Florida Senate - 2014 COMMITTEE AMENDMENT Bill No. HB 5601 Ì306866LÎ306866 LEGISLATIVE ACTION Senate . House Comm: WD . 04/09/2014 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— following: 1 Senate Amendment (with title amendment) 2 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. 101 (5) FUND ADMINISTRATOR POWERS AND DUTIES.— 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. 239 (7) QUALIFIED TELEVISION CONTENT CRITERIA.—The fund 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
VISITFlorida 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. 327 328 ================= 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.