Florida Senate - 2014 COMMITTEE AMENDMENT Bill No. HB 5601 Ì316994UÎ316994 LEGISLATIVE ACTION Senate . House Comm: WD . 04/25/2014 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— following: 1 Senate Amendment to Amendment (477076) (with title 2 amendment) 3 4 Between lines 219 and 220 5 insert: 6 Section 6. Section 288.127, Florida Statutes, is created to 7 read: 8 288.127 Qualified Television Loan Fund (QTV Fund).— 9 (1) DEFINITIONS.—As used in this section, the term: 10 (a) “Fund administrator” means a private sector 11 organization under contract with the department to manage and 12 administer the QTV Fund. 13 (b) “Major broadcaster” means broadcasting organizations 14 that include, but are not limited to, television broadcasting 15 networks, cable television, direct broadcast satellite, 16 telecommunications companies, and internet streaming or other 17 digital media platforms. 18 (c) “Private investment capital” means capital from 19 private, nongovernmental funding sources that will be coinvested 20 with the QTV Fund in segregated accounts. 21 (d) “Qualified lending partner” means a financial 22 institution, as defined in s. 655.005, selected by a fund 23 administrator with demonstrated capability in providing 24 financing to television production and specialized expertise in 25 intellectual property, tax credit programs, customary broadcast 26 license agreements, advertising inventories, and ancillary 27 revenue sources, with a combined portfolio in film, television, 28 and entertainment media of at least $500 million. 29 (e) “Qualified television content” means series, mini 30 series, or made-for-TV content produced by a qualified 31 production company that has in place a distribution contract 32 with a major broadcaster, under a customary broadcast license 33 agreement. The term does not include a production that contains 34 content that is obscene, as defined in s. 847.001. 35 (2) PURPOSE.—The purpose of the QTV Fund is to create a 36 public-private partnership in the form of a revolving loan fund 37 to administer a loan program for television production. The QTV 38 Fund shall be privately managed under state oversight to 39 incentivize the use of this state as a site for producing 40 qualified television content and to develop and sustain the 41 workforce and infrastructure for television content production. 42 (3) CREATION.—The Qualified Television Loan Fund is created 43 within the department. The QTV Fund shall be a public fund that 44 is privately managed by the fund administrator under contract 45 entered into with the department. The department shall disburse 46 the funds appropriated for this program to the fund 47 administrator to invest in the QTV Fund during the existence of 48 the program pursuant to this section and the contract entered 49 into between the fund administrator and the department. State 50 funds in the QTV Fund may be used only to enter into loan 51 agreements and to pay any administrative costs or other 52 authorized fees under this section. 53 (a) The QTV Fund shall be a revolving loan fund that shall 54 invest and reinvest the principal and interest of the fund in 55 accordance with s. 617.2104, in such a manner as to not subject 56 the funds to state or federal taxes and to be consistent with 57 the investment policy statement adopted by the fund 58 administrator. As the production companies repay the principal 59 and interest for the QTV Fund, the state funds shall be 60 returned, less any QTV Fund expenses, to the account to be lent 61 to subsequent borrowers. 62 (b) Funds from the QTV Fund shall be disbursed by the fund 63 administrator through a lending vehicle to make short-term loans 64 pursuant to this section. 65 (4) FUND ADMINISTRATOR.— 66 (a) The department shall contract with a fund administrator 67 by September 1, 2014, and award the contract in accordance with 68 the competitive bidding requirements in s. 287.057. 69 (b) The department shall select as fund administrator a 70 private sector entity that demonstrates the ability to implement 71 the program under this section and that meets the requirements 72 set forth in this section. Preference shall be given to 73 applicants that are headquartered in this state. Additional 74 consideration may be given to applicants with experience in the 75 management of economic development or job creation-related 76 funds. The qualifications for the fund administrator must 77 include, but are not limited to, the following: 78 1. A demonstrated track record of managing private sector 79 equity or debt funds in the entertainment and media industries. 80 2. The ability to demonstrate through a partnership 81 agreement that a qualified lending partner is in place, with the 82 capability of providing leverage of a minimum of 2.5 times the 83 capital amount of the QTV Fund, for financing the production 84 cost of qualified television content in the form of senior debt. 85 (c) For overseeing and administering the QTV Fund, the fund 86 administrator shall be reimbursed for the portion of costs the 87 fund administrator incurrs in establishing and operating the 88 Fund related to the state’s investment, which shall be paid from 89 state funds in the QTV Fund. Any additional private investment 90 capital in the segregated accounts is responsible for its own 91 management fees. The fund administrator shall be entitled to a 92 reasonable profit, but such distribution may not be made from 93 any principal funds from the original appropriation. 94 (d) The fund administrator shall provide services defined 95 under this section for the duration of the QTV Fund term unless 96 removed for cause. Cause shall be further defined under the 97 contract with the fund administrator and must include, but is 98 not limited to, the engagement in fraud or other criminal acts 99 by board members, incapacity, unfitness, neglect of duty, 100 official incompetence and irresponsibility, misfeasance, 101 malfeasance, nonfeasance, or lack of performance. 102 (5) FUND ADMINISTRATOR POWERS AND DUTIES.— 103 (a) Authority to contract.—The fund administrator may enter 104 into agreements with qualified lending partners for concurrent 105 lending through the QTV Fund. A loan made by the qualified 106 lending partner must be accounted for separately from the state 107 funds or any other private investment capital. Such loan shall 108 be made as senior debt. The fund administrator may raise private 109 investment capital for mezzanine equity and other equity or 110 raise junior capital for concurrent lending through the QTV 111 Fund. However, loans from private investment capital may not be 112 made at more favorable terms and conditions than the terms and 113 conditions of the state funds in the QTV Fund. The state 114 appropriation must be maintained in a separate account from any 115 private investment capital and administered in a separate legal 116 investment entity or entities. Private investment capital and 117 loans shall be segregated from each other, and funds may not be 118 commingled. 119 (b) General duties.—The fund administrator: 120 1. Shall prudently manage the funds in the QTV Fund as a 121 revolving loan fund. 122 2. Shall contract with one or more qualified lending 123 partners. 124 3. Shall provide improvement of the credit profile of a 125 structured financial transaction for qualified production 126 companies that produce qualified television content meeting the 127 criteria in subsection (7). 128 4. May raise additional private investment capital to be 129 held in separate accounts, in addition to the leverage provided 130 by the qualified lending partner. 131 5. Shall administer the QTV Fund in accordance with this 132 part. 133 6. Shall agree to maintain the recipient’s books and 134 records relating to funds received from the department according 135 to generally accepted accounting principles and in accordance 136 with the requirements of s. 215.97(7) and to make those books 137 and records available to the department for inspection upon 138 reasonable notice. The books and records must be maintained with 139 detailed records showing the use of proceeds from loans to fund 140 qualified television content. 141 7. Shall maintain its registered office in this state 142 throughout the duration of the contract. 143 (c) Financial reporting.—The fund administrator shall 144 submit to the department by February 28 each year audited 145 financial statements for the preceding tax year which are 146 audited by an independent certified public accountant after the 147 end of each year in which the fund administrator is under 148 contract with the department. In addition to providing an 149 independent opinion on the annual financial statements, such 150 audit provides a basis to verify the segregation of state funds 151 from those of any private investment capital. 152 (d) Program reporting.—The fund administrator shall submit 153 an annual report to the department by February 28 after the end 154 of each year in which the fund administrator is under contract 155 with the department. The report must include information on the 156 loans made in the preceding calendar year and must include, but 157 need not be limited to, the following: 158 1. The name of the qualified television content. 159 2. The names of the counties in which the production 160 occurred. 161 3. The number of jobs created and retained as a result of 162 the production. 163 4. The loan amounts, including the amount of private 164 investment capital and funds provided by a qualified lending 165 partner. 166 5. The loan repayment status for each loan. 167 6. The number, and amounts, of any loans with payments past 168 due. 169 7. The number, and amounts, of any loans in default. 170 8. A description of the assets securing the loans. 171 9. Other information and documentation required by the 172 department. 173 (e) Plan of accountability.—The fund administrator shall 174 submit an annual plan of accountability of economic development, 175 including a report detailing the job creation resulting from the 176 QTV Fund loans made during the current year and cumulatively 177 since the inception of the program. The fund administrator shall 178 also provide any additional information requested by the 179 department pertaining to economic development and job creation 180 in the state. 181 (f) Conflict-of-interest statement.—The fund administrator 182 shall provide a conflict-of-interest statement from its 183 governing board certifying that no board member, director, 184 employee, agent, immediate family member thereof, or other 185 person connected to or affiliated with the fund administrator is 186 receiving or will receive any type of compensation or 187 remuneration from a production company that has received or will 188 receive funds from the loan program or from a qualified lending 189 partner. The department may waive this requirement for good 190 cause shown. 191 (6) LOAN STRUCTURE.— 192 (a) The QTV Fund may make loans to production companies to 193 fund production costs or provide improvement of the credit 194 profile of a structured financial transaction for qualified 195 television content that meets the criteria requirements of 196 subsection (7). To make a loan, the fund administrator shall 197 take into consideration the types of eligible collateral, the 198 credit worthiness of the project, the producer’s track record, 199 the possibility that the project will encourage, enhance, or 200 create economic benefits, and the extent to which assistance 201 would foster innovative public-private partnerships and attract 202 private debt or equity investment. 203 (b) The QTV Fund loan package shall be secured by 204 contractual and predictable sources of repayment such as 205 domestic and international broadcaster license agreements and 206 other ancillary revenues that are derived from media content 207 rights. Unsecured loans may not be made. 208 (c) The loans shall be made on the basis of a second lien 209 or primary security rights on the media assets listed in 210 paragraph (b). 211 (d) The QTV Fund shall provide funding only in conjunction 212 with senior loans provided by a qualified lending partner. Loans 213 from the QTV Fund may be subordinated to senior debt from the 214 qualified lending partner and may not exceed 30 percent of the 215 total production funding cost of any particular project. 216 (e) The production company’s repayment of any loan shall be 217 in accordance with the broadcast license agreement and the 218 delivery of qualified television content to the major 219 broadcaster and shall be within 60 days after such delivery. 220 (f) Loans made by the QTV Fund may not exceed 36 months in 221 duration, except for extenuating circumstances for which the 222 fund administrator may grant an extension upon making written 223 findings to the department specifying the conditions requiring 224 the extension. 225 (g) The fund administrator or a board member, employee, or 226 agent thereof, or an immediate family member of a board member, 227 employee, or agent, may not have a financial interest in an 228 entity that is awarded a loan under a loan program and may not 229 benefit directly or indirectly from the making of such a loan. A 230 loan may not be made to a person if it violates this paragraph. 231 As used in this section, the term “immediate family” means a 232 parent, child, or spouse, or any other relative by blood, 233 marriage, or adoption, of a board member, employee, or agent of 234 the loan administrator. 235 (h) With the exception of funds appropriated to the 236 department for the loan program, the credit of the state may not 237 be pledged. The state is not liable or obligated in any way for 238 claims against the QTV Fund or against the fund administrator, 239 the qualified lending partner, or the department. 240 (7) QUALIFIED TELEVISION CONTENT CRITERIA.—The fund 241 administrator must consider at a minimum the following criteria 242 for evaluating the qualifying television content: 243 (a) The content is intended for broadcast by a major 244 broadcaster on a major network, cable, or streaming channel. 245 (b) The content is produced in this state, or a minimum of 246 80 percent of the production budget must be spent in this state. 247 This requirement may be amended by the fund administrator upon 248 notice to the department. Such notice must include a specific 249 justification for the change and must be transmitted to the 250 department in writing. The department has 10 business days to 251 object to the change. If the department does not object to the 252 change within 10 business days, the change is deemed acceptable 253 by the department, and the fund administrator may grant the 254 amendment to the requirement in this paragraph. 255 (c) If the content is a series, there is a programming 256 order for at least 13 episodes. This requirement may be amended 257 by the fund administrator upon notice to the department. Such 258 notice must include a specific justification for the change and 259 must be transmitted to the department in writing. The department 260 has 10 business days to object to the change. If the department 261 does not object to the change within 10 business days, the 262 change is deemed acceptable by the department, and the fund 263 administrator may grant the amendment to the requirement in this 264 paragraph. 265 (d) The producer must have a contract in place with a major 266 broadcaster to acquire content programming under a customary 267 broadcast license agreement and the contract must cover at least 268 60 percent of the budget. 269 (e) The producer must retain a foreign sales agent and must 270 be able to provide the fund administrator with the foreign sales 271 agent’s official estimates of foreign and ancillary sales. 272 (f) The project must be bonded and secured by an industry 273 approved completion guarantor if the production cost per episode 274 exceeds $1 million. This requirement may be waived if the loan 275 applicant provides the fund administrator with evidence of 276 adequate structure to protect the state’s funds. 277 (8) AUDITOR GENERAL AUDIT.—The Auditor General is 278 authorized to conduct operational audits, as defined in s. 279 11.45, of the QTV Fund and fund administrator. The scope of 280 audit must include, but is not limited to, internal controls 281 evaluations, internal audit functions, reporting and performance 282 requirements for the use of the funds, and compliance with state 283 and federal law. The fund administrator shall provide to the 284 Auditor General any detail or supplemental data required. 285 (9) RULEMAKING AUTHORITY.—The department may adopt rules to 286 administer this section. 287 (10) EXPIRATION.—This section expires December 31, 2024, at 288 which point all funds remaining in the QTV Fund shall revert to 289 the General Revenue Fund. 290 (11) EMERGENCY RULES.— 291 (a) The executive director of the department is authorized, 292 and all conditions are deemed met, to adopt emergency rules 293 pursuant to ss. 120.536(1) and 120.54(4) for the purpose of 294 implementing this section. 295 (b) Notwithstanding any other law, the emergency rules 296 adopted pursuant to paragraph (a) remain in effect for 6 months 297 after adoption and may be renewed during the pendency of 298 procedures to adopt permanent rules addressing the subject of 299 the emergency rules. 300 (c) This subsection expires October 1, 2015. 301 Section 7. Paragraph (b) of subsection (2) of section 302 288.0001, Florida Statutes, is amended 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 Section 8. For fiscal year 2014-2015, the sum of $20 328 million of nonrecurring funds is appropriated from the General 329 Revenue Fund to the Economic Development Trust Fund of the 330 Department of Economic Opportunity for the purpose of making 331 disbursements in accordance with s. 288.127(3), Florida 332 Statutes. 333 334 ================= T I T L E A M E N D M E N T ================ 335 And the title is amended as follows: 336 Delete lines 378 - 391 337 and insert: 338 An act relating to economic development; amending s. 339 202.12, F.S.; reducing the tax rate applied to the 340 sale of communications services; reducing the tax rate 341 applied to the retail sale of direct-to-home satellite 342 services; amending s. 202.12001, F.S.; conforming 343 rates to the reduction of the communications services 344 tax; amending s. 202.18, F.S.; revising the 345 distribution of tax revenues received; amending s. 346 203.001. F.S.; conforming rates to the reduction of 347 the communications services tax; amending s. 212.20, 348 F.S.; providing for a monthly distribution of a 349 specified amount of sales tax revenue to a complex 350 certified as a motorsports entertainment complex by 351 the Department of Economic Opportunity; creating s. 352 288.127, F.S.; providing definitions; providing a 353 purpose; creating the Qualified Television Loan Fund; 354 requiring the Department of Economic Opportunity to 355 contract with a fund administrator; providing fund 356 administrator qualifications; providing for the fund 357 administrator’s compensation and removal; specifying 358 the fund administrator powers and duties; providing 359 the structure of the loans; providing qualified 360 television content criteria; permitting the Auditor 361 General to conduct an operational audit of the fund 362 and the fund administrator; authorizing the department 363 to adopt rules; providing for expiration of the act; 364 providing emergency rulemaking authority; amending s. 365 288.0001, F.S.; requiring an analysis of the qualified 366 television loan fund in the Economic Development 367 Programs Evaluation; providing an appropriation; 368 amending s.