tax credit programs, customary broadcast
   25  license agreements, advertising inventories, and ancillary
   26  revenue sources, with a combined portfolio in film, television,
   27  and entertainment media of at least $500 million.
   28         (e) “Qualified television content” means series, mini
   29  series, or made-for-TV content produced by a qualified
   30  production company that has in place a distribution contract
   31  with a major broadcaster, under a customary broadcast license
   32  agreement. The term does not include a production that contains
   33  content that is obscene, as defined in s. 847.001.
   34         (2) PURPOSE.—The purpose of the QTV Fund is to create a
   35  public-private partnership in the form of a revolving loan fund
   36  to administer a loan program for television production. The QTV
   37  Fund shall be privately managed under state oversight to
   38  incentivize the use of this state as a site for producing
   39  qualified television content and to develop and sustain the
   40  workforce and infrastructure for television content production.
   41         (3) CREATION.—The Qualified Television Loan Fund is created
   42  within the department. The QTV Fund shall be a public fund that
   43  is privately managed by the fund administrator under contract
   44  entered into with the department. The department shall disburse
   45  the funds appropriated for this program to the fund
   46  administrator to invest in the QTV Fund during the existence of
   47  the program pursuant to this section and the contract entered
   48  into between the fund administrator and the department. State
   49  funds in the QTV Fund may be used only to enter into loan
   50  agreements and to pay any administrative costs or other
   51  authorized fees under this section.
   52         (a) The QTV Fund shall be a revolving loan fund that shall
   53  invest and reinvest the principal and interest of the fund in
   54  accordance with s. 617.2104, in such a manner as to not subject
   55  the funds to state or federal taxes and to be consistent with
   56  the investment policy statement adopted by the fund
   57  administrator. As the production companies repay the principal
   58  and interest for the QTV Fund, the state funds shall be
   59  returned, less any QTV Fund expenses, to the account to be lent
   60  to subsequent borrowers.
   61         (b) Funds from the QTV Fund shall be disbursed by the fund
   62  administrator through a lending vehicle to make short-term loans
   63  pursuant to this section.
   64         (4) FUND ADMINISTRATOR.—
   65         (a) The department shall contract with a fund administrator
   66  by September 1, 2014, and award the contract in accordance with
   67  the competitive bidding requirements in s. 287.057.
   68         (b) The department shall select as fund administrator a
   69  private sector entity that demonstrates the ability to implement
   70  the program under this section and that meets the requirements
   71  set forth in this section. Preference shall be given to
   72  applicants that are headquartered in this state. Additional
   73  consideration may be given to applicants with experience in the
   74  management of economic development or job creation-related
   75  funds. The qualifications for the fund administrator must
   76  include, but are not limited to, the following:
   77         1. A demonstrated track record of managing private sector
   78  equity or debt funds in the entertainment and media industries.
   79         2. The ability to demonstrate through a partnership
   80  agreement that a qualified lending partner is in place, with the
   81  capability of providing leverage of a minimum of 2.5 times the
   82  capital amount of the QTV Fund, for financing the production
   83  cost of qualified television content in the form of senior debt.
   84         (c) For overseeing and administering the QTV Fund, the fund
   85  administrator shall be reimbursed for the portion of costs the
   86  fund administrator incurrs in establishing and operating the
   87  Fund related to the state’s investment, which shall be paid from
   88  state funds in the QTV Fund. Any additional private investment
   89  capital in the segregated accounts is responsible for its own
   90  management fees. The fund administrator shall be entitled to a
   91  reasonable profit, but such distribution may not be made from
   92  any principal funds from the original appropriation.
   93         (d) The fund administrator shall provide services defined
   94  under this section for the duration of the QTV Fund term unless
   95  removed for cause. Cause shall be further defined under the
   96  contract with the fund administrator and must include, but is
   97  not limited to, the engagement in fraud or other criminal acts
   98  by board members, incapacity, unfitness, neglect of duty,
   99  official incompetence and irresponsibility, misfeasance,
  100  malfeasance, nonfeasance, or lack of performance.
  102         (a) Authority to contract.—The fund administrator may enter
  103  into agreements with qualified lending partners for concurrent
  104  lending through the QTV Fund. A loan made by the qualified
  105  lending partner must be accounted for separately from the state
  106  funds or any other private investment capital. Such loan shall
  107  be made as senior debt. The fund administrator may raise private
  108  investment capital for mezzanine equity and other equity or
  109  raise junior capital for concurrent lending through the QTV
  110  Fund. However, loans from private investment capital may not be
  111  made at more favorable terms and conditions than the terms and
  112  conditions of the state funds in the QTV Fund. The state
  113  appropriation must be maintained in a separate account from any
  114  private investment capital and administered in a separate legal
  115  investment entity or entities. Private investment capital and
  116  loans shall be segregated from each other, and funds may not be
  117  commingled.
  118         (b) General duties.—The fund administrator:
  119         1. Shall prudently manage the funds in the QTV Fund as a
  120  revolving loan fund.
  121         2. Shall contract with one or more qualified lending
  122  partners.
  123         3. Shall provide improvement of the credit profile of a
  124  structured financial transaction for qualified production
  125  companies that produce qualified television content meeting the
  126  criteria in subsection (7).
  127         4. May raise additional private investment capital to be
  128  held in separate accounts, in addition to the leverage provided
  129  by the qualified lending partner.
  130         5. Shall administer the QTV Fund in accordance with this
  131  part.
  132         6. Shall agree to maintain the recipient’s books and
  133  records relating to funds received from the department according
  134  to generally accepted accounting principles and in accordance
  135  with the requirements of s. 215.97(7) and to make those books
  136  and records available to the department for inspection upon
  137  reasonable notice. The books and records must be maintained with
  138  detailed records showing the use of proceeds from loans to fund
  139  qualified television content.
  140         7. Shall maintain its registered office in this state
  141  throughout the duration of the contract.
  142         (c) Financial reporting.—The fund administrator shall
  143  submit to the department by February 28 each year audited
  144  financial statements for the preceding tax year which are
  145  audited by an independent certified public accountant after the
  146  end of each year in which the fund administrator is under
  147  contract with the department. In addition to providing an
  148  independent opinion on the annual financial statements, such
  149  audit provides a basis to verify the segregation of state funds
  150  from those of any private investment capital.
  151         (d) Program reporting.—The fund administrator shall submit
  152  an annual report to the department by February 28 after the end
  153  of each year in which the fund administrator is under contract
  154  with the department. The report must include information on the
  155  loans made in the preceding calendar year and must include, but
  156  need not be limited to, the following:
  157         1. The name of the qualified television content.
  158         2. The names of the counties in which the production
  159  occurred.
  160         3. The number of jobs created and retained as a result of
  161  the production.
  162         4. The loan amounts, including the amount of private
  163  investment capital and funds provided by a qualified lending
  164  partner.
  165         5. The loan repayment status for each loan.
  166         6. The number, and amounts, of any loans with payments past
  167  due.
  168         7. The number, and amounts, of any loans in default.
  169         8. A description of the assets securing the loans.
  170         9. Other information and documentation required by the
  171  department.
  172         (e) Plan of accountability.—The fund administrator shall
  173  submit an annual plan of accountability of economic development,
  174  including a report detailing the job creation resulting from the
  175  QTV Fund loans made during the current year and cumulatively
  176  since the inception of the program. The fund administrator shall
  177  also provide any additional information requested by the
  178  department pertaining to economic development and job creation
  179  in the state.
  180         (f) Conflict-of-interest statement.—The fund administrator
  181  shall provide a conflict-of-interest statement from its
  182  governing board certifying that no board member, director,
  183  employee, agent, immediate family member thereof, or other
  184  person connected to or affiliated with the fund administrator is
  185  receiving or will receive any type of compensation or
  186  remuneration from a production company that has received or will
  187  receive funds from the loan program or from a qualified lending
  188  partner. The department may waive this requirement for good
  189  cause shown.
  190         (6) LOAN STRUCTURE.—
  191         (a) The QTV Fund may make loans to production companies to
  192  fund production costs or provide improvement of the credit
  193  profile of a structured financial transaction for qualified
  194  television content that meets the criteria requirements of
  195  subsection (7). To make a loan, the fund administrator shall
  196  take into consideration the types of eligible collateral, the
  197  credit worthiness of the project, the producer’s track record,
  198  the possibility that the project will encourage, enhance, or
  199  create economic benefits, and the extent to which assistance
  200  would foster innovative public-private partnerships and attract
  201  private debt or equity investment.
  202         (b) The QTV Fund loan package shall be secured by
  203  contractual and predictable sources of repayment such as
  204  domestic and international broadcaster license agreements and
  205  other ancillary revenues that are derived from media content
  206  rights. Unsecured loans may not be made.
  207         (c) The loans shall be made on the basis of a second lien
  208  or primary security rights on the media assets listed in
  209  paragraph (b).
  210         (d) The QTV Fund shall provide funding only in conjunction
  211  with senior loans provided by a qualified lending partner. Loans
  212  from the QTV Fund may be subordinated to senior debt from the
  213  qualified lending partner and may not exceed 30 percent of the
  214  total production funding cost of any particular project.
  215         (e) The production company’s repayment of any loan shall be
  216  in accordance with the broadcast license agreement and the
  217  delivery of qualified television content to the major
  218  broadcaster and shall be within 60 days after such delivery.
  219         (f) Loans made by the QTV Fund may not exceed 36 months in
  220  duration, except for extenuating circumstances for which the
  221  fund administrator may grant an extension upon making written
  222  findings to the department specifying the conditions requiring
  223  the extension.
  224         (g) The fund administrator or a board member, employee, or
  225  agent thereof, or an immediate family member of a board member,
  226  employee, or agent, may not have a financial interest in an
  227  entity that is awarded a loan under a loan program and may not
  228  benefit directly or indirectly from the making of such a loan. A
  229  loan may not be made to a person if it violates this paragraph.
  230  As used in this section, the term “immediate family” means a
  231  parent, child, or spouse, or any other relative by blood,
  232  marriage, or adoption, of a board member, employee, or agent of
  233  the loan administrator.
  234         (h) With the exception of funds appropriated to the
  235  department for the loan program, the credit of the state may not
  236  be pledged. The state is not liable or obligated in any way for
  237  claims against the QTV Fund or against the fund administrator,
  238  the qualified lending partner, or the department.
  240  administrator must consider at a minimum the following criteria
  241  for evaluating the qualifying television content:
  242         (a) The content is intended for broadcast by a major
  243  broadcaster on a major network, cable, or streaming channel.
  244         (b) The content is produced in this state, or a minimum of
  245  80 percent of the production budget must be spent in this state.
  246  This requirement may be amended by the fund administrator upon
  247  notice to the department. Such notice must include a specific
  248  justification for the change and must be transmitted to the
  249  department in writing. The department has 10 business days to
  250  object to the change. If the department does not object to the
  251  change within 10 business days, the change is deemed acceptable
  252  by the department, and the fund administrator may grant the
  253  amendment to the requirement in this paragraph.
  254         (c) If the content is a series, there is a programming
  255  order for at least 13 episodes. This requirement may be amended
  256  by the fund administrator upon notice to the department. Such
  257  notice must include a specific justification for the change and
  258  must be transmitted to the department in writing. The department
  259  has 10 business days to object to the change. If the department
  260  does not object to the change within 10 business days, the
  261  change is deemed acceptable by the department, and the fund
  262  administrator may grant the amendment to the requirement in this
  263  paragraph.
  264         (d) The producer must have a contract in place with a major
  265  broadcaster to acquire content programming under a customary
  266  broadcast license agreement and the contract must cover at least
  267  60 percent of the budget.
  268         (e) The producer must retain a foreign sales agent and must
  269  be able to provide the fund administrator with the foreign sales
  270  agent’s official estimates of foreign and ancillary sales.
  271         (f) The project must be bonded and secured by an industry
  272  approved completion guarantor if the production cost per episode
  273  exceeds $1 million. This requirement may be waived if the loan
  274  applicant provides the fund administrator with evidence of
  275  adequate structure to protect the state’s funds.
  276         (8) AUDITOR GENERAL AUDIT.—The Auditor General is
  277  authorized to conduct operational audits, as defined in s.
  278  11.45, of the QTV Fund and fund administrator. The scope of
  279  audit must include, but is not limited to, internal controls
  280  evaluations, internal audit functions, reporting and performance
  281  requirements for the use of the funds, and compliance with state
  282  and federal law. The fund administrator shall provide to the
  283  Auditor General any detail or supplemental data required.
  284         (9) RULEMAKING AUTHORITY.—The department may adopt rules to
  285  administer this section.
  286         (10) EXPIRATION.—This section expires December 31, 2024, at
  287  which point all funds remaining in the QTV Fund shall revert to
  288  the General Revenue Fund.
  289         (11) EMERGENCY RULES.—
  290         (a) The executive director of the department is authorized,
  291  and all conditions are deemed met, to adopt emergency rules
  292  pursuant to ss. 120.536(1) and 120.54(4) for the purpose of
  293  implementing this section.
  294         (b) Notwithstanding any other law, the emergency rules
  295  adopted pursuant to paragraph (a) remain in effect for 6 months
  296  after adoption and may be renewed during the pendency of
  297  procedures to adopt permanent rules addressing the subject of
  298  the emergency rules.
  299         (c) This subsection expires October 1, 2015.
  300         Section 15. Effective upon becoming law, paragraph (b) of
  301  subsection (2) of section 288.0001, Florida Statutes, is amended
  302  to read:
  303         288.0001 Economic Development Programs Evaluation.—The
  304  Office of Economic and Demographic Research and the Office of
  305  Program Policy Analysis and Government Accountability (OPPAGA)
  306  shall develop and present to the Governor, the President of the
  307  Senate, the Speaker of the House of Representatives, and the
  308  chairs of the legislative appropriations committees the Economic
  309  Development Programs Evaluation.
  310         (2) The Office of Economic and Demographic Research and
  311  OPPAGA shall provide a detailed analysis of economic development
  312  programs as provided in the following schedule:
  313         (b) By January 1, 2015, and every 3 years thereafter, an
  314  analysis of the following:
  315         1. The entertainment industry financial incentive program
  316  established under s. 288.1254.
  317         2. The entertainment industry sales tax exemption program
  318  established under s. 288.1258.
  319         3. The VISIT Florida Tourism Industry Marketing Corporation
  320  and its programs established or funded under ss. 288.122,
  321  288.1226, 288.12265, and 288.124.
  322         4. The Florida Sports Foundation and related programs
  323  established under ss. 288.1162, 288.11621, 288.1166, 288.1167,
  324  288.1168, 288.1169, and 288.1171.
  325         5. The qualified television loan fund established under s.
  326  288.127.
  328  ================= T I T L E  A M E N D M E N T ================
  329  And the title is amended as follows:
  330         Delete lines 57 - 61
  331  and insert:
  332         television content criteria; permitting the Auditor
  333         General to conduct an operational audit of the fund
  334         and the fund administrator; authorizing the department
  335         to adopt rules; providing for expiration of the act;
  336         providing emergency rulemaking authority; amending s.
  337         288.0001, F.S.; requiring an analysis of the qualified
  338         television loan fund in the Economic Development
  339         Programs Evaluation; amending s.