Florida Senate - 2014                        COMMITTEE AMENDMENT
       Bill No. HB 5601
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: RE            .                                
                  04/25/2014           .                                

       The Committee on Appropriations (Bean) recommended the
    1         Senate Amendment to Amendment (477076) (with title
    2  amendment)
    4         Between lines 315 and 316
    5  insert:
    6         Section 7. Section 288.127, Florida Statutes, is created to
    7  read:
    8         288.127 Qualified television loan 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 that has 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, and 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         (f) “QTV Fund” means the qualified television loan fund.
   36         (2) PURPOSE.—The purpose of the QTV Fund is to create a
   37  public-private partnership in the form of a revolving loan fund
   38  to administer a loan program for television production. The QTV
   39  Fund shall be privately managed under state oversight to
   40  incentivize the use of this state as a site for producing
   41  qualified television content and to develop and sustain the
   42  workforce and infrastructure for television content production.
   43         (3) CREATION.—The qualified television loan fund is created
   44  within the department. The QTV Fund shall be a public fund that
   45  is privately managed by the fund administrator under contract
   46  with the department. The department shall disburse the funds
   47  appropriated for this program to the fund administrator to
   48  invest in the QTV Fund during the existence of the program
   49  pursuant to this section and the contract between the fund
   50  administrator and the department. State funds in the QTV Fund
   51  may be used only to enter into loan agreements and to pay any
   52  administrative costs or other authorized fees under this
   53  section.
   54         (a) The QTV Fund shall be a revolving loan fund that
   55  invests and reinvests the principal and interest of the fund in
   56  accordance with s. 617.2104 in a manner so as to not subject the
   57  funds to state or federal taxes and to be consistent with the
   58  investment policy statement adopted by the fund administrator.
   59  As production companies repay the principal and interest to the
   60  QTV Fund, state funds, less any QTV Fund expenses, shall be
   61  returned to the account to be lent 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 that have experience in
   75  the management of economic development or job creation-related
   76  funds. The qualifications for the fund administrator must
   77  include, but are not limited to:
   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, which
   82  has the capability of providing leverage of a minimum of 2.5
   83  times the capital amount of the QTV Fund, for financing the
   84  production cost of qualified television content in the form of
   85  senior debt.
   86         (c) For overseeing and administering the QTV Fund, the fund
   87  administrator shall be reimbursed for the costs the fund
   88  administrator incurs in establishing and operating the fund
   89  related to the state’s investment, which shall be paid from
   90  state funds in the QTV Fund. Any additional private investment
   91  capital in the segregated accounts is responsible for its own
   92  management fees. The fund administrator is entitled to a
   93  reasonable profit, but such distribution may not be made from
   94  the principal funds from the original appropriation.
   95         (d) The fund administrator shall provide services defined
   96  under this section for the duration of the QTV Fund term unless
   97  removed for cause. Cause shall be further defined under the
   98  contract with the fund administrator and must include, but is
   99  not limited to, the engagement in fraud or other criminal acts
  100  by board members, incapacity, unfitness, neglect of duty,
  101  official incompetence and irresponsibility, misfeasance,
  102  malfeasance, nonfeasance, or lack of performance.
  104         (a) Authority to contract.—The fund administrator may enter
  105  into agreements with qualified lending partners for concurrent
  106  lending through the QTV Fund. A loan made by the qualified
  107  lending partner must be accounted for separately from the state
  108  funds or other private investment capital. Such loan shall be
  109  made as senior debt. The fund administrator may raise private
  110  investment capital for mezzanine equity and other equity or
  111  raise junior capital for concurrent lending through the QTV
  112  Fund. However, loans from private investment capital may not be
  113  made at more favorable terms and conditions than the terms and
  114  conditions of the state funds in the QTV Fund. The state
  115  appropriation must be maintained in a separate account from
  116  private investment capital and administered in a separate legal
  117  investment entity or entities. Private investment capital and
  118  loans shall be segregated from each other, and funds may not be
  119  commingled.
  120         (b) General duties.—The fund administrator:
  121         1. Shall prudently manage the funds in the QTV Fund as a
  122  revolving loan fund.
  123         2. Shall contract with one or more qualified lending
  124  partners.
  125         3. Shall provide improvement of the credit profile of a
  126  structured financial transaction for qualified production
  127  companies that produce qualified television content meeting the
  128  criteria in subsection (7).
  129         4. May raise additional private investment capital to be
  130  held in separate accounts, in addition to the leverage provided
  131  by the qualified lending partner.
  132         5. Shall administer the QTV Fund in accordance with this
  133  part.
  134         6. Shall agree to maintain the recipient’s books and
  135  records relating to funds received from the department according
  136  to generally accepted accounting principles and in accordance
  137  with s. 215.97(7) and to make those books and records available
  138  to the department for inspection upon reasonable notice. The
  139  books and records must be maintained with detailed records
  140  showing the use of proceeds from loans to fund qualified
  141  television content.
  142         7. Shall maintain its registered office in this state
  143  throughout the duration of the contract.
  144         (c) Financial reporting.—The fund administrator shall
  145  annually submit to the department by February 28 audited
  146  financial statements for the preceding tax year which are
  147  audited by an independent certified public accountant after the
  148  end of each year in which the fund administrator is under
  149  contract with the department. In addition to providing an
  150  independent opinion on the annual financial statements, such
  151  audit provides a basis for verifying the segregation of state
  152  funds from those of any private investment capital.
  153         (d) Program reporting.—The fund administrator shall submit
  154  a report to the department by February 28 after the end of each
  155  year in which the fund administrator is under contract with the
  156  department. The report must include information on the loans
  157  made in the preceding calendar year, including:
  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  consider the types of eligible collateral, the credit worthiness
  198  of the project, the producer’s track record, the possibility
  199  that the project will encourage, enhance, or create economic
  200  benefits, and the extent to which assistance would foster
  201  innovative public-private partnerships and attract private debt
  202  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 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 a 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 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 other relative by blood, marriage,
  233  or adoption, of a board member, employee, or agent of the loan
  234  administrator.
  235         (h) Except for funds appropriated to the department for the
  236  loan program, the credit of the state may not be pledged. The
  237  state is not liable or obligated in any way for claims against
  238  the QTV Fund or against the fund administrator, the qualified
  239  lending partner, or the department.
  241  administrator must, at a minimum, consider the following
  242  criteria 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 within
  252  10 business days, the change is deemed acceptable by the
  253  department, and the fund administrator may grant the amendment.
  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 within 10 business days, the change is deemed
  261  acceptable by the department, and the fund administrator may
  262  grant the amendment.
  263         (d) The producer must have a contract in place with a major
  264  broadcaster to acquire content programming under a customary
  265  broadcast license agreement and the contract must cover at least
  266  60 percent of the budget.
  267         (e) The producer must retain a foreign sales agent and must
  268  be able to provide the fund administrator with the foreign sales
  269  agent’s official estimates of foreign and ancillary sales.
  270         (f) The project must be bonded and secured by an industry
  271  approved completion guarantor if the production cost per episode
  272  exceeds $1 million. This requirement may be waived if the loan
  273  applicant provides the fund administrator with evidence of
  274  adequate structure to protect the state’s funds.
  275         (8) AUDITOR GENERAL AUDIT.—The Auditor General may conduct
  276  operational audits, as defined in s. 11.45, of the QTV Fund and
  277  fund administrator. The scope of audit must include, but is not
  278  limited to, internal controls evaluations, internal audit
  279  functions, reporting and performance requirements for the use of
  280  the funds, and compliance with state and federal law. The fund
  281  administrator shall provide to the Auditor General any detail or
  282  supplemental data required.
  283         (9) RULEMAKING AUTHORITY.—The department may adopt rules to
  284  administer this section.
  285         (10) EXPIRATION.—This section expires December 31, 2024, at
  286  which point all funds remaining in the QTV Fund revert to the
  287  General Revenue Fund.
  288         (11) EMERGENCY RULES.—
  289         (a) The executive director of the department is authorized,
  290  and all conditions are deemed met, to adopt emergency rules
  291  pursuant to ss. 120.536(1) and 120.54(4) for the purpose of
  292  implementing this section.
  293         (b) Notwithstanding any other law, the emergency rules
  294  adopted pursuant to paragraph (a) remain in effect for 6 months
  295  after adoption and may be renewed during the pendency of
  296  procedures to adopt permanent rules addressing the subject of
  297  the emergency rules.
  298         (c) This subsection expires October 1, 2015.
  299         Section 10. Paragraph (b) of subsection (2) of section
  300  288.0001, Florida Statutes, is amended to read:
  301         288.0001 Economic Development Programs Evaluation.—The
  302  Office of Economic and Demographic Research and the Office of
  303  Program Policy Analysis and Government Accountability (OPPAGA)
  304  shall develop and present to the Governor, the President of the
  305  Senate, the Speaker of the House of Representatives, and the
  306  chairs of the legislative appropriations committees the Economic
  307  Development Programs Evaluation.
  308         (2) The Office of Economic and Demographic Research and
  309  OPPAGA shall provide a detailed analysis of economic development
  310  programs as provided in the following schedule:
  311         (b) By January 1, 2015, and every 3 years thereafter, an
  312  analysis of the following:
  313         1. The entertainment industry financial incentive program
  314  established under s. 288.1254.
  315         2. The entertainment industry sales tax exemption program
  316  established under s. 288.1258.
  317         3. The VISIT Florida Tourism Industry Marketing Corporation
  318  and its programs established or funded under ss. 288.122,
  319  288.1226, 288.12265, and 288.124.
  320         4. The Florida Sports Foundation and related programs
  321  established under ss. 288.1162, 288.11621, 288.1166, 288.1167,
  322  288.1168, 288.1169, and 288.1171.
  323         5. The qualified television loan fund established under s.
  324  288.127.
  326  ================= T I T L E  A M E N D M E N T ================
  327  And the title is amended as follows:
  328         Delete lines 378 - 398
  329  and insert:
  330         An act relating to economic development; amending s.
  331         202.12, F.S.; reducing the tax rate applied to the
  332         sale of communications services; reducing the tax rate
  333         applied to the retail sale of direct-to-home satellite
  334         services; amending s. 202.12001, F.S.; conforming
  335         rates to the reduction of the communications services
  336         tax; amending s. 202.18, F.S.; revising the
  337         distribution of tax revenues received; amending s.
  338         203.001. F.S.; conforming rates to the reduction of
  339         the communications services tax; amending s. 212.20,
  340         F.S.; providing for a monthly distribution of a
  341         specified amount of sales tax revenue to a complex
  342         certified as a motorsports entertainment complex by
  343         the Department of Economic Opportunity; amending s.
  344         288.1171, F.S.; authorizing the department to certify
  345         a single applicant as a motorsports entertainment
  346         complex if it meets specified criteria; authorizing
  347         the Auditor General to verify the expenditure of
  348         specified distributions and to notify the Department
  349         of Revenue of improperly expended funds so that it may
  350         pursue recovery; creating s. 288.127, F.S.; providing
  351         definitions; providing a purpose; creating the
  352         qualified television loan fund; requiring the
  353         Department of Economic Opportunity to contract with a
  354         fund administrator; providing fund administrator
  355         qualifications; providing for the fund administrator’s
  356         compensation and removal; specifying the fund
  357         administrator powers and duties; providing the
  358         structure of the loans; providing qualified television
  359         content criteria; permitting the Auditor General to
  360         conduct an operational audit of the fund and the fund
  361         administrator; authorizing the department to adopt
  362         rules; providing for expiration of the act; providing
  363         emergency rulemaking authority; amending s. 288.0001,
  364         F.S.; requiring an analysis of the qualified
  365         television loan fund in the Economic Development
  366         Programs Evaluation; specifying a period during which
  367         the