Florida Senate - 2016                                     SB 106
       
       
        
       By Senator Bean
       
       
       
       
       
       4-00155A-16                                            2016106__
    1                        A bill to be entitled                      
    2         An act relating to economic development; creating s.
    3         288.127, F.S.; defining terms; providing a purpose;
    4         creating the qualified television revolving loan fund;
    5         requiring the Department of Economic Opportunity to
    6         contract with a fund administrator; providing fund
    7         administrator qualifications; providing for the fund
    8         administrator’s compensation and removal; specifying
    9         the fund administrator’s powers and duties; providing
   10         the structure of the loans; providing qualified
   11         television content criteria; authorizing the Auditor
   12         General to conduct an operational audit of the fund
   13         and the fund administrator; authorizing the department
   14         to adopt rules; providing for expiration of the loan
   15         program; providing emergency rulemaking authority;
   16         providing for expiration of the emergency rulemaking
   17         authority; amending s. 288.0001, F.S.; revising the
   18         initial date by which the Office of Economic and
   19         Demographic Research and the Office of Program Policy
   20         Analysis and Government Accountability must provide a
   21         detailed analysis on specified programs; making
   22         technical changes; requiring an analysis of the
   23         qualified television revolving loan fund in the
   24         Economic Development Programs Evaluation; providing an
   25         effective date.
   26          
   27  Be It Enacted by the Legislature of the State of Florida:
   28  
   29         Section 1. Section 288.127, Florida Statutes, is created to
   30  read:
   31         288.127 Qualified television revolving loan fund.—
   32         (1) DEFINITIONS.—As used in this section, the term:
   33         (a) “Fund administrator” means a private sector
   34  organization under contract with the department to manage and
   35  administer the qualified television revolving loan fund.
   36         (b) “Major broadcaster” means broadcasting organizations
   37  that include, but are not limited to, television broadcasting
   38  networks, cable television, direct broadcast satellite,
   39  telecommunications companies, and Internet streaming or other
   40  digital media platforms.
   41         (c) “Private investment capital” means capital from
   42  private, nongovernmental funding sources which will be
   43  coinvested with the QTV Fund in segregated accounts.
   44         (d) “QTV Fund” means the qualified television revolving
   45  loan fund.
   46         (e) “Qualified lending partner” means a financial
   47  institution, as defined in s. 655.005, selected by a fund
   48  administrator which has demonstrated capability in providing
   49  financing to television production and specialized expertise in
   50  intellectual property, tax credit programs, customary broadcast
   51  license agreements, advertising inventories, and ancillary
   52  revenue sources, and a combined portfolio in film, television,
   53  and entertainment media of at least $500 million.
   54         (f) “Qualified television content” means series,
   55  miniseries, or made-for-TV content produced by a qualified
   56  production company that has in place a distribution contract
   57  with a major broadcaster, under a customary broadcaster license
   58  agreement, and meets the criteria provided in subsection (7).
   59  The term does not include a production that contains content
   60  that is obscene, as defined in s. 847.001.
   61         (2) PURPOSE.—The purpose of the QTV Fund is to create a
   62  public-private partnership in the form of a revolving loan fund
   63  to administer a loan program for television production. The QTV
   64  Fund is privately managed under state oversight to incentivize
   65  the use of this state as a site for producing qualified
   66  television content and to develop and sustain the workforce and
   67  infrastructure for television content production.
   68         (3) CREATION.—The qualified television revolving loan fund
   69  is created within the department. The QTV Fund shall be a public
   70  fund that is privately managed by the fund administrator. The
   71  department shall disburse the funds appropriated for this loan
   72  program to the fund administrator to invest in the QTV Fund
   73  during the existence of the program pursuant to this section and
   74  the contract between the fund administrator and the department.
   75  State funds in the QTV Fund may be used only to enter into loan
   76  agreements and to pay any administrative costs or other
   77  authorized fees under this section.
   78         (a) The QTV Fund is a revolving loan fund that must invest
   79  and reinvest the principal and interest of the fund in
   80  accordance with s. 617.2104 in a manner so as not to subject the
   81  funds to state or federal taxes and to be consistent with the
   82  investment policy statement adopted by the fund administrator.
   83  As production companies repay the principal and interest to the
   84  QTV Fund, state funds, less any QTV Fund expenses, shall be
   85  returned to the account to be lent to subsequent borrowers.
   86         (b) The fund administrator shall disburse funds from the
   87  QTV Fund through a lending vehicle to make loans not to exceed
   88  36 months in duration pursuant to this section.
   89         (4) FUND ADMINISTRATOR.—
   90         (a) The department shall contract with a fund administrator
   91  within 90 days after funds are appropriated for the loan program
   92  and shall award the contract in accordance with the competitive
   93  bidding requirements in s. 287.057.
   94         (b) The department shall select as fund administrator a
   95  private sector entity that demonstrates the ability to implement
   96  the program under this section and that meets the requirements
   97  set forth in this section. Preference shall be given to
   98  applicants that are headquartered in this state. Additional
   99  consideration may be given to applicants that have experience in
  100  the management of economic development or job creation-related
  101  funds. The qualifications for the fund administrator must
  102  include, but are not limited to:
  103         1. A demonstrated track record of managing private sector
  104  equity or debt funds in the entertainment and media industries.
  105         2. The ability to demonstrate through a partnership
  106  agreement that a qualified lending partner is in place which has
  107  the capability of providing leverage of a minimum of 2.5 times
  108  the capital amount of the QTV Fund, for financing the production
  109  cost of qualified television content in the form of senior debt.
  110         (c) For overseeing and administering the QTV Fund, the fund
  111  administrator shall be reimbursed for the costs that the fund
  112  administrator incurs in establishing and operating the fund
  113  related to the state’s investment, which shall be paid from
  114  state funds in the QTV Fund. Any additional private investment
  115  capital in the segregated accounts is responsible for its own
  116  management fees. The fund administrator is entitled to a
  117  reasonable profit, but such distribution may not be made from
  118  the principal funds from the original appropriation.
  119         (d) The fund administrator shall provide services defined
  120  under this section for the duration of the QTV Fund term unless
  121  removed by the department. The contract between the department
  122  and the fund administrator shall set forth the circumstances
  123  under which the contract may be terminated.
  124         (5) FUND ADMINISTRATOR POWERS AND DUTIES.—
  125         (a) Authority to contract.—The fund administrator may enter
  126  into agreements with qualified lending partners for concurrent
  127  lending through the QTV Fund. A loan made by the qualified
  128  lending partner must be accounted for separately from the state
  129  funds or other private investment capital. Such loan shall be
  130  made as senior debt. The fund administrator may raise private
  131  investment capital for mezzanine equity and other equity or
  132  raise junior capital for concurrent lending through the QTV
  133  Fund. However, loans from private investment capital, which is
  134  invested at the same risk profile as the QTV Fund, may not be
  135  made at more favorable terms and conditions than the terms and
  136  conditions of the state funds in the QTV Fund. The state
  137  appropriation must be maintained in a separate account from
  138  private investment capital and administered in a separate legal
  139  investment entity or entities. Private investment capital and
  140  loans shall be segregated from each other, and funds may not be
  141  commingled.
  142         (b) General duties.—The fund administrator:
  143         1. Shall prudently manage the funds in the QTV Fund as a
  144  revolving loan fund.
  145         2. Shall contract with one or more qualified lending
  146  partners.
  147         3. Shall provide improvement of the credit profile of a
  148  structured financial transaction for qualified production
  149  companies that produce qualified television content meeting the
  150  criteria in subsection (7).
  151         4. May raise additional private investment capital to be
  152  held in separate accounts, in addition to the leverage provided
  153  by the qualified lending partner.
  154         5. Shall administer the QTV Fund in accordance with this
  155  part.
  156         6. Shall agree to verify that the recipient’s books and
  157  records relating to funds received from the department are
  158  maintained according to generally accepted accounting principles
  159  and in accordance with s. 215.97(7) and to ensure that those
  160  books and records will be available to the department for
  161  inspection upon reasonable notice. The books and records must be
  162  maintained with detailed records showing the use of proceeds
  163  from loans to fund qualified television content.
  164         7. Shall maintain its registered office in this state
  165  throughout the duration of the contract.
  166         (c) Financial reporting.—By February 28 of each year, the
  167  fund administrator shall submit to the department financial
  168  statements for the preceding tax year which are audited by an
  169  independent certified public accountant after the end of each
  170  year in which the fund administrator is under contract with the
  171  department. In addition to providing an independent opinion on
  172  the annual financial statements, such audit provides a basis for
  173  verifying the segregation of state funds from those of any
  174  private investment capital.
  175         (d) Program reporting.—The fund administrator shall submit
  176  a report to the department by February 28 after the end of each
  177  year in which the fund administrator is under contract with the
  178  department. The report must include information on the loans
  179  made in the preceding calendar year, including:
  180         1. The name of the qualified television content.
  181         2. The names of the counties in which the production
  182  occurred.
  183         3. The number of jobs created and retained as a result of
  184  the production.
  185         4. The loan amounts, including the amount of private
  186  investment capital and funds provided by a qualified lending
  187  partner.
  188         5. The loan repayment status for each loan.
  189         6. The number and amounts of any loans with payments past
  190  due.
  191         7. The number and amounts of any loans in default.
  192         8. A description of the assets securing the loans.
  193         9. Other information and documentation required by the
  194  department.
  195         (e) Plan of accountability.—The fund administrator shall
  196  submit an annual plan of accountability of economic development,
  197  including a report detailing the job creation resulting from the
  198  QTV Fund loans made during the current year and cumulatively
  199  since the inception of the program. The fund administrator shall
  200  also provide any additional information requested by the
  201  department pertaining to economic development and job creation
  202  in the state.
  203         (f) Conflict-of-interest statement.—The fund administrator
  204  shall provide a conflict-of-interest statement from its
  205  governing board certifying that no board member, director,
  206  employee, or agent, or immediate family member thereof, or other
  207  person connected to or affiliated with the fund administrator is
  208  receiving or will receive any type of compensation or
  209  remuneration from a production company that has received or will
  210  receive funds from the loan program or from a qualified lending
  211  partner. The department may waive this requirement for good
  212  cause shown.
  213         (6) LOAN STRUCTURE.—
  214         (a) The QTV Fund may be used to make loans to production
  215  companies to fund production costs or provide improvement of the
  216  credit profile of a structured financial transaction for
  217  qualified television content that meets the criteria
  218  requirements of subsection (7). To make a loan, the fund
  219  administrator shall consider the types of eligible collateral,
  220  the credit worthiness of the project, the producer’s track
  221  record, the possibility that the project will encourage,
  222  enhance, or create economic benefits, and the extent to which
  223  assistance would foster innovative public-private partnerships
  224  and attract private debt or equity investment.
  225         (b) The QTV Fund loan package shall be secured by
  226  anticipated receivables from domestic and international
  227  broadcaster license agreements and other ancillary revenues that
  228  are derived from media content rights. Unsecured loans may not
  229  be made.
  230         (c) The loans shall be made on the basis of a second lien
  231  or primary security rights on the media assets listed in
  232  paragraph (b).
  233         (d) The QTV Fund shall provide funding only in conjunction
  234  with senior loans provided by a qualified lending partner. Loans
  235  from the fund may be subordinated to senior debt from the
  236  qualified lending partner and may not exceed 30 percent of the
  237  total production funding cost of any particular project.
  238         (e) The production company’s repayment of a loan shall be
  239  in accordance with the license fee payment schedule agreement
  240  and the delivery of qualified television content to the major
  241  broadcaster and shall be within 60 days after such delivery.
  242         (f) Loans made by the QTV Fund may not exceed 36 months in
  243  duration, except for extenuating circumstances for which the
  244  fund administrator may grant an extension upon making written
  245  findings to the department specifying the conditions requiring
  246  the extension.
  247         (g) The fund administrator, or a board member, employee, or
  248  agent thereof, or an immediate family member of a board member,
  249  employee, or agent, may not have a financial interest in an
  250  entity that is awarded a loan under the loan program and may not
  251  benefit directly or indirectly from the making of such loan. A
  252  loan may not be made to a person if it violates this paragraph.
  253  As used in this section, the term “immediate family” means a
  254  parent, child, or spouse, or other relative by blood, marriage,
  255  or adoption, of the fund administrator, or a board member,
  256  employee, or agent thereof.
  257         (h) Except for funds appropriated to the department for the
  258  loan program, the credit of the state may not be pledged. The
  259  state is not liable or obligated in any way for claims against
  260  the QTV Fund or against the fund administrator, the qualified
  261  lending partner, or the department.
  262         (7) QUALIFIED TELEVISION CONTENT CRITERIA.—The fund
  263  administrator must, at a minimum, consider the following
  264  criteria for evaluating the qualifying television content:
  265         (a) The content is intended for broadcast by a major
  266  broadcaster on a major network, cable, or streaming channel.
  267         (b) The content is produced in this state, or a minimum of
  268  80 percent of the production budget must be spent in this state.
  269  This requirement may be amended by the fund administrator upon
  270  notice to the department. Such notice must include a specific
  271  justification for the change and must be transmitted to the
  272  department in writing. The department has 10 business days to
  273  object to the change. If the department does not object within
  274  10 business days, the change is deemed acceptable by the
  275  department, and the fund administrator may grant the amendment.
  276         (c) If the content is a series, the series is:
  277         1. A production created to run multiple seasons which has
  278  an estimated order of at least seven episodes per season and
  279  qualified expenditures of at least $1 million per episode; or
  280         2. A telenovela that has qualified expenditures of more
  281  than $6 million; a minimum of 45 principal photography days
  282  filmed in this state; and a production cast, including
  283  background production, occurring in this state.
  284  
  285  These requirements may be amended by the fund administrator upon
  286  notice to the department. Such notice must include a specific
  287  justification for the change and must be transmitted to the
  288  department in writing. The department has 10 business days to
  289  object to the change. If the department does not object within
  290  10 business days, the change is deemed acceptable by the
  291  department, and the fund administrator may grant the amendment.
  292         (d) The producer must have a contract in place with a major
  293  broadcaster to acquire content programming under a customary
  294  broadcast license agreement, and the contract must cover at
  295  least 60 percent of the budget.
  296         (e) The producer must retain a foreign sales agent and must
  297  be able to provide the fund administrator with the foreign sales
  298  agent’s official estimates of foreign and ancillary sales.
  299         (f) The project must be bonded and secured by an industry
  300  approved completion guarantor if the production cost per episode
  301  exceeds $1 million. This requirement may be waived if the loan
  302  applicant provides the fund administrator with evidence of
  303  adequate structure to protect the state’s funds.
  304         (8) AUDITOR GENERAL AUDIT.—The Auditor General may conduct
  305  operational audits, as defined in s. 11.45, of the QTV Fund and
  306  fund administrator. The scope of the audit must include, but is
  307  not limited to, internal controls evaluations, internal audit
  308  functions, reporting and performance requirements for the use of
  309  the funds, and compliance with state and federal law. The fund
  310  administrator shall provide to the Auditor General any detail or
  311  supplemental data required.
  312         (9) RULEMAKING AUTHORITY.—The department may adopt rules to
  313  administer this section.
  314         (10) EXPIRATION.—This section expires December 31, 2026, at
  315  which point all funds remaining in the QTV Fund revert to the
  316  General Revenue Fund.
  317         (11) EMERGENCY RULES.—
  318         (a) The executive director of the department is authorized,
  319  and all conditions are deemed met, to adopt emergency rules
  320  pursuant to ss. 120.536(1) and 120.54(4) for the purpose of
  321  implementing this section.
  322         (b) Notwithstanding any other law, the emergency rules
  323  adopted pursuant to paragraph (a) remain in effect for 6 months
  324  after adoption and may be renewed during the pendency of
  325  procedures to adopt permanent rules addressing the subject of
  326  the emergency rules.
  327         (c) This subsection expires October 1, 2017.
  328         Section 2. Paragraph (b) of subsection (2) of section
  329  288.0001, Florida Statutes, is amended to read:
  330         288.0001 Economic Development Programs Evaluation.—The
  331  Office of Economic and Demographic Research and the Office of
  332  Program Policy Analysis and Government Accountability (OPPAGA)
  333  shall develop and present to the Governor, the President of the
  334  Senate, the Speaker of the House of Representatives, and the
  335  chairs of the legislative appropriations committees the Economic
  336  Development Programs Evaluation.
  337         (2) The Office of Economic and Demographic Research and
  338  OPPAGA shall provide a detailed analysis of economic development
  339  programs as provided in the following schedule:
  340         (b) By January 1, 2019 2015, and every 3 years thereafter,
  341  an analysis of the following:
  342         1. The entertainment industry financial incentive program
  343  established under s. 288.1254.
  344         2. The entertainment industry sales tax exemption program
  345  established under s. 288.1258.
  346         3. The VISIT Florida Tourism Industry Marketing Corporation
  347  and its programs established or funded under ss. 288.122,
  348  288.1226, 288.12265, and 288.124.
  349         4. The Florida Sports Foundation and related programs
  350  established under ss. 288.1162, 288.11621, 288.1166, 288.1167,
  351  288.1168, 288.1169, and 288.1171.
  352         5. The qualified television revolving loan fund established
  353  under s. 288.127.
  354         Section 3. This act shall take effect upon becoming a law.